Future of Resilience by Denmark in Silicon Valley

Future of Resilience

Cases from Silicon Valley to Foster Questions and Reflections

foreword Welcome to an exercise of strategic exploration

Over the past year, Innovation Centre Denmark

and foresight! Business resilience is in many sens-

in Silicon Valley has collected actionable insights

es about leadership during the perfect storm. In

from innovative Californian companies to some of

a world grappling with a 'polycrisis', the impera-

the challenges posed by the world they operate in.

tive for Business Resilience has never been more

While it is clear that no ‘one-size-fits-all’ approach

critical. This publication delves into Technological

exists and that each company must find their own

Resilience, ESG Resilience, and Climate Resilience.

path to resilience, the publication is intended to spur discussions and provide inspiration for execu-

Join us on a voyage through nine inspirational case

tives and board members navigating the unpredict-

studies of cutting-edge Californian companies to

able terrain of today's business landscape.

uncover the strategies that empower organizations not just to survive, but to thrive in a ‘polycrisis’.

Special thanks are extended to our esteemed project partners at DTU Entrepreneurship and DTU

The three areas of resilience are described indi-

Board Education, who co-organized and hosted the

vidually, but the challenge lies precisely in the fact

Future of Resilience Roundtable in May 2023, and

that as a company executive or board member,

to all contributors who have made this exploration

one must be able to address many challenges si-

into resilience possible.

multaneously and make important decisions with far-reaching consequences amid significant uncer-

We hope you find the chosen cases inspiring, and if

tainty. The uncertainties and the need to focus on

you wish to continue conversations, we invite you to

building resilience are likely to only increase in the

reach out for further dialogue about business resil-

future.

ience in Denmark and California.

Jesper Kamp

Allan Skårup Kristensen

CEO & Consul General

Science & Innovation Attaché

Innovation Centre Denmark Silicon Valley January, 2024

Over the years, DTU Entrepreneurship & Board

And now, the exploration of the nine Californian

Education has engaged in a fruitful collaboration

company cases, specifically addressing business re-

with Innovation Center Denmark in Silicon Valley.

silience, is poised to instigate new and nuanced dis-

Our partnership, encompassing visits to California

cussions. I am confident that these conversations will

and the development of joint programs, is now re-

stimulate pertinent dialogues concerning the strate-

flected in this publication for which the work was

gic preparedness of our companies and entrepre-

kicked off with a joint roundtable discussion on our

neurs in an increasingly unpredictable world.

campus in Lyngby, Denmark with participation from distinguished senior Danish board members and entrepreneurs. Jes Broeng The insights shared by Innovation Centre Denmark

Professor, Director of DTU Entrepreneurship

from Silicon Valley always holds profound relevance for both board members and entrepreneurs in Denmark, given the substantial maturity and scale of

Technical University of Denmark, Kongens Lyngby

the Silicon Valley ecosystem.

January, 2024

Contents 4

Executive Summary

The Resilience Imperative

Technological Resilience: AI Strategy – Leader or Laggard? 10 Bloomberg: Building In-House AI

Morgan Stanley: Partnering with Benefits

Databricks: Buying Into the AI Race

ESG Resilience: Blending Profit with Purpose?

Patagonia: Planet Earth as a Shareholder

OpenAI: Balancing Profit and Humanity

Salesforce: A Pledge for Societal Good

Climate Resilience: Suck it Up?

Apple: Begin with Reduction Follow with Removal

Stripe: Facilitating a CDR Market

Heirloom: The Future of CDR?

Executive Summary In a world marked by unprecedented challenges,

The exploration of these resilience strategies reveals

this publication illustrates different approaches to

an array of tensions and consequential approaches

building business resilience. The global ‘polycrisis’

within each type of resilience. These showcase the

– characterized by the confluence of the COVID-19

complexities of building resilient strategies and

pandemic, escalating climate change, geopolitical

demonstrate how company leaders are forced to

uncertainties, and rapid technological changes, in-

consider conflicting actions when deciding on a way

cluding, for example, the launch of ChatGPT – calls

forward.

for businesses to focus on building resilience. Within Technological Resilience, the report explores Across the topics of resilience, studies have shown

three approaches to the disruptive force of genera-

that businesses integrating resilience into their

tive AI: building, buying, and partnering, each with

core strategies can enhance their ability to quickly

its own inherent advantages and disadvantages.

adapt to changing market conditions, technological

Similarly, the section on ESG Resilience explores

disruptions, and unforeseen global crises. These

how organizations can strike a balance between

strategies help companies stay ahead of regulato-

meeting shareholder expectations and address-

ry changes, meet evolving consumer expectations,

ing the pressing needs of society and the environ-

and contribute positively to society and the environ-

ment, giving rise to diverse strategies ranging from

ment, which, in turn, can drive long-term sustain-

purpose-driven initiatives to innovative ownership

able growth and profitability. In essence, resilience

models. Lastly, the cases on climate resilience illu-

is a proactive strategy that empowers companies to

strate perspectives relevant for the critical decision

thrive in an ever-changing and challenging world.

about how to balance company emission reduction and removal to reach net zero emissions.

This publication delves into strategies from which businesses can draw inspiration to build resilience

In conclusion, we believe that understanding and re-

over the long haul. It focuses on three resilience

flecting upon these cases, which showcase diverse

categories: Technological Resilience, in the context

resilience strategies, is highly relevant for business-

of the disruptive potential of Generative AI; ESG

es navigating an increasingly unpredictable world.

(Environmental, Social, and Governance) Resilience,

The insights drawn from these cases are meant to

addressing the integration of profit motives with

serve as a starting point for business executives and

increasing societal and environmental responsi-

board members to engage in meaningful conversa-

bilities; and Climate Resilience, gaining urgency as

tions and reflections, ultimately inspiring the deve-

global temperatures continue to rise. The chosen

lopment of resilient business strategies.

areas draw inspiration from innovative approaches adopted by Californian companies and aim to serve as a source of inspiration for Danish counterparts.

The Resilience Imperative The risk of business disruption is always present. However, the global ‘polycrisis’1 we are currently experiencing has led to a renewed and intensified focus on Business Resilience for organizations across the globe. The COVID-19 pandemic, increasing global signs of climate change, and geopolitical conflicts and uncertainties have emphasized the necessity for business leaders to adopt a new mindset, one that goes beyond near- and medium-term earnings, in order to successfully navigate and react to future disruptions. Additionally, the changing landscapes of consumer behavior, as well as the speed of new technological advancements, require immediate action for businesses to stay ahead and avoid being outcompeted by more agile and technologically adept companies. So, in a world where the future is uncertain and change comes fast, how can companies prepare, respond, and even emerge stronger? In this publication, we explore different business strategies a company can adopt to build resilience in the long

to industry pioneers – we have chosen to focus on

run. Based on a series of dialogues, roundtable

three sub-categories of Business Resilience, namely;

discussions, and interviews with key Danish and

Technological-, ESG-, and Climate Resilience, as pre-

American stakeholders – from educational leaders

sented in Figure 1.

1The World Economic Forum has coined the term ’polycrisis’ in their

annual Global Risks Report of 2023, giving credence to the seemingly increasing number of crises that we are concurrently facing in the world.

2Cisco: “What is Business Resilience?”, n.d.

For each resilience category, we have identified

into the complexities of modern-day companies, re-

three relevant American companies or ’case studies’

vealing how they manifest across various sectors,

each presenting a different strategy and approach

from sustainable enterprises to tech giants and ag-

to navigating challenges and becoming resilient in

ile startups. Insights and perspectives are extracted

their respective domains. While these categories

from these case studies and synthesized through di-

and case studies only represent a certain aspect

alogues with companies and thought leaders based

of what resilience entails, they offer an exploration

in the San Francisco Bay Area. Each case study within this publication aims to spark new conversations

Facts

on the Future of Resilience.

