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Business and the Fourth Wave of

Findings from Environmental Defense Fund’s 2019 Fourth Wave Benchmark Survey Introduction What is the Fourth Wave?

Consumers, investors and he Fourth Wave of to increase employees are using their influence Environmentalism and the to demand solutions to our global T is how we bottom line. crisis. From calling for describe the potential for reduced carbon emissions to technological innovation This report reflects what we supporting companies that use to supercharge and scale heard from 600 U.S. senior , they are companies’ sustainability business leaders — from making it clear that improving the efforts. Our awareness chief executives to directors, world around us is a top priority — of , all at companies with $500 and business leaders are realizing and our ability to address million or greater revenue that what’s for the planet can those issues, has slowly — about the relationship also be good for their bottom line. evolved over the last century between business, from land conservation to and sustainability in their Executives may not know it, but protecting people and nature organizations. Second-year they are well poised to deliver through policymaking, and trends show that business on these demands. They are eventually to finding market- leaders are increasingly already investing in cutting edge- based solutions to reduce familiar with emerging , such as environmental impact. Today, technologies, are weaving and data analytics, to drive change comes a lot faster. sustainability goals more business growth and maintain Fourth Wave technological deeply into business strategy, their competitive edge. But they , including artificial and yet aren’t fully connecting are missing an even greater intelligence, automation, the dots between how the opportunity to leverage these blockchain, data analytics and innovative technologies they same technologies to lessen sensors, allow businesses to use to run their companies their environmental impact. lower , can also be their best decrease and solutions for more meaningful Data from the Environmental carbon emissions, and sustainability. Defense Fund’s second annual reduce waste — all while also Fourth Wave of Environmentalism boosting their bottom line. In short: CEOs are missing Adoption Benchmark Survey show a golden opportunity to turn that while 92% of leaders agree The urgency and opportunity their technology investments that new and emerging Fourth are stronger than ever before into a one-two punch that Wave innovations can boost both for business leaders to raise delivers business results and economic and environmental the bar for sustainability. protects the planet. Read on results, only 59% are actually Our 2019 report illuminates for how executives can lead investing in new technologies how top decision-makers their industries in meeting today with that dual goal in mind. across five sectors—retail, stakeholders’ demands by manufacturing, , delivering results that boost technology and finance — revenue and sustainability. can navigate technological

There’s a 33-point opportunity gap for leaders to accelerate their sustainability initiatives by applying the Fourth Wave innovations they already use.

Business and the Fourth Wave of Environmentalism // 2019 About the Fourth Wave Adoption Benchmark Survey

Our second annual survey KRC Research explores how the Fourth Wave conducted an About is taking hold in businesses anonymous online across the . Using survey from March Environmental opinion research firm KRC 13 to April 12, 2019, Defense Fund Research, we surveyed 600 U.S. with 600 leaders senior business professionals to at the director, vice president/ understand: senior vice president and CEO levels in companies with $500 million to $5 billion in revenue. What it means to be both Quotas ensured a balanced a business leader and sample across five industries environmental steward in (retail, manufacturing, energy, Environmental Defense Fund top companies today. technology and finance) and (EDF) is one of the world’s five functional areas (marketing, largest environmental nonprofit finance, operations/R&D, organizations, with more than 2.5 How companies are leveraging strategy/executive and IT). million members and a staff of new technologies to expand Respondents also had insight 700 scientists, economists, policy their sustainability and drive into their companies’ business, experts and other professionals business results. growth and tech strategies, working around the world. sustainability practices, and EDF finds practical and lasting approaches to corporate social solutions to the world’s most How companies and industries responsibility, talent acquisition, serious environmental problems. have progressed in adopting and diversity and inclusion. Working with leading businesses, Fourth Wave strategies and New this year, our survey innovators, scientists and innovations. included directors, who are often academics, EDF is catalyzing closer to the implementation of scalable solutions for minimizing new technologies across the the environmental, economic and Where business leaders are business than executives are. human risks associated feeling the pressure to balance Their responses provide a more with rising climate pollution. profits and sustainability. robust, up-close understanding of companies’ Fourth Wave commitments and investments. Please note, since directors were How seniority provides a not included in the 2018 survey, different view on businesses’ any year over year comparisons application and use of Fourth are for VPs and C-suite Wave technologies responses only. for sustainability.

Business and the Fourth Wave of Environmentalism // 2019 Table of Contents

The gap between opportunity and investment 1

Emerging technologies are surging 1

TechCrunch’s take: How businesses are riding the Fourth Wave 5

The 33-point opportunity gap 7

Case study: Applying technology to sustainability is a win-win for business and profit 15

Growth ahead 20

Case study: UPS: Using data to boost performance, reduce cost 26

Executives are raising the bar 27

Conclusion 32 AT A GLANCE The gap between opportunity and investment

1 Uptake surging 2 Competition leads Businesses are embracing Fourth Wave technologies of business leaders agree more than ever before. About 8 in 10 companies are using % that investing in emerging at least one of these innovations: data analytics, automation, 94 technologies is essential , sensors and blockchain. And 9 in 10 say to staying competitive. these technologies are relevant for their core business.

3 Tech is good 4 But investment lags 5 This creates an for the planet of leaders are currently opportunity gap of business % investing in Fourth Wave tech There’s a 33-point gap where % leaders agree 59 for sustainability. The retail, businesses can accelerate their 92 that emerging finance and manufacturing industries are sustainability initiatives with the technologies can boost least likely to be using these innovations to innovations they already have at hand. both ROI and sustainability. solve environmental problems.

6 Business and sustainability 7 Yet leaders feel the heat 8 Consumers want goals are more at odds 7 in 10 C-suite leaders and VPs are The share of executives feeling pressure from customers More than 9 in 10 who say their business and and investors to make business leaders say environmental objectives sustainability a strategic consumers will likely hold them are at odds has increased priority, and 8 in 10 feel accountable for their environmental 37 points since 2018. pressure from regulators. impact, up 12 points from 2018.

