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TED Talks Daily

4 hard truths about capitalism and climate | Steve Howard

with Steve Howard

Published November 22, 2025
View Show Notes

About This Episode

Sustainability investor Steve Howard outlines four hard truths about capitalism and climate change, arguing that businesses, financial markets, and policies must be rewired to enable large-scale decarbonization. He explains how companies are structurally resistant to change, how short-term profit focus and unpriced environmental externalities distort markets, and why long, loud, legal climate policies are essential to drive investment into cleaner technologies. Drawing on examples from Temasek, IKEA, Singapore, and emerging climate-tech firms, he shows how better (cleaner, cheaper, higher-performing) solutions can scale quickly and calls on policymakers, asset owners, businesses, and individuals to actively redirect capital toward climate solutions.

Topics Covered

Climate change activism Sustainability Capital allocation Investing Energy policy and regulation Pollution Entrepreneurship Business growth and scaling Food systems Climate finance

Disclaimer: We provide independent summaries of podcasts and are not affiliated with or endorsed in any way by any podcast or creator. All podcast names and content are the property of their respective owners. The views and opinions expressed within the podcasts belong solely to the original hosts and guests and do not reflect the views or positions of Summapod.

Quick Takeaways

  • Businesses are structurally hardwired and softwired to do what they already do, making large shifts like moving from internal combustion engines to electric vehicles inherently difficult without external pressure and incentives.
  • Financial markets are dominated by short-term profit motives and fail to price environmental externalities, even though the economic costs of unabated climate change are estimated to be in the tens of trillions of dollars.
  • Long-term asset owners such as pension funds and sovereign wealth funds have a direct financial interest in climate stability and can rewire their own incentives, metrics, and strategies to invest in climate solutions.
  • Policy functions as a master switch: long, loud, legal climate policies (like carbon taxes and fast-track regulation) can level the playing field and unlock massive private investment in clean technologies.
  • When cleaner technologies become genuinely "better"-cheaper, higher quality, and more convenient-such as LEDs or electric mobility, they can transform entire global industries within a decade.
  • Emerging markets and pre-commercial climate technologies like green steel, green cement, green hydrogen, and sustainable aviation fuel need patient, risk-tolerant capital to scale.
  • Targeted innovations like end-of-pipe cement decarbonization and battery swapping platforms for two- and three-wheelers show how climate tech can be integrated into existing systems while improving user experience.
  • Individuals, asset allocators, policymakers, and business leaders all have agency: from redesigning portfolios and policies to moving personal pensions and building businesses around better, low-carbon products.
  • Human systems-markets, policies, and business models-are designed by people, and rewiring capitalism is presented as both necessary and possible to help solve climate change.

Podcast Notes

Host introduction and framing of the episode

Introduction to TED Talks Daily and host

Identification of the show and host[2:54]
• The host states that the listener is hearing TED Talks Daily and introduces herself as Elise Hu.

Framing the core question: capitalism and climate

Questioning capitalism's role in both causing and solving the climate crisis[2:58]
• Elise Hu asks whether capitalism, which many believe has led to the current climate crisis, could also be the system that helps solve it.
Introducing Steve Howard and his central thesis[3:06]
• The host introduces Steve Howard as a sustainability investor who examines whether profit-driven systems can scale climate solutions fast enough.
• She notes that Steve believes capitalism can help, but only if we are willing to change the rules.

Steve Howard introduces himself and the main climate-capitalism question

Personal background and current role

Professional identity and position[3:25]
• Steve Howard introduces himself as Vice Chair of Sustainability at the global investment firm Temasek.
Experience working on climate issues[3:41]
• He says he has been wrestling with the question of how capitalism can help solve climate change for about three decades.
• He mentions he was formerly Chief Sustainability Officer at IKEA.
• He has helped set up several climate change organisations, including We Mean Business Coalition, the Climate Group, and more recently Tilt Collective.

Framing the "hard truths" about capitalism and climate

Introduction of the idea of hard truths[3:48]
• Steve says he has come to the conclusion that there are some real hard truths about capitalism's relationship with climate change.