Business Resilience describes an organization’s ability to respond and adapt quickly to disruptions or significant unplanned changes that could threaten its operations, people, assets, brand, or reputation2.

Innovation Centre Denmark in Silicon Valley invites you on this reflective journey, hoping that the findings will fuel conversations, reflections, and new insights on the Future of Resilience.

figure 1: Resilience categories

1. Technological resilience

2. ESG resilience

3. Climate resilience

An organization’s capacity to

An organization’s ability to

overcome challenges when new

navigate and succeed in the face

anticipate, prepare for, and

disruptive technologies emerge

of Environmental, Social, and

respond to hazardous events,

and its ability to swiftly adapt in

Governance challenges by

trends, or disturbances related

such circumstances.

integrating sustainability into its

to climate.

core strategy and operations.

cases Bloomberg Morgan Stanley Databricks

Patagonia OpenAI Salesforce

Apple Stripe Heirloom

1. Technological Resilience: AI Strategy – Leader or Laggard?

To shed light on the different strategic approaches a company can choose when building Technological Resilience, we have explored how Bloomberg, Morgan Stanley, and Databricks respond to the disruptions caused by Generative AI. In this context, we observe that the three companies opt for one of three approaches: building their own model, acquiring a company with the necessary expertise and platform, or forming partnerships with major tech companies, like OpenAI. However, the landscape may not be as uniform, as many companies choose to simply purchase access to Generative AI through APIs or other means.

2. ESG Resilience: Blending Profit with Purpose? In this section, we dive into how Patagonia, OpenAI, and Salesforce address Environmental, Social and Governance-related (ESG) Resilience. These cases illustrate different strategic approaches to, on one hand, navigating pressure for including stakeholder perspectives and expectations for increasingly sustainable practices, while at the same time maximizing profit for the benefit of shareholders. Notably, it has been shown that there is a correlation between ESG performance and profitable growth, which underscores that companies may benefit from taking stakeholders into account3.

Accenture: “Measuring up: Achieving Resilience Through ESG”, 2023. National Centers for Environmental Information: “Global Climate Report”, 2023 5 U.S. Department of Energy, Office of Fossil Energy and Carbon Management: “Carbon Dioxide Removal”, n.d. 3 4

3. Climate Resilience: Suck it Up? The final section of the publication scrutinizes the

diverse strategies in integrating Carbon Dioxide Re-

strategies of Apple, Stripe, and Heirloom in build-

moval (CDR) into their climate resilience initiatives,

ing climate resilience. With the alarming prediction

showcasing a mix of emission reduction, removal,

that 2023 could be the warmest year on record , it

and innovative approaches. These strategies range

prompts questions about how businesses can culti-

from comprehensive approaches encompassing the

vate a resilient climate strategy that is both adapt-

entire supply chain to specific technological innova-

able and forward-thinking. The three cases illustrate

tions in CDR.

Facts Emission Reduction: Refers to approaches for reducing greenhouse gas emissions, including carbon dioxide (CO2) equivalents. This encompasses reductions through reduced activity, more efficient use of resources, waste reduction, and more. Carbon Dioxide Removal (CDR): Refers to approaches that remove carbon dioxide (CO2) and other greenhouse gas emissions from the atmosphere. CDR encompasses a wide array of approaches, such as Direct Air Capture (DAC) coupled to durable storage, soil carbon sequestration, biomass carbon removal and storage, ocean-based CDR, afforestation/reforestation, and more5.

Facts Technological Resilience is broadly defined as an organization’s capacity to overcome challenges when new disruptive technologies emerge and its ability to adapt swiftly

Technological Resilience:

in such circumstances.

AI Strategy – Leader or Laggard? One of the most significant disruptions affecting or-

ted – whether to adopt or implement generative AI

ganizations in the past year is generative AI, with its

by acquiring AI companies, forming partnerships

potential to profoundly transform businesses. Since

with established AI companies, or developing gene-

the introduction of ChatGPT in November 2022, the-

rative AI models from the ground up.

re has been a noticeable fear of missing out, with companies heavily investing and harboring concerns about their relevance in the emerging era dominated by generative AI6. Generative AI accelerates innovation and creativity by generating new ideas, designs, and content, whi-

Large Language Models (LLMs) constitute

le also automating repetitive tasks to save time and

a specific category within generative AI,

resources. The technology, including Large Language Models (LLMs) like OpenAI’s ChatGPT, has shown immense transformative potential for businesses, while simultaneously implying implicit threats for companies that are too slow to adapt. This disruptive technology prompts business leaders to consider the most resilient strategic approach for addressing this transformative force to avoid being outcompe-

6 Forbes: ”FOMO-Driven Generative AI Acquisition Spree Has Begun”, 2023 7 AWS: “What are Large Language Models (LLMs)?”, n.d.

Facts designed for generating text-based content. Their rising popularity stems from their versatility, applicable to various tasks, including text generation, translation, content summarization, rewriting, classification, categorization, sentiment analysis, as well as applications in conversational AI and chatbots7.

The three forthcoming cases – Bloomberg, Morgan Stanley, and Databricks – while differing in their approaches, shed light on the common challenge faced by businesses across sectors. They underscore the critical question: How can businesses build a resilient strategy that effectively navigates the ever-evolving landscape of generative AI while at the same time securing their competitive edge? By building, buying, or partnering? According to Forbes, the AI ecosystem will consist of two types of players; the leading companies like Google, Microsoft, and OpenAI, and a vibrant open-source community constantly challenging the state of the art⁸. These two company types are also represented in this publication. Databricks offers an open platform, enabling businesses to leverage their technology for building generative AI at a more affordable cost, allowing small businesses to harness the benefits of generative AI.

Facts Build strategy: The build strategy involves developing generative AI solutions in-house, leveraging the organization’s internal resources. Companies may opt for this strategy when they have the expertise and resources to create a customized solution tailored to their specific needs. Buy strategy: The buy strategy involves the acquisition of companies possessing established technologies, products, or services. Companies may choose this approach when lacking inhouse expertise and are in pursuit of specific skills or tools held by a particular company. Partner strategy: The partner strategy involves partnering with external companies, such as AI companies or technology providers, to jointly develop or access needed capabilities. Companies may pursue partnerships to leverage complementary strengths, share resources, or gain access to specific expertise without fully building or buying a solution independently.