9 Energy, tech 10 Blockchain, 11 Growth potential ahead sectors finding sensors still CEOs are driving the vision for success nascent their companies’ sustainability, The energy and technology sectors These technologies but directors have insight into are furthest ahead in applying Fourth are the least used hurdles on the ground. Senior Wave innovations to sustainability. Fourth Wave innovations, which leaders and directors can combine Both industries lead the charge makes them important areas where vision, investment in using data, AI, automation and leaders can gain a competitive edge and implementation sensors and see strong potential — especially if blockchain increases to deepen their in how they can improve clean energy use or is powered by sustainability efforts. environmental impact. . 1 Business and the Fourth Wave of Environmentalism // 2019 What are New and emerging technologies play an increasingly influential role in raising the bar for corporate sustainability. Fourth Wave technologies are the Fourth Wave innovations with the potential to drive both business and environmental goals for a company. For this report, we asked business leaders about the following technologies? five technologies:

ARTIFICIAL INTELLIGENCE (AI) Computers learn, AUTOMATION TECHNOLOGIES These allow processes adjust and perform human-like tasks to better enable to be controlled without human involvement, often automation and deliver precise data and results. increasing efficiency and reducing waste.

BLOCKCHAIN Blockchain uses DATA ANALYTICS Broadly speaking, SENSORS These have cryptography to securely record transactions this involves processing proliferated in recent years, in a public ledger. This makes it valuable for to gain insights. In practice, it can allowing companies to detect, storing and manipulating sensitive data such range from simple statistical analysis visualize and measure a wide as financial, medical, identity, voting or chain to sophisticated data mining and variety of variables. of custody information. machine learning.

What do we mean by Fourth Wave?

The Fourth Wave of environmental innovation refers to a powerful new era of environmentalism that uses cutting-edge technologies to supercharge the work of previous waves. The has evolved from land conservation, to policymaking to protect people and nature, to market-based solutions for reducing environmental impact. Now business leaders have technological innovations at hand to accelerate sustainability efforts while also driving revenue growth. This report examines businesses’ with the Fourth Wave and where they can boost their efforts.

Business and the Fourth Wave of Environmentalism // 2019 SECTION 1.

Emerging technologies are surging Competition and opportunity poise businesses for big impact

Companies across every Fourth Wave innovations driving industry today are using progress and efficiency — and cutting-edge technology to they’re feeling the pressure to drive business results and stay keep up. relevant. Retailers use advanced data analytics to predict online More familiarity, purchasing trends and deliver more leverage customers tailored search results. Suppliers harness blockchain Uptake of Fourth Wave to better track products and technologies is surging as transactions for improved efficiency. Time is money,” business leaders become Manufacturers are enhancing responded an IT more familiar with these mechanical processes with artificial vice president in innovations. Among executives intelligence for safer, more precise surveyed this year, over 90% output. In every sector, Fourth Wave the retail sector, say their businesses are either technologies are becoming more whose company in the early adoption phase or vital to modern business as leaders has invested in have successfully integrated data feel the pressure to stay competitive. cloud data and analytics and automation into their work, compared to 86% and 85%, Data from our 2019 survey shows AI technologies. respectively, last year. that leaders in all industries are “When you embracing these innovations more can get things We see robust but slightly slower deeply as companies strive to gain uptake this year with AI (88%), their edge. While top executives done with more sensors (85%) and blockchain in 2018 told us that Fourth Wave speed, you can (79%). Implementation or early technologies helped them more increase both adoption has increased across all closely align their business and technologies since 2018. (AI was not sustainability goals, this year’s your cash flow included in our 2018 survey, so we data shows that leaders are seeing and revenue.” could not track its uptake to date.)

1 Business and the Fourth Wave of Environmentalism // 2019 At an industry level, the energy Figure 1 and tech sectors are most likely Uptake of Fourth Wave technologies is surging to leverage these technologies, Growth in companies using Fourth Wave technologies from 2018 to 2019. perhaps because they are so directly applicable to their 2018 % 2019 % businesses. In fact, more than 6 in 10 tech leaders say they have successfully implemented and 86% integrated data analytics into Data analytics 93% their processes, and half say automation technologies are fully Artificial implemented into their business. intelligence 90% Among energy leaders, more than (AI) half have applied analytics and 85% automation into their work. Across Automation technologies 92% all technologies, retail businesses and financial firms show a slightly

81% slower rate of adoption, but they Sensors are definitely engaged. The Fourth 88% Wave appears to be well baked into

71% all sectors today. Blockchain 83% Competition is the main reason for this surge. This year, 62% of CEOs and vice presidents agree completely that investing Adoption of Fourth Wave technologies by industry. in emerging technologies is essential for staying competitive, Retail Manufacturing Energy Tech Financial a response up 18 points from last year. When we widen our lens, 94% of leaders are in somewhat

100% or complete agreement with that statement. Competition seems to be the driving force however you slice the data across industry, 80% revenue level or perspective.

60% Good for business It’s clear that Fourth Wave technologies are good for % 40 business. At least 9 in 10 leaders surveyed say data, automation, sensors and AI are relevant for 20% their core business, and 88% put blockchain in that category. Data analytics tops the list: 100% of 0% directors say it’s relevant for their Data Artificial Automation Sensors Blockchain analytics intelligence technologies work, and VPs and the C-suite rank (AI) it nearly as high.

2 Business and the Fourth Wave of Environmentalism // 2019 We are investing in data mining with data analytics to try and reduce our during the shipping process of our materials.

Senior director of IT in the energy industry

3 Business and the Fourth Wave of Environmentalism // 2019 Figure 2 Technology adoption - key to staying competitive 2018 %

More than ever before, business leaders believe that investing in emerging technologies is essential 2019 % to staying competitive, with only the financial sector showing a decrease since 2018.

