Articles

What Keeps You Up At Night?

HCLI Research

Published 16 November 2016

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Philippe Joubert is the former President of Alstom Power and Deputy CEO of Alstom Group, a Power and Transport Company with 94,000 people around the world and sales of 24 billion euros. Currently he is the Senior Advisor and Special Envoy, Energy and Climate, at the World Business Council for Sustainable Development (WBCSD), and Chair of HRH The Prince of Wales’s Corporate Leaders Group. Joubert shares insights on the future of energy, and how to be ready for upcoming environmental challenges.

We all have questions and concerns, not just personal ones, but worries about the wider world in general. Philippe Joubert found that his deepest concerns lie in the limited time we have to resolve environmental issues, and how vital stakeholders like business leaders are not fully tackling these urgent problems yet. “The reason I decided to do what I am doing today is because I understood the urgency and magnitude of the problem we have been creating, the fact that we have very little time to solve it and that business will be the main driver for a solution — this is what keeps me up at night,” explains Joubert. Drying water bodies, erratic monsoons and melting ice caps are just a few pressing signs of environmental deterioration. “Today, we are consuming the equivalent of 1.6 planets a year. Based on current trends, this will rise to two planets a year by 2030,” he says.

What Should Business Leaders Do?

“Business is responsible for up to 75% of the impact on the environment globally. Without business participation, there will be no solution but the market forces alone cannot bring the solutions to reality,” he says. It will take strong private and public partnerships and leadership from large corporations. He highlights a few important actions business leaders should take to maximise their role in resolving environmental issues.

1. PUT SUSTAINABILITY AT THE HEART OF YOUR STRATEGY

Lead by example. Business-as-usual is no longer compatible with the current catastrophic deterioration of our environment and climate situation. “If they continue to consider that nature will always be free, with unlimited resources, and not compensate for the damage they cause or replace the resources they use, companies and our whole economical system will eventually be led to a wall,” says Joubert. Many business models lack ingrained sustainability, and reported profit gains do not account for the environmental damage that lie behind them. The insensitivity towards environmental damage is attributed to the lack of real quantitative analysis required on this subject in financial reports.

As a result, the economic gains overshadow environmental losses that are not accounted for. This issue sheds light on business leaders, as the problem stems from their lack of awareness of the environmental risk they engage in. Priorities must thus change. If business goals are tied together with, for example, their water usage and the impact on corporate reputation, companies will naturally act and respond differently.

2. SPEAK UP

Business leaders should create conversations and discover means to alleviate the creation of waste or other impacts, and bring this vision to the employees, customers and the supply chain. These conversations should be carried forward to policymakers and councils for sustainable practices, in order to establish mutual understanding among the stakeholders. “In Paris, the climate conference (COP21) served as a platform to connect business leaders with policymakers and climate negotiators, and for business voices to be part of the wider dialogue and really heard within this context for the first time,” says Joubert. The level of understanding flowing through the conference was helpful for businesses in raising their awareness of carbon footprints, and learning to create impact through agreed environmental goals. This was also the base for a renewed interest and global action plan toward the establishment of carbon pricing.

3. ENGAGE IN FORWARD THINKING

Joubert mentions that leaders need to be knowledgeable when making sustainable decisions, and have the courage to plan ahead of time. They should also be ready to adapt their business model to change. “Having the foresight to change allows them to reap the benefits of being the first mover,” he says. People are no longer just resources for the company; they also wield the means to make informed decisions with regards to the company. “People are not just resources; they have resources,” says Joubert. Joubert cites examples of voluntary turnover in companies that engage in environmentally unfriendly activities such as arctic drilling. Some businesses have stopped engaging in such activities because of the internal pressure from their employees, unsatisfied with the stark misalignment between their values and company goals. Employees today pay attention to their moral affiliation with the company, as they hope to twin their sense of purpose with that of the organisation. “Sixty to eighty percent of university graduates choose not to work for companies that are in conflict with their personal purpose, and this trend.

The Future of Energy

Joubert shares his take on the future of energy, including alternative sustainable energy sources that could alleviate the level of carbon footprints in the long term.

1. ENERGY COULD BE DECARBONISED

This could be done through alternative energy sources providing clean power. “Paris really set a change in speed for the energy revolution, to decarbonise energy and power generation, lowering the carbon emission goal to net zero emissions,” says Joubert. Wind and solar energy could be the dominant sources, and wave or tidal power could also help fuel sustainable alternative energy. But there is no silver bullet; all non- CO2 technologies, including nuclear and fossil fuel with carbon capture and storage, will be needed.

2. ENERGY MAY BECOME DECENTRALISED AGAIN

In the past electricity has been produced using centralised generation, distributed one way from the centre to the consumer. In certain regions where the grid does not exist yet and is too costly to build, we are seeing the emergence of an off-grid solution.This is where decentralised power, positioned to answer local needs, can provide the necessary power without being connected to large central installation as it was at the origin of power generation. Renewable sources associated with storage will provide this power in the future.

3. THE SMART-GRID SYSTEM

Together with decentralised power, demand management will also need to be organised. This will be the role of the so-called smart grid system. Fundamentally, these systems provide consumers with real-time data on their energy usage to make informed choices about energy consumption.

This could allow households who have energy-generating tools to sell excess energy they generate, providing opportunities to better distribute energy. The smart grid is still being refined, with hopes that it could help consumers adapt seamlessly to renewable energy in their households.

4. NUCLEAR ENERGY?

It may still require some time to fully replace conventional fossil fuel energy-generation methods. The economy may enter a transition stage where countries have to turn to nuclear energy to power through this shift. “This is sometimes criticised, but it could be a solution if we focus on lowering carbon emissions,” explains Joubert. The introduction of carbon capture and storage is also necessary as coal and gas will not leave the matrix in the short term; although a fuel transition from coal to gas would be helpful in a transition phase.

Education as Foundation

“Education is the basis of everything, along with a science-based target.” But while scientific research has helped understand environmental issues, the jargon used can “blur our conversations. We should look for ways to explain science in a simple and positive way,” emphasises Joubert. After education comes action. On a tactical level, business strategies and best practices should be shared proactively among business leaders to accelerate the emergence of new behaviours. Meanwhile, to accelerate and scale up, we must work at the policy level and a price has to be placed on factors that harm the environment in order to impact profits.

Finally, “you will never truly change the behaviour of a company if you do not change the way the profit of the company and how the bonus of the CEO is calculated,” says Joubert. Nature can no longer be considered free and unlimited. In the business balance sheet, we must now account for the external costs of using, and in some cases abusing, the environment. This will also help more and more companies join the movement towards net zero emissions.

This article originally appeared in HQ Asia (Issue 10) 2016.