Climate Change & Business: What Every MBA Needs to Know
- Hi, everyone, let's go ahead and get started. Welcome, I am your host today. My name is Katie Kross. I am the Managing Director of the Center for Energy, Development and the Global Environment here at The Fuqua School of Business at Duke University. We are pleased that you have chosen to join us today for Climate Change in Business: What Every MBA Needs to Know. We have a great program for you today and I think you'll find it both educational and engaging.
I'm going to walk you through our agenda and introduce our first speaker in a moment. But first, just a few logistical announcements. So first of all, we are recording today's webinar, so if you miss any part of it or you want to watch it again later, you'll have access to the recording after we end today. So anyone who's a registered participant will get a link to the recording. Secondly, we are using the Zoom webinar platform for this session, so you'll only be able to see the speakers and our slides on the screen.
There's no chat function. But if you do have questions for the speakers, you can enter them using the Q&A function, and then I will be moderating the questions. So I'll be reviewing the Q&A box and I will be posing the most relevant questions to our speakers as they come in throughout the webinar. And then finally, just before we get started, I obviously want to say a big thanks to our speakers who are here today as well as to Jon Slaton, who is helping us as our multimedia manager behind the scenes. Our topic today is climate change, but not just climate change. More specifically, it's about the business implications of climate change.
We want to talk about the operational and financial risks that climate change is going to present for businesses, how businesses can adapt and innovate, and what it will take to get us to a decarbonized economy. Who will the winners and losers be? Climate change is not just a policy issue, it's not just a political issue, it is a business issue. The effects of climate change are already affecting markets, they are interrupting supply chains, they're affecting investment decision making.
And businesses that are looking ahead to the future understand that there are real assets at stake, there are real operational implications, there are real investments to be made in response to understanding climate change risks. So simply put, there's real money to be made and lost. And we think every MBA needs to be well-versed in climate change as both a business risk and a business opportunity. So today, we have a multifaceted program for you.
First, we are going to hear from Mike Lenox who's going to get us up to speed on the topic. How is climate change affecting business now and how is it likely to affect business in the future? What will carbonization require? What do you need to know? We'll hear from Mike and a presentation and then we'll have time for some audience questions. Then we're going to give you an industry perspective. So I'm going to moderate dialogue with MBA alumna, Radhika Lalit, about her interest in climate change and how it has led to a meaningful career focused on decarbonizing the economy. And then finally, Ashley Medlar and I are going to tell you more about some of the next steps available to you.
So some of the resources and the specific opportunities for you to engage more deeply on this topic. So without further ado, let me switch my slide. Slides aren't working. There we go, okay. So we're going to get started here. Our first speaker is Mike Lenox. Mike is the Taylor Murphy professor in Business Administration at the Darden School of Business at the University of Virginia or UVA, where he is also the senior associate dean and chief strategy officer for the school.
He teaches a core MBA strategy course as well as an MBA elective on strategy in the digital age. His research has appeared in over 30 academic publications and has been cited in lots of media outlets, including The New York Times, The Financial Times, The Economist. He's also the author of a great book called "Can Business Save the Earth?" as well as a very brand new book that's relevant to our conversation today called the "The Decarbonization Imperative: Transforming the Global Economy by 2050."
So without further ado, let me welcome Mike and turn it over to him. - All right. Well, thank you so much, Katie, for giving me this opportunity. Very much looking forward to today's webinar.
Thank you, Duke and EDGE as well. I do have to comment, I was on the faculty at Duke for six years and actually raised the money that became EDGE. I'm not even sure you knew that Katie, but before I left, helped raise some of the money that became that. This is obviously a topic near and dear to my heart. Let me pull up some slides here real quick, and get ourselves going. So we're going to talk about actually both the books that that Katie mentioned here, "Can Business Save the Earth?" with my colleague, Ronnie Chatterji, who's at Duke, and as well as my latest book, "The Decarbonization Imperative" with Becky Duff, who is a senior researcher here at the Darden School in UVA.
And they're obviously very complementary works both dealing with sustainability, the latter dealing more specifically with climate change, and what's happening in that space. But before we get into that, I actually want to talk about whales. So when I was a child growing up in the '70s, I was a huge fan of whales. I had whale poster in my room and a little stuffed whale. And this was during a time period where there was a movement to save the whales to try to limit or eliminate the global whaling industry, and so there was efforts by Greenpeace and the like to do so.
Now, why do I bring this up? I bring this up because when we think about environmental issues, especially as an economist, we typically think of it in terms of negative externalities. So there's a market for whaling, but then there are those who put value on the whale that aren't priced into the market. And the way we handle this problem is probably through some type of either regulation or maybe there's a side payment made by those who love whales to those who do the whaling to get them to stop the whaling and the like.
And that's really the way we frame so many of these issues and the way we talk about them both in academia, but also in the policy arena. So let's go back 150 years and talk about the New England whaling industry. Very vibrant, important industry in the US economy around this time.
