The waters of the vast Fuxian Lake, which cover 100 square miles and reach depths of more than 500 meters, offered a poignant backdrop for the inaugural Fortune Global Sustainability Forum, which was hosted in a Hilton resort nestled on the lake’s southeastern shore in China’s mountainous Yunnan province last week.
The lake, kept clean by a government initiative to eliminate pollution, underscores that humans can affect the environment for the better. But it also hides the ruins of a 2,000-year-old civilization consumed by the lake eons ago. The drowned city lies beneath the surface as a quiet reminder of humanity’s precarious perch on the planet.
To reach consensus on how businesses can avert environmental crisis and—in a sense—avoid being consumed by some future lake, more than 90 speakers and many more delegates joined the Fortune Global Sustainability Forum last week. Over three days, several key points emerged:
First, global capitalism is, slowly but very surely, starting to reckon with the economic risks posed by climate change and other environmental threats. This year the Bank of England included climate change related risks in its bi-annual “stress test” of the insurance industry for the first time. ICBC, the world’s largest bank by assets, ran a similar stress test in 2015 and, we learned, issues higher interest loans to firms that are over-exposed to environmental hazards. Since fighting climate change in an effort to protect melting glaciers hasn’t gotten very far, perhaps fighting climate change in an effort to protect corporate bottom lines will prove more effective.
Second, sustainability is a squishy term. The chief planner of China’s Ministry of Natural Resources has a five-point definition of sustainability, which includes the preservation of minority cultures. Architect Bill McDonough thinks “sustainable” is boring and wants the conversation to be about growth—growth towards a future that is “good” rather than one that is “less bad.” But, as one speaker during a town hall at the conference argued, growth given finite resources is definitionally unsustainable.
Third, on the topic of finite resources: renewables are ready to take over. Solar energy is—in certain parts of the world—already cheaper than electricity from coal, according to Jiang Kejun of China’s Energy Research Institute, an affiliate of the country’s economic-planning body, the NDRC. Norwegian hydropower giant Statkraft projects that renewables will account for 80% of global electricity supply by 2050. There’s still work to be done—such as building infrastructure and advancing battery tech to silo excess energy—but the economics of doing so are no longer insurmountable.
Fourth: plastics need a two-part solution. The first step is to improve recycling initiatives and develop circular economies where plastic can be returned to manufacturers and used to churn out new gear. But that’s just an easing measure. The second step is to stop making plastic altogether.
Fifth: time to address structural environmental ills, particularly climate change, is short—if not already expired—but solutions are available now. Investors need to back sustainable solutions; governments need to incentivize that change; and businesses need to stop implementing strategies that lock in bad practices.
Until next time,
Fortune Global Sustainability Forum Co-chairs,
In The Loop
Growing pains. According to a report led by Beijing’s Tsinghua University, the world will miss the Paris Agreement objective of keeping global temperature rises to below 2 degrees Celsius if China’s multi-trillion-dollar Belt and Road Initiative continues as is. To keep the rise below 2 degrees BRI countries would need to deploy never-seen-before decarbonization processes and deploy cutting edge green tech. Yet the majority of BRI energy investments continue to be in coal. South China Morning Post
Blue-Green Party. Democratic Party presidential hopefuls flexed their green credentials ahead of last week’s town hall, hosted by CNN, releasing policy documents on sustainability and climate change. The Democratic National Committee had turned down a suggestion to debate climate change but CNN picked up the mantle. Ten candidates joined the debate and, while each had a signature stance, most advocated introducing a carbon tax on industry. New York Times
Clouds gathering. The Justice Department is reportedly investigating whether four auto makers—Ford, Volkswagen, Honda and BMW—violated anti-trust rules by pledging to follow California’s standards on tailpipe emissions, which are stricter than the federal standards put forward by the Trump administration. Since thirteen other states take their cue on exhaust regulations from California, which is allowed to set its own emission targets, the Golden State’s regulations will likely become a de facto standard for the U.S. Desperate to have it’s own way, the White House is reportedly investigating how to remove California’s right to self-regulate. New York Times
3% of Chinese desert
Deploying solar panels across 3% of China’s roughly 1.03 million square miles of desert would satisfy the entirety of China’s energy demands, said Zhong Baoshan, chairman of Xi’an based LONGi Solar, during Fortune’s Global Sustainability Forum last week. That’s a fascinating prospect. Last year, China consumed approximately 37.8 trillion kWh of energy. According to my crude calculations, which are by no means a comprehensive fact check, 345-watt solar panels spread out across 3% of the desert could generate 25.96 trillion kWh of energy a year. While that’s somewhat short of China’s total energy use but it is far above China’s total electricity usage, which was just 6.84 trillion kWh in 2018.
From the Forum
How the Energy Industry Is Using Data to Decarbonize Itself Fortune Editors
This edition of The Loop was edited by Eamon Barrett, who you can email through email@example.com. Sign up for other Fortune newsletters here.