How can businesses help the planet get to net-zero greenhouse gas emissions by 2050?

Businesses must weave climate change into their core business models and enterprise risk strategies—not treat it as an add-on. Business executives and board members need to educate themselves and provide leadership and accountability on climate issues. Trillions of dollars of public and private capital must work together to accelerate the green transition. And businesses need to cooperate with each other, governments and NGOs to tackle the biggest threat of our time.

Those were the key takeaways from Harvard Business School's day-long May 10 conference “Accelerating Climate Solutions” for school alumni on what is required to discover, develop, scale, and achieve meaningful progress on climate solutions.

“It's an every-sector-of-the-economy issue,” HBS Professor George Serafeim, one of four faculty moderators, said during the opening panel discussion. A few examples: We must convert a billion vehicles on the roads to electric, electrify the heating and cooling systems of millions of buildings, transform the way that household appliances consume energy, and rethink agricultural production.

Hurdles mentioned during panel discussions include how to pay for developing countries to lower their greenhouse gas emissions, how to develop a workforce with the skills for new climate jobs, and how to navigate evolving government policy.

“The obstacle to change is that it's easier to do nothing than to go out there and take on risk,” said panelist Lauren Taylor Wolfe, cofounder and managing partner of Impactive Capital, an activist investment management firm.

But the payoff can be huge if businesses approach opportunities correctly.

“We are talking about trillions of dollars of economic opportunity, but there are no short cuts,” Serafeim said on the sidelines of the conference. “That means if you are an entrepreneur or if you are leading a business, you need to develop a product that people love, and people are going to use. You can't ask people to worsen their lives.”

Businesses can see the possibilities because the process has begun, Serafeim added: “The transformation is happening. It's already underway across several sectors.”

His assessment echoed remarks a day earlier by former U.S. Secretary of State John Kerry, who spoke at Harvard's Salata Institute for Climate and Sustainability as part of the university's Climate Action Week. Kerry said that the CEOs of several major companies—Ford Motor Co., General Motors, Google, Apple, Salesforce, and FedEx—understand the urgency of climate solutions and will ensure that progress continues, regardless of who's in charge in Washington, DC.

“Thereçs no way we're going backward. The global economy has made this decision and it's more powerful than any politician,” Kerry said.

Climate Is Central to Every Business

During a panel discussion about the centrality of climate to current business strategy, HBS professors presented results of their research that demonstrated how CEOs across sectors—including insurance, agriculture and automobiles—are increasingly seeking new climate-driven opportunities while building climate risk into their firms' short- and long-term strategies.

These risks and opportunities exist against a rapidly changing geopolitical backdrop. “We're going to see rising rather than declining geopolitical tensions and competition around green resources, green technology, green standards,” HBS Professor Gunnar Trumbull said.

On the flip side, this competition presents businesses with the opportunity to participate in the transition to a net-zero economy, rather than leaving it up to organizations such as the United Nations. “Countries are going to compete our way out of climate,” Trumbull said. “It puts business right at the center of the solution.”

Given this global economic shift, Serafeim said that it's vital for climate to be top of mind for employees, from C-suite leaders to accountants to supply chain managers, as everyone must understand and work towards shared climate-driven goals.

Who Pays? Who Profits?

During a discussion on how to finance the transition to a net-zero world, panelists expressed confidence that capital can be found through public and private initiatives in “the Global North,” a loose term used by civil society for Europe, the United States, Canada, Australia, and other wealthy countries. However, the outlook was less sunny for the “Global South,” which refers broadly to Latin America, Africa, and much of Asia. Most of the world's population lives in the Global South, which is growing significantly and relying on fossil fuels.

For example, the private sector invests $65 billion a year in India, according to Jayant Sinha, a member of India's Parliament and chairperson of its Standing Committee on Finance. Latest modeling shows the need for $50 billion more a year—a nearly 80 percent increase—to be on a net-zero path for 2070.

“That's virtually impossible to do given the state of our financial system,” Sinha said. “And India is one of the most sophisticated financial systems in the Global South.”

In contrast, some optimism came from Girish Nadkarni, senior advisor for OCGI Climate Investments. Nadkarni said the solution is to revamp the global financial system so that intermediaries such as the International Monetary Fund and the World Bank can pay businesses for the systemic risks involved in investing in more challenging countries.

A New Climate Workforce

Even with policies and funding that support a variety of green technologies, the United States lacks a way to train workers to do the new jobs fast enough to reach its climate targets—and to transition the workers in a way that does not worsen entrenched inequalities.