8 Forbes: ”Generative AI Unleashed: Charting the Enterprise Future”, 2023

On the other hand, Morgan Stanley has chosen to

that the company should build the model internally.

strategically partner with one of the leading AI com-

Conversely, for tactical purposes, he recommends

panies, OpenAI. However, the final case, Bloomberg,

buying access or partnering with AI companies due

deviates from this dichotomy by opting to construct

to the associated lower costs and risks. However, if a

their own GPT from the ground up, leveraging

company opts to partner with industry leaders, en-

in-house capabilities.

suring the confidentiality of data becomes crucial. Additionally, Ghose regards LLMs as a commodity

Shomit Ghose, partner at Clearvision Ventures, out-

with similar capabilities across providers. Conse-

lines that a company’s choice to build, buy, or part-

quently, data takes precedence, and businesses

ner depends on whether generative AI aligns with a

must weigh whether partnering with major tech

company’s tactical or strategic purposes. If genera-

players grants them unwanted access to their data.

tive AI holds strategic significance, Ghose suggests

“LLMs are table-stakes and not a source of competitive advantage. If LLMs are deemed to have strategic value in a business – for example, fine-tuning on a specific domain – then the company can build something themselves. If it has tactical value, the company should buy the LLM from the cheapest large company provider.” Shomit Ghose Partner at Clearvision Ventures9

9 Interview between ICDK and Shomit Ghose, 2023

For business leaders to evaluate whether an AI im-

strategy may risk falling behind in the rapidly evolv-

plementation serves a tactical or strategic purpose,

ing AI landscape, as they compete with tech giants

they can evaluate whether the integration will deli-

that have already established impressive AI capabil-

ver a competitive advantage or have transformative

ities. According to Microsoft’s AI platform corporate

impact, signaling strategic significance. If the objec-

VP, John Montgomery, the build conversation is go-

tives are more narrowly focused, such as keeping

ing to be reserved for companies that probably al-

pace with competitors or meeting customer expec-

ready have a lot of expertise in building and design-

tations, the integration is likely to be deemed tacti-

ing large language models11. On the other hand, if

cal10. Additionally, business leaders could consider

companies choose to partner with AI companies,

whether the solution or tool could be easily adopted

they can gain access to cutting-edge solutions with-

and reused across multiple divisions, functions, or

out bearing the full development costs. These col-

units. In such cases, even if the development team

laborations provide customized AI solutions and

pursues tactical objectives, the integration may be

early access to advancements, offering a potential

regarded as strategic.

competitive edge. However, choosing a partner requires careful consideration, addressing dependen-

The three strategies – build, buy, and partner – are

cies, data security, intellectual property, and the

not without challenges. Following a build strategy,

risk of vendor lock-in.

which involves developing generative AI models from in-house capabilities, demands considerable

The following cases illustrate three distinct compa-

financial investments, access to supercomputing

nies that have opted for either building, buying, or

resources, and a substantial allocation of time and

partnering strategies in the era of generative AI.

effort. Furthermore, businesses pursuing the build

Accenture:“The “TheBest BestAIAIStrategy: Strategy:Build, Build,Buy, Buy,ororPartner?”, Partner?”,2019 2019 Accenture: CIO:“Should “ShouldYou YouBuild BuildororBuy BuyGenerative GenerativeAI?”, AI?”,2023 2023 CIO:

10 10 11 11

Bloomberg:

Building In-House AI Bloomberg's strategic leap into in-house Large Language Model development Bloomberg, headquartered in New York, is a glob-

workload14. Additionally, users of Bloomberg Termi-

al leader in business and financial information &

nal, a platform for financial professionals who need

services. In 2022, the company reported revenue

real-time data, news, and analytics, invest a signifi-

of USD 12.2 billion and had a global workforce of

cant amount of time searching for information with-

over 19,000 employees . The company's strategic

in the platform. Given that generative AI is often

emphasis is heavily placed on technology and inno-

referred to as the new frontier for productivity, it

vation, as exemplified by its workforce comprising

is not surprising that the company has been stra-

over 8,000 engineers, developers, data scientists,

tegically exploring how to leverage this technology

and technologists. Technologists account for 42%

to enhance the productivity and efficiency of their

of the total employee base . Additionally, the com-

business15.

pany prides itself on being an innovative first mover, who is “always going where others aren’t, can’t, or

With Bloomberg’s aspiration to be a first mover, the

won’t” .

company released BloombergGPT on March 30,

2023. Bloomberg created their GPT from scratch, Bloomberg’s employees perform financial data

utilizing their domain-specific proprietary data and

analysis, conduct research, sentiment analysis,

general-purpose data during training of the mo-

news classification, and question answering which,

del16. The company collaborated across various

according to the company, takes up a substantial

departments and teams to build the model from

12 Forbes: ”Bloomberg”, n.d.

13 Bloomberg: ”Pushing the Boundaries on Innovation”, n.d. 14 Bloomberg: ”Introducing BloombergGPT,

Bloomberg’s 50-Billion Parameter Large Language Model, Purpose-Built from Scratch for Finance”, 2023

15 McKinsey: “The Economic Potential of Generative AI:

The Next Productivity Frontier”, 2023

16 Medium: BloombergGPT, the First Large Language Model

for Finance”, 2023

the ground up. The team combined a 363 billion

public available financial data, such as Bloomberg

token dataset, which Bloomberg curated, with a

press releases and news articles15. In this context,

345 billion token public dataset, ultimately creating

BloombergGPT's competitiveness resides in their

a dataset with over 700 billion tokens for training

vast datasets, a feature various sources have also

the model17. Notably, nearly half of the data used

referred to as their ‘crown jewel’18.

for training Bloomberg's GPT model originated from nonfinancial sources obtained through web

Nevertheless, the approach of building in-house is

scraping. These sources encompass platforms such

not without its risks. It requires significant financial

as GitHub, YouTube subtitles, and Wikipedia17. The

investments in both time and resources, and neces-

other half is a combination of proprietary data

sitates that Bloomberg possess and sustain top tal-

collected by Bloomberg in the last forty years and

ent in the AI and engineering domain.

17 18

CNBC: ”Bloomberg Plans to Integrate GPT-Style A.I. Unto Its Terminal”, 2023 Forbes: “Bloomberg Uses Its Vast Data to Create New Finance AI”, 2023

MorgAn Stanley:

Partnering with Benefits engaging in the evolution of generative AI: Morgan Stanley's partnership with OpenAI The leading global investment bank and wealth

Their co-created chatbot exclusively generates

management firm, Morgan Stanley, has been ad-

responses using content from Morgan Stanley's

dressing the challenges of disruptions caused by

proprietary data, which includes investment strat-

emergent technology, driven by their belief that “ev-

egies, market research, commentary, and insights

erything today is ripe for disruption. Stay abreast of the

from analysts21. According to Chief Data Officer

latest trends and developments” 19. Additionally, the

Jeff McMillan, the chatbot is used by all of Wealth

firm’s dedication to digital innovation is manifested

Management's advisors and staff throughout the

in their strategy, prominently highlighting technolo-

asset management group. It will radically change

gy and innovation as vital components for achieving

the way information and solutions are accessed and

long-term success .

tailored to client needs22. The chatbot is capable of

crawling thousands of internal documents and proIn the recent year Morgan Stanley has, similar to

viding an answer to the financial advisor within sec-

many major corporations, directed its attention to-

onds, a task that would require the financial advisor

wards generative AI. The company has determined

a significant amount of time to complete. Hence, by

its course of action in navigating the rapidly evolv-

utilizing the chatbot, the firm frees up considerable

ing era of generative AI, highlighting strategic part-

time. This time can then be effectively channeled

nerships with tech innovators as a core element in

to assist a larger number of clients while simulta-

their strategy . The rationale behind this decision

neously managing a broader array of tasks that de-

is based on the company’s conviction that partner-

mand personalized attention23.

ships allow them to remain agile and take advantage of emerging opportunities21. Consistent with

The reason behind the partnership is, according to

this strategy, Morgan Stanley entered into a part-

Wealth Management Head and Co-President Andy

nership with OpenAI, the company behind ChatGPT,

Saperstein:

in March 2023. Morgan Stanley: ”Frontier Technology”, 2023 Morgan Stanley: ”Technology”, 2023 21 InvestmentNews: ”Morgan Stanley Partners with OpenAI on Internal Chatbot for Its Advisors”, 2023 19 20

The partnership mirrors Morgan Stanley's strategic response to disruptive technologies within a rapidly

