If you stick around the world of sustainable business long enough, you’re sure to see an immutable march of memes — terms that rise up and become popularized, often without agreed-upon definitions. Then, over time, they become used, and overused, to the point where they lose much of their meaning. Or, at least, they can mean whatever you want them to mean.

Some of those memes get traction — “zero waste” and “net zero” are two relatively recent examples having their moment. Others come and go — “responsibly sourced,” anyone?

Now comes “climate risk,” a term that has been kicking around for years — I first wrote about it back in 2013 — but that has risen to a point where major financial and governmental institutions around the world are baking it into their policies and programs.

Last week, for example, the U.K. government proposed mandatory climate risk-related governance by large pension plans, to be disclosed in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The proposed scheme requires pension funds to analyze the implications of a range of temperature scenarios on their holdings and “to prompt strategic thinking about climate risks and opportunities.”

The U.K. move is part of a larger trend taking place in Europe, according to a report issued last week by Mercer, the actuarial and benefits consulting arm of Marsh & McLennan Companies. It found that European pension funds’ awareness of, and desire for, action on climate change-related investment risk has surged, with 54 percent of those surveyed actively considering the impact of such risks in their investment allocations, compared to just 14 percent in 2019.

It’s no longer just about ‘What business is doing to the climate.’ It’s also about ‘What the climate is doing to business.’

Why now? There’s no single precipitating event. Rather, the surge of attention to companies’ climate-risk profile appears to be the tipping point of a yearslong pursuit to flip the script on the conversation about business and climate change. That is, it’s no longer just about “What business is doing to the climate.” It’s also about “What the climate is doing to business.”

That understanding is heating up in lockstep with the planet itself. But it’s not always what it seems.

So, what does “climate risk” actually mean?

Minimize or manage?

First, it’s important to understand that “risk” means different things in business than it does in our personal lives. For most individuals, the word is synonymous with “danger” — the risk that we might be infected with coronavirus, for example, or that we could fall into financial distress because of a job loss or some other event. Or that something we don’t want others to know gets found out.

Risk, in that context, is something to be minimized or avoided altogether.

Not so in business. Risk is part of the everyday landscape, referring to things that could negatively affect a company’s financial performance or even cause it to fail. In finance, risk refers to the degree of uncertainty inherent in an investment decision. In general, the higher the risk, the greater returns sought by investors, who want compensation for taking such risks.

Therefore, in business, risks are not something to be avoided but something to be managed: You want to measure, assess and track them, not necessarily avoid or eliminate them. Without taking risks, companies would never grow or, in many cases, prosper.

Within the TCFD framework, climate risk is seen through the eyes of investors and financial institutions — that is, how will their loans and investments fare in a world of climate-related disruptions? The framework’s stated goal is “to price risk to support informed, efficient capital-allocation decisions.”

Climate change poses significant financial challenges, and the risk-return profile of companies exposed to climate-related risks may change significantly as more companies are affected by climate change, climate policy and new technologies. A 2015 study by The Economist Intelligence Unit estimated that as much as $43 trillion of manageable assets may be at risk globally between now and the end of the century.

So, the TCFD framework is about protecting those assets and the companies that own them. It’s strictly about disclosure to protect investors and lenders, not reducing impacts to protect people and the planet. According to the TCFD:

[P]ublication of climate-related financial information in mainstream annual financial filings will help ensure that appropriate controls govern the production and disclosure of the required information. More specifically, the task force expects the governance processes for these disclosures would be similar to those used for existing public financial disclosures and would likely involve review by the chief financial officer and audit committee, as appropriate.

Nothing there about companies actually lowering their emissions or otherwise investing in climate solutions, only about disclosing the potential risks to a company’s finances from the growing climate crisis.

Thus, a company reporting on climate risk under the TCFD protocol isn’t necessarily committing to fight climate change. Rather, it is declaring, “We understand the potential impacts of climate change on our business and have made our financial projections with that in mind.”

Business as usual?

In theory, companies might make different business decisions to avoid those risks. But not necessarily: They could decide to incorporate those risks into investment or operational decisions in order to maintain business as usual. So long as a company discloses those risks, investors may be satisfied.

