Engaging enterprises with the climate crisis

Almost every large corporation is committed to achieving net zero carbon emissions by 2050 but lacks a roadmap to get there, says John Sterman, professor of management at MIT's Sloan School of Management, co-director of the MIT Sloan Sustainability Initiative, and leader of its Climate Pathways Project. Sterman and colleagues offer a suite of well-honed strategies to smooth this journey, including a free global climate policy simulator called En-ROADS, developed in partnership with the nonprofit think tank Climate Interactive, which was founded by MIT alumni. Sterman, the Climate Interactive team, and colleagues around the world have run En-ROADS workshops that have educated more than 230,000 people, including thousands of senior elected officials and leaders in business and civil society around the world. 

Running on ordinary laptops, En-ROADS examines how we can reduce carbon emissions to keep global warming under 2 degrees Celsius, Sterman says. Users, expert or not, can easily explore how dozens of policies, such as pricing carbon and electrifying vehicles, can affect hundreds of factors such as temperature, energy prices, and sea level rise. 

En-ROADs and related work on climate change are just one thread in Sterman's decades of research to integrate environmental sustainability with business decisions. 

"There's a fundamental alignment between a healthy environment, a healthy society, and a healthy economy," he says. "Destroy the environment and you destroy the economy and society. Likewise, hungry, ill-housed, insecure people, lacking decent jobs and equity in opportunity, will catch the last fish and cut the last tree, destroying the environment and society. Unfortunately, a lot of businesses still see the issue as a trade-off — if we focus on the environment, it will hurt our bottom line; if we improve working conditions, it will raise our labor costs. That turns out not to be true in many, many cases. But how can we help people understand that fundamental alignment? That's where simulation models can play a big role."

Learning with management flight simulators 

"My original field is system dynamics, a method for understanding the complex systems in which we're embedded—whether those are organizations, companies, markets, society as a whole, or the climate system" Sterman says. "You can build these wonderful, complex simulation models that offer important insights and insight into high-leverage policies so that organizations can make significant improvements." 

"But those models don't do any good at all unless the folks in those organizations can learn for themselves about what those high-leverage opportunities are," he emphasizes. "You can show people the best scientific evidence, the best data, and it's not necessarily going to change their minds about what they ought to be doing. You've got to create a process that helps smart but busy people learn how they can improve their organizations." 

Sterman and his colleagues pioneered management flight simulators — which, like aircraft flight simulators, offer an environment in which you can make decisions, seeing what works and what doesn't, at low cost with no risk. 

"People learn best from experience and experiment," he points out. "But in many of the most important settings that we face today, experience comes too late to be useful, and experiments are impossible. In such settings, simulation becomes the only way people can learn for themselves and gain the confidence to change their behavior in the real world." 

"You can’t learn to fly a new jetliner by watching someone else; to learn, one must be at the controls," Sterman emphasizes. "People don't change deeply embedded beliefs and behaviors just because somebody tells them that what they're doing is harmful and there are better options. People have to learn for themselves."

Learning the business of sustainability 

His longstanding "laboratory for sustainable business" course lets MIT Sloan School students learn the state of the art in sustainability challenges — not just climate change but microplastics, water shortages, toxins in our food and air, and other crises. As part of the course, students work in teams with organizations on real sustainability challenges. "We've had a very wide range of companies and other organizations participate, and many of them come back year after year," Sterman says. 

MIT Sloan also offers executive education in sustainability, in both open enrollment and customized programs. "We've had all kinds of folks, from all over the world and every industry" he says. 

In his opening class for executive MBAs, he polls attendees to ask if sustainability is a material issue for their companies, and how actively those companies are addressing that issue. Almost all of the attendees agree that sustainability is a key issue, but nearly all say their companies are not doing enough, with many saying they “comply with all applicable laws and regulations.” 

"So there's a huge disconnect," Sterman points out. "How do you close that gap? How do you take action? How do you break the idea that if you take action to be more sustainable it will hurt your business, when in fact it's almost always the other way around? And then how can you make the change happen, so that what you're doing will get implemented and stick?" 

Simulating policies for sustainability 

Management flight simulators that offer active learning can provide crucial guidance. In the case of climate change, En-ROADs presents a straightforward interface that lets users adjust sliders to experiment with actions to try to bring down carbon emissions. "Should we have a price on carbon?" Sterman asks. "Should we promote renewables? Should we work on methane? Stop deforestation? You can try anything you want. You get immediate feedback on the likely consequences of your decisions. Often people are surprised as favorite policies — say, planting trees — have only minor impact on global warming. (In the case of trees, because it takes so long for the trees to grow)."

One En-ROADS alumnus works for a pharmaceutical company that set a target of zero net emissions by mid-century. But, as often observed, measures proposed at the senior corporate level were often resisted by the operating units. The alumnus attacked the problem by bringing workshops with simulations and other sustainability tools to front-line employees in a manufacturing plant he knew well. He asked these employees how they thought they could reduce carbon emissions and what they needed to do so. 

"It turns out that they had a long list of opportunities to reduce the emissions from this plant," Sterman says. "But they didn't have any support to get it done. He helped their ideas get that support, get the resources, come up with ways to monitor their progress, and ways to look for quick wins. It's been highly successful." 

En-ROADS helps people understand that process improvement activity takes resources; you might need to take some equipment offline temporarily, for example, to upgrade or improve it. "There's a little bit of a worse-before-better trade-off," he says. "You need to be prepared. The active learning, the use of the simulators, helps people prepare for that journey and overcome the barriers that they will face." 

Interactive workshops with En-ROADS and other sustainability tools also brought change to another large corporation, HSBC Bank U.S.A. Like many other financial institutions, HSBC has committed to significantly cut its emissions, but many employees and executives didn't understand why or what that would entail. For instance, would the bank give up potential business in carbon-intensive industries? 

Brought to more than 1,000 employees, the En-ROADS workshops let employees surface concerns they might have about continuing to be successful while addressing climate concerns. "It turns out in many cases, there isn't that much of a trade-off," Sterman remarks. "Fossil energy projects, for example, are extremely risky. And there are opportunities to improve margins in other businesses where you can help cut their carbon footprint." 

The free version of En-ROADS generally satisfies the needs of most organizations, but Sterman and his partners also can augment the model or develop customized workshops to address specific concerns. 

People who take the workshops emerge with a greater understanding of climate change and its effects, and a deeper knowledge of the high-leverage opportunities to cut emissions. "Even more importantly, they come out with a greater sense of urgency," he says. "But they also come out with an understanding that it's not too late. Time is short, but what we do can still make a difference."