This article is adapted from Andrew Winston’s book, The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World.
Imagine a ship filling up with water. Time is running short, and everyone needs to help bail. But how fast should we work? We could ask people in the boat how much they think they can scoop out in the next hour, and then suggest they stretch a bit. But shouldn’t we first calculate how much water we must bail to keep afloat, and then divvy up the task? It’s the only practical path, right? Anything short of that would be suicide.
Setting bottom-up goals makes some sense, but only if the targets have no larger ramifications or connections to the real world. Think about what happens when a company can only survive if it hits certain goals. Consider chip makers Intel and AMD, for decades trying to reach innovation targets driven by Moore’s Law (doubling the number of transistors on a chip every two years) just to keep their products relevant in the marketplace. These two competitors couldn’t use a bottom-up approach.
When it comes to the planet’s ability to support us, and in particular the carbon reduction we have to achieve, few entities – companies and countries alike – are working backward from what we have to do. Instead, most organizations are planning forward from what they think they can do. So how fast do we have to bail?
Let’s recall the simple, stark math. To hold the planet’s warming to 2 degrees Celsius (3.6 degrees Fahrenheit), we must emit no more than 565 billion tons of carbon globally (and the most recent scenarios suggest far less). According to PwC, we have to bring down the global economy’s carbon intensity (how much carbon it takes to generate a dollar of GDP) by an average of 6 percent annually until 2100. And since climate change is cumulative, the earlier the better.
A growing number of large companies have set goals in line with what the science is telling us. Let’s look at how they’ve approached the challenge.
The Diageo Example
In late 2012, I was speaking to Roberta Barbieri, the global project manager for environmental sustainability for spirits giant Diageo. As we talked about how to set aggressive goals on carbon emissions, she casually mentioned that Diageo’s North American division—a group with $5.6 billion in sales and 14 production and manufacturing facilities—had already cut emissions by 80 percent.