On May 10, 2023, Harvard Business School assembled a group of experts to discuss the path “Toward a Decarbonized Future: Why Pays? Who Profits?” In a discussion led by HBS Professor Peter Tufano, the experts described a series of vexing realities impacting the financing as well as the technical innovations, companies and markets necessary to save the planet.

To memorialize their content, organizers from the HBS Business and Environment Initiative asked panelists to share (in writing) the main messages they hoped attendees would take away from their remarks as well as anything they might have learned during the conference.

Scott Jacobs, CEO of Generate Capital, a leading sustainable infrastructure platform, offered several surprisingly upbeat messages. Jacobs wrote: “Solving the Net Zero challenge is a physical problem, not a digital one. The solutions we need are largely available today, so the near-term is defined much more by deploying existing solutions than inventing never-before-known solutions.” He added: “The Infrastructure/Energy Transition is well underway, driven by customer demand for more affordable resources, more resilient resources, and decarbonized resources.”

Jacobs stressed that the price tag for the transition is both known and huge. “Despite the massive capital flows into the Transition, the capital markets remain challenged when it comes to long-term oriented investments, to capital-intensive investments, and to operationally-intensive investments, which is the vast majority of the $9 trillion per year needed to meet Net Zero commitments.”

Current McKinsey Senior Partner Daniel Stephens agreed that the price tag is huge, but wrote:

“The big challenge is allocation and delivery, not the total bill.” He added: “The scale of the financing need is quite large … but it isn’t the ‘total dollar value’ that is really our biggest challenge. It is our ability to build things that will need that financing, and our ability to get that financing to the parts of the industry (developing markets, brown-to-green decarbonization) that are not currently getting it.”

Stephens stressed: “Finance reduced emissions, instead of reduce financed emissions.” He wrote: “To do that we are going to need better and more reliable data and insights from financial institutions and investors, not focused solely on ‘reducing financed emissions,’ which is what we have built so far, but focused on ‘financing reduced emissions.’”

Girish Nadkarni, recently retired CEO of Total Energy Ventures and senior advisor to OGCI Climate Investments, called for corporations to increase their climate change activities. He offered three points:

1. We need to harness and leverage the capital, project management expertise and domain knowledge of corporations to work on financing and de-risking the various solutions for climate change.

2. Rather than companies acting individually, we need to engage the whole value chain to address the challenges.

3. Carbon dioxide removal (CDR) is the next big thing both as a mitigation strategy and a business opportunity.

Indian politician Jayant Sinha admitted that his country generates some seven percent of global greenhouse gas emissions. However, he stressed that India does not have the money or the technologies to get to net zero until possibly 2070, 40 years after the deadline the United Nations has called for.

A member of the Indian Parliament and Chairperson of the Standing Committee on Finance, Sinha stunned his fellow panelists when he warned that by 2050, economic growth expected in the “global south” – specifically Brazil, Indonesia and Nigeria, along with India – could well obliterate all the progress in greenhouse gas emission reductions produced in the global north.

Sinha cited three main risks that have choked the financing of green transition projects in his and other developing countries: long-term currency risks, government policy risks, and uncertainty about payments.

In answer to conference organizers’ question about what he learned, McKinsey Senior Partner Daniel Stephens wrote: “I did not have an appreciation for just how fast developing world emissions will grow, and that if we only succeed in the developed world, the developing world will almost entirely make up for that success and global emissions will be essentially flat out to 2050. I don’t think that fact is well understood.”

Both Scott Jacobs and Girish Nadkarni agreed. Nadkarni wrote: “We need to engage the global south more.”

Jacobs added: “I learned just how much “The Global South” sees a carbon price as a threat rather than an opportunity.” In fact, Jacobs said during the event, “We have failed to get the world to internalize the cost of carbon pollution. We haven’t had the audacity to cite a carbon price high enough to change behavior. A price signal would be a silver bullet that would drive that change.”

Jacobs did have answers for some of the risk issues, at least in the global north. He said his company has a decade of proven success in de-risking climate solutions, accelerating them, and scaling them across a number of markets. Describing Generate’s model, he called for its widespread adoption. Jacobs wrote: “A new model is necessary for aligning all stakeholder interests so that we can build the infrastructure we need. That model needs to be permanently capitalized, flexible in being able to meet multiple financing needs, and operationally expert to ensure the assets actually deliver for the customers and communities these assets are meant to serve. Generate built that new model.”

Stephens wrote that he was surprised “that investors continue to struggle to find a pipeline of projects for investment. I knew this was true in the debt part of the capital stack but sounds like it is true in the equity stack as well.”

Revisiting these panelists’ content, the HBS audience heard loud and clear the $9 trillion per year price tag for climate solutions and the complexity of ways to deploy capital to meet those needs as well as the geopolitical challenges of saving the entire planet, not just the developed world. Questions coming out of the panel include:

How can readers/attendees contribute to some of the key challenges and opportunities presented? How can business leaders deploy existing funds to enable economic growth that does not harm the planet? How can we unlock the trillions of dollars of financing that does already exist to accelerate climate solutions? What new partnerships, alliances contracts and roles can private sector entities in particular play to advance these combined goals?