Bruce Piasecki on Climate Competitiveness and Trane Technologies

Sea Change Radio

Generally speaking, the exclusive guiding principle for corporate success seems to be making obscene amounts of money. But what if corporations recognized that a truly valuable return goes beyond wealth accumulation to include positive impacts on the environment and society? This week on Sea Change Radio, we speak to Bruce Piasecki, an expert in the social impact investing space whose new book is entitled, Wealth and Climate Competitiveness. We learn about Piasecki’s personal journey, find out why he believes one corporation, Trane Technologies, is doing the right things, and examine what he means by climate competitiveness.

Narrator | 00:02 – This is Sea Change Radio covering the shift to sustainability. I’m Alex Wise.

Bruce Piasecki (BP) | 00:21 – What my work has always been about is the art of competitive frugality. That those who learn how to do more with less waste, less prejudice, less bias, are actually agile enough to see advantage before others capitalize on it.

Narrator | 00:42 – Generally speaking, the exclusive guiding principle for corporate success seems to be making obscene amounts of money. But what if corporations recognized that a truly valuable return goes beyond wealth accumulation to include positive impacts on the environment and society? This week on Sea Change Radio, we speak to Bruce Piasecki, an expert in the social impact investing space whose new book is entitled, “Wealth and Climate Competitiveness.” We learn about Piasecki’s personal journey, find out why he believes one corporation, Trane Technologies, is doing the right things, and examine what he means by climate competitiveness.

Alex Wise (AW) | 01:40 – I am joined now on Sea Change Radio by Bruce Piasecki. He is a book writer of the New York Times bestseller, “Doing More With Less,” and he also is the co-founder of the Creative Force Foundation. His latest book is “Wealth and Climate Competitiveness.” Bruce, welcome to See Change Radio.

Bruce Piasecki (BP) | 02:01 – Very glad to be here.

Alex Wise (AW) | 02:03 – I want to dive into one of the case studies within your book, “Wealth and Climate Competitiveness.” But first, why don’t you give us the basic thesis for the book. You’re quite prolific, but I want to know the genesis of, or the inspiration behind the book, if you can, just in more of a general terms.

Bruce Piasecki (BP) | 02:22 – To be supportive, it represents a sea change in me, . I had always wanted to write about prejudice, Alex, I look like a Caucasian athlete, which is my essence. But I had brothers, two of which were Puerto Rican and a Chinese sister Su-Yin Chang, and not a nuclear family. My mother, I had no father. He died when I was three. And so I witnessed the good trouble of prejudice from the time I was three throughout my first 20, 30 years of being a person in a neighborhood or in society. And so even though I had written, uh, books about famous people like Eileen Fisher or giants of social investing, I wanted to write a book from my heart about the prejudices I watched from poverty to wealth, how people’s perspectives of me changed when I became exceedingly wealthy from my work. And I also wanted to write a book about how we can’t solve the climate crisis unless we break down those prejudices.

Alex Wise (AW) | 03:33 – And how does climate competitiveness play a role in that brainchild as well.

BP | 03:39 – When I found myself working in seven person teams in 22 nations in Africa, of all things for Walmart, I started scratching my head. I had already worked for Toyota in helping them bring the hybrid powertrain and invent it here in North America. So I always was interested in doing more with less. I was always, uh, having been lucky enough to have been born poor and having climbed a series of social ladders by the time I was 25, I was shocked that some of the world’s biggest, most impactful firms, Walmart and Toyota being two of many hired us for change management. They knew that they were hitting a stone wall. It’s not really about what people like Paul Polman talk about in prior interviews with you. It’s not a big pivot that Andrew Winston talks about. It’s incremental change from within so that I was hired to enter the corporate mansion as a competitive person, go up the elevators of prejudice to the top, whereas working for CEOs and also CFOs and general counsels and essentially to bring the view of the outside world inside. So “Wealth and Climate Competitiveness” is a book where I’m showing that you cannot be competitive in a world of 8 billion people unless you learn how to bring the outside views of the women’s movement unless you’re outsmart the prejudices that sustainability and the environmental movement have has helped people see. But those people, uh, are normally like where I came from. We’re outside of the mansion, we’re not in the corporate mansion. We might be in the neighborhood, but we’re more in the muck of the every day. And so my new book is about the narrative that will enable us to bring the outside trends and insights that we need to conquer the climate crisis inside.

AW | 05:37 – And you talk about getting off the petrochemical treadmill companies being able to do that, ones that are agile enough and prescient enough to make that transition. Why don’t you expand, if you can, on that idea of, of getting off the treadmill.

