At TC Sessions: Climate 2022 last week, we tackled an age-old question: Are corporations really that bad?
Your answer may change depending on what side of the bed you wake up on any given morning and whether you believe Amazon is currently trying to quash a grassroots workers movement. Some have a more positive perspective, at least when it comes to climate-related matters.
On TechCrunch’s Found podcast, the co-founder and CEO of carbon accounting firm Persefoni, Kentaro Kawamori, said that climate change was caused by capitalism — and that capitalism will solve it.
“Capitalism created the climate crisis because we wanted cheap, reliable access,” Kawamori elaborated on our stage. “So the way that capitalism solves this is to take the market demand that’s coming for greener products.”
We know that large corporations have an outsized impact on climate change, so by Kawamori’s logic, corporations must be held responsible for reversing their destruction. One report from 2017 found that just 100 companies are responsible for 71% of global emissions.
We want corporations to do better, but it’s not so easy to understand how they can best accomplish that. Air travel, for instance, makes up 9% to 12% of transportation emissions in the U.S., and the airline JetBlue has committed to reaching net-zero by 2040. But even if JetBlue threw its bottom line out the emergency exit and decided to propel all of its planes with sustainable aviation fuel tomorrow, it couldn’t — there’s simply not enough of it.
JetBlue Technology Ventures, the investment arm of the airline, is part of the company’s climate plan, investing in companies that aspire to make air travel more sustainable.
“Startups in [sustainability] need funding. They’re never going to be able to develop these technologies and mature these technologies to actually make a difference without funding,” Amy Burr, president of JetBlue Technology Ventures, said on our stage. “Without VC money, I think that we don’t really have this new innovation, this next generation of technology that really will change how we look at the problem.”
Microsoft also has a $1 billion climate innovation fund, but Mark Kroese, general manager of Microsoft’s Sustainability Solutions team, said that this fund differs from other forms of venture capital because it’s focused on accelerating the technology to mitigate climate change, rather than on maximizing returns.
“In the case of climate change, time is not our friend,” Kroese said at TC Sessions: Climate.
Even oil companies like ExxonMobil, Shell and Chevron, which are some of the most brutal offenders when it comes to emissions, run venture capital funds that invest in climate tech. So it’s no wonder that these initiatives are accused of “greenwashing,” or making a company look good without actually embracing sustainability.
To diversify their climate efforts, corporations also try to reduce their carbon footprint by purchasing carbon offsets. But climate modeling expert William Collins told our own Harri Weber that these offsets are “as far as we can tell, a feel-good measure.”
When corporations purchase carbon offsets, they’re paying someone else to remove a certain amount of greenhouse gases (for example, they might plant a field of trees). But then, what happens if a forest fire — which might have been caused by rising temperatures — wipes out those trees?
“If a tree sequesters carbon in the wood, does it stay there forever?” asked Kawamori. “It doesn’t, right? The tree will eventually die [ … ] so this whole concept of credits and offsets or removals is still in a really early and nascent stage.”
Burr said that carbon offsetting is currently a critical part of JetBlue’s climate strategy, but in the long term, the corporation hopes that this won’t be such a big piece of its sustainability program.
Will corporations be encouraged to do better if they aren’t required to? As of now, the U.S. Securities and Exchange Commission doesn’t require companies to report on climate impact, but a new ruling proposed in March could change that.
“We actually helped advise the SEC on that,” Kawamori said. “So what’s going to happen is you’re going to see a new level of transparency, audibility and trust in the claims companies are making.”
For now, it’s hard to take companies at their word when they tell us about their plans for the next few decades — but Kawamori notes that we need corporations to cooperate if we’re going to solve the climate problem. It’s a public corporation’s fiduciary duty to make money for its shareholders, but as the market evolves, social responsibility is becoming a duty, too.
“A company’s primary purpose of existence is still to create value for its shareholders,” Kawamori said. “But the definition of value has changed.”
Watch the whole session below!