Hard Truth 1: Every business is a machine

Concept of businesses being hardwired and softwired

Businesses as machines designed to do specific things[3:48]
• Steve states that every business is a machine, hardwired and softwired to do what it does, which is why it is very good at that activity.
Implication for change in companies[3:41]
• This hardwiring makes change for such companies incredibly hard.

Example of a car manufacturer resisting electric vehicles

Conversation with a chief technology officer[4:08]
• About 15 years ago, Steve was at the headquarters of a global car manufacturer, speaking with its chief technology officer (CTO).
• He suggested that the future was electric vehicles.
• The CTO slapped the table and declared that never while he was CTO would the company make an electric vehicle.
How the situation changed over time[4:34]
• Steve notes that the CTO was "absolutely right" because he is no longer CTO.
• Steve recently took a taxi that was one of that company's electric vehicles.
Systemic factors beyond individual leadership[4:40]
• Steve cautions that it is easy to make the story about that CTO and his leadership, but he realized there were hundreds of proud, skilled engineers in the surrounding buildings.
• Those engineers had spent their careers making ever-better internal combustion engines.
• The company had spent a hundred years perfecting global supply chains for components like spark plugs and carburettors.
• He characterizes this as an internal combustion engine vehicle company, not just any vehicle company.

Broader point: many sectors are hard to change

Change difficulty across industries[5:02]
• Steve notes that many companies, from manufacturing to technology and even finance, are hardwired and softwired to do what they do.
Exceptions exist but are rare[5:18]
• He acknowledges that there are exceptions-companies that do change-but emphasizes that they are exactly that: exceptions.
• He argues that it is a mistake to think all companies will change themselves, by themselves.

Hard Truth 2: Financial markets are short-term and externalities are not priced

Short-termism in financial markets

Perspective from a private bank leader[5:33]
• Steve relays that a leader of a private bank told him he had never met a long-term investor.
Perspective from a hedge fund leader[5:39]
• A hedge fund leader told Steve that they are profit-seeking creatures.
• This hedge fund leader said he wakes up thinking how much profit he will make today and goes to bed thinking how much profit he did make.
Resulting behavior of markets[5:56]
• Steve concludes that markets are baked in to pursue short-term profit over long-term value creation.

Unpriced externalities and the "free ride" of the free market

Definition and impact of externalities[6:10]
• Steve explains that economists refer to externalities as costs external to the market but not external to people and the planet.
• He lists impacts on nature, pollution, destruction of habitats, harms to human health, and escalating costs of climate change as examples of these externalities.
Magnitude and non-pricing of externalities[6:10]
• These costs are not priced into the market, meaning companies do not pay the bill.
• He notes that economists can debate the exact number, but the costs are known to be in the trillions of dollars.
• He emphasizes that the bill is mostly unpaid and is rising by the day.

Role and incentives of long-term investors

Exposure of asset owners to the total economy[6:59]
• Steve says that if you are a long-term investor-such as a large asset owner, pension fund, sovereign wealth fund, endowment, or family office-you are exposed to the total economy.
Economic growth as key to long-term financial success[7:04]
• He states that the best guarantee of long-term financial success for such investors is economic growth itself.
• He argues that an inclusive, resilient economy that tackles climate change is the one with the best economic growth prospects.

Economic impact of unabated climate change

Estimate from Cambridge University[7:23]
• Steve notes that Cambridge University ran numbers on unabated climate change and estimated it could reduce global GDP by about a quarter.
• He compares this to five COVID pandemics and stresses that this would be a pandemic that does not go away.
Implications for asset allocators[7:38]
• If you are a long-term investor or principal owner of capital, Steve says it is in your interest to invest in solving climate change.
• He argues this should include not just the easy things but also the hard things, using what he calls conviction capital.

Example: How Temasek rewired itself for climate alignment

Temasek's long-term orientation and purpose

Longer-term investor identity[7:54]
• Steve describes Temasek as a longer-term investor that has just celebrated its 50th anniversary.
• He says their purpose is "so that every generation prospers."
• He notes that Temasek still has stakes in some companies today that it held when it started 50 years ago.