% % % % 94 % 95 95 95 % 93 93 92% % 87 % 84% 85 80% 76%

Total Retail Manufacturing Energy Technology Financial

More than 90% of leaders say impact of these innovations, from each innovation has potential for business and economic development Respondents their company, just slightly higher to improved quality of life, are more than what we heard in 2018. Data widely felt now than in 2018. And they agree that these analytics, AI and automation top anticipate seeing new and emerging technologies the list (99%), followed by sensors innovations even more deeply also can (98%) and blockchain (97%). Leaders entrenched in their organizations five across all five industries ranked these years from now. Data analytics will improve their technologies similarly, indicating that continue to be most relevant across organizations’ every sector is putting stock in the all sectors, with AI, automation and operations value of Fourth Wave innovations for sensors not far behind. Competition, their companies. no doubt, will continue to drive and business leaders — yet there’s more strategies. The forecast for using these they can do to stay ahead of technologies indicates more growth the curve. ahead. Business leaders say the

4 Business and the Fourth Wave of Environmentalism // 2019 Jonathan Shieber TechCrunch’s take Senior Editor, TechCrunch How businesses are riding the Fourth Wave

The Fourth Wave of environmentalism appears to be surging.

nvestments from venture capital and even (in some cases) improve productivity private equity firms into sustainable among employees. The benefits reflect the technologies surged to over $9 billion last broad swath of industries where clean and year. And their appetite to invest in new sustainable technologies can be applied. technologies transforming everything from energy generation to energy efficiency and For example, the largest investment in 2018 automation to the of mobility was a $1.1 billion commitment into View — remains unabated. a company that uses sensors and coatings to create what it calls smart windows. The The $9.2 billion that investment firms company’s product can improve energy committed to new technologies in 2018 efficiency and, it argues, productivity. was a 127% jump from 2017 and returns the category to highs it had not seen View claims it can increase a building’s since the height of the cleantech bubble in energy efficiency by 20% while giving 2010, according to the clean energy and employees the benefit of working in sustainability tracking and analytics firm natural light, which has been shown iBloomberg New Energy Finance. to have health benefits. Thanks to continuing advances in sensor Improving data centers technology, data processing, materials science, genetics, and the falling costs of and operations existing renewable power technologies, While View is focused on conservation sustainable technologies are indeed and health, other sensor technologies poised for a renaissance — and at price are tackling rising sources of energy points that should make large consumption — and emissions — take notice. through adding efficiencies to data center operations. Boon for employees Companies like , Alphabet and Indeed, the adoption of renewable Microsoft have established global networks technologies improves operational that supply hosted internet services to efficiencies within companies and may many of the world’s businesses.

5 Business and the Fourth Wave of Environmentalism //// 20192019 These data centers are quickly These companies are, in many moonshots at the far edges of rising as a source of concern ways, exemplars of how to technological possibility. among , and apply technology to business they are turning to technology operations to drive down These startups touch everything solutions to slow the pace of their costs, improve efficiencies and from nuclear fusion technologies energy consumption. reduce emissions. Conversion (Commonwealth Fusion to renewable energy — or the Systems) to new, low-carbon Data centers currently use nearly use of offsets — is one arrow in manufacturing technologies for 200 terawatt hours each year, the quiver of these companies. making steel (Boston Metal) and which equates to about 1% of But so is a deep knowledge cement (Carbon Cure). global energy demand and 0.3% of their operations through of overall carbon emissions, visibility they can acquire by Shifts toward clean according to a 2018 article in deploying automation and Nature. However, the information sensing technologies to optimize energy and communications technology efficiency. Underpinning all of these industry as a whole, including advances, and providing support mobile phone networks, personal A growing industry of for technology development digital devices and televisions, when profit-seeking investors accounts for 2% of global sustainability tech abandoned the market, have emissions. Emerging technologies from been the big utility and energy companies like Spark Meter, companies themselves. Notably, as of April 2018, which is driving down the cost of Apple was powered entirely meters for microgrid energy; AMP There can be no deep by renewable energy and has Robotics, which is automating decarbonization without them, convinced over 20 of its suppliers factories to improve efficiency; and these companies have to engage in carbon offsets to and even new blockchain-based actually been making progress make more of its own supply software platforms for new in meeting the demands of chain carbon neutral as well. application development, like regulators and investors to make The other tech companies are the Energy Web Foundation, are the shift to clean energy . also forging ahead. Google becoming viable businesses on is the world’s largest buyer the back of investments from Whether through investments in of renewable energy to offset venture capital firms and large infrastructure to support electric emissions, while Apple has also technology companies. vehicles or software and services slashed its emissions by 58% to ease the transmission of since 2011. And while the founders and renewable power across the executives of these companies grid, utilities have provided Even companies like Facebook reap the benefits from key support to the startups and Amazon are getting into the technology deployments in developing these technologies act. Facebook aims to power its their organizations, they are of tomorrow. operations entirely with renewable investing some of their wealth in energy by 2020, and Amazon startups that could improve their As the Fourth Wave surges, it says half of its shipments will be operations even more down is this combination of utilities carbon neutral by 2030. Amazon the road. and industry, responding to already claims to have eliminated the demands of consumers, 244,000 tons of packaging For instance, , Bill investors and regulators that materials and avoided shipments Gates and will implement the technologies of 500 million boxes. are all backers of Breakthrough that will show an upside for both Energy Ventures — a venture business and the environment. fund committed to backing

6 Business and the Fourth Wave of Environmentalism // 2019 SECTION 2. The 33-point opportunity gap Commitments aren’t keeping pace with potential impact

92% of leaders While familiarity and uptake of Fourth Wave technologies are agree 4W strong among the 600 leaders we surveyed, companies are technologies can missing the opportunity to apply the technologies they help improve both Yet only 59% are their bottom line investing for this already use for business to simultaneously address and sustainability. purpose. sustainability goals. 92% Nearly every CEO and VP we surveyed agrees that emerging technologies have at least some potential to improve their organization’s environmental impact, and 92% of all leaders agree that these technologies can help businesses 59% improve their bottom line as well as their sustainability. Yet only 59% of leaders say their business is currently making these investments. That’s a 33-point margin for potential growth.