So, an oil and gas concern such as Chevron or the South African mining company Gold Fields can report its climate risks using the TCFD framework without necessarily changing its operations or emissions one bit. As Chevron Chairman and CEO Michael K. Wirth wrote in the introduction to his company’s TCFD disclosure:

This report demonstrates that we proactively consider climate change risks and opportunities in our business decisions. We have the experience, processes and governance in place to manage these risks and opportunities, and we are equipped to deliver industry-leading results and superior stockholder value in any business environment.

No gauzy verbiage there about leaving the world a better place. It’s drilling and refining as usual — but with fuller disclosure.

The climate-risk bandwagon has the potential to effect change. As I noted recently, financial institutions are beginning to link borrowers’ sustainability performance to the cost of loans — better performers get lower rates — which could spur companies to change. As climate impacts worsen and the risks grow, investors and lenders may well press companies to more aggressively reduce the greenhouse gas emissions associated with their operations and value chain.

So, the question to ask about disclosing climate risk is what difference it actually will make — and what it will take for companies to go beyond simply managing risk to actually reducing their contributions to the climate crisis. How many “once-in-a-century” wildfires, droughts, hurricanes or floods will it take before companies recognize that the stability of their facilities, supply chains, operations, employees and customers is being jeopardized? Or that the infrastructure they rely on — roads, bridges, tunnels, railways, airports, electric grids, water works, broadband fiber — cannot be taken for granted in a climate-changing world?

Disclosure is good: Sunlight is the best disinfectant, as the saying goes. But without actually addressing what’s causing the infection in the first place, the patient’s prognosis may be doomed.

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Sun Chemical, a member of the DIC Group, is a leading producer of printing inks, coatings and supplies, pigments, polymers, liquid compounds, solid compounds and application materials. Together with DIC, Sun Chemical has annual sales of more than $7.5 billion and over 20,000 employees supporting customers around the world. Sun Chemical is a subsidiary of Sun Chemical Group Coöperatief U.A. in the Netherlands and is headquartered in Parsippany, New Jersey, in the United States.

German auto giant Mercedes-Benz announced its largest order of electric vehicles to date Friday: 1,800 electric delivery vans for retail giant Amazon to use across Europe.

The deal shows how companies are increasingly paying attention to ways to decarbonize transportation including buying more zero-emission commercial vehicles. In particular, the market for electric last-mile delivery vehicles is starting to grow quickly as logistics companies such as FedEx and Amazon, as well as retailers such as IKEA, set and strive to hit climate goals. 

Mercedes-Benz, a subsidiary of Daimler, has been a longtime partner of Amazon, as well as global shipping companies. Two years ago, Amazon bought 20,000 Mercedes-Benz Sprinter vans to launch its local franchised shipping program in the United States. However, those were internal combustion vehicles.

The world’s largest automakers have been relatively slow to build and market electric trucks and buses, citing a lack of demand from customers and technology that isn’t ready for prime time. That’s left an opening for startups such as Rivian, which has a deal to sell Amazon 100,000 electric trucks. 

But Mercedes-Benz appears to be making up for lost time. The automaker also announced Friday that it’s joining the Climate Pledge, an initiative coordinated by Amazon and firm Global Optimism that commits signatories to achieving the objectives laid out in the Paris Climate Agreement by 2040, a decade earlier than the agreement’s 2050 goal. Mercedes-Benz says it will become net carbon-neutral by 2040. 

Amazon plans to use the 1,800 electric delivery vans — 1,200 e-Sprinter vans and 600 e-Vito vans — to deliver goods in countries in Europe. European countries including England, Germany, Spain, Denmark and Sweden are acting aggressively to decarbonize transportation emissions and are more swiftly adopting electric trucks compared to the U.S.

Mercedes-Benz says by the end of the year it will offer five electric vehicle models and 20 plug-in hybrid vehicle editions. Its vehicle and battery production also will be carbon-neutral, using clean energy.