Internal rewiring to align with climate goals

New metrics and pricing mechanisms[8:07]
• To align with climate change objectives, Temasek had to rewire itself by measuring portfolio carbon emissions.
• They set carbon budgets and implemented an internal carbon price.
• They also aligned staff incentives with climate-related success and set targets.
Engagement with portfolio companies and strategy shifts[8:26]
• Temasek engaged all its portfolio companies around these climate objectives.
• They realigned investment strategies, reskilled investment teams, and invested in new partnerships and platform companies.
• The goal was to build capabilities to invest in the sustainable businesses of today and tomorrow.

Scale of Temasek's sustainability-aligned portfolio

Growth of sustainability-aligned investments[8:45]
• Steve states that Temasek's portfolio of sustainability-aligned investments is 40 billion Singapore dollars.
• He notes that this is up significantly from just a few billion a few years ago.
• He describes this as growing and a start, emphasizing that it is a journey but that they are well on the way.

Hard Truth 3: Policy is a master switch

Need for long, loud, legal policies to level the playing field

Policy as enabler of climate technologies[9:04]
• Steve asserts that policy is a master switch if we want to level the playing field for climate technologies.
• He says we need policies that are long, loud, and legal to unlock investment and motivate innovators.
Definition of "long" policy[9:15]
• Long means that if a technology takes 10 years to develop, a one-year policy is useless; policies must last a full investment cycle.
Definition of "loud" policy[9:27]
• Loud means the policy signal must be unmissable to market participants.
Definition of "legal" policy[9:46]
• Legal means policies must have teeth, and compliance cannot be optional.

Business attitudes toward policy and desire for clarity

Businesses and regulations[9:37]
• Steve observes that most businesses do not embrace policies but they do want clarity and a level playing field.
• He notes that policy is needed to make a free market into a fair market.

Importance of policy at all jurisdictional levels

Role of large and small jurisdictions[9:51]
• He says that while it would be good for all countries, especially large countries, to have strong policies and not roll them back, cities, states, and smaller countries can also have powerful policy impacts.

Case study: Singapore's carbon tax and regulatory approach

Singapore's CO2 tax as a price signal

Pricing an externality[10:09]
• Steve describes the Singapore CO2 tax as a carbon tax that provides a price signal by putting a price on carbon.
• He explains that this prices an externality and helps businesses, including many Temasek portfolio companies, turn long-term targets into concrete plans to decarbonize.
Creating the business case through carbon pricing[10:23]
• Because of the carbon price, companies can create a business case for decarbonizing their operations.

Linkage to global carbon markets and GenZero

Use of international carbon credits[10:37]
• Steve notes that the Singapore carbon tax has a link to global carbon markets, allowing part of the tax obligation to be met with international carbon credits.
• He expects global carbon markets to become increasingly important over the next decade.
Enabling GenZero's investments[10:41]
• This framework allows Temasek's platform company GenZero to invest with greater confidence in projects that remove or reduce emissions elsewhere.
• He gives examples of nature-based solutions and forest restoration projects.

Policy as carrot: fast regulatory approval in Singapore

Support for alternative proteins[11:01]
• Steve explains that policy can be a carrot as well as a stick.
• He cites Singapore's decision to provide super-fast regulatory approval for plant-based proteins and cell-cultivated meats.
Why speed matters for startups[11:20]
• He notes that startups measure time in days and weeks, not years.
• Fast approval lets startups reach customers, test products, and generate revenue quickly, which he describes as invaluable.
• Singapore has become a hub for such alternative protein companies.

Fast planning and infrastructure deployment

Planning processes and green infrastructure[11:23]
• Steve says it is not only startups that benefit from fast regulatory approval and good planning, but big infrastructure projects as well.
• He questions why projects should be tied up for years if effective, fast planning can get green shovels in the ground and green investment flowing.