Clearly hunting and harvesting whales to be used mainly for whale oil to be used in lighting, so street lighting and home lighting and the like. What's interesting to me about this industry is this industry disappeared after about a 10-year period, kind of rapid decline and disappearance in the US market. Now, if we framed it in my original framing here, was there some grand arising of awakening of let's save the whales. Was there regulatory pressures? Was their public pressure to do so? Well, no, what happened in this case was the discovery of oil in Western Pennsylvania and this gentleman here, Abraham Gesner, discovered how you could take oil and refine it into kerosene.
And over a very short period of time, we had a technology disruption and a replacement of whale oil with kerosene. I would observe about 30 years after this, we had yet another disruption disrupting kerosene, which was the discovery of the incandescent light bulb by Thomas Edison and the electrification of our cities and homes as a way to provide lighting. I bring these stories up because this idea of disruption and technology replacement is central to our understanding and the behavior of markets here. This is not an uncommon phenomenon. In fact, it repeats itself quite frequently in different markets.
Many markets right now are talking about digital transformation and digital disruption. But this general pattern of new technologies replacing the old is very common. So in my book with Ronnie Chatterji on "Can Business Save the Earth?" we take this notion of disruption and put it central to what we think is necessary for us to meet our sustainability challenges.
So we make this argument that sustainable disruptive innovations are needed on a massive scale, sustainable in the environmental sense, disruptive in the economic sense here. We're very clear that when we talk about innovation, we're thinking about commercial viability here. Sometimes you hear the line, we have all the technology we need or inventions we need to deal with climate change. However, if they're not being adopted in the marketplace, that probably tells us something about their commercial viability. So in this world in this perspective, clearly, business and markets are critical players for advancing innovation. I have a special warm place in my heart for entrepreneurs.
We can talk more about that and the role they often plays, disruptors in markets. But it's also important to recognize that innovation itself does not just magically appear out of two people in their garage, but that actually emerges out of the broader socioeconomic system. And so this is where the role of institutions plays an important role. So essential to our thinking and the way we look at the world is this idea of the industry lifecycle. There's some common patterns we see when disruptions occur. S curves are an important concept here where we see progress and technology maybe being slow at first, but if it's going to be disruptive, we get this kind of massive increase in the performance of technology, and it probably eventually levels off.
We see a similar type of S curve often with cumulative revenues that the market might take a while to get started, but eventually, it hopefully takes off and becomes a dominant source of revenue. I think really interesting in these, we often get the solid line impact of firms. When the technology begins to take off, we often get massive entry, lots of competition, and often a shakeout ensues in which companies go out of business, there might be consolidation, and we're often left with a fewer set of firms left. I raised this because this industry lifecycle gives us a vehicle to look empirically at whether or not we're actually seeing disruption occur in real time trying to understand what's happening in various markets here. So our general framework is to think about how the innovation process takes place, looking at the value chain of innovation from innovators to investors and managers and customers, but being cognizant of this broader institutional envelope that they operate in, including activists and NGOs and universities on kind of the private intermediary side.
And then, of course, the role that public intervenors like regulators and the federal government play in this innovation process. Okay, so this is the general framing in which I look at the world here around sustainability and climate change. Let's take a deep dive into climate change. Here we see a glacier, I believe this is in Greenland, melting into the sea. Probably many of you are aware of the concerns with climate change, the impacts of it, everything from rising sea levels to increased extreme weather and the like. The basic science behind this, again, I'm an economist, but this is what the climate scientists tell us is that we've seen this massive increase in concentration of CO2 basically since the industrial era.
If we are going to hit the targets set by the global community especially those set during the Paris Accord to try to limit global warming to 1.5 degrees Celsius or at worst two degrees Celsius, the way to think about this is that we have a carbon budget that as we emit more greenhouse gases, eventually we will pass a threshold in which warming will go beyond these two degree target that has been set. So what does that mean from an emissions standpoint? Is that if we begin today, if we begin today and start to significantly reduce emissions, we will need to get to what we call net zero by likely to 2050 if not well before then. So what you see here in the dark line is kind of the optimistic scenario where we smoothly reduce emissions until we get to net zero by 2050. If we continue to increase global greenhouse gas emissions, which is what it looks like right now, but look more like the second curve, which will then pull that date in for when we need to reach net zero, maybe as early as 2035 or even earlier here.
And again, to be clear, what net zero emissions refers to is when you think of manmade greenhouse gas emissions, there are natural processes to absorb those, the forest, the oceans absorb carbon dioxide, so this is an excess to what the Earth's natural capacity to absorb these are. So to get to net zero doesn't necessarily say that there's zero emissions period, but it does suggest that those emissions are balanced with the processes of the Earth to be able to absorb them. So this gives us the title of our book, "The Decarbonization Imperative," this idea that we need to, as the term of art is, decarbonize the global economy by 2050 if not sooner. So what does that mean in real terms here? So here we see a breakdown of scope one emissions. This is where the emissions actually occur as opposed to, for example, throughout the supply chain of a company here.