Among the C-suite and VPs only, that number is just slightly higher than half, and it’s down significantly from 76% in 2018.

Figure 3 Commitment Investment Opportunity gap The opportunity gap: commitment vs. investment in technology for sustainability

Retail Manufacturing Energy Technology Financial 47-point gap 3-point gap 44-point gap 42-point gap 30-point gap

7 Business and the Fourth Wave of Environmentalism // 2019 Four pillars 1. Commit to corporate sustainability. By publicly committing to science-based sustainability goals, leaders of business send a strong signal to customers, employees, shareholders and sustainability suppliers that sustainability is core to business. 2. Collaborate for scale. leadership Leaders can leverage their influence beyond their own operations, driving impact at scale by collaborating across industries and global Business leaders supply chains. can map a more resilient future by 3. Advocate for smart . following EDF’s Corporate actions must extend to supporting environmental safeguards framework: that benefit business, drive innovation and reduce risk. 4. Accelerate environmental innovation. Better alignment between business and sustainability goals is at leaders’ fingertips. Business innovation must also drive environmental progress.

How are executives 2019 embracing the pillars of sustainability leadership? C & VP Direct Total Retail Manuf. Energy Tech Financial

Setting science-based % % % % % % % % sustainability goals 88 75 86 91 80 92 93 75

Collaborating across your % % % % % % % % industry for sustainability 94 79 91 91 88 96 90 90

Scaling sustainability % % % % % % % % across your supply chain 92 79 90 93 88 95 89 85

Publicly weighing in on % % % % % % % % environmental policy 70 66 69 52 75 66 82 71

Using emerging technology to increase your organization’s 94% 81% 92% 95% 87% 95% 92% 91% sustainability

8 Business and the Fourth Wave of Environmentalism // 2019 Strong case for investment These rates are higher across the board than in 2018. Why is this a missed opportunity? For one thing, the Leaders feel the squeeze business case for investing in Fourth Wave tech for sustainability is strong. When a And those pressures will continue. More than 9 in 10 applies planet-friendly, value-added practices to leaders (93%) believe consumers are likely to hold its business, it can boost competitive advantage, businesses accountable for their environmental impact, gain customer and employee loyalty, demonstrate up 12 points from last year’s response from VPs and transparency, and strengthen its bottom line. (See the C-suite. Close behind consumers are investors sidebar, “The push for businesses to adapt and adopt.”) and shareholders (85%), employees (85%) and regulators (84%). And our data suggests that business leaders are feeling the heat to adapt and beyond business as they know it.

Among the CEOs and VPs we surveyed, 7 in 10 say they feel the push from customers and investors to make sustainability a strategic priority for their organization, and 8 in 10 note pressure from regulators.

The push for businesses to adapt and adopt Investor pressures Shareholders are increasingly recognizing that is bad for business and are pressuring companies he days when business to analyze their climate risk or reveal their carbon leaders could dodge social footprints. The Wall Street Journal reported that in 2019, T or political issues are the number of climate-related shareholder proposals in coming to an end. CEO engagement U.S. companies jumped to more than 75, up from just 17 on issues such as health care, proposals in 2013. sexual harassment, gun control and immigration have been steadily on According to Bloomberg, “Adding to the pressure is the rise — in large part in response the Climate Action 100+, a group of 320 investors that to stakeholder pressure to act. manage more than $33 trillion in assets that’s demanding

companies adhere to the targets.” On climate change, it’s no longer enough to post sustainability rhetoric on an intranet. Investors, customers, employees and future employees are demanding that executives publicly and visibly walk the walk. 9 Business and the Fourth Wave of Environmentalism //// 20192019 In 2019, thousands of Amazon employees signed a letter to CEO Jeff Bezos and the company’s board of directors, asking for broad action to fight climate change.

10 Business and the Fourth Wave of Environmentalism // 2019 Customers demand more

Nielsen studies have shown that more than 80% of customers “feel strongly that companies should Future help improve the environment. This passion for corporate is shared across employees gender lines and generations. Millennials, Gen Z and Gen X are the most supportive, but their older have a stake counterparts aren’t far behind.” Nearly 40% of millennials, who will represent one in three Further, in 2018 Unilever’s workers by 2020, have chosen grew 69% faster than the rest of the a job because of its approach business, compared to 46% in 2017. Sales of to corporate sustainability. these more sustainable products delivered 75% This young workforce expects of the company’s growth in 2018. employers to have a strong environmental agenda and According to Unilever CEO Alan Jope, “Two-thirds wants CEOs to take a of consumers around the world say they choose leadership role. brands because of their stand on social issues, and over 90% of millennials say they would switch brands for one which champions a cause.”

Tech’s potential for action

Employees raise With pressure mounting on corporate America to wield its their voices influence to address climate change, more businesses In 2019, thousands of Amazon employees need to get off the sidelines signed a letter to CEO Jeff Bezos and the and take charge. One of company’s board of directors, asking for broad the most immediate actions action to fight climate change. They pointed out companies can take to get that Amazon’s action on climate has not come started is to use technology to close to the level of ambition and innovation the reduce environmental impacts. world expects and requires of its largest internet As companies move from retailer and cloud computing company. early adoption to successful implementation of tech in their As BlackRock CEO Larry Fink wrote in business, they’re missing out his annual letter to executives, “contentious town on an opportunity to apply it to halls” where employees speak up about the sustainability. importance of corporate purpose are becoming a fact of life. “This phenomenon will only grow,” Fink predicted, “as millennials and even younger generations occupy increasingly senior positions in business.” 11 Business and the Fourth Wave of Environmentalism //// 20192019 and in hand with these external motivators, there’s growing awareness internally for businesses to up their game on environmental H accountability. A sizable majority of business leaders (85%) think businesses will adopt new technology to protect the environment on their own, regardless of pressure from other groups. That share has also increased 10 points from 2018.

Figure 4 2018 % Who’s holding businesses accountable for environmental impact? 2019 %

Consumers 81% will hold businesses more accountable for their impact on the environment. 93%

Businesses 78% will adopt new technologies that improve their environmental impact on their own, regardless of 88% pressure from consumers, or investors.