“Morgan Stanley aims to leverage OpenAI’s breakthrough technology into a competitive advantage in how our Financial Advisors can harness Morgan Stanley’s knowledge and insights in ways that were once never thought feasible” Andy Saperstein, Wealth Management Head and Co-President at Morgan Stanley23

evolving digital landscape. Additionally, it demonstrates the company's belief that establishing partnerships can render their business resilient to new AI disruptions. While the partnership between Morgan Stanley and OpenAI is still in its early stages, it has the potential to be a major breakthrough in the field of financial services. By combining OpenAI's technology with Morgan Stanley's expertise, the two companies could create a new generation of wealth management services that are more efficient, personalized, and accurate. However, engaging in partnerships with major tech corporations carries inherent risks. At present, Morgan Stanley is dependent on OpenAI for the construction of their GPT, exposing the com-

Through

their

partnership

with

OpenAI,

pany to potential vulnerabilities arising from

Morgan Stanley can engage in co-creation, leading

changes

OpenAI's priorities, capabilities, or

to AI solutions specifically designed to meet their

business directions. This was illustrated by the

unique requirements. Additionally, the partnership

turmoil OpenAI underwent in November 2023

affords Morgan Stanley the advantage of accessing

when the board fired the CEO and co-founder,

OpenAI's latest, state-of-the-art AI solutions in ad-

Sam Altman. This cast doubt on the future direction

vance, potentially enabling them to maintain a com-

and existence of the company, and after strong ob-

petitive edge over rivals without such a partnership.

jections from OpenAI's employees and Microsoft,

Furthermore, Morgan Stanley acquires additional ben-

which owns 49% of the company, he was ultimately

efits from the partnership that companies solely rely-

rehired. Additionally, Morgan Stanley must address

ing on OpenAI's API will not have. Notably, they gain

concerns related to vendor lock-in, ensuring that

access to personalized support provided by OpenAI's

their intellectual property remains safeguarded and

team of skilled software engineers and scientists.

wholly owned by the company.

CNBC: ”Morgan Stanley is Testing an OpenAI-Powered Chatbot for Its 16,000 Financial Advisors”, 2023 23 Morgan Stanley: ”Morgan Stanley Wealth Management Announces Key Milestone in Innovation Journey with OpenAI”, 2023 22

Databricks:

Buying into the AI Race Strategic acquisition boosts Databricks in the generative AI race Databricks, headquartered in San Francisco, is an

With this acquisition, the company secured the

American data and AI company known for their

biggest acquisition of the generative AI era to

lakehouse software that stores and analyzes data.

date25. Following the acquisition, the entire Mo-

The company is relied upon by more than 10,000

saicML team, consisting of 62 employees, inclu-

organizations worldwide, including over 50% of the

ding MosaicML’s industry-leading research team,

Fortune 500, and was recently valued at 43 billion

will join Databricks. This translates to Databricks

USD. Despite the company's focus on data ware-

paying USD 21 million per employee.

houses and lakes, it is expanding its offerings to include generative AI on its platform. Determined to

In addition to Databricks acquiring the entire staff

become the preferred data platform for developing

from MosaicML, the company gains access to

generative AI solutions, Databricks has strategically

MosaicML's

pursued this objective.

easily train and deploy large language models

platform,

enabling

customers

on their proprietary data. Following this developOn June 26, 2023, the company made a significant

ment, Databricks has introduced the Data Intelli-

announcement, revealing the acquisition of the

gence Platform, seamlessly incorporating Mosa-

generative AI startup MosaicML for approximately

icML's generative AI expertise into its lakehouse25.

USD 1.3 billion.

With this strategic move, Databricks is targeting companies that do not have the resources to build

Oracle: “What Is a Data Lakehouse?”, n.d. 25 Forbes: ”Databricks’ New AI Product Adds A ChatGPT-Like Interface to Its Software”, 2023 24

their own large language model from scratch and

Facts Data Lakehouses combines the ability to store different kinds of data in a flexible way, similar to a data lake, with the organized management tools of data warehouses. This integration creates a larger and more efficient system. Building a data lakehouse helps organizations simplify their data management by using one comprehensive system. It eliminates the need for separate solutions and breaks down the barriers between different data storage locations24 .

open-source software models improves rapidly, customers are increasingly experimenting with these models to assess factors such as quality, cost, reliability, and security27. The key distinction between collaborating with, for example, OpenAI, and using Databricks’ platform is that customers can retain complete ownership of their generative AI models. Moreover, since these models are constructed using open-source technologies, there is no risk of vendor lock-in, as the responsibility for the models is held companies that prefer not to partner with big tech due to e.g. security risks. Databricks CEO, Ali Ghodsi, states: “What we are seeing most interest in is people who have very sensitive data who want to build their own AI (…) we’re helping them do that”25. When integrating MosaicML into Databricks, the company argues that businesses can quickly and cost-effectively build and train their own large language models. Databricks claims that this could potentially reduce costs from millions of dollars to mere thousands26. The intention is to shift the paradigm from relying on major tech players like OpenAI and Google to putting organizations in control of their AI initiatives and proprietary data. Databricks advocates for the success of open-source generative

by an open-source community rather than a single company27. Choosing to acquire rather than build from scratch or form partnerships enables Databricks to swiftly integrate advanced generative AI capabilities into its portfolio. This approach potentially saves Databricks a considerable amount of time that would have been required for in-house development. Considering these points, acquisitions can be beneficial, offering immediate access to necessary tools and a workforce with the requisite skills that the acquiring company might not have. Nevertheless, this approach requires thoughtful consideration and a detailed assessment of key factors such as overvaluation and cultural integration.

AI. They assert that many customers are adopting open-source LLMs for various generative AI applications. According to Databricks, as the quality of

CIOTrends: ”Databricks to Acquire Generative AI Platform MosaicML”, 2023 27 Databricks: ”Build on Open Source”, n.d. 26

ESG Resilience:

Blending Profit with Purpose? Studies have shown that organizations embracing

During the pandemic, we have seen a marked in-

and applying Environmental, Social, and Gover-

crease in consumer awareness toward company

nance (ESG) standards are more resilient to risks

transparency and trustworthiness31. With each

and more likely to succeed in the face of disruptions.

younger generation, there is an increased propen-

Judith Rodin, former advisor on President Clinton's

sity to choose companies that align with their pur-

Committee of Advisors on Science and Technology,

pose and implement strategies to benefit surround-

has even argued that ESG is missing a metric: 'R' for

ing stakeholders31.

resilience28. At the same time, business communities are discussing and coming up with recommen-

Research shows that companies with consistently

dations on how shareholder primacy and commit-

high ESG performance tend to achieve shareholder

ment to other stakeholders should evolve .

returns 2.6 times higher and operating margins 4.7

times higher than those with medium ESG perforESG represents a subset of non-financial perfor-

mance. These companies exhibit greater resilience

mance indicators that include sustainable, ethical,

by adeptly navigating ESG risks, managing resourc-

and corporate governance issues, such as man-

es effectively, and capitalizing on growth opportu-

aging a company’s carbon footprint and ensuring

nities in a low-carbon economy, leading to greater

there are systems in place to create accountability .

long-term results31. Thus, compelling companies

Effectively applying ESG standards has been shown to make organizations more resilient to risks and successful in the long run, as unaddressed ESG risks pose severe threats to a company both in the short and long term31.

