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Why Investing in Climate Action During a Recession Is a Smart Business Move

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The link between climate and the private sector was top of the agenda. In my session with investor and philanthropist Tom Steyer and Apple’s head of environment, policy, and social initiatives Lisa P. Jackson, we dug into what strikes me as one of the biggest challenges at the intersection of climate action and business right now: how to keep companies investing in climate solutions in the face of economic uncertainty and a looming recession.

The answer? To make the case for climate action in financial and economic terms. “The way that we’re going to win this climate crisis is in the marketplace,” said Steyer. “We are going to win because we’re going to have better, faster, cheaper, cleaner products.”

The first place to start as companies look for any way to save a dime is the opportunity to embrace climate and sustainability. For many outside the climate space, including many well-intentioned leaders, solutions are perceived to be costly investments with little financial upside. While it’s certainly true that some options remain pricey—think of, say, installing direct air capture technology that sucks carbon out of the atmosphere—many others actually save companies money.

Energy efficiency, for example, is a low-hanging fruit. An analysis published by the Environmental Protection Agency’s Energy Star program found that efficient buildings can save their operators $0.60 per square foot in operational expenses annually and another $0.53 per square foot in utility costs. This opportunity to cut costs has caught on for large industrial firms for whom energy is a top line item, but it still needs to catch on for many others that haven’t historically paid much attention to their energy consumption.

“Today, that waste of energy is not large enough for most companies for it to show up… it’s line item number 67,” says Aamir Paul, the president of North America operations at Schneider Electric. “It is that low-hanging fruit.”

The same goes for vehicle fleets. No matter how large or small the fleet, more fuel-efficient vehicles mean lower costs. And that’s been the case well before EVs became widespread. For example, a fleet efficiency program prioritizing diesel-powered trucks that use less fuel that Walmart wrapped in 2015 saved the company $1 billion annually and made their trucks twice as efficient. Now, the company is exploring how to electrify its fleet.

Investing in clean energy, too, can cut costs and reduce vulnerability to volatile energy prices. While renewable energy costs have risen due to the same inflationary pressures that have raised costs everywhere, they remain cost effective in most places. And, importantly, the prices don’t fluctuate over time once the facility is built as with fossil fuels. Many of the largest firms—like Apple, which has been carbon neutral across its global corporate operations since 2020—have signed long-term renewable energy contracts for just that reason. “I always tell people, the CFO does not run when he sees me coming,” said Jackson. “You can make money investing in clean energy.”

I begin with the immediate costs because, well, cost-cutting is a top priority for many businesses right now. But it’s important to also consider the long-term financial upside that may come from climate-friendly investments. Already trillions of dollars have been mobilized to facilitate the transition. Government bodies in the U.S., Europe, and elsewhere have begun implementing new climate policies with a reach that will extend beyond fossil fuel companies and big industrial emitters. In other words, the energy transition is in full swing, and demands that companies embrace sustainability and cut their emissions will only grow.

“You have a gigantic tailwind of something that is going to pervade virtually every part of the economy,” said Steyer. “That means you have an opportunity if you’re just a straight up financial investor: to outperform.”

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Write to Justin Worland at justin.worland@time.com