Many of us–90,000 attendees and 65,000 International Builders Show registrants, by National Association of Home Builders estimates–gathered in Las Vegas last week.
Learning, connections, sales pitches, product launches, the event succeeds in bringing residential construction’s trillion-dollar, multi-tentacled ecosystem in under one big tent for the better part of a week, a living, breathing market of negotiations, insights, and ideas that keep building’s life-cycle cycling. Spirits are running high. Focus among those home builders we spent time with has lasered-in on raising one’s game. There’s mojo out there in the markets, and an opportunity to meet it with products and processes that builder teams have geared up for a moment just like this one.
And then there were the blackjack and the roulette wheels and the craps tables and the one-armed bandits. Builders love Vegas. Builders love to gamble in Vegas. And builders love to gamble. Blackjack–where a player’s strategy shapes itself around cards the dealer reveals, hit, stand, double-down, split, etc. Some think this game originated in 17th Century Spain, while others trace it to earlier–Roman Empire days–where, instead of playing cards, wooden blocks with numbers on them were the basis of the game.
At any rate, blackjack’s inventors might well have had builders in mind when they concocted this particular mix of strategy and chance, statistics and random possibilities, winning and losing, glee and pain.
And while we were out … nearly six-thousand miles and, seemingly, another planet away, Davos, Switzerland. There, as home building’s hive of nearly 100,000 participants gravitated around color trends, interest rate projections, ease-of-installation, data and technology’s impacts, and most-of-all, costs–plus the blackjack tables–World Economic Forum leaders riveted themselves to another game of risk.
Wall Street Journal reporters Stephen Fidler and Elena Cherney, who covered the annual meeting in Davos, characterized the intensity, urgency, and challenge around the issue as they lead into details about the who, the what, the how, and the why-it-matters at the essence of business and economics, locally and worldwide. They write:
The annual meeting of the World Economic Forum in Davos showed climate change has become a top issue for many businesses and governments, but also demonstrated a yawning gap between how they view the scale of the challenge and what can be achieved without significant new policies.
It was a year in which the issue, which many people here believe has contributed to extreme weather-related events such as the Australian bush fires, appeared to shift from a fashionable talking point to a matter that is beginning to have real-world consequences for many banks and businesses.
It was on the eve of the Jan. 21 to 24 forum that BlackRock ceo Larry Fink released his annual letter to CEOs, advising them as to the priorities BlackRock would apply to its make-or-break investment tactics and strategy in the near- and long-term future. Fink’s words–backed up by upwards of $7.5 trillion in assets under management–amount to a bomb blast.
Fink writes:
In a letter to our clients today, BlackRock announced a number of initiatives to place sustainability at the center of our investment approach, including: making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.
Over the next few years, one of the most important questions we will face is the scale and scope of government action on climate change, which will generally define the speed with which we move to a low-carbon economy. This challenge cannot be solved without a coordinated, international response from governments, aligned with the goals of the Paris Agreement.
Under any scenario, the energy transition will still take decades. Despite recent rapid advances, the technology does not yet exist to cost-effectively replace many of today’s essential uses of hydrocarbons. We need to be mindful of the economic, scientific, social and political realities of the energy transition. Governments and the private sector must work together to pursue a transition that is both fair and just – we cannot leave behind parts of society, or entire countries in developing markets, as we pursue the path to a low-carbon world.
Make no mistake, Larry Fink has his fair share of detractors. Some call him out as being less than honest and overly moralistic in laying out business principles and practices. Some go so far as to allege he’s merely angling for personal and professional gain through “virtue-signalling.” Still others, like the Sierra Club, believe Fink’s missive masks a hypocritical all-talk-no-action greenwash.
Despite the principles Fink has laid out in this and previous years’ letters, BlackRock continues to be the world’s largest investor in the industries that are driving the climate crisis. BlackRock is the largest investor in new coal plant development worldwide, one of the largest investors in oil and gas companies, and the largest US investor in rainforest destruction.
Not only has BlackRock refused to divest from destructive industries, it has also failed to use its influence for good. BlackRock consistently votes against shareholder climate proposals and has a worse track record than other large global asset managers. As 50/50 Climate Project found in an analysis of 2018 shareholder votes, BlackRock supported only 23 percent percent of proposals related to addressing climate change. BlackRock also continues to vote for the reappointment of nearly all directors at companies, even when they fail to address climate risk.