Hard Truth 4: The importance of "better" solutions

"Better" as a central concept

Emphasis on a single critical word[11:41]
• Steve states his fourth truth is just one word, which he considers really important: "better."
Learning the concept at IKEA[11:47]
• He says he learned the power of "better" while working at IKEA and introduces an example involving LED lighting.

IKEA's transition to LED lighting

Initial state of LED products[11:13]
• When Steve started at IKEA, the company had some LED lights, but they were expensive, had limited sales, and produced harsh, stark light.
Strategic decision to go 100% LED[11:59]
• Despite early limitations, IKEA knew that LEDs were far more energy efficient and that the technology was developing, so they saw LEDs as the future.
• IKEA set a target to have 100% LEDs across the business.
• They aligned all investments around ever-better LED products.
Actions across the supply chain and production[12:17]
• IKEA communicated across its supply chains and used its own purchasing power to secure finance for new factories and production lines dedicated to LEDs.
Achieving a "better" product and rapid scale[12:43]
• Once they reached an LED that was not only energy efficient but also affordable and provided high-quality light, described as the next best thing to daylight, the lights "flew off the shelves."
• IKEA met its target of selling only LEDs from 2015 onward.

Global transformation of the lighting sector

Shift in LED market share from 2010 to 2020[12:48]
• Steve notes that in 2010, less than 1% of the global lighting sector was LEDs, with more than 99% being other types of light bulbs.
• By 2020, more than 60% of the lighting sector was LED.
• He says this means the entire global lighting sector, which had existed for more than 100 years, was flipped in a decade.
• He repeats that when you get to "better," you achieve scale really fast.

Other technologies moving from green premium to green discount

Examples of mature climate technologies[13:09]
• Steve says many other technologies have reached the "better" stage and moved from a green premium to a green discount.
• He lists solar, wind, and batteries (storage) as examples and calls this very exciting.
Platforms for business model innovation[13:24]
• Once technologies reach "better," they create platforms for business model innovation.

Example of business model innovation: Battery swapping in India

LeapFrog's investment in an Indian startup

Description of the startup's service[13:32]
• Steve mentions that Temasek's impact investing partner, LeapFrog, invested in a young startup in India.
• The startup operates battery-swapping stations for two-wheeler and auto rickshaw drivers.
Customer experience and benefits[13:54]
• Instead of waiting in a long queue to refuel, drivers can pull in, have their batteries swapped in two minutes for a fixed price, have a cup of chai, and then drive away.
• Steve notes that this solution is cleaner, cheaper, quieter, and mechanically more efficient.
• He says customers love the service.
Scale achieved by the platform[13:55]
• The startup has 75,000 drivers on its platform and is growing.
• They are conducting more than 3 million battery swaps per month.

Financing challenges: Emerging markets and pre-parity technologies

Need for capital in emerging markets

Scarcity of capital despite strong models[14:14]
• Steve notes that many areas in emerging markets have business model innovation built on better technologies, such as pay-as-you-go solar.
• He emphasizes that capital is scarce in these regions.
Call for capital allocation to emerging markets[14:15]
• He says we need capital allocators to direct capital to emerging markets.

Financing gaps for not-yet-parity climate technologies

First-of-a-kind and similar industrial plants[14:28]
• Another difficult area for financing is large industrial plants working on their first, second, or third-of-a-kind facilities.
• He lists sustainable aviation fuel, green hydrogen, green cement, green steel, and cell-cultivated meats and plant-based proteins as examples.
These sectors as industries of the future[14:41]
• Steve stresses that these are the industries of the future.
• He says investors and policymakers must recognize this and lean in behind them.
• He predicts a future that is cleaner, cheaper, better, faster, and tastier.

Decarbonizing heavy industry: Cement case study

Scale and impact of cement and concrete

Cement's role and emissions[15:04]
• Steve notes that Temasek has long invested in large real estate businesses, which are big users of steel, cement, and concrete.
• He explains that cement, in the form of concrete, is the second most abundant material used after water.
• Annual usage is about 30 billion tons, and cement accounts for 8% of CO2 emissions.
Market structure and innovation barriers in cement[15:08]
• Cement is described as hyper-commoditized with very slim profit margins.
• There is lots of sunk capital in cement factories around the world, making it hard to innovate and transform the industry.

