Behemoth problems like climate change can seem intractable, particularly if the responsibility is on individuals. With the Paris Climate Agreement only being upheld by a handful of countries, and the U.S. government rolling back regulations meant to curb emissions, one might wonder how we will ever make the necessary progress to avoid the worst of climate change.
Enter the role of cities and companies.
Following the Trump administration effectively withdrawing the United States from the Paris Climate Agreement, leaders in business and local government formed the group We Are Still In. It brings together over 3,500 organizations in the U.S. who reject the inaction from the federal government and are committed to upholding the terms of the Agreement. It sent a powerful message to the administration, and to the rest of the world.
The largest concentrations of resources lie with cities and companies. Their considerable influence and resources mean that they carry immense potential to change the status quo. If they can allocate appropriate resources towards tackling critical global challenges like climate change, the impact they can have is enormous. So just how big is this impact, and how might it change?
First, the most powerful cities in the world. The top three urban economies currently look a lot like you might expect—Tokyo, New York, and Los Angeles, respectively. The GDP of Los Angeles, alone, is almost twice as large as the entire country of Sweden. However, the most powerful city economies are expected to change dramatically in the next 30 years. The fastest growing economies are in India and China. By 2025, the vast majority of the world’s largest cities will be in the Global South, and the balance of rich cities in the West to rich cities in the East will have tilted; of the 100 largest urban economies in 2025, 48 will be in emerging economies. This is due to population growth, urbanization, and economic development.
Cities not only have enormous resources—they also have fantastic potential for electrification. While electrification doesn’t make sense everywhere yet—due to the grid being carbon-based or a lack of access (or both)—in over 100 cities worldwide the potential to dramatically reduce greenhouse gas emissions is waiting to be tapped into. The potential is especially high in South and Central America: The Atacama desert has the potential to power all of South America through solar energy, but only if the region chooses to invest in a more progressive path forward. Increasing renewable energy would also save the region more than $30 billion in the next decade or so compared to the current trajectory.
This potential will only increase in the future; by 2050, the vast majority of countries will have more of their population living in cities than in the countryside. This means that new infrastructure will need to be built, which opens up the possibilities to “start from scratch” in a sustainable way.
Of course, cities would not grow so quickly nor be so powerful without the help of companies. In fact, if we put the largest GDPs on the same scale as the largest revenue streams, 69 of the 100 top economic entities in the world are corporations. The top ten corporations have a combined revenue that is larger than China’s. Even smaller companies have enormous influence compared to many national governments; Spotify’s revenues in 2017 were greater than Mauritania’s GDP. If Starbucks were a country, it would have the 104th highest GDP in the world—higher than Trinidad and Tobago.
So, what can we do with this power?
Leaders of businesses and cities are already beginning to realize their collective potential and are starting to combine forces across knowledge-sharing platforms. The C40 Cities Climate Leadership Group provides a forum for mayors of global cities to limit and adapt to climate change. 100 Resilient Cities similarly offers useful resources for cities to learn from one another on a number of issues, including the effects of climate change.
On the business front, RE100 is a network of corporations making the commitment to transition to 100% renewable energy by 2050 (at the latest). One of these partners, the IKEA Group, has committed to generating as much renewable energy as it consumes by 2020. Apple has already achieved 100% renewable energy across its facilities and is now focusing on helping its manufacturing partners lower emissions.
There are also many examples of effective public-private partnerships (PPPs). Forward Chicago brought corporate and non-profit communities together to support the Chicago Climate Action Plan. Many cities are partnering with utilities companies to meet energy goals. In Los Angeles, PPPs may lead to delivering transportation projects years ahead of schedule. Partnering with corporations can also be an effective way to ensure continuity of projects when a mayor is replaced by a successor. As of 2017, there was $100 billion in capital raised for infrastructure improvements in the U.S. that had yet to be invested. While by no means a silver bullet, PPPs make economic sense when it comes to investing in carbon-neutral solutions.
Of course, companies and cities have often miscalculated social and environmental impacts of activities, resulting at times in mass protests, human rights violations, and excess greenhouse gas emissions. In one example: Australia experiencing the hottest summer on record and a crisis of coral reef bleaching, the mayor of Rockhampton in Queensland recently expressed support for a controversial new coal mine to open in the region. But on the whole, cities and companies are leading the charge.
In an ideal world, renewable energy, powerful companies, and emerging urban economies would coincide, as in the case of Indian startup ReNew Power. The independent energy producer has received $1 billion in funding this year alone, and for good reason: Indian cities have incredible potential to shift the balance of power from oil and gas to renewables. While the company currently only produces about 1% of the country’s energy, this is expected to grow considerably, as India now produces the world’s cheapest solar power. The economics of sustainability look good for those parties willing to challenge the status quo.
If we can bring the world’s most powerful companies together with the world’s most powerful cities, just imagine what we can achieve.
If you enjoyed reading this article and want to take action, we want to hear from you! We are currently developing a framework for cities and companies to more adequately account for social and environmental risk. To get in touch email firstname.lastname@example.org and our team will be happy to share more.