World leaders are refocusing on slowing climate change, and sustainability-focused companies stand to benefit.
Many of the world’s most powerful nations have committed to initiatives to curb climate change at the U.N. Climate Change Conference, or COP26, during the past two weeks. The U.S. announced it would work more aggressively to decrease its carbon emissions to help the world avoid 1.5 degrees of warming as part of a joint pledge with China. And a coalition of global financial firms worth a combined $130 trillion committed to helping the world achieve net zero emissions by 2050.
All that could mean opportunities for green businesses. Jamie Alexander, director at the climate change-focused nonprofit Project Drawdown, points to three sectors in particular that could stand to benefit: agriculture, home and building construction, and transportation. “The biggest sources of carbon emissions,” she says, “are where there are the biggest opportunities.”
Alexander notes that agriculture produces approximately the same amount of carbon emissions as oil and gas. As such, farms and food companies that apply regenerative practices such as crop rotation that lower emissions could see more demand as consumers pay closer attention to their carbon footprints. Indoor farming companies like Bowery Farming and AeroFarms, for example, reduce the distance that produce needs to travel before reaching the consumer, since it doesn’t need to be grown in specific geographic regions.
In the residential construction industry, companies that reduce energy consumption are expected to see an increase in demand, according to Columbia Business School professor of economics Geoffrey Heal. “There will be a lot of retrofitting homes to install more efficient heating and cooling systems, so the construction industry really stands to benefit,” says Heal.
The Build Back Better plan being debated by Congress currently includes tax rebates for repairs, such as HVAC and insulation upgrades, that make homes more energy efficient. There’s also a $2,500 subsidy for installing heat pumps, which generate heat without using oil or gas.
“You’re going to see a lot more contractors trying to develop the expertise to install and manage heat pumps in the coming years,” says Heal. “It’s a skill not a lot of people have right now, and there’s going to be a lot of demand for it.”
Experts believe there will be big opportunities for green transportation businesses in the coming years as cities rethink their public transit systems to make them more sustainable. This could be good news for electric vehicle charging companies and other businesses that support sustainable transportation.
“Charging stations are critical,” says Alexander. “If people are confident they’ll be able to find a station when they need one and not get stranded during a road trip, they’ll have fewer reservations about moving to electric vehicles.”
Washington, D.C.-based energy demand management company Arcadia helps individuals and organizations switch to renewable energy sources such as solar farms. It also helps them optimize their power usage by charging electric vehicles during the times of day that are least carbon-intensive. The recently approved infrastructure plan sets aside up to $15 billion for the construction of charging facilities. Heal believes these facilities will be a focus for the government in the coming years as it tries to achieve its sustainability goals.
Arcadia founder Kiran Bhatraju has been lobbying for governments to force utility companies to make their energy usage data accessible, which he believes would help companies and everyday citizens make more sustainable decisions. After all, he says, “you can’t actually achieve net zero if you can’t measure it.” Should such data become widely accessible, it would create more business opportunities for companies like his, as more businesses and consumers become aware of their carbon footprints.
Overall, experts believe the business sector will be a key to helping the world achieve the goals set out in COP26.
“The important thing to remember is that companies are responsible for the lion’s share of global emissions,” says Alexander. “So they have a big responsibility to help solve this.”