This article is based on Andrew Greenspan’s keynote at the 2020 international conference of the System Dynamics Society, entitled “Corporate Sustainability Applications of the En-ROADS Model”. The full presentation can be found here.
From my seat in Corporate Sustainability within HSBC Bank USA, there are questions I often ask myself about how to engage others on climate change. For senior managers, how can I cultivate leadership toward action? How do I help my colleagues – in asset management, in credit risk, in procurement – understand the urgency and complexity of the problem? How can I best engage and inspire in a way that’s meaningful to others, given all of the other demands on their time and attention?
We’ve been collaborating with Climate Interactive for the past three years, using the climate model En-ROADS to answer these questions in a unique and powerful way. But what makes En-ROADS so useful? And how, exactly, is a multinational bank using a system dynamics climate simulation model in its work?
First, En-ROADS is effective because it enables the creation of a vision. We’ve developed our own HSBC workshop around En-ROADS. In it, employees brainstorm the bank’s sustainability commitments and use the model to ask: what would be the possible effect on temperature if the rest of the world followed our lead? We use the model to explore possible alternative futures to the scary trajectory that we’re on. Over the course of the workshops conducted, we’ve registered consistent feedback from employees that they feel more hopeful, less overwhelmed, and can use En-ROADS to think about how to act on climate in their own roles.
Here’s an example of a scenario we came up with in one workshop. It incorporates several of the key HSBC sustainability commitments. For example, we are RE100 members, committed to buying 100% of our energy from renewable sources by 2030. We’re also leaders in the financing of renewable energy projects in North America. We’ve set targets for winding down coal financing. We have policies that govern our lending practices for environmentally sensitive sectors, which include prohibitions on any financing activity that could result in deforestation. This past fall, HSBC announced a pledge to reduce financed emissions from our portfolio of customers to net zero by 2050 or sooner, in line with the goals of the Paris Agreement.
To reflect these, and as a proxy for coordinated global action, the group moved En-ROADS dashboard levers to subsidize renewable energy; put a very high tax on coal; and reduce deforestation, as components of a broader scenario. The result shows what the impact could be if these policies were to be implemented globally.
(live scenario here)
En-ROADS also explores impact through a grounding in science. As a bank, we can explore questions such as: what are our leverage points? What are the small things that we do that can have a significant impact, and how can we amplify that impact through further action? How can we establish a foundational understanding of the impacts of climate transition risk along different temperature pathways, an incredibly important topic for any financial institution or investor to understand? What might happen to energy prices under different conditions and scenarios? En-ROADS is easy for a layperson to work with and is incredibly effective in the application of just the basic features, but beneath the dashboard is additional functionality within a complex and robust model backed by thirty years of climate modeling.
Our global Head of Corporate Sustainability wanted to improve our employees’ ability to “speak climate,” to think and talk about the problem in a sophisticated and scientifically accurate manner. En-ROADS has helped us to achieve that.
Perhaps most importantly in a corporate setting, En-ROADS offers a highly interactive and collaborative experience. People don’t want to be lectured about climate science, they want to explore and learn for themselves. The tool is most powerful when we “give” the model to participants and let them embark upon their own learning journey.
When I delivered a climate workshop to our Continental Europe executive committee, two members of our C-suite hunkered down together on their laptops. We had scheduled twenty minutes of breakout group time to create two degree scenarios using any of the 18 En-ROADS levers, but these two managers spent their time debating the details and impacts of different carbon pricing strategies: testing assumptions, challenging each other’s’ thinking, and entertaining multiple viewpoints. I see this deep level of engagement and peer challenge constantly in the En-ROADS workshop. No one is tinkering on their smartphones when we run these sessions.
Those are a few of the things I have found particularly valuable about En-ROADS. So, how have we specifically been using it at HSBC? Here are a few more examples:
Influence the C-suite. We often bring together senior decision-makers to experience En-ROADS. In New York, I recently did a session with our Chief Operating Officer and her executive team. We have an energy efficiency target for our sustainable operations strategy, and I asked her to mentally model what she thought the effect of a tripling in the annual rate of efficiency in our buildings would have. Moving the building efficiency lever in the model yielded a third of a degree decrease in temperature in our scenario – a big step forward. There was a virtual moment where our COO looked at our Head of Corporate Real Estate, and they had a new, shared understanding of how important our energy efficiency targets can be to meeting the overall strategic objectives.
Demonstrate industry thought leadership. At HSBC, we’re interested in financing the transition to low carbon. We also want to build knowledge and drive the conversation on climate across all industries. That’s why last February in Phoenix, HSBC and Climate Interactive ran an En-ROADS workshop at the GreenBiz conference, the premier annual event for sustainable business. Out of 111 sessions, our workshop was rated number one in a post-event survey.
