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The digital age needs a new generation of purpose-driven companies
By Dennis Pamlin, Head of Strategy, Digital with Purpose, GeSI Executive Director, Mission Innovation’s Net-Zero Compatible Innovations Initiative
Society is undergoing one of the most significant transformations in human history, one that poses fundamental questions about what we produce and how we produce it; about what we value and how those values are reflected in society; about how we interact with other people; and more.
At the core of this societal shift sits climate change. How we view climate change depends in part on how we view climate science, which rests on tools and ideas that were largely unknown only a few decades ago; and on what we see as possible and desirable.
Although new solutions to climate change are emerging fast, they are often held back by existing structures and stakeholders. Current innovation ecosystems sustain economic growth primarily by improving existing systems and protecting existing assets. As the OECD notes, most climate action today focuses on optimizing parts in systems that are unsustainable-by-design; As a consequence, even efforts to replace internal-combustion engines with electric vehicles can be inefficient if embedded in car-dependent systems
From footprints to handprints
When the focus is on improving current systems, the obvious way to approach companies is to ask them to reduce the negative impact of their operations. But when new opportunities arise, the focus should shift to how they can provide solutions for others – their handprint.
One example of such a shift is the need to focus on getting people access to what they need, rather than physically moving them from one place to another. Digitalization has helped greatly: Not only can cars become self-driving and shared, but tele-meetings, 3-D printers, and AI can support city planning with fewer roads, more green spaces, and vertical farming. This gives people access to education, healthcare, nutrition and exercise, in ways that do not require physical movement. Companies that enable such opportunities should begin focusing on their handprint.
This refocusing could occur if we make two changes in the existing innovation ecosystem:
From existing sectors to human needs.
Instead of concentrating only on current sectors and the products they provide, we can include strategies and initiatives that focus on human needs. Instead of asking what can be done in existing systems, with existing thinking, we can use a human-need approach to better understand the gap between what is needed and what is currently seen as possible.
Studies have shown that smarter and more resource-efficient solutions become easier to identify when the objective moves beyond simply reducing greenhouse gases. For example, a recent study by a professor of civil engineering at Stanford looked at the risk of blackouts if renewable energy sources are integrated into the electric power grid. The study concluded that “an energy system running on wind, water and solar coupled with storage avoids blackouts, lowers energy requirements and consumer costs, while creating millions of jobs, improving people’s health, and reducing land requirements.”
From stakeholders as sources of emission, to stakeholders as solution providers
Current climate innovation looks mainly at how to reduce the carbon footprint of products and services on the supply side. Companies, cities, and countries are seen purely as sources of emissions, and the future imagined is a copy of the present – just without greenhouse gases.
Experts acknowledge that most current climate initiatives aim either to promote incremental change in existing technologies, or to improve performance in existing renewable alternatives. With a new generation of companies putting digitalization at the core of their purpose, the need to include a handprint approach becomes clear.
Companies must provide solutions to climate change
A change in thinking is required to trigger a change in behavior. So far, climate change has mainly been approached as a problem of reducing emissions from companies and their value chains. This perspective is supported by news media and investors who ask companies about their carbon reduction targets, and by existing reporting frameworks and tools that help companies track and report their reductions.
While companies must ensure that their own emissions are compatible with a 1.5 degree Celsius development path, their own emissions are only one side of the coin. Companies exist to provide society with needed solutions. Their role as solution providers can no longer be ignored.
Instead of the reduction of emissions from existing companies and structures – a footprint approach – the main challenge is to deliver what is needed in a society where the estimated global population of 11 billion people in the year 2100 can live flourishing lives: a handprint approach. This means that “avoided emissions” must be included in corporate climate strategies covering innovation, product development, marketing, sales and business model innovation. These strategies can help everyone on the planet to live better lives.
How did we get here?
There are many reasons for the primacy of the current approach. Most climate-related initiatives and organizations were created before the Fourth Industrial Revolution, at a time when many large polluters questioned whether climate change was real. They were created before sustainable solutions became cost-competitive, and before the scope and scale of the reductions needed were accepted and understood.
Most initiatives and tools dealt with laggards in the corporate sector. As a result, companies, as well as cities and even countries, are viewed as problems. The best these “problems” can do is reduce their emissions.
But to view companies, cities and countries only as sources of emissions can easily become an anti-innovation approach. A climate solution innovation approach, with a focus on handprints, provides the opportunity to focus on the solutions the world needs, and to look for ways that companies, cities, and countries can provide them.
Digitalization, arguably the most powerful catalyst humanity has ever created, could exacerbate negative trends if not carefully managed. But with strategic collaboration, it could also provide better lives for everyone on the planet, not only meeting their basic needs but allowing them to flourish as creative citizens in a society that will expand the horizons of what is seen as possible.
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