World Economic Forum: ”ESG is Missing a Metric: R for Resilience”, 2021 Business Roundtable: “Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans”, 2019 30 McKinsey: “Great Expectations: Navigating Challenging Stakeholder Expectations of Brands”, 2021 31 Accenture: ”Measuring Up: Achieving Resilience Through ESG”, 2023 28 29

to consider their impact on society and the planet

While OpenAI and Patagonia underwent transforma-

whilst still serving the incumbent shareholders.

tive shifts to align their business models with societal betterment, Salesforce showcases that even within a

The three cases in this section will showcase how

staunchly shareholder-driven structure, businesses

leading Californian companies have taken different

can be significant forces for good. Salesforce would

approaches to build ESG resilience. With fundamen-

even argue that you must focus on stakeholders to

tally different approaches, the companies either un-

maximize profit for the benefit of shareholders.

derwent significant ownership structure changes to align their strategy with their purpose, incorporated

What is similar for all three cases is the acknowledg-

a resilient society-driven strategy from the inception

ment that ESG resilience goes well hand in hand with

of the company, or linked a beneficiary model for

the profit and momentum created by shareholder-

society directly to their shareholder-driven yields.

driven companies.

Facts ESG Resilience refers to an organization's ability to endure and thrive amidst Environmental, Social, and Governance (ESG) challenges and changes. In a broader sense, ESG resilience is about integrating these sustainability aspects into the core strategy and operations of a business. It's not just about mitigating risks but also about identifying opportunities for sustainable growth and innovation.

Patagonia:

Planet Earth as a Shareholder How Patagonia managed to make planet Earth the beneficiary of a for-profit company

Patagonia has a long-standing tradition of being

pose statement and to use the value and profits built

a leading figure for sustainability and recyclable

over time to realize this pursuit35. In 2020, this cul-

products, truly living up to its purpose statement:

minated into a project named ‘Project Chacabuco’,

‘We’re in business to save our planet’ . Patagonia’s

which works towards the goal35.

core values are quality, integrity, environmentalism, justice, and not bound by convention33, which act as

The three overarching goals for Project Chacabuco

a testament to Patagonia’s purpose-driven nature.

were to: 1) utilize Patagonia’s significant company

However, alongside Patagonia’s pursuit of fulfilling

value to fight climate crisis, 2) provide ongoing ste-

the purpose statement, it has relied on financial suc-

wardship toward the purpose for the next fifty years,

cess . The company has aimed to strike a balance

and 3) reduce the burden on the leadership and risk

between achieving the necessary financial success

for the family and future generations. Ultimately, a

to fuel the company and fulfilling its purpose to

fourth objective emerged: 4) create a new and alter-

'save our planet'.

native company model for capitalism35.

In Yvon Chouinard’s pursuit to make this commitment to our planet, he has since the 1990s contemplated the future ownership model for the company. Two of the main objectives for the new ownership model were to continue working towards the pur-

Patagonia: ”Company History”, n.d. Patagonia: ”Our Core Values”, n.d Harvard Business Review: “What Happens When a Company (Like Patagonia) Transfers Ownership to a Nonprofit?”, 2022 35 Harvard Business Review: “Patagonia: "Earth Is Now Our Only Shareholder"”, 2023 32 33 34

“Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it.” Yvon Chouinard, founder of Patagonia

Project Chacabuco took close to two years to come

continue to manage Patagonia as a for-profit compa-

up with an optimal solution for the new ownership

ny with an emphasis on employee well-being. How-

model, reviewing numerous options, including in-

ever, instead of distributing profits among sharehold-

tergenerational transfer, public stock offering, sale

ers, the profits will be transferred to a non-profit or-

to a private equity group or competitor, Employee

ganization that supports efforts to address climate

Stock Ownership Plan (ESOP), and finally, creating a

change and protect undeveloped land37. With this

non-profit foundation owner that would have con-

model, the setup of Patagonia resembles that of Dan-

trol over the company.

ish companies such as Carlsberg and Novo Nordisk, which are owned by their respective foundations38.

The company envisioned the new ownership structure for Patagonia where, despite being privately owned and for-profit, it still managed to enshrine the purpose statement of the company35. Yvon Chouinard and his family transferred voting control of Patagonia to a stewardship trust and their non-voting interests in the company to a nonprofit organization36. This innovative ownership model centers around the Perpetual Business Purpose Trust, which will

Groff & N. Gary: “Patagonia, Purpose Trusts, and Stewardship Trusts - Business with a Purpose”, 2023 Forbes: “How Will the Patagonia Perpetual Purpose Trust Terms be Enforced”, 2022 38 Forbes: “Chouinard’s Donation of Patagonia is Big and Bold but Not New”, 2022 36

OpenAI:

Balancing Profit and Humanity OpenAI’s two-fold approach for balancing profit with purpose OpenAI is one of the most prominent AI re-

Sam Altman and Elon Musk, with the purpose of en-

search labs, known for creating ChatGPT, a

suring ‘AI that benefits all of humanity’40. However,

technology that caused ripple effects through-

being a non-profit company, and a leading devel-

out many industries. During November 2023,

oper of AI aiming to benefit all of humanity, does

OpenAI went through severe public turmoil when

not come without its challenges. One of OpenAI’s

their CEO and Founder, Sam Altman, was fired and

challenges has been choosing a financial strategy

then rehired. Upon his return as CEO, Sam Altman,

stable enough to balance the research and technolo-

made it very clear in an internal message to the com-

gical output whilst still underpinning the non-profit

pany, how excited he was about the future and the

nature of the company.

unique setup of OpenAI:

“I believe our resilience and spirit set us apart in the industry.” Sam Altman, CEO OpenAI39

The early days of OpenAI could be illustrated as a research laboratory funded by pledged donations. The focus was to create cutting-edge AI research and allow free and open collaboration with other organizations, researchers, and institutions, giving credence to the name ‘OpenAI’. As demarcated on an introductory OpenAI post from

The resilience, spirit, and ultimately, the success

2015, it states: “Since our research is free from finan-

of OpenAI have not been overnight achievements,

cial obligations, we can better focus on a positive hu-

as some may believe. In fact, OpenAI was found-

man impact.”41 With much of the funding coming

ed in 2015 as a non-profit company by a number

from pledged donations – in excess of USD 1 billion

of tech experts and serial entrepreneurs, including

dollars from the founding members – OpenAI was

not pressured by external investors to create com-

are made purely based on financial gain42. To fur-

mercial value and could focus on developing AI for

ther strengthen this objective, only a very limited

humanity rather than commercializing a product.

number of board members can hold a financial stake. Those with a financial stake are prohibited

However, OpenAI faced financial challenges and in-

from voting on any business matters due to the

ternal conflicts, leading to a pivotal decision in 2019

conflict of interest between limited partners and

to transition from a non-profit to a for-profit model,

OpenAI’s purpose statement.

with Microsoft prevailing as its biggest investor. The shift sparked concerns about whether the compa-

The valuation of OpenAI, its resilience as referred

ny’s commitment to ethical governance of AI would

to by Sam Altman, and early focus on developing

waver in pursuit of financial gain. To address these

AI benefitting all of humanity, is a complex story

concerns, OpenAI devised a unique corporate struc-

which is very likely only in its early stages. Striking a

ture with two arms: a non-profit and a for-profit,

balance between ethical development of a product,

featuring a 'capped profit' framework. Under this

that could influence how we work in the future, and

framework, excess profits from the for-profit arm

governing a company able to secure funding based

flows directly to the non-profit, ensuring the pur-

on solid returns, is a very unique case which will be

pose remains paramount while still delivering the

followed by all tech stakeholders from all over the

promised return to investors.

world over the coming years.