Not surprisingly, the biggest one is electrical production. So this is the use of fossil fuels to produce electricity and heat. It's about a quarter of all global emissions. Another 10% is from the energy industry itself, the flaring of methane, for example, and the refining and production of fossil fuels. Transportation is another one that obviously most people think about when they think about greenhouse gas emissions, the burning of oil and gas in our automobiles. Surprisingly, to some on a global basis, that's only about 14% of our emissions.
Some other areas that receive less attention, industrials, there are a number of different industries that in the process of producing their products and services are significant emitters. In particular, we highlight in the book three of those, which are steel, cement, and petrochemicals. These are backbones of our global economy, they are significant emitters of greenhouse gases, and as you can see here, make up roughly a fifth of all industrial emissions. We move on to buildings, our built environment uses fossil fuels for heat and for cooking, smaller percentage, but one that is significant nonetheless.
And then last, but certainly not least, we have agriculture and land use, and that's roughly a quarter of all global emissions. It's the one that probably gets the least attention, but it's significant nonetheless. Again, those emissions largely come from livestock and the processing of manure, the production of methane from cows and the like, and also the use of nitrogen-based fertilizer, which releases nitric oxide, which is another potent greenhouse gas into the atmosphere. And again, this is, in large part, part of our industrialized agricultural economy that we live in.
So what would a decarbonized world look like? Well, we're getting an increasing sense of what that world would likely look like if we were going to really take this net zero decarbonization seriously. So it all really centers around electrical production of, I was going to say in the simplest terms, moving as much of these other sources to electrification and then figuring out how to decarbonize our electrical generation. So let's start with number two actually here, which is automobiles.
I am under the belief that we are seeing a disruption in automobiles to electric vehicles. We use the term electric vehicles broadly to refer to both battery powered electrics but could include fuel cells and probably the use of hydrogen to power those. The numbers are still very small, but the trajectory is, going back to my earlier point, not what we would think would be happening if we would see a major disruption? We've seen exponential increase in sales, we're seeing exponential increase in the efficiency of electric motors, in particular, the reduction in cost of batteries, and not surprisingly, as a result in the competitive environment, we're seeing massive entry from obviously companies like Tesla, newer companies like Rivian, but also all the established auto companies are producing electric vehicles.
Next, if we move to buildings. Buildings themselves, there are viable commercial alternatives typically to electrify buildings, electric heat pumps, electric induction stoves and the like. The challenge there is largely retrofitting existing the stock of buildings to make the retrofits necessary to electrify them and eliminate their current emissions. Buildings have some interesting opportunities. Of course, you could put solar on those buildings, there are interest in architectural circles around green roofs and actually being carbon sinks in buildings. Again, not a huge percentage, but again, a lot of interesting activity in that space.
As we move to industrials, again, electrification as the solution. We can electrify most of our manufacturing processes and the like. However, some of the sectors like steel and cement and petrochemicals are just particularly hard, and they're going to require technological shifts and changes to be able to address.
So for example, there is work on green cement, there's some interesting startups that are receiving funding for this. Green cement is an alternative to Portland cement, that not only would eliminate the emissions, but actually be potentially negative emissions 'cause it will cure, as it cures, it will absorb carbon dioxide in the cement production. Steel, similarly, there's something called mini mills, which are dominant here in the United States, which uses an electric arc furnace, which could be powered by renewables, and eliminating emissions there.
There are some still huge issues in terms of our ability to scale, our ability to meet global production needs in both steel and cement. Really, the story is China. China's well over 80% of the production in both those industries. If China doesn't decarbonize, we're not going to get there. So again, for at least these three sectors, they're really pushing for electrification, and that electrification is going to put huge demands on our grid system. It probably means that we'll see significant increases in the need for electricity generation, so we're going to need to build out further capacity.
And simultaneously, there's going to be obviously pressure to decarbonize that production. Here in the United States, we've already seen coal largely be waning and going away. The main argument is, other sources are just simply more cost-effective, including the use of natural gas, and increasingly, the use of solar and wind. Solar and wind have gone through a miraculous story in terms of the reduction of costs, making them economically viable, making them, in many cases, even the lowest cost source of energy. But it comes with a catch and that catch is intermittency.
The sun doesn't always shine, the wind doesn't always blow. And as a result, if we're going to be able to provide steady electricity, we're going to need to figure out storage solutions to be able to back up our renewable production. That might be electric batteries and there's been interesting work on there. Even Tesla is doing utility scale batteries. They will likely include distributed sources of energy.
The fact that we could have solar panels on our homes and businesses, and that's going to require innovation around smart grid, meaning a grid that looks more like Uber than a traditional straight linear production process. And what I mean by that is a grid that can trade electricity from producers to suppliers and vice versa, and do so in a way that helps create efficiencies and lowers what we call peak demand for electricity. This isn't, by the way, an incredibly tall order, we can talk about the role that nuclear might play, we can talk about the role that hydro currently plays.