Panelists listed several obstacles to achieving a trained climate workforce: insufficient funding for the federal retraining program for dislocated workers, a higher education system that heavily favors four-year institutions, and even the way we talk about so-called blue-collar jobs and high school children who may not attend college.

For the past 40 years, the United States has underinvested in trade professions and encouraged engineering students to go into computer science, said Kate Gordon, senior advisor to U.S. Secretary of Energy Jennifer Granholm. That has left our workforce ill-equipped to transition into clean energy jobs, 60 percent of which are in the construction industry.

However, there are a few proven and promising training techniques. The United States has implemented some examples of Germany's workforce training model, which trains workers based on market demand. Among them, Pima Community College near Tucson, Arizona, has worked in partnership with technology company Intel to offer compressed training of 80 hours over two weeks. Students who complete it get jobs with Intel.

Furthermore, many skills are transferrable from old industries to climate jobs. A range of professions offer useful knowledge—from HVAC technicians and engineers, to project managers and people who work in logistics, said Evette Ellis, cofounder and chief workforce developer of ChargerHelp!, the Los Angeles-based technology first start-up that operates and fixes public electric vehicle charging stations currently in 17 states. The company was recently honored by Vice President Kamala Harris for its innovative workforce development efforts.

Accountability and Governance

Given today's political scrutiny and greenwashing claims, it's vitally important for CEOs to deliver against publicly announced targets for carbon reductions. In addition to aligning executive compensation with carbon targets, boards and investors can ensure that corporate culture and systems focus on climate threats and deliver on public pledges, according to panelists.

To perform this role, board members must know the basics of climate, said Bonita Stewart, a board partner at Gradient Ventures, Google's early-stage venture fund investing in the future of AI. She and other board members took a course so that they could have robust discussions with company management.

Taylor Wolfe, the activist investor, advises investors and board members to focus on three areas relevant to climate goals: strategy, board committees and accountability.

Pressuring management to integrate climate issues across strategy discussions can ensure the issue remains top of mind. Board committees also have a role to play in oversight of climate commitments, both in attracting the right leadership talent and through audit, sustainability and compensation committees.

Regarding accountability, “If you have ambitious goals, you should have ambitious metrics,” Stewart said. These can be used for assessing CEO and other leader performance and for assessing how a company is managing climate-related risks.

Given the complexity of climate threats, even the best efforts on governance and accountability may not be sufficient without the right leadership.

“We need better leadership, we need better CEOs, we need better investors,” said Scott Jacobs, CEO and cofounder of investment firm Generate Capital.

Climate Alliances

Business alliances for global companies, banks, insurers and investors are helping to set climate standards. One example is Glasgow Financial Alliance for Net Zero (GFANZ), a network of more than 550 financial institutions across 50 countries.

Some alliances work with their members to create standard carbon disclosure mechanisms that align with the goals of the Paris Agreement. The goal is to create consistent, comparable information so that businesses and investors can make sound financial decisions. Others work together to send strong demand signals to new sectors.

Some claim that this kind of agreed disclosure is anti-competitive.

Some members of climate alliances are increasingly wary of the anti-competitive accusation. However, alliance advocates say the collective development of standards is paving the way for smart regulation. Also, panelists predicted that the sheer scope of what must be accomplished will lead companies to join forces.

Some members of climate alliances strongly reject the anti-competitive accusation, because ultimately, individual firms or investors have agency. Alliance advocates say the collective development of standards is paving the way for smart regulation. Also, panelists predicted that the sheer scope of what must be accomplished will lead companies to join forces.

“This problem can't be solved by an individual. We have to live with a bit of messiness,” said Angela Barranco, executive director of Climate Group North America, a group of 500 large companies that collaborate and share best practices to reduce carbon emissions.

We Can Solve It Together

Despite recent gloomy climate forecasts and a backdrop of political disagreements, the conference ended on a note of optimism.

Businesses already are ignoring normal competition and today's deep political divisions and working together on climate ventures, according to panelist Carmichael Roberts, partner in Breakthrough Energy Ventures, founded by Bill Gates, which has raised more than $2 billion to support companies offering climate solutions.

“There's something about the collaborative nature around climate. It's not a sharp-elbowed kind of space,” Roberts said. “You've got blue states inventing stuff, so to speak, red states doing the fundamental manufacturing.”

HBS Professor Peter Tufano closed the conference with a note of optimism, “There's a really big problem we've got to solve, but we can solve it together.”