Temasek's investment in end-of-pipe cement technology

Description of the bolt-on solution[15:30]
• Temasek has invested in a company that provides an end-of-pipe solution for cement plants.
• The technology is described as a bolt-on that captures CO2 emissions that would otherwise cause climate change and pollute the atmosphere.
• The captured CO2 is remineralized and incorporated back into the cement, resulting in zero pollution and more cement.
Requirement for patient capital[15:48]
• Steve stresses that such companies require patient capital.
• This company alone has processed a hundred million tons of cement and invested a hundred thousand hours of R&D into the technology.
• He notes that it will need a lot of capital to roll the technology out across the cement industry.

Calls to action for different stakeholders

Ask to policymakers

Implement long, loud, legal policies and price externalities[16:07]
• Steve explicitly states he has an ask for policymakers: to adopt long, loud, legal policy regimes.
• He urges making the free market a fair market by pricing externalities.
Economic benefits of strong climate policy[16:07]
• He argues that this will unlock a green industrial revolution in their economies.
• It will create green jobs of the future and future-proof their economies.

Ask to asset allocators and owners of capital

Directing patient capital to climate solutions[16:40]
• Steve addresses asset allocators and those who influence them, including pension funds, endowments, family offices, and sovereign wealth funds.
• He asks them to take a pot of patient, long-term capital and put it behind climate change solutions.
• He emphasizes investing not just in the easy things but also in the hard things.
• He asserts that it is in their interest and that they will be backing the industries of the future.
• He says he knows many people in that sector and explicitly states he is talking to them, urging them to remember his ask.

Ask to individuals

Checking personal pensions and savings[17:04]
• Steve suggests that individuals who have a pension or savings should look at their provider.
• He advises asking providers what their climate allocation is.
• If the provider does not have a great answer, he recommends moving the money somewhere else.

Ask to business leaders and entrepreneurs

Embracing change and better solutions[17:20]
• Steve calls on business leaders and entrepreneurs to embrace change and unlock opportunity.
• He urges them to "go for better."

Conclusion: Past successes and the potential to rewire capitalism

Acknowledging difficulty but pointing to historical precedent

Use of a historical playbook[17:27]
• Steve concedes that the task will not be easy, but notes that humanity has used this playbook before.
• He summarizes the playbook as good government policy and incentives, business innovation, and investment.

Examples of past environmental and energy successes

Ending acid rain and repairing the ozone hole[17:36]
• He says that using this playbook, we have ended acid rain.
• We have also closed the ozone hole.
Scaling renewable energy and LEDs[17:47]
• Steve notes that humanity has harnessed the power of the sun and wind to create the cheapest forms of energy on the planet.
• He adds that we have five billion years of sun reserves.
• He states that we have lit a billion homes with LEDs.

Humans as authors of the rules and markets

Human agency in designing systems[17:53]
• Steve emphasizes that humanity wrote the rulebook.
• He points out that we created all markets, allowed externalities, wrote all policies, and built all machines.
Possibility of rewiring capitalism[18:06]
• He concludes that if we rewire capitalism, we can help solve climate change.
• He ends his talk with a thank you.

Host closing and production credits

Context on where and when the talk was delivered

Event details[18:23]
• Elise Hu notes that this was Steve Howard speaking at the TED Countdown Summit in Nairobi, Kenya, in 2025.

Mention of TED curation guidelines

Pointer to more information[18:29]
• She says that if listeners are curious about TED's curation, they can find out more at TED.com slash curation guidelines.

Production credits for TED Talks Daily episode

Fact-checking and production team recognition[18:36]
• The host states that TED Talks Daily is part of the TED Audio Collective.
• She notes that the talk was fact-checked by the TED Research Team and produced and edited by team members including Martha Estefanos, Oliver Friedman, Brian Green, Lucy Little, and Tansika Sangmarnivong.
• She adds that the episode was mixed by Christopher Fasey-Bogan, with additional support from Emma Taubner and Daniela Balarezo.
Outro from the host[18:54]
• Elise Hu signs off by saying she will be back tomorrow with a fresh idea for the listener's feed and thanks listeners for listening.

