GNFZ's Charge: Orchestrating Tech, Finance, Policy & Public Will for Accelerated Climate Action

As always, the United Nations Climate Change Conference coincides with a growing list of global challenges.

While the 40,000 or so attendees of COP27 are certainly addressing the specific technologies and strategies needed to overcome the climate crisis, my objective here is to outline what’s required to accelerate their higher-order solutions in service of a more immediate decarbonization of the global economy.

Indeed, in the view of the Global Network for Zero (GNFZ), the persistence of global climate change — or rather, our unrelenting contributions to it — can only be addressed by deploying interoperable technological, financial, societal and public policy solutions.

To illustrate this theory, there is perhaps no case more appropriate than that of the United States, the country most responsible for global climate change and, rightfully, most capable of driving its arrest, reversal and remediation.

The legacy of climate action in the United States, both on the part of the public and private sectors, has been fragmented at best. And while that may be changing, there’s much work to be done to ensure a streamlined, accelerated revolution is delivered in time.

Government's Charge

Take, for instance, the enactment this year of the U.S. Inflation Reduction Act (IRA), the single largest public investment in climate change and energy security from the world’s largest historical emitter and second-largest annual energy consumer. Leading estimates suggest that this unprecedented legislation will drive an approximately 40% reduction in U.S. annual greenhouse gas emissions by 2030, putting the country’s Paris Agreement commitment within reach.

However, as I’ve written in the past, this necessary outcome is by no means guaranteed.

The IRA, to be sure, is robust and, commendably, enshrines an “all of the above” approach to the emissions-reducing actions it seeks to incentivize. But it does little in the way of removing either the legacy market failures and policy hurdles that, despite the enormous sum of private capital waiting to be committed toward the U.S. energy transition, are largely to blame for a recent slowdown in the deployment of renewable energy generation facilities and other zero emissions-enabling technologies.

Much of the trouble has to do with the fact that the IRA is overly reliant on incentives, rather than compulsory mandates. Yet, with follow-on interoperable policies, legislators and regulators at the federal level and below can see to it — both independently and in close coordination — that the IRA delivers on its potential.

The case for interoperability extends beyond the confines of the IRA. Similar to what I advocated in response to the National Building Performance Standards Coalition, we need policies that better align the climate objectives and capacities of the federal government with those of its state and local counterparts.

But we also need policies that seek to do more than merely transmit market signals for climate alignment. We need policymakers to support the establishment of new industries, as well as new markets to support the acceleration of that alignment, and specifically the responsible scaling of these industries’ growth and maturation.

The International Energy Agency (IEA), among plenty of other similarly authoritative institutions, urges that policymakers cannot rely on an oversupply of mature and commercially available zero emissions-enabling technologies. Commendably, the Biden-Harris administration clearly recognizes the need for government-driven and financed research, development, demonstration and accelerated deployment of decarbonization solutions for niche sectors and discrete energy applications.

And while a formal carbon price or emissions trading system may be politically infeasible at the federal level, the White House and, to a lesser extent, state governments can still set up markets that reward decarbonization of the public and private sectors—both at home and abroad.

This, at least, is the thus far well-received intent of the U.S. SEC’s proposed corporate climate risk disclosure rule, which will give investors insight into how companies are managing their operational emissions and other financially relevant climate risks.

More recently, at COP27 this week, White House climate envoy John Kerry unveiled a provisional plan to give global governments a new market-based incentive to accelerate their respective emissions reductions. The framework, which seeks to primarily benefit developing nations, would allow regional governments or state bodies to earn carbon credits for verified power sector emissions reductions, which they would then be able to tender in a yet-to-be-established voluntary marketplace.

While the plan may be unrefined (and evidently controversial), the bold premise of the proposal is worth considering. On the one hand, it has the potential to remove as many as two gigatons of planet-warming emissions from the atmosphere. On the other, it demonstrates an acknowledgment of a sense of urgency and, accordingly, a credible pursuit of the innovative cross-sectoral, transnational partnerships we need to accelerate the achievement of Paris Agreement goals.

To the credit of President Biden, who is headlining the conference today, the diversity of areas where his administration is demonstrating climate action leadership, initiative and resolve continues to expand. But, with the window for economy-wide decarbonization rapidly waning, the U.S. government and its global counterparts cannot and should not be expected to do this alone.

Industry's Charge

Industry’s role in the campaign against climate disaster can be considered in two components.

First, as policymakers in the U.S. and elsewhere have striven to make clear of late, there’s the need for businesses and investors to open their wallets and contribute to the innovation, development, commercialization, adoption and maturation of all manner of zero emissions-enabling technologies.

Interoperability in this case, then, would entail end-user engagement earlier in the life cycle of decarbonization technologies so that they may have greater control over the eventual features and functionalities of a given solution, thus bringing certainty to their eventual investment decision.

Second, more challenging for enterprise leaders will be the improvement of their internal carbon accounting and disclosure processes and, more still, the integration of climate-related goals and performance metrics into broader corporate strategy.

The importance of this cannot be overstated. While we’ve witnessed increasingly healthy growth in the number of companies issuing credible, decision-useful disclosures of their ESG performance via voluntary frameworks, the extent to which companies are reporting success in driving climate-aligned, financially advantageous business practices is severely lacking.

The trouble this breeds is that issuers in the capital markets will struggle to attract the large and growing pool of ESG-mandated capital. To combat this, enterprise leaders will need to seek avenues of interoperability with financiers, civil society organizations, technologists and other stakeholders.

