Also: PDD stock surges, caste discrimination, CEO-to-chairman pipeline.
Good morning.
Question three of my Five Big Questions for CEOs (to review, go here) is this:
The energy transition is happening. How will my company be affected?
It’s hard to overstate how far the business world has moved on this issue in the last five years. The majority of the Fortune 500 have now made climate commitments. And while some may be engaged in pure greenwashing, I find in my conversations with CEOs that most are taking it seriously. Indeed, some may be taking it too seriously—General Motors’ commitment to stop making carbon-emitting cars by 2035 still seems ahead of the market.
It’s also hard to overstate the change in U.S. policy on this issue. The absurdly-named Inflation Reduction Act vaulted the United States from the back to the front of the pack in terms of incentivizing climate action.
But that still leaves lots of questions, complications, and trade-offs for business leaders to struggle with. One big one: What is the role of fossil fuels in the transition? The invasion of Ukraine last year highlighted oil’s continuing importance to energy security. Best estimates now suggest oil will be needed for many decades to come. That, in turn, has put an increased focus on carbon-capture technology as a way to make oil use friendlier for the climate. But some climate activists claim such efforts will simply delay the necessary transition.
Meanwhile, the U.S. IRA has surfaced other contradictions between climate policy and national security policy (as well as labor policy.) How quickly can we move toward clean electricity, for instance, if the solar panels and batteries all come from China, and China is a national security threat?
But business leaders who ignore this changed reality on climate—like those who ignore A.I.—do so at their peril. GM’s big move wasn’t just motivated by a desire to save the world—it also was motivated by a desire to save GM from being displaced by Tesla. Countless other companies face smaller but similar versions of the same dilemma. If the energy steamroller is coming, do you want to be behind it or ahead of it? And how quickly do you have to get there?
Fortune will be calling on the best minds in business for their guidance on this subject at our events this fall—starting with the Fortune Impact Initiative meeting in Atlanta Sept. 11-12, where we will hear from chief sustainability officers from companies such as GE, Mastercard, Walmart and more. The topic will certainly dominate our virtual Fortune Global Sustainability Forum on Sept. 28, where speakers include EPA Administrator Michael Regan and investor Vinod Khosla. And at the CEO Initiative annual meeting in D.C. on Oct. 3, we will talk with both business and government leaders involved in the energy transition—including Commerce Secretary Gina Raimondo and chemist and entrepreneur Christina Lampe-Önnerud, who is trying to rebuild a U.S. battery industry after selling her previous company to China. Then at the Fortune Global Forum in Abu Dhabi Nov. 27-29, we will talk to a man at the center many of the tensions in this debate—Dr. Sultan Al-Jaber, who is both CEO of the Abu Dhabi National Oil Company and president of this year’s COP meeting in Dubai. We’ll also hear from leaders of many alternative energy efforts, such as Marco Alverà, CEO of TES-H2, one of the world’s leading hydrogen companies; Stefano Buono, a nuclear physicist and founder of newcleo; and Maksym Timchenko, CEO of DTEK, who is helping to reimagine Ukraine’s energy sector in the middle of a war.
More news below. And read about Amazon CEO Andy Jassy’s ultimatum to his workers: Come back to the office, or “it’s probably not going to work out for you.” Tomorrow: Geopolitics.
Alan Murray
@alansmurray
alan.murray@fortune.com
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The power of the Chinese consumer
Shares in PDD Holdings, the parent of shopping networks Pinduoduo and Temu, surged over 15% in New York trading on Tuesday after the company reported a 47% jump in net income. Executives are bullish on Chinese consumers despite the country’s broad economic slowdown, with co-CEO Zhao Jiazhen noting “consumers’ increasing willingness to shop.” The company did not share details on Temu, its buzzy service that was the top shopping app in the U.S. over the last three months. Bloomberg
Caste discrimination
California may soon become the first U.S. state to ban caste discrimination. Late Monday, the California State Assembly near-unanimously approved a bill adding caste to the list of protected categories under state anti-discrimination laws. The discussion is controversial in South Asian immigrant communities: Activists allege that discrimination continues in places like the U.S. tech sector, while others complain that focusing on the practice is "anti-Hindu." Reuters
CEO-to-chairman pipeline
Companies that appoint their outgoing CEOs as executive chairs consistently underperform those that don't. So why do firms keep on doing it? A board may want an experienced advisor to help a first-time CEO run the company—and the ex-CEO might want a formal title to justify a hefty, CEO-like paycheck. Fortune
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