Lessons Learned

Actionable insights and wisdom you can apply to your business, career, and personal life.

1

Organizations and markets are structurally wired for their current ways of operating, so shifting them toward climate solutions requires deliberate rewiring of incentives, processes, and capabilities rather than expecting spontaneous transformation.

Reflection Questions:

  • • Where in your own organization or work are you relying on existing structures to change themselves instead of intentionally redesigning them?
  • • How could you realign incentives, metrics, or routines in one area of your work so they point more directly toward long-term goals rather than short-term comfort?
  • • What is one concrete system (a process, KPI, or policy) you could start to rewire over the next quarter to better align with your values and long-term objectives?
2

Long-term asset owners and decision-makers are directly exposed to systemic risks like climate change, so aligning their capital with solutions is both a risk management move and a growth strategy.

Reflection Questions:

  • • What long-term risks are currently implicit in your financial, career, or strategic choices that you rarely account for explicitly?
  • • How might shifting even a small portion of your resources toward solutions to those risks change your long-term resilience and opportunities?
  • • What is one portfolio, budget, or project you influence where you could intentionally reallocate capital toward long-term, impact-aligned investments this year?
3

Policy functions as a master switch for markets: clear, durable, enforceable rules can rapidly unlock innovation and private investment that remain dormant under weak or ambiguous regulation.

Reflection Questions:

  • • In your industry or community, what existing rules or lack of rules are silently shaping behavior away from the outcomes you want?
  • • How could you engage with policymakers, industry bodies, or internal governance to advocate for "long, loud, legal" guidelines that support positive change?
  • • What is one specific rule, standard, or policy-internal or external-you could help revise or introduce over the next year to better align incentives with long-term value?
4

Climate-friendly technologies only scale explosively when they become genuinely better for users-cheaper, higher quality, and more convenient-so designing for "better" is more powerful than appealing only to ethics.

Reflection Questions:

  • • Which of your products, services, or habits currently rely on people sacrificing convenience or cost rather than offering them something clearly better?
  • • How might you redesign one offering or behavior so that the sustainable or ethical option is also the most attractive on performance, price, or experience?
  • • What is one experiment you can run in the next month to test a "better, not just greener" version of something you provide or consume?
5

Patient, conviction-based capital is essential to bridge the gap for emerging markets and pre-commercial climate technologies that are clearly the future but not yet fully cost-competitive.

Reflection Questions:

  • • Where in your professional or personal life are you demanding quick returns in situations that actually require patience and staged investment?
  • • How could you carve out a "patient capital" bucket-whether time, money, or attention-to back promising but not-yet-proven ideas that align with your long-term vision?
  • • What is one early-stage project, technology, or person you could commit to supporting over multiple years rather than expecting immediate payoffs?
6

Individual choices about where to place savings, pensions, and professional effort contribute to the broader direction of capitalism, giving people leverage to nudge systems toward climate-aligned outcomes.

Reflection Questions:

  • • Do you know how your current financial providers, employer, or main professional activities impact climate and long-term sustainability?
  • • How might moving your money, skills, or time toward more climate-aligned organizations change both your impact and your sense of agency?
  • • What is one specific provider, organization, or project you will review-and possibly switch or influence-within the next three months to better reflect your climate priorities?
7

Human beings create the rulebooks, markets, and machines that shape our world, so systemic problems like climate change are ultimately design problems that can be reworked rather than fixed only at the margins.

Reflection Questions:

  • • Where are you treating a systemic issue in your life or organization as immutable rather than as something designed by people and therefore redesignable?
  • • How could reframing a persistent problem you face as a design challenge open up new options for changing the underlying rules or structures?
  • • What is one system you interact with regularly that you will map and question this month, asking yourself which rules and assumptions could be rewritten?

Episode Summary - Notes by Sawyer

4 hard truths about capitalism and climate | Steve Howard
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