The path to zero isn’t as costly for consumers as you might think
As more and more companies adopt “net zero” climate commitments, it’s worth contemplating what such programs could ultimately cost consumers. No question the answer is “more”—this is the equivalent of a climate tax. But how much more? How big is the tax?
In a piece published this week in Fortune, Boston Consulting Group CEO Rich Lesser builds on research his company has done that offers an intriguing answer: Not nearly as much as you might think.
BCG modeled costs throughout the supply chains of multiple products, and came up with some surprising results. Yes, there’s a high cost for converting upstream production of things like cement and steel to net zero—as Bill Gates laid out in a piece for Fortune in February. But if you trace those costs through the entire supply chain, you find the effect on the consumer is not that great. According to BCG’s calculations, it would only add around $600 to the price of a car, $3 to the price of a smartphone, or $1 to a pair of jeans. That’s a small price to pay for preventing climate catastrophe.
“Decarbonization adds only modest costs to the end of any value chain,” he writes, and that fact “presents the biggest opportunity for business to make a real mark in the battle against climate change.”
The challenge is to put the processes in place to track and manage emissions across entire supply chains. That’s not easy, but it’s starting to happen. At the Fortune Global Forum last week, Søren Skou, CEO of the giant shipping firm A.P. Møller-Maersk, said he’s facing increased demands from customers who want him to remove the carbon from their shipping costs, to help meet their net-zero commitments. That has led him to partner with Danish energy firm Orsted to work on emissions-free hydrogen fuels made using offshore wind power.
Much more is needed. “To get on track for a Paris Agreement-compliant world, we need to see collaboration across supply chains at a huge scale,” Lesser writes. “I urge my fellow CEOs to seize the supply chain opportunity.”
BCG is partnering with Fortune this year in an effort to help companies forge the path to a “net zero” future. You can check out our “Path to Zero” hub here. We’ll also be convening CEOs later in the year to focus more directly on the challenge of making and meeting net zero commitments. And we’ll be launching a podcast to track the most important breakthroughs in climate innovation.
As I have written here before, 2021 is shaping up to be an inflection point for business action on climate. Stay tuned, and we will keep you informed.
$2 trillion club
Microsoft, whose share price has risen 19% this year, just become the second U.S. company to reach a $2 trillion market value. The first was Apple. Saudi Aramco also crossed the threshold at the end of 2019, briefly. Fortune
Bitcoin's back, baby, maybe? Currently holding steady around the $34,000 mark, it's certainly recovered from its drop past $29,000 earlier this week, a point at which all its 2021 gains were erased (bad news for Tesla). Experts see choppy waters ahead, as do we all really. Fortune
The Delta strain of the coronavirus is probably going to be dominant in the U.S. within a few weeks, researchers say. Delta (first spotted in India) is competing with Gamma (Brazil) to displace Alpha (U.K.) as the U.S.'s number-one strain. That's bad news for unvaccinated people, who are the most exposed—and unfortunately the U.S. is going to miss the White House's target of 70% of American adults having received at least one dose by July 4th. Wall Street Journal
The pro-democracy Hong Kong tabloid Apple Daily is shutting down following the arrest of its journalists and the freezing of its assets. Authorities say the newspaper, founded by media tycoon Jimmy Lai, colluded with foreign powers by publishing calls for sanctions against the Hong Kong government. Financial Times
AROUND THE WATER COOLER
The U.S. is trying to onshore semiconductor manufacturing, but GlobalFoundries—the third-largest contract chipmaker in the world, and an American firm—is investing $4 billion in a new Singaporean plant instead. Fortune
An international group of heavyweight lawyers has come up with a legal definition for "ecocide," which they say should be made an international crime alongside genocide, crimes against humanity, war crimes and the crime of aggression. The core definition: "Unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts." Stop Ecocide
Europe's top soccer body has sparked outrage by denying Munich's request to light up its football stadium in rainbow colors at a Euro 2020 game today. The match is between Germany and Hungary, which has just passed a Russia-style law banning the portrayal of homosexuality to minors. UEFA said the lighting would be a political statement and therefore against the rules. Stadiums across Germany will now display rainbow colors during the match, to protest UEFA's call. Guardian
The U.K. government will reportedly soon allow Britons to travel to more than 150 countries without needing to quarantine on returning. The change would probably only take effect in August, limiting the benefit to the travel industry. Meanwhile, back to the subject of the Euro 2020 tournament, the finals are going to be held in London with a crowd of around 60,000 people—a fact that has dismayed other European countries who fear sports fans will come home with the Delta variant, which is rife in the U.K. Fortune
This edition of CEO Daily was edited by David Meyer.
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