Investors and Shareholders 73% will hold businesses more accountable for their % impact on the environment. 85

Employees 72%

will hold their employers more accountable for their % impact on the environment. 85

Government Regulators 77% (federal, state and/or local) will hold business more % accountable for their impact on the environment. 84

Hard to see return

So why aren’t we seeing companies make deeper investments in the Fourth Wave? One answer may be in proving the Fourth Wave’s worth. About 4 in 10 leaders say their companies are hindered in making environmentally positive choices because of a lack of clear return on these investments. And 1 in 3 cite lack of a quick return on their investment. At nearly half, leaders in energy were more likely to say lack of ROI kept them from investing, while 4 in 10 retail leaders want to see a faster return.

12 Business and the Fourth Wave of Environmentalism // 2019 Figure 5 2018 %

Impediments to progress: clarity on the ROI of sustainability 2019 % What C-suite and VP business leaders think hinder their organization’s ability to make choices that have a positive impact on the environment.

2018 vs. 2019

42%

38% 37% 37% % 35 34% 33% 32% 32% 32% 30% 29% 28%

15%

8% 7%

Lack of clear Lack of Environmental Lack of quick Lack of Stakeholders Uncertainty None of return on awareness return on infrastructure are not about climate the above investment or education is not part investment concerned with policies around specific of internal environmental technologies dialogues footprint

2019 by industry

50%

40%

30%

20%

10%

0% Retail Manufacturing Energy Technology Financial

Lack of clear return on Lack of awareness or Environmental stewardship is Lack of quick return investment education around specific not part of internal dialogues on investment technologies

Lack of infrastructure Stakeholders are Uncertainty about None of the above not concerned with climate policies environmental footprint

13 Business and the Fourth Wave of Environmentalism // 2019 Other factors are at play too, from how well companies are primed for such investments to what the current political climate means for business. Internally, companies could use more education and conversation about the Fourth Wave’s potential. One in 3 leaders says their organization lacks awareness around specific technologies, and the same amount say their company lacks internal dialogue about environmental stewardship.

Externally, concerns about the regulatory environment are growing. More than 25% of leaders say their sustainability- focused commitments are slowed by uncertainty about climate policies, up from 15% last year.

14 Business and the Fourth Wave of Environmentalism // 2019 Case study

Applying technology to sustainability is a win-win for business and profit

echnology enables measurement Sensors aren’t new, but they have proliferated in recent years, with the global environmental sensors market predicted to be worth more than $3 billion annually by 2027. These sensors are making it easier and more affordable for companies to detect, visualize and manage a wide array of environmental impacts.

For example: Methane, the primary component of natural gas, is a potent gas responsible for 25% of the warming we’re experiencing today. The largest source of industrial emissions is the oil and gas industry, which loses $30 billion worth of methane each year from operations. That’s why companies like ExxonMobil and Schlumberger are working with Stanford and Environmental tDefense Fund to uncover best in class mobile methane monitoring technologies that can help the oil and gas industry find and manage emissions in a faster, more efficient way.

15 Business and the Fourth Wave of Environmentalism // 2019 My company uses machine learning to study and maintain quality; machine learning is making it possible to follow marine litter in real-time, enabling responses that are quick, targeted, and more effective.

Vice president of operations in the energy industry

Technology improves efficiency Technology minimizes risk Google is using AI and machine learning to consume The climate risk analysis industry is also on the rise. less energy, cut energy bills, and reduce emissions. Jupiter Intelligence, for example, recently raised $23 Its DeepMind team has been able to use AI to reduce million to expand its business into new areas like the amount of energy for cooling in their data centers wildfire risk assessment for companies and . by up to 40 percent. The company is also using machine-learning algorithms to harness the power Forward-thinking companies like AT&T are also using of wind energy by predicting wind output 36 hours supercomputers to analyze climate change risk and in advance and delivering optimal hourly delivery inform business decisions. AT&T has collaborated with commitments to the power grid. Google reports the U.S. Department of Energy’s Argonne National that “machine learning has boosted the value of our Laboratory to create climate model datasets that help wind energy by roughly 20 percent, compared to the zero in on extreme weather risks. baseline scenario of no time-based commitments to the grid.” The company then uses the data to determine how climate change will affect its business and ensure the Research from PwC estimates that using AI for safety of its employees, customers, and communities. environmental applications in , water, energy, In addition, AT&T is sharing the climate data with the and transportation could contribute up to $5.2 trillion public — from communities to universities — to help all to the global economy, 38.2 million net new jobs, and become more climate resilient. reduce emissions by 4% in 2030 — an equivalent to the 2030 annual emissions of Australia, Canada and Japan combined.

16 Business and the Fourth Wave of Environmentalism // 2019 A shifting balance Figure 6 80% Tensions within organizations Room for growth: may also be holding back aligning business and investments in tech for environmental goals environmental ends. About Compared to five years ago, are half of CEOs and VPs say that you finding that your business % % 48 their companies’ business objectives and environmental 46 objectives and environmental goals are: goals are more closely aligned today than five years ago, while the other half say these goals More closely aligned are more at odds with each More often at odds 12% other. Interestingly, directors 8% No change 5% are more likely than the C-suite and VPs to see internal alignment, with 80% of directors C-suite & VP Directors noting their organizations’ goals are more in sync now. Across industries and leadership levels, Reasons business objectives and environmental goals are: more than 90% of leaders say the balance is shifting one More closely aligned way or another, indicating this 80% change is far from static.

