Building Resilience Through Corporate Climate Action

Amid the coronavirus pandemic, everyone is rightly focused on protecting lives and livelihoods. Can we simultaneously prevent the next crisis? The answer is yes—if we use this moment to reimagine business for a climate-neutral world. This webinar includes an overview of McKinsey & Company’s world-leading research on climate change and a panel of corporate leaders who have taken giant strides towards a sustainable future.

Presenter and Moderator:

Kimberly Henderson, Partner, McKinsey & Company

Panelists:

• Chris Roe, Principal, Renewable Energy & Sustainable Operations, Amazon
• Cynthia Curtis, Senior Vice President, Sustainability, JLL
• Melissa Lavinson, Senior Vice President, Government and External Affairs, Pepco
• Myrrh Caplan, Senior Sustainability Director, Skanska USA

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Read the summary

Kimberly Henderson, Partner, McKinsey & Company, began the webinar with an overview of McKinsey & Company’s world-leading research on climate change. She noted that in 2020, we are standing at a fork in the road on climate, and the choices we make now determine where we go.

Continued growth of greenhouse gas emissions at today’s pace (“business as usual”) would cause about 5 degrees C of warming by 2050. This amount of warming would case more extreme weather events and have disastrous consequences. For example, heat waves that had a .2% chance of occurring between 1961-1980 now have a 15% chance of occurring. That trend will worsen and could lead to life-threatening temperatures in places like Pakistan.

If we assume that nations and companies around the world follow through on their climate change commitments, we will see some reduction in greenhouse gas emissions and estimated warming of 3.5 degrees C by 2050. This is still enough warming to cause tremendous damage. The global goal among nations and the scientific community is to limit warming to 1.5 degrees C—so much remains to be done.

Summary of the panel discussion

How are each of your companies approaching coming up with a climate plan and setting targets?

• Chris Roe explained that Amazon’s climate pledge was an effort to galvanize the rest of the private sector. They have a series of commitments related to reducing their climate impact, including powering global operations with 100% renewable energy by 2025. To fulfill that commitment, they have placed an enormous order for electric vehicles—over 100,000, the biggest order in history. They are also investing in new technologies through the Climate Pledge Fund.
• Cynthia Curtis noted that JLL has set a science-based emissions target. This requires deep cuts in emissions that come from their suppliers, their own operations, and their clients. Suppliers and clients are particularly important because their emissions are JLL’s biggest share, when you consider all emissions associated with JLL’s business. JLL is also investing in new technologies to help the sector improve.
• Melissa Lavinson said that Pepco will deliver 100% renewable energy to the District by 2032. They are focused on not only reducing their company’s carbon footprint, but also working with their customers and communities. They have managed a few initiatives that have supported entrepreneurs in the climate mitigation space, encouraged customers to conserve electricity, and supported multiple nonprofits through sustainable community grants.
• Myrrh Caplan said that Skanska has committed to being completely carbon neutral by 2045, which is above what was really required for their industry. They have already made a lot of progress through partnerships with their suppliers and project partners and by making big changes like electrifying mining equipment and reducing business travel.

How do you work with suppliers upstream, customers downstream, and others in the community?

• Cynthia described working closely with suppliers and customers and said that it has been central to their climate work. She acknowledged that buildings are a big contributor of greenhouse gasses and the industry has a responsibility to attack the challenge head-on. JLL developed a sustainable procurement framework that has been adopted by procurement teams globally. Suppliers have been supportive and clients are glad to have a partner in addressing their own climate goals.
• Myrrh called out the reality that concrete, obviously an important material in construction, is extremely carbon intensive. They can use different types of concrete that reduce the carbon footprint by half but that is not a big enough reduction. To drive down the carbon footprint of cement further, they partnered with other climate experts to develop a digital tool that calculates the carbon footprint of different concrete mixes and has used that to send the message to suppliers that carbon footprint is an important factor in Skanska’s procurement decisions.
• Chris described using Amazon’s enormous purchasing power to increase renewable energy supply. They have funded the development of 12 renewable energy sites to date. In our region, they have forged an agreement with Arlington County and Dominion to develop enough renewable energy to not only power HQ2, but also all their Whole Foods stores and parts of Arlington County.
• Melissa reiterated that Pepco is working with customers to improve energy efficiency. This also helps low-income customers save money. They are also making improvements to the grid to allow homeowners to use their own solar panels and they are working with the District to put in electric charging infrastructure, which requires working with WMATA. Pepco has a set clear goals and has a firm timeline, and the public sector has a very important role in supporting that.

Kimberly points out that around the world, government-set emissions reductions goals have been becoming more and more ambitious and are actually being met by communities and companies.

Other take-aways:

• On renewable natural gas (RNG) and hydrogen: These are green alternatives to natural gas, but there are big technical and economic challenges to deploying these fuels at scale. Amazon is exploring using these fuels for long-range trucking, but only if the fuels can be produced by powerplants that are powered by renewable energy—otherwise, there is not a big enough carbon reduction benefit. Melissa also noted that in other applications, these fuels are a possible replacement for natural gas but they need to be cost-competitive with renewables. When assessing whether to electrify or invest in hydrogen or RNG, the decision comes down to the economics.
• Quote of the day: If it’s not affordable, it’s not sustainable.
• Cynthia shared a great example of partnerships. JLL worked with Metro to install solar panels on some of its infrastructure so that it can generate revenue, which makes great economic sense because it diversifies its revenue streams. This has been especially helpful in a situation like a pandemic when ridership is down.
• The panelists agreed that public policy has a very important role. It helps to lay out a path that companies can follow. When companies make very long-term investments, clear public policy can give them confidence. Some challenges are just too big for companies to tackle.

If each panelist had a magic wand to fix one thing that would help decarbonize their sector:

1. From Myrrh: We need to increase the circularity of the material supply chain. We have ignored that for so long that it is now working against us.
2. From Chris: Electrification. It’s so fundamental to the climate challenge.
3. Cynthia: Improving building standards and codes. Class A buildings get investment and you can get to better decisions around sustainability, but Class B and C buildings will need standards and regulation to force green designs.
4. Melissa: Increase capacity but reduce size of battery storage.

This webinar was made possible by: