For large, established companies to be sustainable long term, they need to consider how a changing climate will impact what they do. CEOs have got to ask how their businesses can be resilient in the face of climate change and what they can do to help mitigate it.
Nicole Systrom is the Founder of Sutro Energy Group, a consultancy working to scale high-impact climate solutions. On this bonus episode of Reversing Climate Change, Nicole joins guest host Alexsandra Guerra to discuss her recent World Economic Forum article, ‘3 Ways CEOs Can Tackle Climate Change and Build a Net-Zero Economy.’
She explains why large, established companies should lend their political capital to climate tech startups and makes the case that every business should make net-zero a part of their business strategy. Listen in for Nicole’s insight on giving innovators a voice in policy creation and learn how large corporations, legislators and climate tech startups can work together to build a net-zero economy.
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Resources
‘3 Ways CEOs Can Tackle Climate Change and Build a Net-Zero Economy’ by Nicole Systrom
Microsoft’s Climate Innovation Fund
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change podcast by the team at Nori, the carbon removal marketplace. This is a show about the innovators and entrepreneurs developing solutions to climate change.
Hi everyone. This is Alexsandra Guerra from Nori, co-founder and director of corporate development. For this bonus episode, we’ve invited Nicole Systrom, founder of Sutro Energy Group, and Nicole has written a [unclear] article about the three ways CEOs can tackle climate change and build a net-zero economy. So we thought we’d have a fun little conversation, record it, and share it with you guys, so that maybe you can inform your business leaders on how we can achieve net-zero economies through changing our business practices. Hi Nicole, thanks for being here. How are you doing?
Nicole Systrom: [unclear] to be here. Yeah, we’re great.
Alexsandra Guerra: So you wrote this thing, these three ways that you can tackle climate change. It’s on the World Economic Forum — we’ll include a link in the show notes. But can you tell us, what are those three ways that we can tackle climate change?
Nicole Systrom: Sure. So I guess I’d start by saying — I mean, I know your whole company is based around this, like, climate is a problem, there’s a role for really everyone to play, and I think it’s been really heartening to see the corporate world start to really step up, at least in words, over the past 12 months, I’d say. And now, you know, the science is pointing us towards [unclear] — this is really the decade where we have to cut 50% of emissions in order to stay on track to hit our 2050 goals, and the corporate world really needs to start turning those words into action. So that was really the motivation for writing this piece.
And so the piece outlines three ways that CEOs can really work on this. And the first one is supporting early-stage entrepreneurs in climate and climate technology, and helping to scale solutions. The second is lending climate innovators political capital, so helping early-stage companies really play in the political arena where, you know, large corporations have a lot more infrastructure and experience. And then finally, making net zero a part of your business strategy. So happy to dig into any of those that are interesting.
Alexsandra Guerra: Well, I thought it was really interesting that you had laid out one and two. So it’s not just supporting early-stage startups financially, it’s also about supporting them politically. I think that rings really true for us, because we see, particularly within the space of carbon removal — that’s one part of the climate change space that is very nascent, and there’s a lot that’s constantly changing and shifting. So now there’s the Biden administration and they’re talking about a carbon bank, and, you know, we’ve been here three years trying to create a voluntary marketplace for carbon removal with farmers, and so everything is constantly changing and we always want to be involved in those conversations. But that seems like something almost limited to businesses that are a little bit larger — maybe corporations that have some political pull or capital, as opposed to smaller organizations where maybe they can’t even help out in that way.
Nicole Systrom: Yeah, well, so I guess what I’m getting at here is, from a climate tech innovation perspective, many of these companies are small, right? And a lot of them are still working out of [unclear]. I mean, there’s a lot of work to do just to get the technology developed, or the business innovation, you know, like the financial innovation — whatever the innovation of the company is. These climate technology companies are still early in their life cycle, and there’s just a lot of hustle to do the work of the company itself. But it’s still important to remember that all of these startups are happening within a political context, within a policy context, within a political context.
I think, you know, maybe 10 years ago, 10, 15 years ago, in the kind of first round of what we call the green tech, there was a lot of emphasis on the startup as it related to policy changes, and how policy would affect the startup. And a lot of business plans, a lot of companies, got funded based on, you know, a carbon tax getting passed — like a future carbon tax being passed — and then those things didn’t happen. And I think investors and, you know, entrepreneurs really got burned in their connection to policy. But I’m hopeful that the circle is kind of coming back around, right? Because we can’t make the changes we need to make as a global society or the global economy without changing our laws and changing our policies.