Amazon is adding 1,800 electric delivery vehicles from Mercedes-Benz as part of our journey to build the most sustainable transportation fleet in the world, and we will be moving fast to get these vans on the road this year.

Transitioning to electric vehicles after decades of making gas and diesel-powered ones won’t be easy. The German auto industry is losing jobs and profits as it refashions its factories to make electric vehicle drive trains, and reduces production of the traditional engine and gas tank. 

At the same time, big companies such as Amazon increasingly are making global climate commitments in an effort to stay competitive, protect their brands, meet mandates and retain employees. Amazon plans eventually to have all of its shipments to customers become net-zero carbon, with 50 percent of all shipments net-zero by 2030.

Electrification of its fleet will play a large role in those goals. In the release, Amazon CEO Jeff Bezos said that Amazon is buying the electric vans from Mercedes-Benz in an effort “to build the most sustainable transportation fleet in the world.”

Basic human health principles tell us that we should diagnose before we treat and that we should test before we diagnose. 

From annual physicals and screenings to blood tests and imaging exams, providers and specialists have many new tools and resources to address the health issues we experience in real-time and to prevent new issues from arising. For example, our deepening understanding of DNA helps us discern how drugs, medication, multi-vitamins or treatment plans work differently in patients — creating a brand-new frontier, personalized medicine.

Today, by leveraging advancements in technology and new medical discoveries, we are able to treat and prevent diseases and enhance our quality of life, health and wellness. Take the influx of at-home genetic testing kits that provides data on food sensitivities, fertility and predispositions to disease. These same principles of human healthcare, and these same scientific and technological advances, are starting to be applied to soil — our most important asset for securing our food supply.

Soil at the center 

Soil is one of the most important natural resources we have, yet we’ve degraded over a third of the soil used to grow food, feed, fiber and fuel with intensive farming practices. Healthy soil is critical for environmental sustainability, food security and the agricultural economy — even large food companies are starting to fold soil health efforts into their sustainability programs as they understand the impact it has on creating a viable, cost-effective supply chain. 

Soil removes about 25 percent of the world’s fossil fuel emissions each year through carbon sequestering, a natural way of removing carbon dioxide from the atmosphere. From a food security perspective, farmers can harness soil organic matter to ensure greater productivity of their fields and reduce erosion and improve soil structure, which leads to improved water quality in groundwater and surface waters.

If we continue to apply science and technology — and at scale — we can address disease and deterioration of the soil, and we can give it the nutrients it needs to survive and thrive.

According to the Howard G. Buffett Foundation, a foundation whose mission is to catalyze change to improve the standard and quality of life, soil loss costs an estimated $400 billion per year globally.

Undoubtedly, soil is foundational to human life, yet we know very little about the soil itself. We need to get to know our soil if we want a science-based, data-driven agricultural ecosystem. The first step in improving the health of the planet, the quality and quantity of our food, and the prosperity of agricultural businesses is soil wellness. And now we have the tools to investigate.  

A global, comprehensive soil intelligence project

Agronomists are agricultural specialists — soil doctors — who test, touch and smell our soil to assess the earth’s physical and chemical characteristics to determine how to make it most productive, now and going forward. They ask questions such as: Does the soil have large or small pockets of air? Does it have a silty, sandy or clay loam texture? What are the phosphorous levels of the field?

Based on their findings, they might recommend chemical inputs or physical measures farmers can take such as adding tiles to the field to help with drainage, planting cover crops or adding a new crop to rotation to reduce depletion of certain nutrients from the soil to improve its resiliency.  

Problematically, agronomists have a dearth of information on the biomes that makes up our soil. Over 10,000 species and 100 billion actual specimens of bacteria are in a single handful of soil. More biodiversity is in the earth beneath our feet than in all above ground ecosystems combined. Without the ability to account for the biological make up of soil, our agronomists, farmers, chemical and fertilizer providers, food companies, environmental scientists and more cannot fully diagnose, treat or increase the wellness of the soil to grow more food, farm profitably or capture more carbon.  

