227: COP28 Panel: Turning Sustainability Values Into Action

Craig Hanson: [00:03:50] Great. Well, first of all, thank you for hosting this. Thank you, Mastercard for bringing this all together here. And great to see you here all in the audience. A couple of things. So first of all, as you hinted at, recent IPCC report articulated that to achieve the 1.5 degree target, you need about 40 to 70% of the solutions on demand side right. That's the behaviour change by all of us humans in what we buy, what we consume, how we act, etc.. So, and as you noted, people mostly talk about the supply side of things, right. How do you generate more renewable energy, etc., but how do you create electric vehicles. But there's the flip side of the equation of how do you get people actually to buy the renewable energy, to buy the electric vehicles, to change their diets, etc., is equally important in terms of the equation. Now, we all know from surveys that people will say one thing. A recent survey looked at European consumers, and more than half of them said that they take environmental considerations very seriously or somewhat seriously in the purchasing decisions that they make. Now, if that were completely true in actual behaviour of consumption, we might not be where we are today in terms of the world and climate change, right. So it's one thing to say something, another thing to act and one thing we found in our work at World Resources Institute is that we actually need to take some of the techniques that the marketing organizations have done for 70 years to get us to buy certain products as we leave the, as we leave the checkout counter and apply them to sustainability.

Craig Hanson: [00:05:15] And one, just to give one example, I'll come back to many more later on is certain things drive human behaviour, and it's really not saying that this is good for you or good for the environment. It's more subtle things. One example is we did some work with our, Cool Food program with Panera Bread, and we were trying to get, Panera Bread's part of this thing called Cool Food. They're trying to actually reduce their emissions to meet a science based target in terms of the food they actually serve. We're trying to think through how do we actually get people to buy the lower carbon food. So we actually did a did a test with a dish of a certain black bean soup. And you can sell the black, they were selling the black bean soup as low fat black bean soup. And we said, well, maybe that's not what's going to drive behaviour, right. Because actually what we know from surveys is that when people see low fat, they think no taste. Right. And so we tried a couple different names, right. Low fat black bean soup, blah, blah, blah, you know, a few other options. And one of them was sizzling Cuban black bean soup. Sales of the sizzling Cuban black bean soup skyrocketed compared to all the other options right. It's exactly the same product, right. There's no lying in any of this type of stuff, but just what you called it influenced human behaviour. And I think there's lots of things we can learn from things like that to get consumption patterns to match the ambition that we've gotten.

Tom: [00:06:29] Fascinating. I completely agree. And actually, sometimes not talking about climate can be the way to incorporate those types of transformations. Ellen, I'd love to come to you. This gap between values and actions is something I know you've been thinking about a lot in terms of your business strategy. How do you at Mastercard, think about this, and how are you going to try and address this challenge?

Ellen Jackowski: [00:06:47] Sure. Well, again, Tom, thanks so much for moderating the conversation today. So similarly, we've seen the research that that talks about the say do gap. So about 85% according to Mastercard research of consumers have the intention of changing their behaviour right. They want to do something that's climate positive. But then when we actually see the number of folks that are doing this, that gap certainly exists. So with where we sit in the value chain, we have 90 million merchants on the Mastercard network, 20,000 banking partners, and over 3 billion cardholders. So when you think about the number of people on the planet, 8 billion and we have a connection, we can see the consumption patterns of almost half of the population on Earth and some of the largest consumers on Earth. We sit in a really important position to help influence that, say do gap to close. So the way that we think about it is this structure of inspire, inform and enable. How can we inspire with the sizzling Cuban black bean soup, you know, people to make those choices? How do we help our merchants think about the language, the positivity of climate action.

Ellen Jackowski: [00:07:59] And again, it may be not talking about climate for us, our priceless brand. You know, what does priceless mean? What are those experiences? For a while now, we've been defining that. But it's time to evolve it into a sustainable lifestyle. It's also priceless. So we're really focused on that inspiration and the messaging involved there. The second inform is really focused on the information that we can provide to consumers so that they can make a more educated decision. And I'm sure we'll get into some of the the technicalities there of the products that we offer and then finally enable how do we actually turn that into action? That could be things like what we've done earlier this year where we changed a rule on our network, where all of those issuers, the 20,000 banking partners that issue Mastercard's all over the world, now must make their plastic cards out of recycled plastic or bio based plastic. And that provides a nudge to all of those consumers to remind them to take action for sustainable choices.

Tom: [00:08:57] Amazing. Thank you. And speaking of being at pivotal places in the economy, Kate, Google could not be more pivotal in the economy. And I think what's really interesting there is I know you're really committed to closing this value action gap, and I also know that you can't sort of turn Google into a climate NGO where you're trying to push everyone in that direction, and that may have. So how do you do that in a, how do you use the considerable position you're in to change that trajectory, but also do it in such a way that you don't precipitate the pushback that might otherwise come?