OpenAI’s intention with this new ‘capped profit’ model is to ensure that the purpose statement still takes priority, and to disincentivize that decisions

OpenAI: “Sam Altman returns as CEO, OpenAI has a new initial board”, 2023 40 OpenAI: ”About”, n.d. 41 OpenAI: ” Introducing OpenAI”, 2015 42 OpenAI: ”OpenAI LP”, 2019 39

Salesforce:

A Pledge for Societal Good How Salesforce managed to become a force of philanthropic good by embracing shareholder value Salesforce, the world's pioneering Software-as-a-

about how the company should lead by example in

Service (SaaS) company, not only disrupted tradi-

promoting a more fair, equal, and sustainable cap-

tional business models but also introduced a novel

italism. For many corporations, the relentless pur-

approach to philanthropy within capitalism. Under

suit of profit often overshadows their broader soci-

the leadership of Marc Benioff, Salesforce combined

etal responsibilities. Salesforce, however, aimed to

its commitment to stakeholders with its obligations

rewrite this narrative. The challenge was twofold: to

to shareholders, asserting that business can, and

maintain robust financial growth satisfying share-

should, indeed be a powerful platform for change in

holders while also making a tangible societal impact

a market-driven economy.

benefiting stakeholders.

While Salesforce created the SaaS model for many

Benioff envisioned a company that wouldn’t have to

companies to follow, Marc Benioff, the CEO and

sacrifice long-term vision for short-term results by

Founder of Salesforce, also had strong convictions

fulfilling shareholder expectations. He believed that

“No matter what business you’re in, values are the bedrock of a resilient company culture (…) None of us in the business world can afford to sit on the sidelines and ignore what’s going on outside the walls of our workplaces. In the future, profits and progress will no longer be sustainable unless they serve the greater good.” Marc Benioff, Co-Founder and CEO of Salesforce 43

“…business is the greatest platform for change” 44 and

vided 3.5 million hours of community service, and,

that this belief would thrive in a market-driven world,

with more than 3,500 other companies as part

with the aim of betterment for people and the planet.

of the Pledge 1%, Salesforce has managed to create a model that incites positive capitalist change

Suzanne DiBianca, Executive Vice President and

in other companies as well46. This materializes

Chief Impact Officer at Salesforce, was tasked with

Benioff's belief in harnessing a company's resourc-

leading the stakeholder strategy for the company.

es to give back to society.

With this aim of making Salesforce a force for philanthropic good, DiBianca envisioned the ‘1-1-1 mod-

Salesforce's strategy, while rooted in capitalism,

el’ and the ‘Pledge 1%’ .

seeks to elevate businesses beyond mere profit-

making entities. Their model emphasizes that Through the 1-1-1 model, Salesforce pledged to

companies, even while seeking to maximize share-

continuously commit 1% of all equity, technology,

holder value, can be significant drivers for posi-

and employee time toward improving education,

tive change. By bridging the gap between compa-

the environment, and equality for everyone. More-

nies and stakeholders, Salesforce not only fulfills

over, they sought to expand their 'Stakeholder

shareholder expectations but also champions

Capitalism' approach to other companies through

philanthropic causes and urges other businesses to

the Pledge 1% movement, where other companies

follow suit.

can join to instill philanthropic values. This way, Salesforce welcomes other companies to follow in their footsteps toward doing better for the world while remaining capitalistically for-profit.

Salesforce: ”An Inspiring Vision for Successful Companies and Careers of the Future, in Which Changing the World is Everyone’s Business”, n.d. Barnes & Noble: Trailblazer: The Power of Business as the Greatest Platform for Change”, n.d. 45 Forbes: ”The Power of Purpose: How Salesforce and the Pledge 1% Model is Inspiring Silicon Valley to do Good”, 2019 46 Salesforce: ”Pledge 1%”, n.d. 43

In total, Salesforce has donated USD 240 million in grants to over 39,000 different non-profits, pro-

Climate Resilience:

Facts

Among all categories of business resilience, the

As shown in Figure 2, the Intergovernmental Pan-

ability to deal with climate change has received

el on Climate Change (IPCC) estimates that, to stay

significant global attention. The looming challen-

within the international goal of maximum 1.5°C glob-

ges of climate change and the heightened attention

al temperature increase compared to pre-industrial

from all stakeholders have deeply impacted the way

levels, solutions for negative emissions must scale

businesses operate in the modern world, raising

rapidly. Currently, negative emissions are just above

the question: How should businesses foster a resilient

0.1 gigaton CO2 and, to meet the target, it needs to

climate strategy?

scale almost 100-fold to 10 gigatons CO2.

With a growing number of organizations and com-

In Denmark, there is broad support for climate

panies committing to net-zero goals, there is an in-

change mitigation through emission reduction.

creasing push for new and improved technological

In California, however, the interest in and invest-

capabilities and sustainable, marketable products.

ments flowing into Carbon Dioxide Removal (CDR)

Suck it Up?

Climate Resilience: Is the ability to anticipate, prepare for, and respond to hazardous events, trends, or disturbances related to climate47.

from businesses have also seen strong growth over According to Julio Friedmann, Chief Scientist at Car-

the past year49.

bon Direct, reducing emissions is an important mission, but it cannot stand alone.

As Californian and Danish stakeholders share their focus on addressing climate change through emis-

“The science is clear: We must do both – substantially reduce global emissions and remove trillions of tons of carbon dioxide from the atmosphere. This isn't an either/or position.” Julio Friedmann, Chief Scientist, Carbon Direct48

Center for Climate and Energy Solutions (C2ES): “Climate Resilience”, n.d. Global Tech Trends Podcast, released October 2023 49 The Atlantic: “We’ve Never Seen a Carbon-Removal Plan Like This Before”, 2022 47 48

sion reduction, the difference may arise from the, often, more optimistic view on new technology and business opportunities in the U.S. Additionally, interest is further strengthened by the climate mitigation commitments of large tech companies such as Apple, Microsoft, Amazon, and Intel. These companies have all committed to CDR as part of their plans to achieve net-zero emissions by 2030, ultimately addressing their entire climate footprint, including Scope 3 emissions50, 51, 52, 53. The three cases in this section showcase how Californian companies are working with CDR to enable climate resilience. The first case, focusing on Apple,

presents how the company has committed to be-

configurations of initiatives and technologies can

coming carbon neutral across its business, supply

serve as inspiration for Danish stakeholders.

chains, and products by 2030, pledging to reduce emissions by 75% and develop carbon removal solu-

Figure 2: Negative emissions required in 1.5 Celsius warming pathways (IPCC)

tions for the remaining 25% . 54

International Panel on Climate Change

Facts 10.0

Scope 1, 2, and 3 are the internationally

100x

footprint calculations. Scope 1: Direct emissions from owned or controlled sources.

Gigaton CO2

recognized standard for corporate carbon

Scale up from present day

= High range

Scope 2: Indirect emissions from the gener-

= Low range

ation of purchased energy.

3.0

Scope 3: All indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both

1.2

upstream and downstream emissions55. 0.1

Hence, Apple has a clear plan – and com-

Today

2025

2030

2050

mitment to – both the reduction and removal of greenhouse gas emissions. The second case, focusing on Stripe, showcases their commitment to CDR and how they are contributing to the development of the CDR market. This is achieved through Frontier, with an advanced market commitment, and by expanding CDR availability to fit smaller clients through Stripe Climate. Lastly, the case on Heirloom exemplifies large-scale innovation and commitment to the future of one of the

most promising CDR technologies, Direct Air Cap-

Carbon Dioxide Removal (CDR): Refers to

ture (DAC).

approaches that remove carbon dioxide

Our cases illustrate the roles businesses play in

from the atmosphere. CDR encompasses a

enabling climate resilience and how different Apple: ”Environmental Progress Report”, 2023 Microsoft: ”Microsoft Will be Carbon Negative by 2030”, 2020 52 Amazon: ”Driving Climate Solutions”, n.d. 53 Intel: ”Intel Commits to Net-Zero Greenhouse Gas Emissions in its Global Operations by 2040”, 2022 54 Apple: ”Environmental Progress Report”, 2023 55 Greenhouse Gas Protocol: ”FAQ”, n.d. 50 51

(CO2) and other greenhouse gas emissions wide array of approaches, such as Direct Air Capture (DAC) coupled to durable storage, soil carbon sequestration, biomass carbon removal and storage, ocean-based CDR, afforestation/reforestation, and more5.