BP | 05:53 – I actually in the book talk about how when Spindletop was hit in Texas and the black gold started coming out, it changed the essence of civics so that people before 120 years ago before the distortions of the petrochemical treadmill were basically in smaller social settings where they understood the rate of consumption and they understood the role of a range of people in solving social problems. But that oil made some and many so wealth wealthy that it created a distortion where we began to think of the capitalist as a bird of prey that would fly over hundreds of square miles and then strike with no regard and strike horror and dread and change in people’s lives. And so my notebook talks about a narrative based on the 700 year old tale of Robinhood and his merry pranksters. And I believe that the ESG investment movement as evident in some of your interviews, is a movement where every time someone clicks a shift from the greed and the endless gold of the petrochemical treadmill towards environment, social or government, that is being a Mary prankster, you’re a part of the Robinhood tradition of taking from the rich and giving to those who are needed. So, you know, Robinhood is a tale, invented in England 700 years ago that I studied in the book as something that morphed through small changes until it got into modern Hollywood. But it is a compelling new narrative that I think many of us are doing. It is an example of “good trouble” where you make capitalism, not speculative capitalism, but social response capitalism.

AW | 07:50 – And how do the writings of Henry David Thoreau play a part in this capitalistic viewpoint? The commons and corporate greed don’t necessarily have to be completely bifurcated, it seems like.

BP | 08:04 – Correct. I think of them in my book and in my management practice as osmotic. It’s two circles that are now, now intermixed like, um, the activities within a cell. I, I guess I would say that I’d like people to know after 22 books that I finally figured out how to wr write a closer to a Henry David Thoreau type passage. It’s not heavy chapters, it’s passages. And I do think it’s based on an honest assessment of human behavior. So Henry David Thoreau is a big player in this book for a couple of reasons. The the, the first is when he writes civil disobedience, he is already educated as an elite. He is already known by Ralph Walter Emerson. He is already what we would call a rich kid, but he decides to teach us as that an informed minority of the well-educated and the rich can actually have resistant power. And so in civil disobedience, he talks about, of course, 19th century industrialism where it was important for people like the textile girls or others, uh, protestors to essentially stick their hands in the mills to prevent capitalist injustice. But I think, uh, Henry David’s Thoreau sensibility in Walden is one in which we learn what is enough by retreating from the excess of the petrochemical treadmill.

(Music Break) | 09:45

AW | 10:41 – This is Alex Wise on Sea Change Radio, and I’m speaking to Bruce Piasecki. His latest book is Wealth and Climate Competitiveness. So Bruce, you mentioned earlier an archived Sea Change Radio interview with consultant Andrew Winston talking about Unilever and the ability that that company’s had to pivot, still stay profitable while quote unquote doing the right thing and being well governed relatively. You decide to focus on a, another company that doesn’t get as much publicity in the corporate social responsibility ESG Space train technologies. Why don’t you give us a little backstory on Trane Technologies and then explain what sets them apart from their competitors?

BP | 11:30 – So I first got intimate in the corporate mansion of Trane when they hired me to bring 35 companies inside their mansion to hold several days of benchmarking discussions. And they had already participated for 10 years before in my leadership workshops twice a year. So we were intimate before they brought our company’s down to them. Now by chance, when I was down there six years ago, they were splitting off of Ingersoll Rand, which was the 110 year old first corporate mansion and became a separate entity under the stock market. Now that entity in the six years of my case study in my new book has increased in stock value 406%. And so you have to ask yourself, Alex, I’m a capitalist. I invest in stock. You have to ask how did they create that future? How did they adapt to the changes in the market? And as an industrial, you know, one of the, you know, s and p 500, while the s and p 500 doubled in value those six years, what is it about Trane that enabled to grow in stock value?

AW | 12:45 – Let me interrupt you real quickly before you, we get into their current stock. Let’s go back even to the beginnings of, of the company as Ingersoll ran back in the mid-19th century, correct?

BP | 12:57 – Correct. So Ingersoll-Rand was primarily heavy tool making. And what happens we train is they do three fundamental industrial things. One is they’re involved in the cooling and the refrigeration of buildings and food transport. So for my client, Walmart, they ship more food than anyone in the front of the Walmart truck. They build the refrigeration system. They also in malls, you know, when we’re in shopping in a mall or when we’re in a, um, a movie theater, they’re the ones that are doing the analytics and the technology to reduce the amount of CFCs per refrigerant. Then finally, they also work on directly on food waste. So it’s building science, food, transportation, and by good fortune. So, you know, you have to always look at the luck of the market. They were the best to transport the visor high temperature vaccine during the pandemic. So as a stock analyst, I was trying to figure out how much of their four times in value 406 actually was a result of the pandemic and how much of it was a shift. And I decided it was all climate competitiveness that they have developed their strategies in those three business SEC segments based on the world trend of climate and about the need for efficiency. So I decided to write about them. Unilever is essentially one of the world’s largest railroad train type capitalists. They have 300 different brands of which the most fashionable and progressive is Ben and Jerry’s, right? But they actually have 300 other types of things where each is run separately and profitably, but it’s really 300 different entities. But they’re primarily a consumer product. They’re not industrial heavy like Trane. So in my book Wealth and Climate Competitiveness, I wanted to write about an industrial heavy that is normally inescapably attached to petrochemical treadmill and how they changed.