Kate Brandt: [00:09:26] Yes. Well, again, wonderful to be with you all. And this is, I think, one of the most important conversations we could be having. And I think to your point, Tom, you know, it was very noteworthy that the AR6 Report for the first time pointed to the importance of individual action. And, Craig, you cited some interesting statistics. The one that I've noted is that the IEA estimates that about 55% of cumulative emissions reductions we need by 2050 are connected to a consumer choice in some way. And we're seeing this in Google search trends, in fact. So you know, as a knowledge and information company, we love to look at trends. So you cited some very interesting trends Ellen, I was going to share a few more with you. We've seen that global EV related searches have nearly doubled over the past two years. Search interest in energy crisis hit an all time high in 2023, and that global search interest in rooftop solar power increased by 60% last year. So further affirming what we've all been saying is clearly the interest is there. But again, how do we close that gap? And the way that we have been thinking about it at Google is people come to Google in moments of decision seeking helpful information. And so we want to meet them. They're coming to us with search interest on these topics.

Kate Brandt: [00:10:40] How do we meet them in those moments of decision in meaningful ways? And then also thinking about the science based approach of, as an individual, what are actually the most carbon intensive decisions I'm making? And what we know is that a couple of key areas are home energy, how your heating and cooling your home and also transportation, how you're getting around. And those are also natural areas for us where we already have products and solutions that people are using. So we've really, in our initial work in this space, put a good big emphasis on those two areas. And we shared in October at an event we hosted in Brussels, kind of the first tranche of solutions that we've produced in those areas. So this is things like, we now have a whole new and hopefully more helpful experience for our users on buying an EV. We have an EV calculator that enables you to understand the life cycle cost of an EV, as it would compare to an ICE vehicle. We're showing locally relevant information about tax incentives in the US and parts of Europe, and we're looking to expand that through additional data. And we're also showing people, you know, we know about range anxiety. That's a real issue for some people in buying an EV. So there's a helpful feature where you can see your favourite places you like to go on a family vacation.

Kate Brandt: [00:11:56] Could you get there or what would that experience look like? Where would you need to stop to charge? So we've put those features out there and then in home energy similarly, you know, we all know heat pumps have been a big topic of conversation. But the challenge is a lot of people don't know about them. I always admit that five years ago I didn't even know about them, and I missed an opportunity to put one in my house. And so equally, we're working with organizations like the IEA to surface helpful information to people when they come to us. And they said, well, our air conditioner is, my air conditioner is broken. So they see information about heat pumps. What are their options for heating and cooling. What incentives exist. So those are some of the kinds of features that we've been rolling out in this initial tranche. But as we look ahead, we've set a pretty bold ambition, which is that we want to enable a gigaton of avoided emissions for individuals, for cities, for partners by 2030 and every year thereafter. And so for us, that's really about how do we enable other people to achieve their climate goals through really helpful information.

Tom: [00:13:00] And I love that for lots of reasons. But one is I've sort of long thought that we kind of made a mistake by thinking that actually we would solve climate, by looking entity by entity, looking at what their emissions are then somehow at the end, we'd add all that up and that would equate to solving the problem. Whereas, of course, we know that many of the most interesting things are about the influence we have and the systemic impact. So just one question further on there is, I love that initiative. How do you track that? Or is it enough to know that you're having an influence?

Kate Brandt: [00:13:26] Yeah. So this is a big question. And we have a couple of early kind of lighthouse solutions that we have shared enabled emissions reductions for, where it's a little bit more straightforward to figure that out. So things like our Nest Learning Thermostat, you know, we know that that's enabled customers to save over 1,000,000,000 kilowatt hours of energy. And then you can convert that into carbon. So that's fairly straightforward. Also one of the other features in this domain and the transportation space is something called eco friendly routing, where you may have seen that little green leaf that's popped up in your Google Maps that's showing you the most fuel efficient route if it isn't already the fastest one. And so we've done a pretty complex calculation that tells us we think that's roughly enabled about, 2.4 million metric tons of CO2e equivalent emissions reductions. And now we're working on quantifying some other solutions. But I think this is, you know, as we were discussing backstage, I think this is a really important topic where as companies are expanding their work in sustainability, as both of ours are, to not only be about how do we manage our own footprint, but how do we enable others. We want to be able to quantify roughly what is that opportunity, what is that benefit we're accruing. But that that's a very challenging measurement proposition. And so how do we get that right, that we're indicating progress, but acknowledging that that measurement is going to be complex.