There are some huge issues around whether we can build out such an architecture. There's efforts by some to do what we call a hydrogen economy. But it's safe to say that there is a lot of ferment in this area and that will likely continue. Last but not least, there's agriculture.
As I've said, agriculture is particularly vexing for a number of reasons. There are some really interesting developments taking place and market opportunities there though. We see what we call smart ag or precision agriculture now taking place where people are using drones and AI to be able to, in essence, micro dose water and nutrients to fields to increase their yields and reduce the environmental footprint of the activity. There are efforts around substitutes.
Clearly, there's a lot of dairy substitutes that are available now in the forms of oats and almond's milk and the like. We're also seeing things like clean meat where we would grow meat in a laboratory. And as fanciful as that sounds, there is a number of ventures out there that have been able to raise significant funding to try to advance that concept and make it commercializable and scalable. So overall, I think the message here is, we're seeing a series of disruptions taking place in a number of different industry segments.
These are being driven in part by the technology. But they're also being driven in large part by the societal need here. And then that manifests itself in a number of different ways. It could be consumers, forcing retailers, or others to push up their supply chains to decarbonize.
We've seen that, for example, with the tech companies like Amazon and Microsoft, requiring that their data centers be powered by renewable energy causing companies like Dominion here in the state of Virginia to begin to adopt large scale solar projects. And then we also, of course, see regulation playing a role here driving these types of industry transformations. So I'm going to end with just two quick thoughts here. In terms of the book, we're really taking this macro perspective and asking what is the likelihood of achieving decarbonization, and what levers may be pulled? And at the end of the day, we advance what we call a technology policy for the US and globally that really pushes the innovation and technology disruption angle. But for our purposes today, I think about what you as an MBA or as a business leader need to be thinking about. I just put some things up here that I think we'll be able to talk about more for the rest of the seminar.
First, what are the business risks? Well, clearly, there are direct climate impacts on your operations. Katie mentioned some of these at the beginning, supply chain disruptions, the rising of seas, maybe disrupting real estate, or properties. I think the markets are getting better at asking and having businesses understand those risks and articulate those risks. As I mentioned, where those risks might become more pronounced are the secondary, more sociopolitical impacts, policy risk here, putting a price on carbon that came to fruition changes the market dynamics quite a bit as you can imagine. The social license to operate, and in particular, consumer willingness to buy products that have a large carbon footprint. We're seeing some shifts in that consumer behavior.
And then of course, last but not least, certainly this potential for technology disruption. And what we're seeing again in electrification of vehicles is a harbinger of what could happen in other industries as well that if you're not getting ahead of this, if you're not investing in this as a business opportunity, you risk being disrupted and put out of business. And then we can flip this around, of course, in terms of the business opportunities. Clearly, opportunities to reduce risk here by decarbonize, clearly opportunities to increase willingness to pay by decarbonizing, though we can talk more about how pronounced are those and how large are those signals being sent by consumers. But last but not least, again, rather than be disrupted, you could be a disruptor by taking the lead in some of these emerging sectors that we're seeing now.
So I know this is a broad overview, but just wanted to touch upon our thinking on climate change and decarbonization, and hopefully, you can see the obvious connections here to what this is going to mean for really a whole number of different sectors and businesses. So with that, let me turn it back over to Katie. - Great, thanks, Mike. We have a couple of really good questions in the chat box here, so I'm sure you get asked this a lot. One thing I love about the book is that it does give very specific recommendations for each of the sectors that you approach, and some of those are more policy-oriented, government-oriented, like implementing or raising tax on gasoline or price on carbon, and some of them are more technology-driven. So the question is, though, which is the bigger lever in terms of driving us towards decarbonization? Is it policy or is it business innovation? - So I actually don't view these as separable that way.
I view the market works in a broader institutional context here. And where you see that probably most pronounced and obviously consistent with our own thinking here is around innovation. Take Tesla for, for example. Some of the fundamental advances in battery technology, which has allowed Tesla to succeed, were driven by NSF funding by the US Federal Government and DOE funding in our energy department. It led to research and universities that then eventually found its way into the technology. Tesla themselves received a large federal grant subsidy to help them get over the valley of death that many entrepreneurial ventures go through.
And people were might remember the Solyndra story. People probably don't know much about the Tesla story where Tesla was able to pay back the loan with interest once they had achieved some of their growth there. The tax subsidies for EVs clearly have energized the market in the early stages as well in terms of driving consumers to purchase the vehicles.
So, again, I tried to reject the hypothesis that it's either markets or regulation, it is an integrated system that then lead markets forward. Where I think I differ than especially some of my economist colleagues is this emphasis on innovation. Markets, when technology can get to the point of being market viable, markets can diffuse things very quickly.