Apple:

Begin with Reduction, Follow with Removal

How Apple addresses the 98% of emissions not directly under control Apple, an American company based in Silicon Valley,

ing a nearly 30 percent increase in the last year57.

has announced its plan to become carbon neutral

This effort not only aids in Apple's own pursuit of

by 2030, not only across its own directly controlled

carbon neutrality but also helps potential suppliers

business activities but also throughout its supply

and partners to adopt similar sustainable practices,

chain and products. Considering that 98% of its

thereby expanding its impact beyond the company's

emissions are not directly under Apple’s control, this

direct operations.

is a daunting task. However, the company's efforts to transform its complete global operations are al-

The indirect overall emissions in a company's value

ready well underway. Apple plans to reach its 2030

chain, Scope 3, accounts for all of its up and down-

goal by reducing its total emissions by 75% and

stream emissions. These are connected to activi-

implementing Carbon Dioxide Removal (CDR) solu-

ties such as the production of purchased materials,

tions to balance and address the remaining 25% .

outsourced activities, waste disposal, and the use

of sold products and services59. Such emissions are The scale of Apple’s commitments, extending be-

usually the hardest for companies to measure and

yond just reducing its own absolute emissions, has

tackle. At the same time, this area offers the broad-

the potential to drive massive change. Especially

est potential for innovation and improvements in ef-

through its vast supply chain, where now more than

ficiency and provides opportunities for companies to

300 manufacturers in over 28 different countries

influence their wider business ecosystems.

have committed to using 100% clean energy for Apple production by 203056. Apple works closely with its suppliers, providing them with resources, training, and support to transition to cleaner energy and reduce their emissions. As of 2023, Apple’s manufacturing partners support over 13 gigawatts of renewable electricity around the world, mark-

Facts Climate Resilience: Is the ability to anticipate, prepare for, and respond to hazardous events, trends, or disturbances related to climate .

In Apple's case, this presents a chance to redefine

its total emissions, involves an initial commit-

product design, manufacturing processes, and the

ment to nature-based CDR projects. In 2021,

use of energy, setting a new standard for sustain-

Apple launched its Restore Fund with a USD 200

able operations within the industry. One key exam-

million commitment. In 2023, Apple further ex-

ple of this initiative is Apple's Clean Energy Charging

panded its commitment to CDR by making an

feature60. Introduced with iOS 16, this innovative

additional investment commitment of up to USD

feature enables your device to charge when the

200 million to a fund aimed at removing 1 million

lowest carbon-emission electricity sources are avail-

metric tons of carbon dioxide per year at its peak,

able61. This initiative demonstrates how Apple is uti-

all while generating a financial return for the fund's

lizing technological advancements in their journey

investors.

towards carbon neutrality. According to Mary Ann Piette, Senior Scientist at Lawrence Berkeley Na-

Apple's approach to climate resilience illustrates

tional Laboratory, this development is a part of the

how addressing a company’s complete carbon emis-

future of devices, where there will be an increasing

sions is possible even when 98% is out of its direct

shift in energy consumption to align with cleaner

control. It involves prioritizing reductions to the

and cheaper grid power55. If adopted by all U.S. iP-

fullest extent and then committing to CDR, while

hone users, this feature could have a positive CO2

recognizing that long-term success aligns with

impact comparable to removing 85,000 cars from

sustainable practices. Apple is not only reduc-

the roads62.

ing emissions; it's also safeguarding its business against potential disruptions caused by resource

As of 2020, Apple had achieved a 40% reduction in

scarcity, regulatory changes, or reputational risks

CO2 emissions relative to 2015. Currently, the com-

associated with environmental impact. This points

pany claims carbon neutrality across its operations

to the growing consensus among leading business-

and has also launched its very first carbon-neutral

es that addressing climate change is not merely

product63.

an ethical obligation but also a strategic imperative for resilience. It's about securing the future of

One component of Apple’s climate strategy, aimed

the company, the communities in which it operates,

at addressing or offsetting the remaining 25% of

and the planet.

“Fighting climate change remains one of Apple’s most urgent priorities (…). We’re looking forward to continued partnership with our suppliers to make Apple’s supply chain carbon neutral by 2030. Climate action at Apple doesn’t stop at our doors, and in this work, we’re determined to be a ripple in the pond that creates a bigger change.” Tim Cook, CEO of Apple 58

Energy World: “Apple Leads Tech Giants in Pushing Suppliers to Adopt Clean Energy”, 2023 57 Apple: ”Apple Calls on Global Supply Chain to Decarbonize by 2030”, 2022 58 Greenhouse Gas Protocol: ”Scope 3 Calculation Guidance”, 2013 59 Apple: “Use Clean Energy Charging on Your iPhone”, 2023 56

Computer World: ”Apple's Clean Energy Charging is the Future of Electronics”, 2023 The Washington Post: “The iPhone is Staging a Quiet Revolution in How We Charge Our Devices”, 2023 62 Apple: ”Environmental Progress Report”, 2022 63 Techcrunch: “Stripe Now Valued at USD 50B Following USD 6.5B Raise”, 2023 60 61

Stripe:

Facilitating a CDR Market Aggregating demand and supply: How Stripe is supporting the CDR market development Currently valued at USD 50 billion64, Stripe, the fi-

er recognizes that although some investments may

nancial infrastructure company, ranks as one of the

take time to generate significant results, in the fu-

most highly valued venture-backed private compa-

ture, they will yield the best financial outcomes. As

nies in the U.S. Beyond the proficiency in stream-

an infrastructure company, adopting a long-term

lining online transactions and payments, Stripe's

perspective is imperative, and this unique position

dedication to addressing environmental concerns

in the ecosystem is central to Stripe's efforts in cli-

has become a significant part of their identity.

mate change mitigation.

Their commitment to mitigating climate change is not only an integral component of their corporate

In 2019, Stripe embarked on its climate journey an-

ethos but is also redefining what it means to be a

nouncing that it would invest USD 1 million annually

forward-thinking business. As Stripe steers the cor-

in permanent Carbon Dioxide Removal (CDR) solu-

porate world toward greater climate engagement,

tions with the focus on the potential cost-effective-

they illustrate that thriving in a future dominated by

ness and scalability of the technology in the future65.

low-carbon initiatives is not only possible but can

While the response from the CDR community was

also be a crucial aspect of a company's strategy for

overwhelmingly positive, Stripe realized that many

succeed.

of their users, wanting to contribute to climate action, faced challenges in identifying effective ways

As Stripe's Climate Lead, Nan Ransohoff has not-

for doing so65. Recognizing the unmet demand

ed, at the end of the day, Stripe is in the business

for practical and effective CDR solutions, Stripe

of economic growth just like any other company .

