Delphi on the Front Lines at Ceres 2015

Key Takeaways from Ceres 2015: Business Disruption, Innovation and Climate Change

Climate change represents a massive business opportunity. That was the resounding message from the annual Ceres Conference, which took place last week in San Francisco. With a tagline of “Innovate, Collaborate, and Accelerate”, the two-day event brought together nearly 600 delegates from across North America to explore issues ranging from sustainability reporting and governance models, to financing renewable energy technology, supply chain human rights, and addressing California’s historic drought.

Climate change as a business opportunity is not a new concept: the economic, employment, health, and competitiveness benefits associated with investments in renewable energy, transportation and green infrastructure, water solutions, and other activities, have been talked about for decades. So what is new and on the radar

1. Business opportunities are growing – and the pace of investment and change is likely to accelerate

The presentations and case studies at the Ceres event demonstrated that there is now an enormous amount of data and evidence that business opportunities and investment in the clean economy are growing – in many cases, exponentially.

Ceres predicts that clean energy investments must increase by $1 trillion annually by 2030 to meet the goal of keeping global temperatures from rising more than 2° C above the global average – what they are labelling the “Clean Trillion” Challenge

2. Disruptive business models are changing the landscape

Disruptive business models are sprouting up across multiple industries and quickly threatening the status quo. Nowhere is the evidence for disruptive change more pronounced than in the energy sector. The solar photovoltaics industry in the U.S. is a great example of this: it showed the largest employment growth in 2014 out of all sectors, with 26,000 jobs created over the previous year, totaling close to 100,000 solar installers in the country.

This revolution and the changing energy dynamics are impacting on markets around the world. Globally, solar technology is scaling up faster than cell phones – this according to Amory Lovins, Founder and Chief Scientist at the Rocky Mountain Institute, who provided a fact-filled plenary talk to a full room. China’s coal burn went down last year despite 7% GDP growth, due in part to its large scale domestic deployment of wind and solar power. In 2015, solar job growth is expected to be 8 times greater than oil, gas, and coal combined.

Steve McBee, President and CEO of NRG Home, spoke to the rapid pace of change in the electric utility sector. Distributed generation through residential rooftop solar systems connected to home batteries and electric vehicles, similar to the model recently announced by Tesla’s founder Elon Musk, are empowering the customer and forcing utilities to rethink their revenue models. The grid is going decentralized and more demand-driven, causing the traditional utility model to break down.

Disruptive technologies, processes, and business models can impact on entire industries very quickly. For context, Dr. Lovins referenced the whaling industry, which eroded virtually overnight when whale oil was replaced by kerosene as a substitute for fuelling lamps. The message: adapt or die!

3. New partnerships and collaboration are driving innovation

Apparel manufacturer Levi’s is partnering with the International Finance Corporation (IFC) – the private sector investment arm of the World Bank – to improve transparency and sustainability across Levi’s supply chain by developing a Global Trade Supplier Finance Program. The Program rewards vendors with lowered lending interest rates when they score well on various sustainability indicators, which is in turn raising the bar on work conditions in Levi’s manufacturing facilities around the globe.

As Michael Kobori, Levi’s Vice President of Sustainability, commented, “We need a race to the top with the right incentives in order to drive sustainability across the supply chain.” The model is applicable to other sectors and the IFC is exploring how to scale up similar programs with other partners.

4. The circular economy concept is gaining traction

Multi-nationals including Unilever, Philips, Renault, and Cisco are revisiting their existing businesses and shifting toward more service-based models that integrate applications of industrial ecology, biomimicry, and cradle-to-cradle concepts to remanufacture and upcycle their old products, generating greater profits and value for customers in the process.

Dame Ellen MacArthur, the first woman to sail solo around the globe and founder of the Ellen MacArthur Foundation provided a keynote presentation at Ceres where she underscored the trillion dollar business opportunities that can be found by embracing a more circular economy. The Ellen MacArthur Foundation is now working with the European Commission to develop a 2050 Roadmap for European cities that will focus on adopting circular economy concepts for buildings, food systems, and mobility.

5. Regulators continue to play an important role

Many policy-makers and regulators in the U.S. are also doing their part by setting up frameworks that are enabling and incentivizing business to integrate sustainability and clean energy into general practice.

Gina McCarthy, Administrator at the U.S. Environmental Protection Agency (EPA), spoke of her federal government’s Clean Power Plan, which now includes more than 200 of Ceres members. She also hinted at a new “Carbon Pollution” Plan to be released later this summer. Mary Nichols, Chair of the California Air Resources Board spoke of Governor Jerry Brown’s recent Executive Order to adopt a target of 40% greenhouse gas emission reductions below 1990 levels by 2030 – the most aggressive of such targets yet to be set in North America.

Conference delegates were left hopeful and inspired by the opportunities in face of what could otherwise be daunting challenges. As was stressed by Steve McBee of NRG Home, “The greatest thing you can do to address climate change is to make the business model work and focus on creating shareholder value”. It will be exciting to see how the transition to a clean economy continues to accelerate and what disruptive changes will be up for discussion at future events, including UN’s COP 21 Climate Conference in Paris, France, this December and GLOBE 2016 in Vancouver, Canada, next March.

Written by: Paul Shorthouse – BC Regional Director (pshorthouse@delphi.ca) 

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