So I'll give you a good example of a hot take here. I imagine some might disagree with me on this, charging stations for EVs. I'm not sure that's the best use of federal dollars at this point because the market is moving quick enough that the private market is beginning to provide EV chargers to meet the market opportunity that's there. I'd rather see dollars spent on actually the electrical grid 'cause I think that's a much more challenging problem that will require significant government investment to make that transition.
So just to give you an example of where we need markets to solve it, and in other cases, where we might need a little bit of nudge from the government. - Awesome. So here's a little bit of a different question. And a lot of business leaders, I asked this, I believe, there's a lot of intervention that we can think about that happens at the industry level or the collective societal level. But how do business leaders make the case for this internally to their organization? - Yeah, and I think this gets back to understanding industry dynamics, right? This isn't all about forgoing regulation. And sometimes, it's not even about meeting new customer demand or consumer demand here.
I think it really depends on what what sector you're in. And I think a theme of the book is to having a sector base understanding and implementation of this is critical. I'll give you another hot take here, again, probably get me in trouble.
All the rhetoric around thinking that the fossil fuel companies, the Exxon Mobil's of the world are going to somehow transition to renewable energy companies, that there's nothing in the history of technology suggests to me that that's a reasonable assumption. What does happen in these types of transitions, they go out of business. And that's actually what we should want as the transition occurs. For those of you may be invested in Exxon Mobil, by the way, this transition is going to take a while, so they're going to be fine for a while here.
But the renewable companies, which is a very different industry, different market segment, that's likely going to be, as we've seen, other players who are going to come and grow and dominate that market. Take autos, my prediction there is we're going to see some of the large global auto manufacturers go out of business, that's the way this happens. And some of them will merge, and we've already seen the rise of like a Tesla.
There'll probably be other startups that will come into the marketplace and grow and succeed. Again, that is just a truism of market-based economies and how they evolve. And so again, it's really going to depend on which sector you're in, but thinking about it as a business opportunity, think of these as disruptions that are going to maybe impact your market, that's how I would frame this and talk about it within my organization. - Awesome, so we have all, those of us who follow this space and have hardly kept up this year in terms of all the changes in what's happening on sustainability, on climate, on ESG investing.
I'm just curious right now at this moment, what are you feeling most optimistic about? - Well, as I mentioned before, I'm most optimistic on the auto sector. I think that's the one where we see the trajectory moving most favorably. Battery technology has gone through an amazing evolution coming down in price, we need that to continue. And there are concerns about lithium production, supply chains, everybody's worried about supply chains, that can hold things up. So I think that's one that there's great opportunity, but there's also a lot of work to be done.
And then when I get depressed, I think about things like agriculture, steel production. It's easy to say, oh, we should substitute away from steel. It's hard to imagine in our modern society doing so.
Just to give you one example, there's a lot of efforts now on what's called structural timber, which is awesome, because we use trees and actually use them for construction, you're actually creating a carbon sink, in that case, you're storing carbon in those buildings. They can get up to about seven or eight stories with structural timber, so that's awesome. You're not building a skyscraper out of structural timber at this point. And if you think about global trends and urbanization, which has some positive environmental benefits, we're going to need to build and cement and steel again, are central to that.
- Excellent. Well, thanks, Mike. I know there's probably lots more questions, and I'm going to tell everybody a little bit more about the book in a few minutes. But I think that's a really nice segue because Radhika is working on some of these really hard to beat thorny climate challenges. And so I'd like to introduce her and have a conversation about what she's working on. And then we'll come back to some more resources at the end of our conversation.
So Radhika Lalit is a manager within the climate-aligned industries program at RMI. And she's the chief strategy officer for the Mission Possible Partnership, and alliance of climate leaders focused on supercharging decarbonization in the world's highest emitting industries and their value chains. Before working on the Mission Possible Partnership, Radhika launched RMI Center for Climate-Aligned Finance to help the financial sector transition their industry clients to a net zero carbon future, and she's worked on a bunch of other initiatives with RMI too.
She has a master's in international policy studies from Stanford as well as an MBA in finance and a bachelor's degree in engineering from leading institutions in India. So she's got a great story to tell. I'm really happy to hear from you, Radhika, about how you've integrated your interest in climate and the private sector specifically into your career. So maybe we can just start there.
Tell us a little bit about your career journey and your background before you got to the role you're in now. - Absolutely, Katie. Thank you for having me and, Professor Lenox, it was a pleasure to hear from you. I completely agree with all your heartaches and your thoughts and insights as part of this book. It's really a privilege to hear from you. So on that, just sharing my story with all of you who are here.
My journey started as an engineer. I had no plans to move into sustainability and climate change. I was actually studying Electronics and Communications Engineering, which has very little to do with all this stuff.