% Within industries, leaders 60 in manufacturing see the closest alignment of business 40% and environmental goals, mostly spurred by emerging 20% technologies, customer demands and the drive to stay 0% competitive. Energy leaders say Retail Manufacturing Energy Technology Financial their organizations’ goals are more often at odds, fueled by More often at odds a mix of competition, demands from customers and employees, 80% and advances in technology. That perspective has flip- 60% flopped since 2018, when 72% cited closer alignment of 40% business and environmental goals. Growing pressure from 20% a more stringent regulatory environment seems to be 0% contributing to that shift. Retail Manufacturing Energy Technology Financial

Increased competition Technological advancements Customer demands

Employee demands More stringent regulation/policy Lack of regulation

17 Business and the Fourth Wave of Environmentalism // 2019 ut leaders across all sectors agree that Figure 7 B there is room for Taking root: Fourth Wave technologies for sustainability growth. More than 9 in 10 say and the bottom line their organizations have made To what extent has implementing emerging technologies that improve both at least some commitments business and environmental outcomes taken root in your industry? to Fourth Wave technologies for sustainability, and nearly all see the potential in data analytics, automation, AI, 2018 vs. 2019 sensors and blockchain for 46% improving sustainability within 44% their businesses. And more than 42% 8 in 10 say these technologies are at least beginning to take

root in their industries for 29% enhancing both business and environmental outcomes. 23%

Nonetheless, a large gap remains between how leaders talk about their sustainability 7%

% commitments and where 3 % % 2 2 1% they actually are investing the to get there. They C-suite & VP 2018 C-suite & VP 2019 have the technology they need to make it happen. Now it’s up to leaders to take bold action to close the opportunity gap and make these commitments count. To the fullest To some To a limited To a very Not at all extent extent extent limited extent

By industry

59%

% 50% 51 50% % 47 46%

38% 35%

28%

22%

15% 15% 11 % 9%

% % 5 5 4% 5% % 1% 2 1% 1%

Retail Manufacturing Energy Technology Financial

18 Business and the Fourth Wave of Environmentalism // 2019 We are leveraging investments in sensor and data analytics with a heavy emphasis on reducing pollution from -powered generation facilities.

Senior director of IT in the energy industry

19 Business and the Fourth Wave of Environmentalism // 2019 SECTION 3. Growth ahead Where leaders can take action now

As the Fourth Wave takes hold, corporate leaders recognize that business as usual will no longer keep them at the head of the pack. To stay competitive and relevant in today’s sustainability-driven climate, companies must embrace the innovations that can take their environmental commitments to the next level — while also continuing to find ways to boost their bottom line. The good news is they can use their current investments in emerging technologies to position themselves as leaders as the Fourth Wave of environmentalism takes hold.

Growing pressures from consumers, investors and employees means companies have to innovate now or risk playing catch-up in the future. The technology and energy industries are leading the charge in integrating sustainability with revenue, according to this year’s survey results. Other industries should look to these sectors as models for how to make new technologies serve the dual goals of profitability and sustainability.

Figure 8 How the Fourth Wave will shape companies’ futures

Improving Improving the Informing Making Job growth Creating long- your economy environmental environmental lasting organization’s policy protection a environmental bottom line mainstream value benefits

92% 91% % 86 % % 85 % 82% 83 82% 83 82% 80% 80% 80% % % 79 % 78 76 % % 76% % 75 75 73 % % % % 71 % 71 70 69% 70 70 65% 62% 62% 60% 58%

Retail Manufacturing Energy Technology Financial

20 Business and the Fourth Wave of Environmentalism // 2019 Figure 9 Following the money: AI, automation and robotics lead investment Of the executives who responded that they were investing in technologies that delivered a win-win for the environment and the bottom line, these were the current types of tech most often noted.

AI / artificial Going digital / Big data / Cloud system / Digital technology / Blockchain intelligence / paperless data analytics / using cloud IoT devices technologies automation / tracking data storage robotics

29% % 25% 26 19% 19% 17 % % % 12 % 11 % % 10 % % 10 % 10 % % % 37 % % 8 8 % 8 8 7 % 7 6 % % 6 % % 5 % 3 % 4 4 3 4 1% 2 1% 1%

Retail Manufacturing Energy Technology Financial

Industry opportunities Tech firms embrace AI Energy rides biggest Fourth Wave Technology companies, too, are making strides in pro-sustainability innovations, especially leveraging In the energy industry, leaders show the greatest artificial intelligence. Half of tech leaders say they have confidence in Fourth Wave technologies for boosting successfully implemented and integrated AI into their business. Ninety-two percent say that Fourth Wave business processes, higher than in other industries. technologies will improve their revenue, 91% say the Looked at another way, more than one-third of same for improving the economy, and 85% say the technology leaders who are investing in innovation same for job growth — all more than other industries. to solve environmental problems and improve the bottom line say they are doing so via AI, automation Some of this confidence may come from the fact that or robotics. the industry is already further along than others in its use of Fourth Wave innovations. Energy leaders These investments send important signals in the tech are more likely to say policies like cap and trade and industry, where respondents most often completely technologies like sensors and blockchain are having a agree that companies who are making these significant effect on the way their business impacts the investments are leaders in the field. CEOs and VPs environment, in line with the exciting potential we see in other industries could take a page from tech’s for these innovations in the future. playbook to establish their own companies as best in class for sustainability.

21 Business and the Fourth Wave of Environmentalism // 2019 We are currently investing in both artificial intelligence and automation technologies. We want to create a more productive way of manufacturing our products using these technologies to lessen our imprint on the environment.

C-suite IT executive in the retail industry

Retail has room to grow Figure 10 2018 % Retail leaders see the greatest potential Recognizing the potential for Fourth Wave 2019 % for data analytics to improve both tech to improve business and sustainability their operations and environmental Extent to which leaders agree that emerging tech can help business impact, followed by AI and automation improve their bottom line and their environmental impact. technologies. But they are slower than other industries to leverage these technologies % % 97 95 % % in their business. Retail executives looking 93% 94 94 to gain a foothold in sustainability can % 86% 87 move more swiftly to weave Fourth Wave innovations into their operations.

They may need more convincing, however. Compared to other industries, retail is least likely to agree that emerging technologies will lead to solutions that improve both their bottom line and sustainability.