And I think a lot of startups are realizing — once again, your work with carbon removal is probably the best example — how important policy is in order to get these companies, these early-stage climate technologies, kind of kick-started in the way that we need them to be. At the same time, you know, most of the entrepreneurs at the early stages that I’ve met, they don’t get into this because they know about policy. They get into it because they’re passionate about climate in general, or they’re passionate about whatever technology they have. They’re technologists, often, at the very beginning, and they don’t, frankly, have time to go figure out who to talk to in Washington, D.C., let alone any one of the state governments, if we’re speaking from a US perspective — which I know this analogy extends to other countries around the world.
And a lot of larger companies, they are large enough to have whole regulatory departments and policy people on staff, and they lobby all the time. They’re very happy to lobby on things that aren’t necessarily directly in line with their business model. But it just seems to me like there’s an opportunity here. I mean, at a minimum, what we need is the corporate world to stop lobbying against climate action, because there’s a lot of that going on. Definitely, you know, companies get in the way and say, “oh, we can’t do anything on climate because that will hurt us in some way,” which provides a lot of cover for policymakers to then not take the bold action we need to take.
So I think at a minimum, we need to ask these kinds of large corporate lobbyists to stop lobbying against climate action. But then, furthermore, I think figuring out a way to lift up climate technologists and help them engage in the policy arena in an effective way can really help move the policy environment forward in a way that actually helps climate tech get something done. Because the other thing that I think can happen is, those policymakers that are working on innovation policy — which is, I think, a lot of what you and I are talking about at this moment — like, if innovators aren’t part of that conversation, there’s no guarantee that that policy gets made in a way that actually helps the innovator.
Alexsandra Guerra: That’s exactly what I was going to say. It’s really interesting, because we’re all playing a very essential role and we’re all part of a crew, really, on this one deck. So policymakers and educators, large established companies and corporations — we have to be communicating with each other. And the unique role that early innovators or startups in the climate tech space, or any space, can play is that they can innovate and test, because we have lower risk, we have lower capital, we don’t really have, like, a set, functioning, highly operating, high-volume business model. We can test and iterate and build new solutions. That’s something that policymakers can’t do.
And so, yeah, it needs to be an open dialogue where learnings can be shared between the two, and what the innovators learn or share can be implemented, or at least considered, in the policy that’s being made. I think that’s my one concern, is when policies are too prescriptive. So I grant you, it would take forever to innovate and fix the mistake of the assumption that you made in the policy that you wrote.
Nicole Systrom: Yeah, well, it’s so rare — I mean, maybe good policy, that’s why we have professional policymakers, like, you know — but because it is a hard thing to do. But, you know, I think about the 45Q tax credit, right? Which some people point to as, like, this is the policy we have to support carbon removal. But if you’re not a huge company, if you don’t have a huge project that’s removing massive amounts of carbon, you can’t take advantage of it, which stifles this whole carbon removal, you know, nascent industry where we have so much innovation going on.
It’s questions like that where, if innovators were at the table, I could say, you know, we have to lower this limit, or how can we make this work so that it’s more available to everyone? Then I think we lift all the boats at once, versus just, like, Chevron being the only company that’s able to take advantage of it, which I don’t think is desirable for us to get where we’re going.
Alexsandra Guerra: Yeah, absolutely. So I want to shift a little bit to your point number three, which is make net zero part of your business strategy. Every business is different in its shape, size, customers, market, what they’re doing. Can you tell us a little bit of some of the examples that you have seen to work, to make net zero part of how you run your business?
Nicole Systrom: Yeah, yeah. I think — well, maybe another way to state this, make net zero part of your business strategy, is my belief that if you are a company, you are a climate company. Like, everyone needs to be asking, you know, if you are operating and doing business right now, you need to be asking yourselves the question of, how does a change in climate affect what we do, and what can we do to be resilient to a changing climate and hopefully help mitigate against that?