Last year at the World Energy Congress in Abu Dhabi, I facilitated a role-playing exercise with En-ROADS. One hundred and fifty energy professionals were grouped into blocs with competing interests: conventional energy, clean energy, land and agriculture, government, and environmental justice hawks. They negotiated a path to meet the goals of the Paris Climate Agreement over the course of three hours. The dashboard levers moved back and forth over the session as they debated, compromised, and hammered out a vision for a sustainable future. This is the world they negotiated over three hours:
(live scenario here)
Collaborate with Clients. At the GreenBiz conference, there were clients of the bank who attended our workshop. With one food and beverage client, who saw En-ROADS’ potential for her organization first-hand, we’ve now co-facilitated five sessions. They have a more direct ability to impact methane and nitrous oxide emissions in agricultural processes than we do, they’ve looked at energy efficiency in transportation, and they are big supporters of renewable energy. Through En-ROADS, we’ve been able to explore what’s possible when two large companies working together with a set of shared values and a common vision.
Explore Societal Trends. Visioning and scenario-planning with the model often leads to fascinating questions from our employees. What does a world powered solely by solar energy look like? What would be the impact of the whole world eating less meat?
At a session I did in Dusseldorf, I used the model to explore the impact of a circular economy. A colleague who worked in procurement admitted that she really didn’t understand the connectivity between the circular economy and mitigating climate change. So I proceeded to show her, using a thought experiment:
(live scenario here)
If you successfully implement the circular economy, you’ll need a lot less oil for virgin plastics by mid-century. There’s much less emission of methane due to less landfill activity because we’ve broken the linear take-make-waste approach to consumer goods. Less packaging means less deforestation and decreased need to mine the world for resources. En-ROADS gives people a nimble and fascinating way to grapple with questions like this, and test out potential answers. It is important to note that with this kind of thought experiment, some of the policies and behaviors have a more rigorous scientific backing and correspond more directly with the levers in En-ROADS than others, and these actions should form the basis of the discussion.
Discuss the Global Response to COVID-19 pandemic. This spring, we started asking questions and using the model to explore some urgent and unexpected questions. How might the world respond to the COVID-19 pandemic? What might a climate-friendly set of economic stimulus packages look like? What lower-carbon behaviors have we developed as consumers during the pandemic that might be maintained afterwards?
Below is a scenario that employees created in one workshop, showing how we might emerge from this crisis with lower-carbon policies and healthier environmental practices. We’re going to continue to work from home a lot. We’re going to walk and cycle more. We’re not going to subsidize fossil fuels. If we need a car, we’re going to buy an electric vehicle.
(live scenario here)
As we all understand, fear is not a good starting point for creativity. We used En-ROADS to focus instead on building a better world post-COVID. It offers hope, encourages open-mindedness, and lets participants experience success at an often stressful and discouraging time.
Practice Multisolving. In all of our En-ROADS sessions, we’ve been using the model to help understand the intersection of climate change, health and equity. I did a workshop with our company affinity groups, which we call Employee Resource Groups. Using a process that Climate Interactive refers to as “multisolving,” we dug deep into conversations about culture, action, and social and environmental injustice in the context of climate change.
Below is an example of a social equity-focused scenario, where solutions to climate have multiple co-benefits that prompted good debate about the equitable way to consider different actions. We want to incentivize transportation electrification, but will charging stations be built in lower-income communities, and will those residents be able to afford EVs? Will the “pedestrianization” of cities happen in all neighborhoods? We don’t want coal-fired power plants in low income communities, so we disincentivized coal. This has an impact on improving local air quality as well as reducing climate impact. Climate Interactive just recently added air quality impact as a feature to the model so that we can see this co-benefit more clearly and accurately.
(live scenario here)
I personally learn something new every time I use the model: insights about how to engage others, better understanding of a key leverage point, a regional anecdote shared by a knowledgeable participant that perfectly brings to light a dynamic in the model, or a different way of thinking about a problem. For companies looking to shape, deliver or simply communicate their climate strategy, En-ROADS has a place in the corporate sustainability toolbox.
Andrew Greenspan is VP of Corporate Sustainability at HSBC. He is currently supporting the development of the bank’s climate transition risk program, which will provide a risk assessment framework for carbon intensive sectors.
Andrew Greenspan and a few others detailed this experience and published it in System Dynamics Review, you can access the peer-reviewed paper here.
Interested in learning more? Sign up for our upcoming webinars on En-ROADS.