The retail industry sees less likelihood than others that regulations will hold them accountable for their environmental impact, perhaps explaining why retail leaders are least likely to weigh in on environmental policy (52% compared to 66–82% in other industries). Total Retail Manufacturing Energy Technology Financial

22 Business and the Fourth Wave of Environmentalism // 2019 Manufacturing gaining momentum into their business (72% compared to 58–65% in other industries). In many ways, manufacturing is embracing the Fourth Wave. It is the most likely of all industries to Yet manufacturers are least confident that the Fourth see emerging technology having a positive impact Wave will boost job growth, the economy or their on protecting the environment, especially around organizations’ bottom lines. Perhaps in part because of analytics. Eight in 10 manufacturing leaders see the these attitudes, just 19% of manufacturers — the least most potential for analytics to improve operations of all industries surveyed — say the implementation of and strategies, and more companies in manufacturing emerging technologies to improve both business and than in any other industry have integrated analytics sustainability has taken root to the fullest extent.

Figure 11 How emerging technologies for business and sustainability are taking root

To the fullest extent 2018 2019 7% To some extent

% % % To a limited extent 23 29 44

To a very limited extent

Not at all

42% 46%

Taking root to the fullest or some extent by industry 2018 % 2019 % 99%

% % 90 80 % 84% 86

% % 74 % % 72 70 70 68%

Retail Manufacturing Energy Technology Financial

23 Business and the Fourth Wave of Environmentalism // 2019 Finance lags under fewer pressures

Finance leaders are feeling less pressure from their key stakeholders to adapt, and they have been less likely to sustainability goals. Finance is the least likely of any industry to say it has successfully implemented key Fourth Wave technologies. More than any other industry, though, financial firms cite reputation as an extremely compelling reason to embrace technology that benefits the environment.

Finance firms that are making the effort are focusing a large share of their attention on going digital or paperless (26% compared to 10% or less in other industries). Nearly half of financial leaders see strong potential for data analytics to impact their bottom line in the future, more than leaders in any other industry.

Technologies for impact Figure 12 The impact of technology on Data, AI and automation sustainability will vary by industry top the list

Biggest impact on bottom line There’s no consensus on which technology will have the greatest impact Biggest impact on environmental footprint on businesses’ environmental footprints, but data analytics, artificial intelligence, automation and sensors rank highest 35% among business leaders. Data analytics is most recognized for its potential impact on

28% the bottom line (35%), with AI (28%) and 25% automation (19%) following. 23% 23% 20% Leaders say they’re applying these 19% technologies to a wide variety of 16% environmental ends, such as monitoring 13% 12% pollution from coal-powered facilities, more cost-effectively using 3D printing in product development, and revealing areas where they can roll back their environmental footprint while also saving money. But these technologies have still more potential Automation Sensors Data analytics Blockchain AI technologies that is yet to be tapped.

24 Business and the Fourth Wave of Environmentalism // 2019 We are investing in blockchain technology which we believe will enable cross-border collaboration and investment in emissions reductions.

C-suite R&D executive in the manufacturing industry

Blockchain still Sensors are nascent seeing growth Bottom line:

Blockchain is the least-familiar Sensors are the second-least businesses can Fourth Wave technology to utilized technology behind step up their survey respondents, who seem blockchain, according to this commitments skeptical of its application. Less year’s survey, and so they than half of leaders believe it is are another key innovation Not enough leaders are very relevant to their industry, executives can use to lead embracing the Fourth the lowest of all tech in our the pack. The finance industry survey. And only about 4 in 10 appears especially skeptical of Wave’s potential to believe it has great potential for how sensors can benefit their deliver on both ROI and either operations and business environmental impact, while sustainability in their strategies or their companies’ energy and manufacturing companies. With plenty environmental impact. Overall, leaders more readily point to just 38% of leaders say they their potential for sustainability of room for growth have successfully implemented efforts. As such, only about 1 in as these innovations and integrated blockchain into 4 financial firms surveyed has evolve, executives can their business. As companies do integrated sensors into their embrace it, they must be sure organization, while more than drive the charge to that they choose blockchain half of energy firms have done ensure they stay ahead that is energy-lean or enables so, with manufacturing, tech and of the competition. renewable energy. retail right behind them.

25 Business and the Fourth Wave of Environmentalism // 2019 Case study UPS: Using data to boost performance, reduce cost

id you know UPS drivers make an 100 million miles and avoided 10 million average of 120 delivery stops per day? gallons of fuel consumption per year. This This makes the number of potential route has resulted in reducing combinations far greater than the number emissions by 100,000 metric tons per of nanoseconds the Earth has existed. year, while also realizing an additional Every extra minute and mile driven adds $10 million reduction in operating expenses cost and environmental impact for the over the expected $400 million in savings. company, as well as the supply chains of its customers. That’s why improving route optimization is a top priority for UPS, which worked for more than a decade to develop its On-Road Integrated Advancements that drive Optimization and Navigation (ORION) program. business performance and enhance customer ORION uses package-level detail, experience have transformed customized map data, advanced UPS from a logistics and algorithms and delivery commitment times to determine the most efficient transportation company to a droute each day. Today, ORION technology company capable computes tens of thousands of route of supporting the most optimizations per minute. In 2019, UPS plans to add real-time optimization for complex supply chains while changing conditions, such as traffic reducing time, costs, and congestion or service updates. UPS emissions,” says Juan Perez, is also using technologies like those made by telematics company Geotab UPS chief information and to help track the location of its delivery engineering officer. trucks and identify ways for drivers to make adjustments and improve their “We’re now working on a next generation performance based on aggregated data. of ORION, which will help us further improve efficiency and reduce miles Since its first full year of use in 2017, driven by optimizing routes dynamically the ORION software has saved UPS as drivers complete their work.”

