John Burke, president and CEO of Trek Bicycle, believes that any company’s active role in slowing global warming is good for the bottom line, even if the upfront costs only create an upside somewhere down the road. .
He is, after all, in a company that sees the bicycle not only as a way to connect directly to an Earth worth saving, but also as a legitimate competitor to automobiles for many uses, especially since electric bikes take off.
In truth, Burke thinks the real outcome is this: an unlivable Earth, no humanity, no business, period.
“If you play for the long term, if we don’t tackle the climate problem, we don’t exist. I think, from a business standpoint, people are looking too shortsighted,” said Burke, who works for Trek, a billion-plus-dollar privately owned global bike maker with Wisconsin roots, since 1984. He has been its president since 1997.
“Business people should be able to look at the numbers and they should be able to look at the charts and they should be able to come to the conclusion that if we don’t fix this, we’re screwed,” he told MarketWatch. in an interview ahead of Earth Day, which takes place annually on April 22.
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The interview comes just weeks after a significant turning point for many companies as the Securities and Exchange Commission moves closer to establishing rules requiring listed companies to inform investors of all risks and opportunities related to climate change, in the same way that profits are disclosed. This will impact every retirement account and 401(k).
Some companies bristle at the cost of this extra reporting; it will be a challenge for many to take up Scope 3 Emissionspollution throughout a supply chain, often beyond the direct control of any particular company.
The SEC is acting amid a larger global push for action, but has raised concerns from business groups and some mostly Republican lawmakers who worry about costs and loss of flexibility. energy in the United States. the last report of the UN’s Intergovernmental Panel on Climate Change says that by 2030, greenhouse gas emissions must be reduced by at least 43% to avoid 1.5 degrees Celsius of warming at the end of the century. Fossil fuels NG00,
burned by man are the biggest contributor to this warming.
Trek’s Burke spoke with MarketWatch about overcoming disclosure and reporting hurdles. Trek doesn’t have to answer to shareholders, but it has to answer to customers.
“‘ Even products that benefit people and the planet leave behind a [carbon] footprint.’”
In 2020, Trek brought in an external consultant for the company’s first emissions audit to better understand its impact on rising global temperatures and develop a plan to become a more conscious and sustainable global citizen. This report shows results, actions to date and a vision for more to come.
“It makes sense for a bike company to care about the environment. Trek makes a product that provides a solution to many of the world’s most complex issues such as climate change – cycling is climate action – as well as an answer to traffic congestion and public health,” said Burke and other leaders calling for the audit.
“But for too long cycling has been given an environmental pass based on that assumption. Even products that benefit people and the planet leave behind a [carbon] footprint. And it’s a footprint Trek isn’t afraid to address and share publicly,” they said.
MarketWatch asked Burke for additional information on the Trek approach. Some answers have been edited for length and clarity.
MarketWatch: Why does anticipating climate change reports, or at least keeping pace, make sense for a business?
burk: To answer that, I must first tell you how I came to this thought as an individual. I was at a speaker’s night about three years ago, and there’s this guy, robert swan who was talking – he is the first person in history to walk to the North and South Poles – and the conversation quickly became a climate conversation. At the end, he said something that stuck in my mind: “The greatest threat to our planet is the belief that someone else will save it.” And I thought that was so true. And I thought of myself. I was waiting for someone else to save him and Trek is waiting for someone else to save him. And it seems like our government is waiting for someone else to save it and at that point I thought, you know, I think we have to do our part.
And then I was on a bike ride with [documentary filmmaker] Rory Kennedy, about three months later. She made a documentaryAbove and beyond…” and it started as a tribute to his uncle, the president [John F. Kennedy], which really pushed NASA to go to the moon. And then things change quickly… and you discover that the organization that knows the most about the state of the Earth is NASA. They show a graph of the parts per million of carbon in the atmosphere…and it goes on, it goes on, it goes on and then through the 1900s it goes straight up.
And they said we had 10 years to solve this problem. And so I went back to Trek and got all my senior executives together in one room…then we got the whole company together. We set out to act quickly on climate change, and we were going to be a leader that other companies could emulate.