launched Stripe Climate – a platform that enables

According to Nan, climate change presents per-

Stripe users to either purchase a specific number of

haps the biggest threat to Stripe’s long-term plans,

tons of offsets or allocate a portion of their revenue

and although unconventional, it is central to their

toward CDR initiatives66. The initiative was not con-

approach65. The company is not solely focused on

ceived to immediately augment Stripe's profits or

immediate returns on their investments, but rath-

those of its customers. Instead, its significant con-

tribution lies in building strong customer loyalty and garnering respect within the industry. This offered businesses of all sizes opportunities to easily contribute to climate change mitigation while conducting their routine operations. In 2022, Stripe joined forces with Alphabet, Meta, Shopify, and McKinsey to launch Frontier and commit USD 925 million over eight years towards the development of CDR solutions65. Frontier acts on behalf of both buyers and suppliers of CDR purchases to vet and pay the suppliers and pool the demand of the buyers. Employing the Advanced Market Commitment (AMC) approach, Frontier aims to send a strong and immediate signal of demand, thereby encouraging further innovation and development of new CDR technologies. As such, Frontier partners both facilitate small volumes of pre-purchase agreements for new CDR technologies and invest in fu-

with Frontier underscores the importance of commitments of such scale in advancing climate solutions67. Frontier’s investment empowers the start-up to accelerate its CDR efforts, reflecting the growing momentum among corporate climate action. On the road to climate resilience and net zero, CDR is indispensable. Stripe and its partners in Frontier have taken important steps to enable the development of the market necessary for the required CDR solutions to evolve. And not only that, but Stripe has also made CDR a competitive strength creating customer loyalty with Stripe Climate. Stripe’s and Frontier’s story illustrates what corporate resilience and climate leadership can look like and proves that companies can play a vital role in finding climate solutions not only for themselves but for an entire ecosystem.

ture tons of CDR to help scale those technologies65. Recently, Frontier announced its first large-scale deal, a USD 53 million agreement with startup Charm Industrial to capture and permanently store 112,000 tons of CO2 underground67. As Charm Industrial's CEO remarks, the significant offtake deal

Techcrunch: “Stripe now valued at USD 50B following USD 6.5B raise”, 2023 65 Frontier: “An advance market commitment to accelerate carbon removal”, 2022 66 Techcrunch: “Stripe Climate is a new tool to let Stripe customers make carbon removal purchases”, 2020 67 Frontier: “Frontier buyers sign first USD 53M in offtake agreements with Charm Industrial”, 2023 64

Heirloom:

The Future of CDR? Emphasizing resilience through innovation: Heirloom pioneering Direct Air Capture technology Heirloom Carbon Technologies was founded in 2020 in San Francisco and is operating America’s first

Facts Direct Air Capture (DAC): Capturing CO2

commercial Direct Air Capture (DAC) facility. The fa-

directly from the air, reducing the atmo-

cility is located in Tracy, California and is one of only

spheric concentration of CO2.

18 DAC facilities operated globally, collectively capturing 10,000 tons of CO2 a year68. Most companies are unable to completely elimi-

A significant challenge that lies ahead for DAC-

nate their full carbon footprint when the effects of

based companies is demonstrating the scalabil-

both up and downstream activities are considered.

ity of the technology in a cost-effective manner.

Therefore, Carbon Dioxide Removal (CDR) can be an

Heirloom seeks to address this challenge by acceler-

important tool for building climate resilience. The

ating the natural process of carbon mineralization,

DAC technology emerges as a notably promising

capturing CO2 using limestone, one of the most

method for CDR as it actively extracts CO2 from the

abundant rocks on the planet70. Carbon mineraliza-

atmosphere without the uncertainty of additionality

tion describes the process whereby CO2 from the

often causing concerns for other CDR initiatives.

atmosphere binds to minerals and permanently transforms into rock – a process normally occurring

DAC can either enable the permanent storage of

over geological timescales but is accelerated into

CO2, actual CDR, or repurpose the captured CO2 for

just days by Heirloom’s technology70.

other innovative uses, such as reinforced concrete and eFuels. An example of such an eFuel could be eMethanol potentially used for large container ships

as a green alternative to marine diesel and as such

DAC can serve as a vital contributor to the decarbonization efforts of other industries, notably shipping.

Reuters: “Fossil-fuel industry embrace raises alarm bells over direct air capture”, 2023 Carbon Offset Guide part of the Carbon Offset Research and Education program: “Additionality”, n.d. 70 Heirloom: ”Restoring Balance to Our Atmosphere”, n.d. 71 Earth.org: "America’s First Direct Air Capture Facility Opens in California”, 2024 72 ClimateNow: “Carbon Dioxide Removal”, 2021

“It is incredibly encouraging to see agreements of this magnitude because corporate buyers, like Microsoft, can unlock a significantly lower cost of capital for Direct Air Capture companies that are seeking to finance infrastructure projects, such as future Carbon Dioxide Removal facilities.” Robert Keepers, Managing Director at J.P. Morgan Green Economy Banking73 Heirloom’s technology is expected to bring down

cant demand critical for building a market for high-quali-

the cost to USD 100 per ton CO2 by 2035 . This price

ty CDR and providing predictable and durable cash flows

is double the cost of existing ‘natural’ solutions for

needed for opening more facilities73.

CO2 absorption and storage, such as forestation and soil carbon sequestration, making the techno-

Hence, Heirloom is one of several promising DAC

logical advancements critical in ensuring DAC as a

companies landing significant deals and operating

viable part of resilient climate strategies .

commercial facilities. However, the timing, prioritization

and funding of CDR versus emission reduction is spurHeirloom customers include Microsoft, Stripe, Meta,

ring debates, on the one hand, while on the other hand,

H&M Group, and many more. Microsoft has signed

the overall long term climate science is clear. We must

one of the largest permanent CO2 removal deals to-

do both CDR and massive emissions reductions to stay

date . The deal commits to the purchase of 315,000

within the 1.5°C global warming path according to the

metric tons of CO2 removal over a multi-year period

IPCC. So, DAC could very well be an important tool for

from Heirloom, corresponding to 31.5x the total year-

companies’ climate resilience strategy going forward

ly capturing happening today . Deals like these are

and for them to achieve their net zero goals.

essential for expanding DAC CDR, signaling signifi-

"Heirloom and Microsoft sign one of the largest permanent CO2 removal deals to-date”, 2023

Thank you: To our partners at DTU Entrepreneurship and DTU Board Education, especially Jes Broeng, Thomas J. Howard, and Anne Malberg Horsager. To Lisa Goldberg, Robert Strand, Shomit Ghose, Julio Friedmann, Darren Bonnstetter, Jakob Jessen, Anders Hoffmann, Anne Thomassen, Charlotte Kjeldsen Krarup,Morten Mommsen, Christoffer Bohn Burlin-Ebert, Laurits Bach Sørensen, Barbara Taudorf Andersen, Hanne Risbjerg Sørensen, Martin Ågerup, Tim McAloone, Mia Blatancic, Karsten Capion, Michael Stanley, Morten Wagner, Nicolaj Reffstrup, Tommy Andersen, Manon Chloé Villers, Alexander Schmidt, Caroline Arends, David M. Schjerlund, Camilla Sofani Bartholdy, Fei Chen, Maria Flora Middelboe Andersen, Mikkel Brun Næsager, Masego Mbaakanyi, Bjarne Schøn, Danny Grydholt-Jantzen, France Bourgouin, Francesco Rosati, Morten Willaing Jeppesen, Søren Riis, Jesper Kamp, Allan Skårup Kristensen for fruitful discussions and your inputs to the publication.

Writing and editing: Innovation Centre Denmark in Silicon Valley: Caroline Emilie Klinteby Szarka, Camille Siersbæk, Mick Kalle Mickelborg, Anna Boonmeemakova, Clara Marie Persson, Anders Christjansen, Morten Larsen, Helene Martine Overø Kristiansen, and Emilia Stefansson. Innovation Centre Denmark Silicon Valley 299 California Avenue, suite 200 Palo Alto, CA 94306, USA Date: January 2024 Design: Montgomery.dk All rights reserved. No part of this project may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.