Australian corporate sustainability is a joke.
It's a self-gratifying accounting process that's designed to make the board, stakeholders and customers comfortable. But the thing is, corporations have the power to have a huge impact, if only they could understand how to wield their power in smarter ways.
Recently I had the privilege of MCing two customer success kick-off days for a huge corporation. One of those Software as a Service Enterprise Resource Platforms (SaaS ERPs) – you know, the huge software companies that grease the wheels of commerce around the world.
During this event, they celebrated servicing cloud products to some of Australia and the world's biggest polluters: coal companies, fossil fuel extractors, and fossil fuel exporters. Then the next minute, they showed off their ‘green’ credentials to their staff by having a big, ‘meaningful’ conversation about corporate sustainability; not about how they were dealing with ESG themselves, but by bringing in a Big 5 consultant to talk about sustainability in general.
Also, there was a spectacular gaffe where the APAC President of the company gave an energetic video address at the start of each day, in which he said: "We will continue to work with our customers to accelerate climate change".
It's unkind to bring up the gaffe. It was unfortunate, yet truer words have never been said. This company proudly counts Yancoal, South32, Rio Tinto, and Woodside Petroleum as their case studies for success.
I learned a few things over these two days.
• ERPs love products that involve processes, reporting and accounting.
• They love selling those numbery products to their clients.
• Big corporations are doubling down on reporting for all things climate in order to be compliant with current and potential future regulations, and to appease stakeholders – not necessarily to make an impact on the greenhouse gas emissions of their company’s or their clients’ operations.
Corporations are furiously creating confusing and frustrating ‘busy work’ in ‘sustainability’, and not educating their staff on the fundamentals. They’re not supporting them to have the conversation with their clients – and that is:
We need to stop burning shit to make power and other things.
It strikes me that staff at these big companies don't have the climate in mind when they're selling cloud products to the biggest polluters in the world. They have their job security in mind. And fair enough.
But even with the most generous definition, the reality is the Scope 3 emissions of your shiny, clean, green tech company – that is the emissions that are created with your product after it leaves your control – include the emissions created by your clients.
And for Australian exporters of fossil fuels, those scope 3 emissions are the third largest in the world.
After ruminating on it for a few days, I had a thought about how these huge SaaS ERPs can exert power in meaningful ways to apply pressure to the Woodsides, Yancoals, and Rios of the world to do more.
Something easy, and something harder.
The easy part: ask the hard questions
When sitting down with fossil fuel extractors and refiners, ask the hard questions.
• When are you folks getting out of fossil fuels?
• What are you doing to move your business away from fossil fuel extraction and production?
• When are you going to pivot to green hydrogen and start to build the associated infrastructure we will need for the next 200 years?
• So, do you folks have a sunset timeline for this world-terminating business?
It doesn't matter that they don't have answers for this. It matters that the questions – although uncomfortable – are asked. This is soft power: to have one of your biggest vendors with millions and billions in customer lifetime value on the line asking you to do better.
Next is obvious, but hard.
The hard part: Create your own carbon premium
ERPs are life-long relationships for businesses. They are hard to implement, they are hard to maintain, and they are hard to extricate and move to another platform product. They infect every dollar spent. This chokehold should be used for good.
Make the dirty clients pay a premium for the service. It could be as low as 5%, but 5% is millions of dollars for these companies.
The conversation could also be flipped the other way. You could use more ‘carrot’ than ‘stick’ for the same effect. "We’ll give a 15% discount for our customers who have a science-based 2030 emissions reduction target and are reaching it without carbon offsets."
This is REAL POWER.
Make them pay, then use that premium to offset the discount you give to carbon neutral or negative companies. This is your new big revenue generator. Many of these fossil fuel multi-nationals don't pay tax, so you may as well charge them heaps!
This is not just for ERPs – this can be for any company that deals with fossil fuel extractors.
For businesses here in Australia, the opportunities are huge to pivot out of fossil fuels, and fast.
The next trillion dollars aren't going to be made selling sunlight trapped in rocks. They're going to be in critical minerals, renewables, green hydrogen, and processing metals into green steel and aluminium right here in Australia. It's in your business’s long term interest to move the market faster, and you can do that with a carbon premium.
The risk is you lose a fossil fuel company as a client. To that, I say: good.
Your company is no longer "working with our customers to accelerate climate change".
Because whether you have a representative from a Big 5 consultancy speak at an event, or you have an app to track your staff's CO2e, or you procure renewable energy to power your sovereign data centre – it's all for naught if the tools that you develop, that you sell, that you service are being used to rapidly extract, refine, export, and burn fossil fuels at scale to rapidly make life untenable on earth.
We need to stop burning shit to make power and other things.
Creating a world where business can still do business – that's the business all businesses should be in right now. All it requires is leadership.
At your next board meeting, have the conversation: "When are we going to implement a carbon premium on fossil fuel companies?"
Check out Dan’s podcast A Rational Fear, and find plenty of resources to accelerate your company’s climate journey on our site.