We are at a climate turning point. Three pillars of change are pushing on industries and companies simultaneously: consumer sentiment is evolving toward climate action, the upheaval of the pandemic on the supply chain has turned focus on increasing ecosystem diversity and resiliency, and governments are boosting financial assistance to implement changes.

The number of governments and businesses pledging to reach net zero, or carbon neutrality, has been growing steadily in recent years. According to the UN, more than 70 countries, 1,200 companies, 1,000 cities, 1,000 educational institutions and 400 financial institutions have set net zero goals, and that number continues to rise. But is this just the latest round of greenwashing or are net zero goals achievable?

We sat down with Nick Heier, a Business Development and Innovation Management Consultant specializing in technology adoption, innovation and biomimicry, to discuss the tangible steps companies can take to set themselves up for net zero success.

NET ZERO CAN MEAN BIG MONEY

While net zero goals might seem counterintuitive to profit, they are not. We’ve written before about the mountains of money that can be made in the process of solving the world’s biggest challenges before.

As Buckminster Fuller once said, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Models that make money off denying reality or solely focusing on short-term gains are key targets for innovators to challenge. Change at the scale of new systems and structures can be daunting but reaching net zero is really about addressing waste and inefficiencies through new models and ecosystems. The companies and industries that can develop new models that help drive success for people and the planet will reap the benefits of being first to a new, sustainable market.

CIRCULAR ECONOMIES AND THE RESILIENCY QUOTIENT

The pandemic put the sensitivities of the global supply chain in stark relief. Delays and personnel shortages have caused cascading issues throughout the supply chain, resulting in shortages in everything from semiconductor chips to cars to beer cans.

Companies can put their supply chain into a mathematical model to give them a simplified output: the resiliency quotient. This number helps quantify the diversity of an ecosystem, along with its vulnerabilities. In addition to supply chains, it has been used to measure the resiliency of water systems and energy grids.

The resiliency quotient can help many companies gauge the risk their current models have. Shortages and low resiliency have many looking for ways to reduce waste within supply chains by implementing circular economies for their products. In a circular economy, materials and products are designed to recapture waste as a resource that they can reuse in manufacturing or sell to other industries for use, leading to new revenue streams.

A BOOST IN GOVERNMENT SPENDING

Many industries will be able to tap into the $1.9 trillion carved out in two recent bills: The Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Here are a few of the highlights of the two bills:

Infrastructure/Buildings

• $110 billion for roads, bridges and major infrastructure projects and to reauthorize the surface transportation program for 5 years
• $65 billion for nationwide high-speed internet access
• $40 billion for bridge repair, replacement and rehabilitation
• $27 billion for building efficiency, electrification, transmission, industrial, DOE grants and loans
• $25 billion for airport repair and modernization
• $17 billion for port infrastructure
• $16 billion for major infrastructure projects
• $1 billion to reconnect segregated communities via infrastructure

Energy/Resources

• $161 billion in clean electricity tax credits
• $65 billion for clean energy transmission
• $55 billion for clean drinking water
• $50 billion for extreme weather protection
• $37 billion individual clean energy incentives
• $21 billion for environmental remediation and pollution reduction
• $14 billion in additional energy and climate spending

Transportation

• $89.9 billion for public transit funding
• $66 billion for rail maintenance and expansion
• $39 billion to modernize transit
• $36 billion in clean fuel and vehicle tax credits
• $11 billion for transportation safety programs
• $7.5 billion to build national EV charging network
• $5 billion for zero emission and clean busses
• $2.5 billion for ferries

Manufacturing

• $37 billion in clean manufacturing tax credits

Healthcare

• $122 billion to repeal drug rebate rule
• $101 billion for prescription drug price caps for seniors (beginning 2025)
• $99 billion to allow for Medicare to negotiate some prescription drug prices (beginning 2025)
• $64 billion for the continuation of Affordable Care Act premium subsidies through 2025
• $34 billion for vaccine coverage, LIS subsidies

Other

• $313 billion for 15% minimum corporate tax
• $124 billion IRS tax enforcement funding

U.S. GOVERNMENT INVESTMENT IN INFRASTRUCTURE

source: Harbor Research

ACHIEVING NET ZERO THROUGH INNOVATION AND ECOSYSTEM PARTNERS

Will the three pillars of change – consumer sentiment, a need ecosystem diversity and resiliency, and government support – finally push industries to adapt? Where should a company looking to transform themselves to net zero begin?

Begin by understanding that the goal may seem audacious but incremental changes across industries will add up to large advances.

• Understand what you do well and what technologies you own. This helps you define your role in the innovation ecosystem and focus on what you do best.
• Understand what the innovation ecosystem looks like where you are in order to be locally attuned and responsive. If you’re a large player, you might be critical to setting the pace of innovation and scaling more localized companies.
• Focus 70% of your energy on internal “horizon one” changes that help make your company bigger, better, faster, stronger, smaller or more efficient. These changes can add up to big differences in achieving net zero goals.
• Focus 20% of innovation on “horizon two” goals that incorporate an external innovation, technology or application from an adjacent market to realize value in a new way with your existing market.
• Focus the last 10% on “horizon three” innovations that puts money toward more radical innovations that might take 7-10 years to develop.
• Tap into government funds to help achieve your goals.

Listen to our full conversation with Nick Heier on strategies to innovate and transform to net zero here:

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