Simple is the task with financiers, whose approaches to sustainable investment practices are not only increasingly data-driven, but are also being sustained via active engagement with their investee companies and other stakeholders. All that’s needed is for enterprise leaders to reciprocate; executives will need to commit to active, routine engagement with their existing and prospective investors. The input of capital providers, among businesses’ other mission-critical stakeholders, is needed to define companies’ ESG performance goals, set consensus metrics to track progress and determine appropriate disclosure methodologies.

On the engagement of civil society organizations — namely the organizations behind the world’s leading voluntary ESG data disclosure frameworks — enterprise leaders will need to coordinate with their industry counterparts. The goal, simply, will be the development of more refined, industry-specific definitions for ESG materiality (i.e., financial relevance), performance metrics, and disclosure methodologies that supplement, rather than detract from the convergence in broad-based voluntary (and mandatory) disclosure frameworks already underway. Because, in the eyes of investors, key is decision-useful uniformity among the disclosures of their existing and prospective investee companies.

But business leaders must treat the collection and reporting of ESG performance data in line with increasingly sophisticated disclosure frameworks as more than a tick-the-box exercise. The true value of their ESG performance data — for both their bottom lines and sustainability outcomes — can only be unlocked through decision-centric analysis and, in turn, incorporation into broader corporate strategy.

But confidently executing these ESG performance management analyses and leveraging their results to inform corporate strategy is more or less impossible without trustworthy operational data.

Business leaders, then, must work toward engagement with both providers of ESG performance data management, analysis and disclosure solutions, as well as with climate risk intelligence providers, to ensure these products address companies’ and industries’ specific ESG accounting and risk assessment needs. Relatedly, companies will benefit from the adoption of bespoke enterprise blockchain applications that, among other advantages, are capable of bringing immutability and traceability to financially material and, soon enough, regulated ESG performance data.

Taken together, as I’ve argued before, the drivers of capital market activity will coalesce around accelerated corporate decarbonization, whereby verifiable evidence of climate-aligned corporate performance will determine capital flows.

Society's Charge

Put simply, government and industry will ultimately fail to execute these maneuvers without the public’s buy-in and participation.

Fortunately, there’s no shortage of evidence that suggests the majority of Americans support more ambitious climate policy and want companies to step up and make more transparent their climate credentials. At the very least, this tells us that policymakers and business leaders can rest assured that their pursuits of sustainable development goals would do more to help than to harm their respective licenses to operate. Even still, the confidence of the American public is not guaranteed.

There are signs that Americans’ concerns over climate change, as well as their faith in the federal government’s efforts to address it, are plateauing. And judging from the ascendance of the so-called “ESG backlash,” it would appear that the American appetite for more sustainable business and investment practices is at risk of following a similar trajectory.

Lastly, there is an apparent dissonance among Americans. While justifiably concerned about the massive carbon footprints of global corporations, they may be failing to appreciate how they, as the population with one of the larger rates of energy consumption per capita, not only contribute to climate change, but are also a critical piece of the net zero puzzle. More still, they often have a gross misinterpretation of their neighbors’ views on both climate change and who is responsible for addressing it — ultimately exacerbating our perennial collective action problem.

The American public, as well as its counterparts around the world, have two key roles to play. 

First, whether it’s through the ballot or the billfold, we must leverage our capacity to act. Persons, households and communities must hold accountable their policymakers and the companies with whom they engage and transact. And they must do the same for their neighbors and themselves. Relatedly, second, we must recognize that holding these parties — ourselves included — accountable for the greater good means enabling one another to discharge our respective duties.

Global Network for Zero's Charge

Acceleration is the foundational premise of the Global Network for Zero (GNFZ). In principle, we are committed to supporting the development and execution of innovative technological, financial, societal and public policy solutions. Yet, in practice, our work is to not only heap the pressure on leaders and power brokers in these realms, but equip them with the resources and solutions they need to deliver with efficiency and effect.

GNFZ's Charge | Technology

We are working to connect climate tech innovators and entrepreneurs with the partners, financiers and customers who will give them the direction, capital and certainty needed to build bolder solutions, so that they may accelerate the climate alignment of their end-users.

GNFZ's Charge | Business & Finance

We are committed to the complete and lasting convergence of the metrics and methods that businesses and investors use to measure and report their ESG performance. At the same time, we are working with business leaders and investors to improve their ESG performance measurement and disclosure processes, so that they may be more credible champions of enterprise sustainability.

Relatedly, we are guiding industry leaders’ selection and implementation of best practices, from investment in promising emerging technologies to the substitution of outmoded processes, so that they may accelerate their advancement of improved sustainability outcomes — and be rewarded for it.

Finally, we are working with industry leaders to establish and participate in marketplaces that drive more accurate valuations for enterprise sustainability.

GNFZ's Charge | Policy

With policymakers, we are committed to instilling in them an appreciation for the value of climate change mitigation, adaptation and reparations. And GNFZ is ideating and advocating for the legislative and regulatory solutions that will unlock the respective and aggregate capacities of public and private institutions to capture that value.

Our charge is to connect policymakers with innovators across the technology, financial and civil society realms, so that they have the insight, direction and impetus they need to implement policies that enable more seamless, more productive and more durable collaborations both at home and abroad. And we will be galvanizing support for the officials and institutions who champion sustainable development goals.

GNFZ's Charge | Society

With the general public, our charge is that of education, inspiration and empowerment. We are working to bring to the world’s attention both the urgency of the climate crisis, as well as the tremendous financial, economic, public health and social outcomes of sound climate policy, ESG maturity and robust individual engagement. And we are equipping persons, households and communities with the knowledge they need to be better climate citizens and hold accountable the powers that be.

Our only hope is that you join us sooner rather than later.