Tom: [00:14:54] Yeah. And how do you keep the focus on the systemic relevant pieces rather than going too far. So this is really, I think what's so exciting about this area is there's so much innovation and creativity, and yet it's still not properly on the COP agenda. And people aren't really identifying the challenge. How do we move this faster, Craig? I mean, do you think that there's a way of, where would you like this to be next year? How do we get that at a COP next year? How do we accelerate the understanding of this issue and get more companies doing more systemic thinking about these solutions?

Craig Hanson: [00:15:21] I think we need, among other things, we need to actually be communicating. You know, what's working. Some of the examples that you just mentioned here, if we had more and more of those, I think that would inspire entities, companies as well as governments of what the portfolio of options are. I would highlight two things. One thing that you had mentioned here with Google in terms of, the information at the moment of decision. So like I put my Google Maps, I have two options. The fact that that leaf comes up at that moment of decision making, right. Or you're doing a search on solar or whatever, right. And then the options pop up right in front of you. So that's at the moment of decision. The second one I think is interesting that we've seen some uptake on is choice editing. Or in one example of a choice editing is shifting the default. So for instance, in the city of New York now in their hospitals, the vegetarian option is the default now option. You have to then ask for the carnivorous option, etc.. On Fridays in New York City, the meal is as vegetarian as plant based plant forward. But then you have to ask for, if you want some, if you wanted the chicken instead, right. So defaults matter.

Craig Hanson: [00:16:32] People are lazy and I would argue as I say, I said I am as well, in terms of decision making and people tend to go for the default as the first. So even shifting that goes on, and we actually had a decision in our household about, our AC units went out and even before my wife and I could actually say, what about this heat pump thing. Actually, the flyer that came out, you know, to us actually had that on there. So which I thought was really, wouldn't have been there three years ago, but it was actually there and saying, hey, you might want to think about this first. Saves your money, might be a little bit more money up front, but here's the cost savings. It was kind of it was the default one. And then oh, but if you don't want that then you can look at the conventional one, which I would argue in the past has always been the other one. Oh, and if you are this fringe person, you might want this eco friendly thing, right. Can we get the eco thing to be more like the default, I think that would help with driving decisions.

Tom: [00:17:19] Right. I mean, thank god we've moved past the phase where we keep saying, you should do this because it's good for the planet, because we know that that didn't work right. And we're now moving into these much more practical, human psychology based approaches. Ellen, same question to you. I mean, I know you've been grappling a lot with like point of purchase decision making. How do you reflect that. What do you think is next as you look forward the next year or more? How do we begin to accelerate this space?

Ellen Jackowski: [00:17:40] Sure. So, you know, one of the early products, kind of our first generation products that we have inform, excuse me, in the inform piece of our strategy is the Mastercard carbon calculator. So at the end of the month you get your bill. It has line items of everything that you've spent and the total financial impact. It also has line items of the estimated carbon that you've spent and the total carbon impact that you've had that month. So interesting, right. Interesting. You've already made that decision. You can use that information for your purchasing next month, but that's kind of hard to do, right. So what would be I think more interesting, which we're working on, is, first of all, how do we get more granular in that data. So right now it's at the sector level. We want to move to the merchant level and eventually where it makes sense, the skew level. But more importantly, how do we bring that information from post transaction to pre transaction so that when consumers are making those decisions they have the right information, the right context there. And again maybe it's not even the actual number itself, the carbon impact. But maybe it's on a scale like a five star system or a five leaf system. So we're working with some of our merchants to pilot some of these concepts, but I think trying to figure out how to bring the right information at the right time in the point of decision making is really important.

Tom: [00:18:53] So, I'm going to ask you the question I always ask podcast guests at the end in a minute, because this is a shorter conversation that would otherwise be, we can maybe carry on if we want to, but is there anything else any of you wanted to share that we didn't get to about this critical issue and where we are?

Kate Brandt: [00:19:08] I mean, I was just going to add the thing that, you know, we've been thinking about a lot is we want to both provide people helpful information in these moments of decision. We also ideally want the sustainable choice to be easy and better to have co-benefits. And then I think the other side of that argument is people who say, why involve the individual at all. And you know, why not just create the solution in the background. And I would sort of say, I actually think we need to approach it from both ends. And so we're, you know, we're also thinking about those kinds of solutions, right. Like we talk about aviation as a hard to abate sector. Do you want to ask people to make a different decision, or do you want to find breakthrough solutions that don't require them to make a different decision. And so, for example, we've been working with Breakthrough Energy in American Airlines to use AI to better understand why contrails form, you know, contrails, those clouds behind airplanes.

Tom: [00:20:00] Hugely impactful.

Kate Brandt: [00:20:01] Right. Those actually represent a third of the global warming impact of aviation. What we found in our initial pilots with American Airlines is you can reduce contrails by more than half by making, you know, adjustments in the altitude that pilots are flying at that are AI recommended. So that's an example where we didn't need anyone to do anything we could provide a really easy solution to, in this case the airline, so they could change their behaviour. And then you didn't have to. So I think we're going to continue to see both sides of this debate. And my answer, like with everything in the decisive decade, is we should do both. We should be doing all of it. We should be giving people helpful information in their moment of decision. And we should also be coming up with those solutions that don't require people to change.