But when I was in my second year of engineering, my mom forced me to go to a rural part of the country to really learn about what's happening within the space, and find ways to contribute to solutions, and that's where my journey really started. That's where I actually started figuring out, what can I do? How can I be part of the change here? And yeah, I spent the summer there, I was forced out of the house, learned a lot about durable sustainable models that are self-sustaining, especially in the Himalayan region of India, and came back and set up my own youth organization, youth platform for engineering students and MBAs and others to be able to contribute to ideas and business models for how we could create change in the society, and it's called Youth for a Cause and that organization is still going on in India, which I'm pretty proud of. That steered my focus on this topic, and I then went on to do my MBA in business sustainability with a concentration in finance and marketing, and then worked for a few years in India with a leading think tank, energy think tank on climate change sustainability issues. I was fortunate to be a sustainability consultant to several Fortune 500 corporations and in these different harder to abate sectors and some other sectors as well. And I walked across a number of areas of expertise ranging from energy, water waste to renewable energy, specifically an energy efficiency, et cetera.
So that gave me a little bit of in depth understanding of where the industry's at. But then, when I was setting up the chief sustainability officers forum in India, India's first CSO forum, what I learned in those boardroom conversations is that it's all about the business case. But at the same time, we need policy to move the needle on a lot of this stuff, which piqued my interest. And I was like, I want to learn more about policy and how do policymakers think and bring about change in markets? And that's when I decided to pursue my master's in International Policy Studies with the concentration in energy and environment. I also was very fortunate to be shortlisted for the EDF climate corps fellowship that Ashley will talk more about later in this webinar, and had a fantastic experience working for Blue Shield of California as a strategy intern, where I really helped them develop their goals, their sustainability goals, evaluated the feasibility of these targets and propose like a roadmap of how Blue Shield of California could help achieve those goals. One of the goals that they had was achieving 30% renewable energy by 2030, and the way that they wanted to do that was they were thinking about solar.
So my role was to be able to develop the how, how would they develop 30% renewable energy. And I'm one of those lucky ones who actually gets to see their projects being implemented in real time. So my presentation to the chief financial officer within Blue Shield went really well, and he approved the project, and they have three facilities today where they're actually have installed solar, which has roughly led to 841 metric tons of CO2 emission reductions on an annual basis. And just to put that in perspective, that's equivalent of taking around 550 passenger cars off the road each year, so not a bad way to get into this arena and make some impact. So I definitely recommend the EDA fellowship.
But fast forward, I actually started working with RMI, which is also a leading energy think tank, and one that's pretty global in nature. We have offices in the US, in China, in India, and operate in small island countries and Africa as well. And the idea that I had was, how do I continue to have impact as I'm working across this domain? So I started with working with on the buildings team. I worked a lot on energy efficiency projects within the US Department of Energy. I helped with the New York City's Mayor's Office of Sustainability devise their goals around the 80% emissions reduction by 2050. I supported a lot of work on the finance side with leading mortgage underwriters, such as Fannie Mae and Freddie Mac, on their Duty to Serve program, and then subsequently founded the Global Cooling Prize, which is an innovation challenge for $1 million that we recently concluded, which aim to really provide the next generation room air conditioning technology, which has at least five times less climate impact than your typical room air conditioner today and why is it- - [Katie] That's one of the paradoxes, right? As the world gets warmer, we're going to need more air conditioners and the air conditioners then contribute to more warming, right? - Absolutely, it's a vicious cycle, and one that, you wouldn't see that as a problem in your rear view mirror.
But when you look ahead, global warming, just due to room air conditioners is going to be roughly half a degree by 2100, by the end of the century, which is massive. And every second, 10 new room air conditioners are sold in the world today. And that's going to keep happening.
So this cooling challenge is no small challenge. And small interventions such as room air conditioning technology can really help move the needle and release, this innovation can really move the market as well. So to give you a glimpse of how the market's changing, at present, room air conditioning technology, the best in classes like 20% of the theoretical maximum efficiency.
And so this is the absolute best in lab that we have, right? That's the level, because the market has been optimizing around costs, the industry has been optimizing around costs, not so much on what goes into this vapor compression technology that has been there since so long. And the innovation that we wanted to get going in this market, the disruption that we wanted to get going in this market was, can innovators come up with something that's not only highly energy efficient, but also uses climate-friendly reference to reduce the whole impact? And we were lucky that we got, we attracted the attention of one of the world's largest air conditioning manufacturers, Daikin and Gree actually won the Global Cooling Prize. And today, they've pledged and committed to getting the technology in the market. So you have the world's two largest air conditioning manufacturers participating in this challenge, coming up with designs that are unique, that integrate solar, in some cases, refrigerants that have not been discovered, have not been mainstreamed as yet, were introduced. And these technologies were actually tested as part of the prize in India. And, the result's great.