So I think maybe one of the most public examples of this is Microsoft, right? Like, they do software. It’s not a company where you’re like, oh, there’s a — you know, I guess their software, running software, consumes electricity, and they should be concerned about energy efficiency in that way, like, fine. But I think Microsoft, actually for many decades now, has been experimenting with different ways to bring climate into its work and innovate against it. I mean, for a while they have had an internal carbon tax that they sort of imposed on every business decision, which I think is pretty wild and innovative.
And now they have a whole — they have a climate fund, they have, you know, they just have a lot of people working on how climate should come into their decisions, but also into their customers’ decisions, right? And I think it’s all from the perspective of, if we have a better, more sustainable world, then there’s a better economy, which helps Microsoft grow its earnings, right? So I think every company can be asking itself, what climate risk do I have? And what opportunity do I have to affect that, or benefit from adopting some kind of climate innovation?
I think just the very basic questions of, like, where are you sited? How would a disaster affect your operations? What can you do to be resilient to that? Where do your people live? Are they safe? Starting from that basic perspective makes a lot of sense to me. And I also think, you know, there’s the kind of normal list of, like, try to switch to renewable energy and become more efficient in your operations, which people should definitely do. But I think what the climate question really invites you to do is take a broader, long-term view on where your business is headed, and the impact it’s having beyond maybe just what you sell every day.
Alexsandra Guerra: I see the value in what you’re saying, right? Like, okay, I’m one of the cofounders of a climate change startup, so I’m not — I’m going to disagree with what you’re stating here. I’m going to push back a little, where it’s like, I don’t know that every company or business should see themselves as a climate business. I think they should — it’s kind of like, it’s interesting because we’re seeing a shift, right? So before it was, how do I make — if I’m going to make a business, you know, it’s to make money, because that’s the point, or to have fulfilling work, et cetera. I think we’re seeing a shift now, especially in the millennials, where it’s not just about the money or the salary. It’s, do I actually, like, belong? Do I feel like there’s purpose in my work? What is the impact, et cetera?
And we’re seeing a shift in that way, which is good. So we could see a shift for more businesses to make net zero part of their business strategy. But there are still — so, I’ve been living in Peru for about six months, and there’s a lot of industry, of course, there, because you have businesses who are taking commodities and selling them to other foreign-owned organizations that then might sell them in the US or Europe or something, right?
And I wonder, you know, for those types, where you have just communities that are just trying to survive — and we have a lot of that also in the US as well, like, we have businesses that are just trying to maintain their community. How do we speak to them in a way where it’s like, look, it’s not an either/or? How do we tie in climate when it’s so separate from what the business owners are even thinking, or the community is concerned about?
Nicole Systrom: Yeah, no, I mean, it’s good — I like the question, it’s a good pushback. I guess what I would argue is that I’m encouraging people to at least ask the question, right? To at least have it on their radar, that this is a thing. I think if you’re a Fortune 500 company, like, you should be having a lot of activity on this, hands down, no questions asked, right? I think what you’re pointing to are these sort of smaller entities, and maybe in emerging economies, where people are still kind of scrambling just to kind of make the business successful. For that group of people, it may be enough to just have the conversation in your mind, to start having the conversation.
And I have to also tie it back to political power, because I think one of the main reasons that policies on climate don’t get passed is because of a storyline about how it’s going to ruin an economy, how switching to renewables will be more expensive, or regenerative agricultural practices would be more expensive and less people will have jobs. And then there’s also the whole trope of the problem with the developed world turning to the developing world, right, and saying to emerging economies, like, don’t develop those fossil fuel resources — you’re trying to, like, lift your country out of, raise the standard of living in your country, and, please, leave all those resources in the ground that you have. Like, that’s — yes, totally agree — that’s completely problematic.
But what I would argue again is, people need to be asking the question and engaging in ways that they can, and where it makes sense to them. I mean, it’s not going to make sense for everyone to go all the way — like, yeah, if you’re a small business, you don’t need to hire a person to come up with a climate strategy for what you’re doing. But I think there is something in having the conversation, asking the question. The more that we have this in our mind, that in order for us to make the changes we need to make, this is like a top-to-bottom reorganization of our economy — we have to decarbonize every last little corner of everything, and that is going to touch every business eventually. Maybe not tomorrow, but it will.
