Why you should care
Because it’s up to industry to drive true change.
OZY and JPMorgan Chase & Co. have partnered to bring you an inside look at how entrepreneurs are coming up with innovative methods to help the communities around them. Enjoy the rest of our special series here.
Though there have been various headline-grabbing moves towards eco-friendly business in recent times, how realistic is it really for a large corporation to operate sustainably? Think about everything it takes to run a global conglomerate. How could that possibly go entirely green?
For one multinational, the answer is a two-pronged approach, aimed at delivering scale instead of small, piecemeal changes. One prong is to create a whole new infrastructure that uses green technology; the other is to collaborate with other companies and create change outside as well as within.
This year, JPMorgan Chase announced it would source 100 percent of its power from renewable sources by 2020, and provide $200 billion of “clean financing” to other businesses by 2025.
This is a huge and complicated commitment from the company. Sourcing 100 percent green energy requires a deep-down overhaul of how you run a business, necessitating new technology and new ideas. “Clean financing,” on the other hand, enables the company to “pay it forward” on a massive scale, facilitating loans for its 22,000 corporate and investor clients so they can go green too.
But while it might seem like the “right” thing to do, a meaningful approach to sustainability is also good business. In January, Forbes reported the stock returns of the Global 100 — the world’s most sustainable companies, according to research firm Corporate Knights — were 24 percentage points higher than those offered by the MSCI All Country World Index.
You can get a sense of why that might be from JPMorgan Chase’s more recent approaches to collaboration and green infrastructure. The firm has signed an agreement to help develop Buckthorn wind farm in Texas, by purchasing half of the farm’s power output in advance (the farm is slated to be up and running by the end of 2017). According to Mike Norton, Head of Property Management for JPMorgan Chase Global Real Estate, the agreement will provide 75 percent of the firm’s power consumption in the state for the next 20 years — and about $100 million in savings. The bank says the agreement has also created almost 200 clean energy construction jobs, and will help the farm produce enough green power annually for 29,300 homes.
But this kind of commitment requires partnership across the board. It is the only way to achieve a circular economy — one where resources remain in a perpetual cycle, renewed and reused, rather than wasted after single use. That demands ambitious change from every company there is. But, according to research by the MIT Sloan Management Review, The Boston Consulting Group and the UN Global Compact, just 47 percent of global companies are currently collaborating with competitors, NGOs, suppliers or regulators to become more sustainable.
Certainly, it’s this sort of partnering across industries that stands the best chance of implementing true sustainability; after all, how could a huge corporation with myriad supply chains achieve 100 percent green operations on its own? As Jason Clay, Senior Vice President of Market Transformation for the World Wildlife Fund, has said: “We need groups to collaborate that never have …. We need to begin to manage this planet as if our life depended on it — because fundamentally, it does.”