Yet attempts to discredit the gist and spirit of Fink’s manifesto cloud and distort an unspeakably urgent matter. It’s a matter that deeply, necessarily, and inescapably impacts people who build homes and communities. It matters to you, to us.
There are two absurdly simplistic, profound, and heart-wrenching reasons it matters so much.
- Children
- The next generation of builders, architects, developers, manufacturers, financiers, and distributors
That’s it. It’s not complex. Although the data on CO2 emissions and the rate at which millennium-old delicate balances have begun to collapse is complicated, the endgame of all of this data, this tonnage of information, this mind-boggling science, this calculus of nature on uppers comes down to the built-space, homes, the world, the systems, the business models, and, as Fink points out, the investment theses we grown-ups are handing to our children, and their children.
Fink’s position is this. Sustainable successful profitability and sustainable shareholder–and stakeholder–returns are not mutually exclusive notions.
Here, New York Times tech columnist Kara Swisher challenges Silicon Valley for its risky belief that “doing well” and “doing good” are two separate paths, one rewarding and one simply costly. She speaks truth to power on the missed opportunity, the potentially hazardous hesitancy to embrace and commit to taking an active role in a decarbonized–but wildly profitable–future. She writes:
in the same way that tech ignores the benefits of diversity — which many studies have shown to be a key signal of a successful organization — it continues to ignore the benefits of green tech. The amount of investment and innovation aimed at green technology remains stubbornly low compared with other tech sectors; most of the high-profile investments come from the likes of Bill Gates and Elon Musk.
I still do not get why Silicon Valley largely scorns green tech — except that perhaps it is a lot harder to get right than offering a new app in which teenagers can do dance-offs.
It’s a big mistake. Recent reports outline a multitrillion-dollar opportunity in the years ahead in a variety of areas, including battery storage, urban mobility, renewables, software and artificial intelligence to help us understand climate data, the food production ecosystem and even the way we construct our buildings, which is a surprisingly major contributor to the greenhouse-gas problem.
A similar challenge faces builders. This is not about choosing one or the other between being profitable or operating on altruistic business principles and values. This is about looking at those two critical “customers” of our firms–one, our own and other people’s children who’ll one-day live in, experience life’s most meaningful moments in, and perhaps die in our buildings and communities; and the other, teenagers and young adults whom we need to attract into our firms, into our business, into our sector to breathe fresh life and new ideas into it. Forget for a moment the dystopian scenario, the apocalypse, the doom and gloom.
Think instead about the enormity of opportunity embedded in the data, the facts of what’s coming in the months, years, and decades ahead. Look, for example, at the $200 million fund Fifth Wall just stood up, the Fifth Wall Carbon Impact Fund, “to invest in innovative technology and business models aimed at helping the global real estate industry minimize, and ultimately eradicate, its greenhouse gas (GHG) footprint.” Colleague Rick Schwolsky writes:
“The crucial role design and construction professionals will play in this fight couldn’t be clearer. According to Architecture 2030 (creator of CarbonPostive ’20 along with ARCHITECT magazine): “Over the next 40 years, the world is projected to construct 230 billion square meters (2.5 trillion square feet) of buildings, an area roughly equal to the current worldwide building stock, or the equivalent of adding another New York City to the planet every 34 days.
This data places efforts to reduce and eventually eliminate embodied carbon at the top of our accelerated target list. And yet we’re still in the early stages of understanding embodied carbon and developing and adopting the tools needed to effectively measure and eliminate embodied carbon from our building materials’ ingredients, processes, products, and practices.
So, will you stand, hit, double-down, split? Or rather, will you refuse to gamble when it comes to the real, human faces of your children, and grandchildren, and their kids, and others’ kids, on and on, in our world and in our industry? We–particularly the builders among us–historically, typically, almost predictably underestimate risk, in a game or in life. We tend, nearly invariably, to believe reward is our due, and is a more likely outcome.
Carbon Positive is a constructive, practical, action-oriented step toward the opportunity beckoning within the throes of a human reckoning. Join us, won’t you?
