Businesses Will Help Us Tackle Our Climate Challenge
By Bill Frist | August 21, 2023
The private sector should be a natural ally when it comes to tackling our growing climate challenge. The business community is, after all, equipped for rapid innovation, scalability, and systemic change – skills that are necessary to successfully curb emissions and meet our climate goals.
I have seen this unique opportunity for private sector leadership first-hand. Most of my waking hours are concentrated on two key areas: conservation and business. And it’s with a foot in each of these worlds that I strongly believe the business community can and should lead the way toward a more sustainable future.
The private sector should be a natural ally when it comes to tackling our growing climate challenge.
Within the private sector, I have been focused specifically on building purposeful and impactful healthcare companies through venture capital (Frist Cressey Ventures) and private equity (Cressey and Company). Both companies seek to transform healthcare and improve the lives and wellbeing of all people, with a special emphasis on health equity. But, like all successful businesses, resourcing innovation and responsibly funding operations to achieve these goals requires each of our portfolio companies to carefully follow bottom lines of revenues and expenses.
And for the private sector at large or even an individual business trying to directly confront climate change this is the practical challenge: striking the right balance between what helps bottom lines and what helps the ultimate health of our planet (and our employees, consumers, and communities). Finding this balance often requires additional resources outside of business practices and day-to-day operations that can be onerous – and expensive — for companies.
The good news is that the cost of clean energy technologies is rapidly declining, improving the business case for more environmentally friendly efforts. And smart, common-sense federal and state policy is helping bridge the remaining gaps and enable the conditions for a more rapid transition to a cleaner economy.
The 2022 Inflation Reduction Act showcases how public policy can leverage business investments for environmental action. It created certainty around and prioritized investments in clean energy and thereby accelerates our transition to electric vehicles, substantially reducing the risk many businesses take in decarbonizing and reducing emissions. Already, the Inflation Reduction Act has generated approximately $110 billion in domestic clean-energy projects and, according to a recent Bloomberg article, “$86 billion in private investment, 51 new or expanded plants for producing solar panels, 10 new factories for making batteries, [and] more than 100,000 clean-energy jobs.”
Another recent example is the 2021 bipartisan Infrastructure and Jobs Act, which is making a transformative investment in modernizing our nation’s crumbling infrastructure. These funds, allocated to each state, are being used to update our transportation network in ways that reduce greenhouse gas emissions and increase resilience against the extreme weather events that have notably been on the rise in recent decades. And along the way it is creating thousands of good-paying jobs, with an emphasis on small business partnership.
There are many more opportunities in policy that remain untapped at the federal and local level. Key to smart policy, though, is aligning outcomes. If businesses are to be more engaged, we must continue to bring to the table creative ideas that catalyze business opportunities and results, and concurrently help us reach agreed upon decarbonization goals.
So far, companies are meeting the moment for rising public expectations of social responsibility with more than 90% of companies today having or developing a formal strategy to manage corporate environmental, social, and governance (ESG) goals. Though the ESG movement is unfortunately subject to politicization, increasingly companies realize that moving in this direction of environmental health and human health is what their employees and consumers broadly desire and are beginning to demand. The growing trend of workers wanting to work at companies committed to community responsibility is well documented.
But simply relying on goodwill, good intentions, and purely voluntary actions alone will not be enough. We need to wisely create policy and market mechanisms that give companies the proper incentives and directives to raise the bar on embedding social and environmental values throughout their business.
Private Sector Action: Healthcare and Beyond
We are now beginning to realize that environmentally focused initiatives and successful business decisions do not have to be mutually exclusive. In addition to advocating for smart policy, organizations in all sectors can start working toward sustainability goals that lead to long-term change. Some companies like Kaiser Permanente, which has pledged to have net zero carbon emissions by 2050, Patagonia, that transformed their business model to respond the climate crisis, and AppleAAPL +1.7%, which has committed to becoming carbon neutral by 2030 and making every product with clean energy, and many others are already paving this path forward.
