KH Insight Report—09
Reflections from COP27.
Måns Jacobsson Hosk
Growing up in a home with a strong environmental and political engagement and trying to keep myself up to date with the developments of climate change in general, I’m still a layman in this field. So, when given the opportunity to visit COP27 in Sharm El Sheikh I was fortunately accompanied by sustainability expert Rebecka Carlsson as well as by my colleagues Mattias Olofsson (CEO) and Zoey Tsopela (Head of Communications at Above.se) from the consultancy group ARC Arise Consulting. I went there with mixed emotions of excitement, hope, fear, and with the ambition to learn more on the account of myself and ARC.
After several intense days of listening to the world’s foremost climate experts, scientists, organizations, world leaders, policymakers, entrepreneurs, grassroots movements, and representatives from the world’s largest corporations (as reported by the media, climate activists were hard to find), I went back home with the same mixed emotions. But this time with an added element of confusion. On the one hand, hearing politicians repeatedly claim the climate crisis is their highest priority, on the other hand not doing what it takes to bend the carbon emissions curve, which is now projected to make the planet exceed 1.5°C in warming – the global warming limit committed to in the #ParisAgreement during COP21. Or as Secretary General of the United Nations, António G. put it in his opening remarks: “We’re on the highway to climate hell with the foot on the gas pedal”. (A speech that coincided with our Swedish government removing mandatory regulations for fuel companies to reduce carbon emissions by blending fossil fuel with biofuel, decreasing taxes on fossil fuel, cutting off subsidies for electric cars, making investments in wind energy harder, and halving investments in environmental and climate change altogether until 2025).
This highway to climate hell can only lead elsewhere if the global community commits to and acts according to the carbon law that scientists acknowledge as a valid model to show how carbon emissions need to be halved by 2030. The world then needs to keep halving emissions every decade until 2050 to reach net zero whereas rich countries like Sweden must move even faster. Best case by halving emissions every 5th year. However, we only have 8 years left before we’ve consumed the world’s remaining carbon budget of 300 gigatons. Beyond that, reaching the 1.5°C goal is no longer possible. This is according to #JohanRockström who spoke at #COP27 and who has continuously served as the voice of clarity, truth, and reason —and of some hope. Because if politicians are not contributing to the extent that is required – or at least not at the necessary speed – to halt climate change, Johan Rockström as well as other scientists and experts across the board pointed to corporations and entrepreneurs as the most important facilitators to help the world adapt to and mitigate climate change.
And as it seems, businesses are in many ways ahead of politicians. Maybe since businesses are used to foreseeing the future and acting on it. Partly because dealing with their own money rather than taxpayers’ money and partly because a company breaking a pledge to their customers gets instant feedback in the form of decreased sales and reputational issues. Whereas politicians obviously can break promises to voters without much consequence – at least until the next election. (Fortunately, voters’ still matter in this context, e.g. by recently voting against Bolsonaro and the further destruction of the Amazonas). And maybe most importantly, a company’s very livelihood is to know as much as possible about its customers. And now, many businesses seem to realize that customers need companies to act more responsibly and to provide more sustainable products and services. So do their employees. Hence, acting on the climate crisis is a matter of business survival. But besides monetary reasons for companies leading the way, the inherent urge of entrepreneurs to fix hard problems also plays a vital part.
“Corporations and entrepreneurs as the most important facilitators to help the world adapt to and mitigate climate change”
At COP27, we also found tangible proof of the force of action from businesses that Johan Rockström and others invoke. A general theme amongst the start-ups, scale-ups, and blue chips we met was their focus on the importance of data and data accuracy as a decision basis both for governments, corporates clients and end-consumers. Swedish scale-up Normative.io, for instance, provides a carbon accounting engine to help companies track and account for their carbon emissions. Doconomy provides individuals and corporations with data-driven tools that enable efficient ways to reduce environmental impact – e.g. a transaction impact calculator that communicates the climate impact of your financial transactions. Google has made the route to your destination with the least amount of fuel consumption standard. Heart Aerospace, another Swedish start-up, is electrifying regional air travel by developing its own airplane and has already landed some impressive deals with e.g. United Airlines. Waste management company Ragn-Sells AS is on its way to net zero, aiming for a mainly circular business model.
But the initiative that probably got the most attention during COP27 was Al Gore’s new venture, Climate TRACE. Through data, AI, and satellite technology they can measure emissions accurately and identify their origin – down to a single factory, power plant or ship. Probably what will prove to be a game changer for filling the data gaps of companies’ emissions reports — ultimately, holding countries and businesses accountable.