“‘I waited for someone else to save [Earth] and Trek waits for someone else to save him. And it seems like our government is waiting for someone else to save it and at that point I thought, you know, I think we have to do our part. ”
Market surveillance: What does this actually look like? The UN, the IPCC, just came out with another report… saying promises are great, actions a little harder. So what does it look like on the pitch then?
burk: The beauty is that it runs through the whole organization. So it wasn’t just one person involved. I think we had over 700 projects that we completed. So if you take a look at a bike box for shipping; there are 33 pieces of plastic in this box. Well, today at Trek there are now three pieces and in a few years there won’t be any more. The best thing is that we are just getting started. Trek is not a perfect company and we have a long way to go, but we are moving forward and moving very fast and making a difference.
[The 2020 Trek audit report also set goals including: improving supply chain processes to reduce air freight mileage by 75% by 2024; consolidating ground shipments to retailers also by 2024; mainland European retailers currently utilize a batched shipping strategy that cuts mileage required to move product; increase reliance on renewable energy; by 2023, all Trek facilities globally will be powered by renewable energy.]
Market surveillance: I imagine that you also believe that there is a commercial imperative. You know your customer. Do you have any thoughts on climate change mitigation as a business imperative?
Burk: Recently, I was a speaker at a business event. I was talking to the event organizer and he asks me to explain to him what Trek does in terms of sustainability. And he’s a guy who runs 35 different companies and I said what we were doing. He saw the slide deck. He asks, why don’t we all do this? I mean, these are big companies. And they do nothing. It’s not that hard. Watch a documentary. Get a bunch of smart people in a room. We’re at a tipping point here in the game, and very few people are even playing.
Market surveillance: So scope 3 emissions, all the way through the supply chain, are kind of the trickiest part of it all. How do you communicate or what do you do for your retailers?
Burk: We have 5,000 retailers worldwide. And last night I re-read a 24-page document for our retailers. For example: here are the four steps to running an eco-friendly retail business; and here are 100-point dashboards to measure yourself; and here is a set of best practices to achieve this.
Market surveillance: Let’s talk about the product line. And not just cycling as exercise and recreation, but as a transportation option. Where are you guys on e-bikes and where do you see it going from here?
burk: This is already a large part of our activity. It’s really taken off in the United States over the past three years. It has been important in Europe for the past 15 years. I think we are in the second leg of the game in the American market. If you look at car trips, I think 40% of car trips are less than two miles. If you look at the health crisis in the United States, it’s a disaster. And no one is doing anything about it. The bicycle is a partial solution to get people moving. Electric bikes are amazing. Imagine the first time you got an iPhone, when people said, “Oh my God, you can take a picture and you can send it to someone.” The same thing happens with an electric bicycle.
“ “I think we’re in the second round of the game in the US market” for e-bikes.”
Market surveillance: I assume you consider yourself a competitor of the automobile based on how someone uses a particular mode of transportation. But I wonder, as many are taking stock anyway, leaving internal combustion engines and potentially moving to electric vehicles, is now more than ever a time when a bicycle, and perhaps an e-bike, competes a way he has never done before?
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burk: Yes, to your question. But the other thing you have is that more and more people are moving to cities, right? You don’t just have the environmental problem of internal combustion engines, you also have a problem of space and how cities can manage the number of cars that are in the system today. And everyone wants a more livable community. And one of the easiest ways to do that is to make your community more walkable and bikeable. If we only talk about trips, to the store, to school, to a friend’s house. In Copenhagen, 35% of journeys are made by bicycle. You know, look at the health of people in Copenhagen and look at the health of people in an American city. I don’t know of any city that has regretted putting in place facilities to make their city more accessible by bike and on foot.
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[Editor’s note: Trek has a range of e-bikes and hybrids for commuting, mountain trails and casual use, ranging in price from roughly $1,500 to $13,000, but prices may vary depending on added features. There’s a guide to take to determine what model might best match a rider’s needs.]