So innovation can really move the needle on decarbonization and the net zero future that we all want to go towards. And yeah, and right now, I am working on something called a Mission Possible Partnership. And the objective of our work is really to supercharge industrial decarbonization across the seven harder to abate sectors that Professor Lenox talked about, including steel, cement, chemicals, aviation, shipping, trucking, and our work is really how do we work with the leaders in this sector to drive this flywheel of climate action by not only engaging with the industry, but also with the different stakeholders of the whole value chain of the industry, including policymakers to see what policies will help these industry leaders, including finance, which is essentially the lifeblood of industry, including the demand side, the customers of the industries that the Teslas of the world will use steel.
And so how would you create that market and the industry itself? So how do we use this whole value chain concept to drive industrial decarbonization? And I'm so excited that we are making progress. - Yeah, you're working on some really important and thorny, but also probably intellectually interesting challenges. So I'm going to ask you the same question I asked Mike. With everything that's going on in all these sectors you're working with, what are you most optimistic about right now? - Yeah, so I think the most promise, the promise here is that this is an opportunity that most people are viewing this as an opportunity.
There is literally $50 trillion in incremental investment required in order to transition ours, all of this economy into a net zero future, and that just spells opportunity for me, and that gives me hope that this is not about using jobs or just... The narrative that we are hearing is not the only narrative that exists, it's about creating a new world order, a new way to do business, a new opportunities, that really will help define the future industries. As Professor Lenox said, the whale industry doesn't exist today and for a good reason. And similarly, there are new industries that have been created that weren't there when the whale industry existed. You are looking at this, I see this as an opportunity, and that gives me hope. - So thinking that we have a lot of MBA students on our call today, what's your advice to them in terms of if they want to make a difference? Where should they go work after graduation? - Yeah, I feel like we've reached a point where every role that you will take will end up contributing to solving the climate challenge in some way or the other.
So you as, as not just future leaders, but leaders in your own right have a voice in the system. And I think you can create this new way of doing business by creatively working closely on these topics. Now, if you're working for the industry, the financial industry or any industry, you will see the impacts of climate change happening. And I see that your role is fundamental to driving change. You are the people who will come up with new business models, new financing mechanisms, and new marketing techniques in order to really help us solve this climate crisis, so you are my hope. - Excellent, so that's a good place for us to break and talk a little bit more about how our audience can get more plugged in, and I'm going to start sharing my slides again here, good.
So Ashley and I are going to talk for a few minutes, I'll come to her in a moment. But we've compiled several of our favorite opportunities for you if you'd like to learn more or just get connected to the topic of climate and business as we go forward. So first, we would be remiss if we didn't talk some more about Mike's great book.
I hope that you'll all take a chance to check it out. His co-author, Becky Duff, is also an amazing colleague at UVA. And they have really given a complete roadmap to what needs to happen in all of these sectors, energy, transportation, industrial, buildings, agriculture, and some of the biggest levers in terms of both policy and innovation that can help us make that happen.
So I think it's a terrific resource. I was really excited to get my copy just a couple of weeks ago, and I hope you'll check it out. Is there anything else you want to say about the book, Mike? - [Mike] No, I think you did it justice there, so I really appreciate that, Katie, to have that promotion there. I think again, I'll just make the pitch again. There are literally hundreds of opportunities in this space and we need innovation across a large number of them.
And so to the point, let's get working on it. - Yeah, yeah, I really appreciate how tactical it is too. It's really packed with lots and lots of data. So another resource that I want to tell you about. We have a new platform that we have launched at Duke called MBA EDGE, here's our website.
All of the content is free for you to download and share, including the first paper, which has the same title as this webinar, "Climate Change and Business: What Every MBA Needs to Know." So if you want to go back and you want just a six-page primer on what climate impacts are and the issues that they're presenting to business, please feel free to download that, share it with your classmates, share it with other MBA alumni, share it with your faculty. We also have primers on other topics like water and business ESG investing as well as some of the hot topics like electric vehicles and energy storage market. And we're going to be adding a lot more content here on the site soon, too. So if you're interested in learning about new papers as they come out, add your name in our mailing list, and you'll get the latest and greatest content as we get it out. - This is just the tip of the iceberg here.
I'm going to give you just five of my favorite climate-related resources. I know that our panelists might have their own, but if you don't already receive it, the Climate Tech VC Newsletter, which comes out weekly as a terrific roundup of all of the big VC investments that are happening and the startups they're funding. Canary Media and Axios Generate newsletter are really good sources for staying abreast of what's happening both on policy and on business news. And then a couple of podcasts here, well, podcasts, My Climate Journey is really terrific, the interviews are great. And the Terra Climate School Platform is another place if you really want to go deeper.
So there are lots of lots beyond these, but I think that these are a few of my favorites when I'm talking with students who just want to know the best place to start. And then last, oh, I have to go back. Last in terms of learning, I really want to put in a plug for ClimateCAP, the Global MBA Summit on Climate, Capital, and Business. This is just for current MBA students, whether you're a daytime MBA or an executive or part-time MBA student, we would love to have you join us.