Alexsandra Guerra: No, I think you’re absolutely right. And it’s a good response, which is, all right, just ask the question. And I love that response, mainly because it allows room for it to be non-confrontational, or to not be something that is threatening, right? It’s always strange when you ask these types of questions, because it might seem like you’ll have to be one or the other — I have to, like, either give it all or give none. And I don’t think that the world is so black and white, and we should at least give room for the idea and the exploration of what would happen if I were to consider this thing, because I do care about it, or I do believe it’s important in some way. And you are totally free not to take action on that.
But at least it gave some space. And the more space we allow for these types of conversations, on how do we include climate in the decisions that we make every day, business or otherwise, the more we will continue to progress as a society. But then there’s always a question of time and urgency.
Nicole Systrom: So I think one of the other sort of aspects of this conversation is, like, the focus on an individual company and choices at that company level, versus trying to change the whole system, right? And maybe that’s part of what you’re pointing to here, is like, a smaller company works within a system, right? Like, it can’t completely change how power is delivered, you know, or whether the trucks a company uses are gas powered or, you know, electric, right? But I don’t want to make the argument here that if corporations just changed their mind, you know, about how to do something, and were all in on climate, this problem would be fixed. Like, that’s not what I’m talking about.
I think it’s linking it to political power as well, because that is actually how a system gets changed — you have to have policy. But these two kinds of things have to happen in tandem, right? Like, we need movement in the corporate sector, in whatever way makes sense for the company that you’re a part of and running. And some companies are larger, larger footprints, more power — they should be doing more, versus a smaller company that, you know, is much more at the whim of the system around it. But the more movement we generate within the corporate sector, I think the easier it becomes for policy to move on the kind of timeline that we’re talking about, that we need to move on.
Alexsandra Guerra: Yeah, again, I think it goes back to the fact that there are key roles that we all play in this effort. The private sector, so corporations, businesses, small and medium size as well; innovators and entrepreneurs and startups; and then policymakers themselves and the people who support them, so [unclear], as well as consumers. We’re all part of this. And so having the space, the forum, to ask those questions and have those conversations, is the key here, and then making those connections, making space for them.
So that again goes to your point number two. I didn’t even go into point number one — I kind of just skipped over it, because it’s kind of like, yeah, give money to startups. So let’s just do a quick little — let’s just give some space to your point number one, which is funding early-stage startups.
Nicole Systrom: My point here is that, you know, especially if you’re an established company, you’re typically not set up to have major game-changing innovation. You’re a large company with a lot of business lines, and those businesses to protect. And so the innovation that you will do within your corporate culture already is more incremental, right? Like, a better widget, you know, a better dishwasher next time around, a little more efficient lawnmower, that kind of thing. Versus, you know, what the study shows is that [unclear] innovation, at least nowadays, really tends to come from outside of large established businesses.
And so what I’m calling for here is — the kinds of innovations that we will need, for those kinds of innovations that we still need to address the climate crisis, I’m encouraging those corporations with balance sheets, or with philanthropy, to think about how to invest in and lift up and support and partner with these early-stage companies in ways that help move their products forward, move their development, and help them scale, so that their products become, you know, the climate tech companies that will probably become more widely available, and therefore we can have the impact that we hope they’ll all have.
And then the other point is, the innovation piece is forward-looking, right, but there are also solutions that already exist, and I encourage companies to think about how to help deploy those that are ready to go already. Because again, we’re talking about decarbonizing every single corner of our economy, every single corner, industry — like, that is a big task.
Alexsandra Guerra: So it’ll take some coordination. Yeah, great. Well, I really appreciate you sharing some of your insights. We’ll include a link to the article that Nicole wrote. Thank you so much for your time here, Nicole.
Nicole Systrom: Oh, it was my pleasure. So fun to chat. Take care, you too.
Ross Kenyon: Thank you so much for listening. If you like the show, please rate and review it in Apple Podcasts and/or Stitcher. It really helps us a lot to get this content to a wider audience. If you think what we’re doing is useful, interesting, fun — hopefully all three — we certainly appreciate your rating and review. You can keep up with Nori at nori.com, where there is a newsletter. That’s nori.com. Subscribe. There’s podcasts, there’s a whole bunch else. Or you can send us an email at podcast@nori.com. We are also now on Patreon, at patreon.com/nori, if you’d like more content, engagement and community. And thank you so much for your support.