AW | 15:11 – So let’s just focus on the refrigerant side of things with Trane Technologies and I for our listeners, it’s T-R-A-N-E, not T-R-A-I-N. So they are doing a more environmentally sound version of what Fon used to be fairly ubiquitous in the seventies and eighties. And then after the Montreal Protocol, there was a lot of work done from the environmental side of things, governments, policy makers trying to eliminate these CFCs from tearing a hole in the ozone. Did train embrace this new technology quicker than their competitors? Or if you could isolate one or two areas that they were able to, uh, maximize with this emerging technology, how were they able to continue to grow a business that had had a fairly rocky recent history in the public’s mindset?

BP | 16:09 – Well said, I love your question and that’s why I wrote a book across three and a half years, and it’s one of seven case studies in wealth and climate. It is true that Freon was first, uh, regulated, through the Montreal Protocol. And one of my books after that regulation, uh, talked about the emergence of the eye clock, which is the industry cooperative for ozone layer protection founded by the 54 major atmospheric polluters that led to the popping of the holes in the ozone layer. Now, most of those companies, those 53 other companies operated in the normal way of an industrial consortium, the least common denominator. They changed less rapidly than Trane because Trane invested $500 million in advance of tax law changes or regulatory changes and were able to make inventions in chloral floral hydrocarbon emissions in the refrigerate refrigeration before it became law or regulation. So they do have some of an early innovator advantage, but what’s fundamentally interesting about them, Alex, is they say in the book is the way they attract human talent and the way they shift in midstream. So actually their way ahead of their competitors because of the 50,000 engineers that they have allowed or aligned around the world to understand the dynamics of money, people and rules regarding atmospheric harm. So climate change is the larger boogeyman that’s much bigger than ozone layer protection. And that’s why I chose them because they’re making changes both in the transportation of food, the transportation of all refrigerated vaccines, and also just in the basics of CFC reduction.

AW | 18:13 – While I read your analysis, I couldn’t help but also wonder about the spinoff from Ingersoll Rand that Trane Technologies and its former company did six years ago. So looking at this split, I I was wondering how much was just window dressing that this was like the environmentally sound piece of the business and they spun off from an industrial giant like Ingersoll Rand that was doing business as usual, or was it both companies? They were climate hawks from the get go.

BP | 18:47 – I think Ingersoll-Rand is a still a solid industrial player in a competitive market, but they’re not as dramatically exemplar of what I was trying to get at. I think that one of the things that I wanted to get at in focusing first on Trane was how they brought the outside world inside. Scott Tew, a managing partner of Trane, a man that I’ve worked on and off with for 15 years, um, brought in leading academics, leading investors, leading scholars, leading corporates, about 12 of them three times a year to their headquarters to interact with their chairman, CEO and three vice senior vice presidents. So Scott Tew’s job as a managing partner was not just to create new product, but actually to, to create what I’m calling, bringing the outside inside. And um, there’s a lawyer in my firm who did that at Kimberly Clark about 15 years ago, other firms like Herman-Miller, the furniture giant, that’s, they’ve done it – BP did it, but less effectively. So in the long run I believe that Trane is exemplar because they know shifts in world trends before their competitors. They’re already hearing it about it from these outside experts that they very carefully select. So let me give you two personalities that they selected and have brought in with great reliable pay and to these are people who are not beholden to the chairman or the CEO, they’re outside of the mansion. One is Terry Yosie, who used to run the World Environment Council for 10 years in Washington. So the whole world would come and apply to his staff to win awards for environmental progress. So Terry is one of the judges of the outside world that’s coming inside to train. Another is, um, I worked with her at Merck and Walgreens, Cathy Sierra. Cathy Sierra, I don’t remember her exact pedigree, Alex, but it was corporate and it was knowledgeable and it’s expert and independent. So just like an auditor financially has to be independent and knowledgeable. What trained it is it picked 12 outsiders that were independent and knowledgeable to kick ’em in the butt to be better than they normally would be. And that’s what I wanted to feature in my book because I think it’s a very powerful technique.