As a clinical physician for 20 years, then a policy maker in the health field, and now a business-centered healthcare service innovator, I personally am looking closely at the heath sector, trying to more fully understand the role it plays in contributing to diminishing the environment we live and breathe in. I encourage others in the business world to look at their own sectors in a similar way.
In healthcare, one is struck by the obvious irony. The healthcare sector is charged with keeping our bodies and minds healthy, but this “healing” industry contributes an inordinately high percentage of our nation’s overall carbon emissions which we know are destructive to human health and wellbeing. Indeed, the healthcare industry accounts for more than 8.5% of our nation’s carbon emissions (a value that increased by 6% from 2010 to 2018) and over 4% of global greenhouse gas emissions)
Healthcare is beginning to address this sustainability paradox – one example is by addressing waste. The National Academy of Medicine has launched the Action Collaborative on Decarbonizing the U.S. Health Sector, the purpose of which is to use public and private partnerships to catalyze environmental impact across our health sector. Here are just a few actions they are calling for to increase accountability and sustainability:
Establishing an executive-level sustainability team and specific decarbonization goals (with a plan for implementation);
Reducing unnecessary building emissions, physical waste, and single use plastics;
Implementing systems and processes to reduce food waste and food packaging;
Optimizing product delivery and reducing business travel and fleet vehicle emissions; and,
Providing electric vehicle charging infrastructure and community incentives for public transportation.
But healthcare is just one sector in the world of business that is stepping up when it comes to sustainability – we hope others become more involved as well. To collectively reach our goals efficiently at the industry level, here are a few things we, whatever our particular business or industry, should all be thinking about:
Improving organizational energy efficiency by reevaluating supply chains, increasing use of clean energy sources, and setting clear, science-based decarbonization goals;
Establishing teams – made up with board members, local operators, community leaders, and staff – to track progress toward reaching sustainability goals;
Examining ways to lend our voices as community advocates and lobby for better policy as well as mandatory and voluntary programs and incentives for decarbonization;
Innovating and scaling sustainable strategies that are good for business;
Encouraging and participating in climate-related discourse and sharing the importance of resilience strategies, lessons learned, and best practices; and,
Investing in nature and doing so not only to reduce emissions but to actually remove carbon from the atmosphere.
These actions – when added together – can rewrite the narrative when it comes to the business community’s involvement in promoting sustainability and climate action. Building a more climate resilient future is undeniably in all our best interests. But getting on the same page requires us to think longer-term and more expansively.
And though it may be among the most challenging aspects of convincing businesses to take action now, realistically it will take making big investments sooner rather than later in the face of what we know are varying degrees of uncertainty. This will not be easy. Already it is challenging us to more imaginatively rethink solutions and to stop seeing “good for nature” as being at odds with “good for people” or “good for business.”
Leading The Way
Successful businesses inherently are already pros at innovating quickly and efficiently, moving fast, and scaling rapidly. Good businesses know how to communicate internally and externally to accomplish goals, expand their reach, and share best practices. And businesses know how to get public policy aligned with top priorities. These are the very same tools and strategies necessary to effectively address escalating climate change and its ramifications.
And it’s about more than just policy. We need more innovation. And we need a lot more capital and investment to go toward existing solutions. The business community has huge potential to invest in highly effective and scalable climate solutions and to change the marketplace with their demand. The private sector can pilot new and emerging technologies, accelerating the ability to more effectively find and implement solutions to the climate crisis.
The for-profit and not-for-profit sectors have much to learn from each other as they align around agreed upon goals. Alignment will require active, focused attention. Working together, we can create thoughtful and ambitious programs that are better for people, businesses, and our planet. When business is at its best, it does exactly what the climate crisis demands: it adapts, solves problems, and moves quickly. Responding to our climate challenge doesn’t need to be one more issue that divides our communities. We can make climate resilience our shared and best interest.