Al Gore also believes that not only the ideas and innovations must originate from the private sector, but also the financing for the climate transition. Only a fraction of the staggering 4,5 trillion dollars a year needed to fund the reversal of the climate crisis comes from governments – the rest must come from private banks, funds, PEs, and VCs, as is the case in the US and Canada where 96% of the investments in renewable energy are private. A testament to the business opportunities in the green economy – investments, that according to Al Gore, also lead to an estimated three times more jobs than dollars spent on fossil fuels. In Africa – the host of this year’s COP27 and a part of the world most afflicted by climate change – the situation is far worse. Here, only 14% of the investments in renewables come from private investments. However, the opportunities are immense. Thanks to the abundance of sun and wind, Africa represents 40% of the world’s potential for renewable energies, which is also the equivalent of 400 times Africa’s current reserves of fossil fuels.
Al Gore also pointed out that politicians need to stop subsidizing fossil fuels that he called “the culture of death”. This coincided with 223 Swedish companies (amongst them e.g. telecom company Ericsson and building company Skanska) publishing a debate article in one of Sweden’s largest daily newspapers Aftonbladet, which explained why they think the politicians’ aversion to climate change is incomprehensible. They called for stricter regulations and more incentives, long-term game rules, and clear goals for businesses to give them security and predictability when making (green) investments.
But bending the emissions curve is not only about saving ourselves and the planet. Rockström also stresses that life on the planet will be more prosperous for countries, companies, and humans alike. Less pollution (alone killing 8,5 million people a year), fewer natural disasters, better food, water security, and smarter products and services provided by innovative companies will lead to healthier and more sustainable lives. A just transition not only for us in the part of the world least affected by climate change, but for all of us.
“One of the most pressing needs to mitigate the climate crisis is still education.”
— Rebecka Carlsson
Worth mentioning is how manufacturing companies can support the green transition. Notably, Sweden sees the inception of some game-changing companies: besides the aforementioned Heart Aerospace, H2 Green Steel is aiming at producing green steel, and Northvolt is scaling rapid production of electric batteries. In terms of the importance of private investments, we also see a clear transition in the wider Nordics. Parallel to COP27 was the launch of private equity firm EQT Ventures’ new 1,1 billion fund specifically targeting entrepreneurs and innovations for the future. Altor Equity Partners (the financial partner of ARC) are also making further commitments to green investments whereas Summa Equity and Norrsken are born out of the ambition for positive impact on the planet.
So, the question is what role a consultancy company like ARC can play. According to Exponential Roadmap Initiative (and others) – a company providing methodology and advice to support companies in their climate transition – there are four pillars a company needs to attend to in their contribution to reaching the 1.5°C targets:
- Pillar 1 is reducing your emissions.
- Pillar 2 is reducing your value chain emissions.
- Pillar 3 is integrating climate into your strategy.
- Pillar 4 is accelerating climate action in society.
For a consultancy, pillars 1 and 2 have a comparably lower impact compared to manufacturing companies. But where ARC can make the greatest difference is to support clients across all four pillars, seeing to their successful sustainability transformation. Through our capabilities, we can cover large parts of our client’s value chain, e.g. data and insight, strategy, brand, innovation, digital and physical product design, communication, digital marketing, sales, and tech. Capabilities that are key to helping our clients understand their current situation, identify tangible opportunities to transition to a more sustainable business, develop and execute tangible solutions, and scale them. And to do this at speed. Speed, which is urgently needed given the current state of things.
Some of the companies we support in these matters are truck manufacturer Scania Group supporting them in the transition from combustion to electrified vehicles, EV car company Polestar in scaling their business, EV motorcycle company Cake in product design, Fairphone in designing circular mobile phones, helping grow sustainable mobility leader Keolis Group, building IKEA’s circular furniture venture NORNORM, and building the brand of Heart Aerospace.
But according to our cicerone, Rebecka Carlsson, who guided us through COP27, one of the most pressing needs to mitigate the climate crisis is still education. Hence, there’s a great need to constantly share facts and quality data about the climate crisis. And with all those factual examples, it’s just as important to inspire new, effective technologies, products, services, and solutions as well as all nascent and promising innovations and initiatives that often originate from companies and entrepreneurs who resist the concept of the impossible.
The theme of COP27 was “Together for Implementation”. That together should involve all of us. Companies, civil society, scientists, NGOs, individuals, and politicians. The same goes for the Implementation part. After our journey I, personally, as well as ARC, are committed to pulling our weight. Together with our clients.