(Music Break) | 21:25

AW | 22:13 – This is Alex Wise on Sea Change Radio, and I’m speaking to Bruce Piasecki. His latest book is “Wealth and Climate Competitiveness.” So Bruce, switching gears a little bit, you have a sub-chapter in your book early on called the Distortions Prejudices Create, and you talk a little bit about our images of capitalism and robber barons. Maybe you can unpack that for us.

BP | 22:37 – So the first of the five prejudice I deal with in the book is this image of where did the robber baron come from? And I believe it’s based on the largest and the surplus wealth of the petrochemical treadmill. So from the robber barons, I then talk in the book about birds of prey because speculative capitalists are even a more vicious and rapid form of robber baron. So I talk about those two prejudices, but as I’m talking about them, Alex, I’m also talking about what they led to our bias about social movements. So when you go into the, the elevator to get to the shaft of these 18 CEOs I worked with, and this is across 40 years of general experience, I’m summing up in general, those that make it up the corporate mansion, they have been traditionally in disregard of social movements. They view social movements as the byproduct of socialists or people who don’t really understand competition. And what my work has always been about is the art of competitive frugality. That those who learn how to do more with less waste, less prejudice, less bias, are actually agile enough, like a train to see advantage before others capitalize on it. And that’s what’s so fascinating. It’s not venture capital, it’s not speculative capitalism, it’s a new form of movement. Social response, capitalism is almost antithetical to the American way of thinking.

AW | 24:13 – This growth mindset, this constant need for growth.

BP | 24:17 – Correct. So take for example, my friend Chris Coulter is an empiricist like me, and he just spoke with me at Standard & Poors earlier this week to 55 global companies. And he brought up the evidence, he asked the question of 31 nations, what is your perception of the need to shift to a green economy? You know, somewhat needed, not very much, not needed at all in places like Indonesia and Brazil and India and Nigeria. 99 to 97% of the populace that Chris Coulter’s teams surveyed said it is a very important need to shift to this off the petrochemical treadmill. To my surprise, in the uk, France, Germany, Netherlands, Australia and the USA, we were the most reluctant. And I think that’s because we’re the most prejudiced in our entrenched positions. We’re so used to not asking the question, what is enough? So 19% of the people surveyed by Chris Coulter’s Globes skin said the green shift is not needed at all. That’s horrible because in these other parts of the world, Singapore, South Korea, Peru, Mexico, it’s less than two out of a hundred people. Here we have 19 people out of a hundred totally resistant to investing in a superior way. Even though you can make more money now in renewable energy, you can make more money in a Toyota powertrain. The general assumption of those who haven’t asked capitalists the question of what is enough, they’re in a grand delusion. They’re in a spiral of self confirmation. And that’s what my new book is about.

AW | 26:05 – And similarly, you could just see that reflected in the governments that you were just talking about, where a Scandinavian policy maker will embrace the global Happiness index while the US is entrenched firmly in the idea of GNP, just constant growth and, and they’re ultimately at odds with each other when we look at what’s happening to the planet.

BP | 26:27 – That’s a brilliant comment, Alex. And what I think is the only way to outsmart those in power that will remain in power for a while is to give them new ways to make money. And so my work has always been about finding something that’s informative, persuasive, and delightful. So if you think of Ben Franklin 300 years ago, he did everything I’m talking about in today’s world of 8 billion people, when he is bringing his paper to his print shop, he’s tired of walking through the mud. So he convinced the government to build sidewalks. As he is getting older, he is tired of squinting. So he invents the bifocal when he is tired of buying all of his books, right? He happens to create the concept of the public library. Most of the time he ate vegetarian like my wife of 47 years because he was frugal, not because he thought it was healthy, he didn’t know the science back then. So to make a long story short, when I’m preaching as the new narrative in some ways is a classical argument. As you hinted at before, there have been selfish problem, problem makers laughing their way into dominance. But there has always been an emergent or progressive part of any culture that has found more frugal ways to do things.

AW | 27:50 – Well, it’s a fascinating topic. The book is terrific, “Wealth and Climate Competitiveness.” I really appreciate your insights, Bruce. Bruce Piasecki, thanks so much for being my guest on Sea Change Radio.

BP | 28:01 – Thank you, Alex.

Narrator | 28:17 – You’ve been listening to Sea Change Radio. Our intro music is by Sanford Lewis, and our outro music is by Alex Wise, additional music by Five Alarm Funk, Louis Jordan, and the North Mississippi All Stars. To read a transcript of this show, go to SeaChangeRadio.com to stream or download the show, or subscribe to our podcast on our site or visit our archives to hear from Doris Kearns Goodwin, Gavin Newsom Stewart Brand, and many others. And tune in to Sea Change Radio next week as we continue making connections for sustainability. For Sea Change Radio, I’m Alex Wise.