Tom: [00:20:44] Yeah, yeah. Moving beyond these dichotomies in the climate space, is it corporates, is it individual, is it governments. And actually saying we've got to do all of this stuff. And it's what's more it's mutually self-supporting, right. If you have individual behaviour change that also changes other strategies. That's definitely the way to think about it. So I like that a lot. Okay. So the question I want to ask you is as you think about the future of sustainable consumption demand side management, what makes you feel outraged and what makes you feel optimistic? And, Craig, I'm going to pick on you to start.

Craig Hanson: [00:21:14] Outraged. The slow pace of change, human habits are hard to change, right. We have them for reasons right. Evolutionary reasons. And so it's tough to change. And so I do agree with Kate here that we need a both and. Right. It's at the point of decision, people want freedom of choice etc.. At the same time there are some things one can do on choice editing or like I was giving an example of New York, or in just finding the solution so that the decision maker, I take an example here of deforestation free products right. You know, we want a world where someone goes to the store and the product they buy has the soy in it, or the beef or whatever. The palm oil, that's deforestation free, not oh, there's deforestation ones over here, the free over here. You get to choose. And this one's $0.05 more. No, it's just all of it. Right. Because you've dealt with it early in the supply chain via voluntary agreements, public policy, etc. we want a world where we can get to that. The consumer doesn't care. At the end of the day, right. Palm oil is one ingredient amongst 15 in your candy bar, right. So those are things that are really good to have. But at the same time, on those things, there's the choice of do I want the heat pump or the conventional trying to get better at having the default shift and then the at the moment of decision, the right information, the right time communicate in the right way. To your point, not necessarily saying it's good for the environment, but it saves you money in the long term. It's better for your household wallet, etc. things like that I think would be very helpful.

Tom: [00:22:40] Okay. You've got to go to optimistic.

Craig Hanson: [00:22:42] Optimistic?

Tom: [00:22:44] Or was that both?

Craig Hanson: [00:22:45] Well, that's a bit of both. I mean, I'm a believer that humanity is an 11th hour, 59 minute species, right. We take things to the very end and then we shift. And so I'm an eternal optimist in that way. Plus there's no other alternative, right. You can't give up.

Tom: [00:23:00] Ellen, do you want to come in?

Ellen Jackowski: [00:23:01] Sure. So in terms of outrage I mean it is the say do gap. The intention is there. You know, the research shows that the numbers show people want to make a more sustainable choice. They want to do the right thing for the planet, for the next generation, for their children. So how do we make it easier. Right. The intention is there, but for some reason it's not happening. So why I'm optimistic is because there are very powerful companies Google, Mastercard, the scale, the reach that we have, all of the other corporations that have shown up here at COP. Right. They're here trying to figure out the solutions, and we have the power to scale. So, you know, the fact that we're all showing up, we're all working together to find the right partnerships and the innovation. I'm very optimistic.

Tom: [00:23:46] Love it. Kate?

Kate Brandt: [00:23:47] I love that Ellen and I was going to say something similar. I would say I'm frustrated that we haven't made more progress yet because there is this demand, and I think there is the opportunity to provide people with the helpful information they need to then make their own choices. And I think increasingly we're seeing the sustainable choices are the better choices. You know, that's why a lot of people love their EVs not for environmental reasons, but because it's just a better performing car and it's cheaper and it's easier to maintain. So I'm impatient for us to get that information in people's hands so they can make those decisions for themselves, and also for more of those better solutions to exist in the marketplace. And I am also optimistic that there is this demand. You know, I think it's not very long ago that we weren't seeing this level of demand from individuals, that people weren't paying attention. I think that's hugely exciting and important, and I think increasingly needs to be part of the conversation at events like COP 28. So that's why I'm really glad we're talking about this today.

Tom: [00:24:47] I love it. Thank you all. I think one thing that struck me throughout this conversation is that governments aren't going to do this right. Politicians don't have the courage to actually look at something that, even on its fringes, looks like they're going to be editing consumer choice because they're afraid politically that's going to blow back in their face. There's some specific examples of that. So this is on the corporate sector to lead. And I love the fact that you're all thinking about this, grappling with it, working out your way in society to figure that out. So Craig Hanson, Kate Brandt, Ellen Jackowski, thank you so much.

Craig Hanson: [00:25:16] Thank you.

Kate Brandt: [00:25:17] Thank you.

Ellen Jackowski: [00:25:17] Thanks, Tom.

Tom: [00:25:18] All right. Okay.