You could argue it is a bit rich that Bill Gates, co-founder of technology titan Microsoft and one of the world’s wealthiest people, is calling for businesses to drive climate change. However, there is no debating that consumer and investor demand is forcing organisations to clean up their processes for the future of an endangered planet.
In How to Avoid a Climate Disaster, his latest book styled a “green manifesto”, published in February, the 65-year-old billionaire introduces the concept of “green premiums” or the differences in cost between a fossil-fuel-based way of doing something and the clean, non-emitting way of doing the same thing. But how achievable is Gates’ vision?
A fresh approach to doing business is essential to avoid a climate disaster, posits Gates. This new way requires courage from business leaders to take on risks they are not used to taking and also that investors are not used to rewarding. It’s a simple problem, he suggests: we must stop greenhouse gases by the middle of the century or else.
Green premiums essentially show how much it will cost to “zero out emissions” in all sectors of the economy where fossil fuels are involved, including producing electricity, manufacturing, agriculture, transportation, and heating and cooling.
There are four areas where organisations can make “a practical difference”, according to Gates. The first involves “mobilising capital” to reduce green premiums. Second, businesses should buy greener products. Next, they should expand research and development. Finally, drive down green premiums by shaping public policies.
“Working in these four areas will not always be comfortable,” Gates concedes, though he adds: “These are short-term costs required of every business leader who wants to do more than pay lip service to climate change. In the long run, these risky steps will be good for business.”
The global reaction to his green manifesto, and green premiums in particular, has been ambivalent. Molly Scott Cato, a Green Party politician, who from 2014 until last year served as a member of the European parliament for South-West England, is in two minds about them.
“As an economist, I like and agree with the green premiums principle of using market incentives to tackle the climate emergency and the consideration of how to achieve wellbeing with minimum energy use is important,” she says.
On the flip side, the professor of economics and finance at the University of Roehampton, says: “Green premiums are too technologically focused and adopt the adage that if you can’t measure it, you can’t manage it.” Scott Cato contends the planet’s systems are highly complex and ungovernable: “Many of the solutions require social rather than technological innovation.”
Stressing the need for greater international collaboration and higher appreciation of the complexities, she says: “Gates’ proposal is also too exclusively focused on the climate and consequently risks displacement, for example where are the biofuels grown and have they destroyed peatlands for food growth?”
Oliver Bolton, chief executive of Earthly, a tech platform that helps businesses become “climate positive” through science-backed natural solutions, identifies another hurdle. “The use of green premiums is ultimately going to be driven by governments changing policy,” he says, “so it could be hard at the outset for businesses to use the model.”
Dr Jane Davidson, pro vice chancellor for sustainability and external engagement at the University of Wales, is more scathing of green premiums. “I’m disappointed at the proposition that ‘green’ is more expensive,” says the former minister for environment and sustainability in Wales. “This is classic short-term thinking, when each year the costs of us not…