The agriculture, food, environment, science and technology communities are collaborating to change this. Combining microbiology, DNA sequencing, data science and machine learning, we can digitize the physical, chemical and biological aspects of the soil to generate evidence-based, actionable soil intelligence. This allows agricultural stakeholders to better identify and prevent disease, understand soil nutrients to make better planting decisions and preserve and restore our deteriorating top soil.

Then you add in hyperspectral imagery technology, which collects and processes information from across the electromagnetic spectrum to help collect and determine soil properties and composition. Alternatively, farmers can use a method called the Haney test to evaluate soil health indicators such as soil respiration and water-soluble organic carbon. Automated sensors can monitor and measure soil’s physical traits, such as respiration and temperature, with predicted development towards the measurement of soil’s biogeochemical properties. 

This is all in an effort to gather data to create intelligence that can help us better understand how to improve the health of the earth beneath our feet. What does it look like in action? Like a 23andMe test but for the soil, farmers can sample their soil and know if their field is at high-risk of certain diseases or nutrient deficiencies based on soil composition; this allows them to make informed decisions about which crop to plant, how many inputs are needed, what kind of and how much fertilizer to use — all based on known risks. 

This isn’t unlike taking our daily vitamins. A 2019 survey showed that 86 percent of Americans consume dietary supplements for their overall health and wellness, yet only 24 percent of those had information indicating a nutritional deficiency. Not every vitamin is needed, and not every treatment plan will work for everyone. The same goes for our fields. 

The same health and wellness interventions we use on ourselves can and should be applied to our living soil. If we continue to apply science and technology — and at scale — we can address disease and deterioration of the soil, and we can give it the nutrients it needs to survive and thrive. 

Hurdles to jump moving forward 

There are hurdles to scaling and applying science to soil — from lack of regulations and investment to upending the status quo — but it’s essential we address them as soil health has vast implications, above and below ground. 

Investing in intelligence to drive agricultural decisions rather than reverting to traditional practices is a major obstacle. According to the latest AgFunder Agri-FoodTech Investing Report, $19.8 billion was invested in agrifood tech across 1,858 deals in 2019. The report shows that the largest year-over-year growth in funding was for downstream innovations such as meat alternatives, indoor farming and robotic food delivery. Investment in startups operating upstream, or closer to the farmer, increased 1.3 percent year over year. There’s a significant opportunity to boost investment for upstream innovations — and nothing is more upstream than soil. 

Today, farmers are experiencing setbacks due to the pandemic. According to the University of Missouri’s Food and Agricultural Research Institute, this year, farmers face losses of more than $20 billion. Taking a risk to try new practices or invest in new technologies weighs heavy on these communities.

Combining microbiology, DNA sequencing, data science and machine learning, we can digitize the physical, chemical and biological aspects of the soil to generate evidence-based, actionable soil intelligence.

Embracing regulation to protect the planet is also key to creating real change for our soil, air and water. Take the phase-out and eventual ban on methyl bromide, a fumigant used to control pests in agriculture and shipping: Methyl bromide used to be injected into the ground to sterilize the soil before crops are planted, with 50 to 95 percent of it eventually entering the atmosphere and depleting the ozone layer, until it was phased out from 1994 to 2005. 

Furthermore, diseases are spreading quickly due to climate change and expanding global trade. For instance, seeds are grown and traded around the world, and there are many examples where diseases in agriculture that originated in other countries have spread across the world in a matter of weeks or months via the seed market. This can have a huge economic toll on food security, quality and production. 

Monitoring, measuring and regulating our ecosystem, along with the substances that we put into our ecosystem and the practices we use to create a global food and agricultural economy, is vital as we work to create a healthier, more vibrant earth for ourselves and future generations. This is an urgent need because of the state of our soil and the depletion of our topsoil. If we continue to use soil the way we are today, we’ll have only 60 more cropping cycles left. 

Now is the time to build a cohort of stakeholders — including farmers, chemical manufacturers, small and large food brands, policy makers, activists, scientists and technologists — armed with information on what good soil looks like, why we should care about what’s under the surface and what immediate and long-term impact soil wellness can have our world to fast-track innovation and positive change.