Kellogg School of Management at Northwestern is hosting this year's summit in February. I will be there. We at Duke hosted the first one and the team at Darden hosted the second one. So this is a continuation of really great programming and we know already that Kellogg's got a great program lined up. So registration is open if you're a current student and you want to connect with other MBA students and hear from business leaders in all of the industries that you're most in interested in, talking about what climate risk and innovation means for their industries.
Please consider coming to join us in Evanston in February. Maybe you'd like to go beyond learning and you'd actually like to get involved. So here's where I want Ashley to step in and talk to you a little bit more about the EDF Climate Corps Program, which is the program that Radhika participated in when she was a student. - Yeah, thanks, Katie. So I'm Ashley, I'm from EDF's Climate Corps Program. And Climate Corps is a summer fellowship that embeds graduate students with leading companies and private or public sector institutions to meet those organization's climate goals.
So, like Radhika, worked with Blue Shield of California, fellows work with one of many host organizations. So fellows spend a summer designing tools, putting together recommendations to meet emission reduction goals in our five main project areas. And, Mike, I was glad to see that there's some overlap between some of these and some of the things you talked about in your presentation. So our first product area is climate commitments. So greenhouse gas accounting, ESG strategy development, putting together roadmaps for net zero or science-based targets, the second zero emissions vehicles with a focus on medium and heavy duty fleets, supply chain sustainability, renewable energy, and building electrification and energy efficiency, and food waste reduction.
So those are our five main project types. We have fellows across sectors and industries. We've worked with over 500 large organizations. But in 2021, the top industries for our private sector host organizations were at financial institutions, tech, manufacturing, and industrial, consumer packaged goods, and retail and apparel.
So those are the most represented, although we have we have many hosts all over. Our fellows, they bring a wide range of academic and professional backgrounds, a specific background in climate or sustainability is not required. But if you're interested in this work, you want to put some of your business skills towards this area is a great opportunity to do it. And this past summer, the majority of our fellows were MBA students, so you all may be well-suited for the program. So if you want to learn more, Katie looks like she's put our website on the slide there.
This year, our application is due by November 30th for our early deadline and January 11th for our regular deadline. If you want to learn more, again, our website there has lots of information on it. We have a recorded info session you can watch. We're having an alumni panel this upcoming Monday.
So if you want to hear from more folks like Radhika who've done the program before, there'll also be breakout sessions in that so you can have a chance to talk to and network with some alum. You can register for that. We have a database of past projects and hosts if you want to get a real, strong sense of the kinds of work fellows and MBA students have done the past that's on our website. So once you check that out, if you have any questions about the program, the application, anything like that, feel free to reach out to us. But yeah, I think this is a great opportunity for you to to take the business skills that you have and apply them to this really, really critical work.
- Thanks, Ashley, and how long, how many years has Climate Corps been going on? - 2008 was our first summer so I think this is year 14? - Wow, yeah. - We've had over 1,200 fellows. - One of the things I hear besides getting great training and the orientation and then a great summer internship experience is that the alumni network of all those 14 years of alumni is really incredible. - Yeah, we have over 2,000 people on our network who, like Radhika, are all doing really, really cool things. I think over 80% of our alum work on climate or sustainability as part of their full-time jobs. - That's incredible.
I mean, it's really been a transformative program. I think that- - Absolutely. - That's helping young professionals jumpstart their careers in sustainability and climate-related roles. - Yeah, and again, you don't really need to have a background in sustainability to use this fellowship as a launchpad. So if you want to learn more, please, please do send us a message.
- Excellent, so last couple of slides here for you. Radhika's has organization, RMI, has incredible job openings open right now, over 40 openings, here's the link as well as summer internships. They are doing just really transformative work on all things decarbonization, climate aligned finance, clean energy. So take a look there. If you're interested in working on climate, there's a couple of other good resources for you, including a couple of specific job boards that are focused on climate and clean energy jobs.
So here are a couple of my favorite resources and then the work on climate community as a select group with lots and lots of opportunities for you to get involved as a student or an alum working as a volunteer, connecting with startups, lending expertise, and looking for roles. So with that, I know we're about out of time. I really want to thank our speakers today. Thank you, everyone, for joining us. Thank you for the great questions. I know that we could go on and talk about all things climate and business for several hours more, but I hope that our objective here today was to inspire you to engage, get excited about the opportunities to make a difference with your career, and to learn more, and hopefully take some next steps.
So as you hopefully gather from this, there's a lot of work to be done, but there's also tremendous opportunities for businesses to make money, to capitalize on those investment and innovation opportunities, and for professionals to really make a difference with your careers. So it's going to take all of us, it's going to take folks working on policy and storytelling and engineering and finance and operations and strategy. We need more of the best and brightest minds, directing their energy towards working on climate in all sectors. But I hope that today, you've piqued your interest in getting into some of these challenges and seeing it as an opportunity for you now and in the future. Thank you for joining us today.