26 Business and the Fourth Wave of Environmentalism // 2019 SECTION 4. Executives are raising the bar Directors can show where the vision stalls

As their companies’ chief visionaries, C-suite Figure 13 leaders have the most optimistic view on how the Fourth Wave can fuel environmental Business, sustainability and tech: how leadership commitments and drive business at the perception has changed same time. They are carving the path to make sustainability a standard practice in their companies and across sectors. But C-suite & VP change from 2018 to 2019 their directors are best positioned to point out roadblocks in their way. As executives 95% 92% 93% 93% take their companies’ sustainability to the % % 88 86 % next level, they should be prepared to 83% 84 navigate the obstacles ahead.

C-suite sees progress ahead

Of the three levels of leadership we surveyed (with directors added as a new segment this year), C-suite executives offer the most positive assessments of their organizations’ commitments to the Fourth Wave. More than VPs or directors, CEOs completely agree that: Recent and emerging technologies The ability to measure a business’ • Recent and emerging technologies can can help businesses improve their impact on the environment will bottom line as well as their impact on mean that businesses change help business improve their bottom line the environment. their processes and strategies to and their environmental impact (57%, lessen their negative impact on the compared to 32% of VPs and 37% of environment. directors). Businesses that use technologies Having environmentally sustainable to improve their impact on the business practices helps me attract • Their businesses are constantly environment are leading companies and retain top talent. trying to find new ways to lessen their within their industry. environmental impact (52%, compared to 39% of VPs and 25% of directors). • Their organizations seriously consider the impact that a new technology will have on the environmental when deciding whether to implement it (43%, compared to 34% of VPs and 24% of directors).

27 Business and the Fourth Wave of Environmentalism // 2019 We’re using AI technology to recycle heat within facilities and maximize the efficiency of heating and cooling. We recycle water to cool computer servers, and we also use water condensed on the windows to absorb heat from the sun and recirculate it.

C-suite financial executive in the retail industry

28 Business and the Fourth Wave of Environmentalism // 2019 And this widespread optimism carries Figure 14 over to their commitments for sustainability. C-suite leaders are more likely than VPs How perceptions differ by executive level or directors to say their organizations are 2019 C-suite and VPs (left) versus Directors (right) significantly committed to using emerging technology to increase sustainability, collaborating across industries for sustainability, scaling sustainability across 95% 92% 93% 93% 92% the supply chain, and publicly weighing % 86% % 86 83 % in on environmental policies. Looking % 80 78 % ahead, they are more confident than 76 other leaders that the Fourth Wave will 61% 61% create long-lasting environmental benefits 58% and make a 51% mainstream value.

Directors cautiously optimistic 17%

While the C-suite puts great faith in the Fourth Wave and how it can be good for both business and sustainability, directors Recent and emerging technologies The ability to measure a business’ have a more tempered perspective. can help businesses improve their impact on the environment will Broadly, just half of directors agree that bottom line as well as their impact on mean that businesses change the environment. their processes and strategies to new technologies driving corporate lessen their negative impact on the sustainability will disrupt their industries environment. (51%, compared to 73% of the C-suite Businesses that use technologies Having environmentally sustainable and 82% of VPs). to improve their impact on the business practices helps me attract environment are leading companies and retain top talent. Directors are also less confident in the within their industry. Fourth Wave’s potential for improving the New technologies driving corporate I think new technologies will be used economy (57%, compared to 82% of the sustainability will disrupt industries. to drive higher profits not for the C-suite and 86% of VPs) or improving their “greater good.” organization’s bottom line (51%, compared More data in the hands of businesses I think technological advances actually to 81% of the C-suite and 85% of VPs). will lead to better environmental have more potential to hurt the outcomes/stewardship. environment than help it. These disparities may point to directors’ on-the-ground view of their companies’ sustainability initiatives — insight that the C-suite would be wise to embrace.

29 Business and the Fourth Wave of Environmentalism // 2019 Figure 15 Varying confidence: how leaders view the Fourth Wave’s impact

C-suite VP Director

Improving Improving the Informing Making Contributing to Creating long- your economy environmental environmental job growth lasting organization’s policy protection a environmental bottom line mainstream value benefits

Collaboration is key The C-suite has

Though directors’ views are an opportunity to still optimistic overall, their tighten the way their somewhat lower expectations company leverages for the Fourth Wave may indicate a disconnect new innovations for that senior leaders must sustainability, hand understand and solve. While in hand with the top executives are setting the people who will lead vision and making investments for improving sustainability, the roll out. When their sustainability directors, vision, investment supply-chain leaders, logistics and implementation officers and others are leading implementation. At that level, combine seamlessly, they are likely in the best the impact will be a position to see the obstacles in boon for business the way. goals and the planet.

30 Business and the Fourth Wave of Environmentalism // 2019 We use quite a few robotic machines in our production unit which gives us extreme precision, saves time, increases efficiency and saves the environment by limiting waste.

Senior director of operations in the manufacturing industry

31 Business and the Fourth Wave of Environmentalism // 2019 SECTION 5. Conclusion As the climate crisis collides with our fast- paced, technology-driven world, business leaders have more responsibility than ever before to shape the future of our planet.

With growing pressures from consumers, investors and employees, corporate leaders understand that they must shoulder the responsibility to prosper with purpose.

But business leaders also have more opportunity to do just that: as they put artificial intelligence, data, robotics and other emerging innovations into practice to beat their competitors, they can also put those technologies to work to accelerate the transition to a clean- energy economy.

This year’s Fourth Wave of Environmentalism Adoption Benchmark Survey shows that leaders are well-positioned to close the 33-point opportunity gap we’ve identified, by pointing the technologies that are already becoming core to their business toward their sustainability efforts too. They have a greater understanding than ever before of how Fourth Wave innovations can deliver on their goals, and they have the will and urgency to get it done.

Whether companies are in early adoption or have successfully woven cutting-edge technology into their corporate fabric, their long-term leadership and competitive edge depend on innovation that drives a win-win for business and the planet.

32 Business and the Fourth Wave of Environmentalism // 2019 Sustainability resources for business leaders: Business.edf.org Supplychain.edf.org edf.org/Leadership ENVIRONMENTAL DEFENSE FUND 257 Park Avenue South © 2019 Environmental Defense Fund New York, New York 10010 www.edf.org