COVID "accelerated the trajectory of sustainability."
Good morning.
With the U.N. Climate Change Conference—a.k.a. COP26—opening in Glasgow on Sunday, business leaders are lining up to encourage political leaders to act. As I’ve noted here before, business—once the resisters in the climate policy debate—has moved to the vanguard and is calling for action. A survey of more than 1,000 CEOs conducted by the U.N. Global Compact and Accenture found that 79% said the pandemic has highlighted the need to transition to more sustainable business models. “I would have predicted that a crisis like COVID would have slammed the brakes on anything other than conventional bottom-line thinking,” said George Oliver, CEO of Johnson Controls. “The fact that it did the exact opposite is extraordinary. It has accelerated the trajectory of sustainability.”
Why has business interest in climate action accelerated? Extreme weather events are one reason, according to the report, making climate a current business risk, not a hypothetical future one. Pressure from employees is another, as Fortune’s recent survey with Deloitte demonstrated.
Pressure from investors is also starting to motivate companies as well. A new study released this morning by Morgan Stanley found that 79% of investors remained focused on sustainable investing during the pandemic—down only six percentage points from before the pandemic. And among Millennials, interest in sustainable investing reached a record high of 99%. Interestingly, while the CEOs generally focus on actions that are both good for the environment and good for business—what business guru Jim Collins calls “the power of and”—the Morgan Stanley research shows 70% of individual investors still believe that sustainable investing involves a trade-off in investment performance. But they are interested, nonetheless.
A number of CEOs are travelling to Glasgow for the event, including Bank of America CEO Brian Moynihan, Pepsi CEO Ramon Laguarta, Citi CEO Jane Fraser, Allianz CEO Oliver Baete, and BCG global chair Rich Lesser. Lesser and I will be discussing the outlook for Glasgow and what it means for business in a webinar at noon today, that you can access here.
Separately, Ellen McGirt and I spoke with ExecOnline CEO Stephen Bailey about his efforts to create “a whole new generation of (business) talent in a much more inclusive way” on our Leadership Next podcast this week. You can listen on Apple or Spotify.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
Big Tech
Both Microsoft and Alphabet reported strong results yesterday. Microsoft's sales and profits grew nicely, thanks to the ongoing rise of its Azure cloud platform. As for the Google parent, its sales beat Wall Street estimates overall but its cloud and YouTube revenue disappointed investors. Fortune
Big Tok
TikTok doesn't give information to the Chinese government, an executive claimed at a Senate hearing yesterday. Michael Beckerman, Americas public policy chief for the ByteDance-owned social-media firm: "We have a world-renowned U.S. based security team that handles access." Reuters
Vaccine mandates
Retailers are pleading with the White House to hold off on long-awaited vaccine mandates until the holiday shopping season is over. Ed Egee, the National Retail Federation’s vice president of government relations and workforce development: “We really questioned the necessity of a federal standard, and if they're going to do it, we’ve asked for a very, very long implementation period." Fortune
Fashion rental
Rent the Runway has raised $357 million in an expanded IPO, giving the fashion-rental/subscription outfit a market value of $1.3 billion. It had a valuation of $870 million when it raised a funding round in April. Fortune
Purpose—A beacon of growth How are high-growth brands activating purpose more holistically? Deloitte’s 2022 Marketing Trends explores how businesses can follow the roadmap of high-growth brands by bringing the customer’s voice into the organization to help ensure the brand is taking an authentic purpose to market. Read the report
Musk vs tax
Elon Musk has lashed out at a looming Democrat proposal to tax billionaires on unrealized capital gains, saying: "Eventually, they run out of other people's money and then they come for you." The move would make it harder for the ultra-wealthy likes of Musk to get away without paying much tax by borrowing against their stock holdings to finance their lifestyles. Fortune
Russian gas
Russia is threatening Moldova's gas supply after the country (once a Soviet region) responded to a price hike by deciding to buy some its gas from someone else for the first time. Sergiu Tofilat, a former energy adviser to Moldova's president: "We have a pro-Western party in power here. So, Russia changed its approach on the gas supply. The Kremlin wants to punish the Moldovan people for voting against a pro-Russia party. It's pure politics." BBC
Chinese property
Fortune's Grady McGregor examines China's possible implementation of a real estate tax: "Despite potential pushback from the rich and powerful, property tax plans are gaining traction at the top levels of China’s government…The lack of a property tax is not simply a quirk in China’s tax code, but a policy that has fundamentally shaped—and distorted—China’s economic boom." Fortune
Bitcoin impact
Every Bitcoin transaction consumes 1,173 kilowatt hours of electricity, according to a MoneySuperMarket report. Digging into the report, Fortune's Shawn Tully says the report's claim of a transaction's cost ($176) is somewhat overblown, but still: "The stunning amount of electricity Bitcoin gobbles for just one transaction, and the cost of that power, raises a basic question. Is creating a 'currency' by consuming all that energy a sound business model?" Fortune
This edition of CEO Daily was edited by David Meyer.
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