Activist CEOs: A new reality for corporate America

The days when business leaders could dodge social or political issues are coming to an end. CEO engagement on issues such as health care, sexual harassment, gun control and immigration have been steadily on the rise.

In a U.S. House committee meeting just last week, lawmakers “grilled [bank] executives more on social issues than business fundamentals,” according to Reuters, and probed them about fossil fuel investments. 

And as a recent Axios Trends piece suggests, pressure on CEOs to address social issues is increasing ahead of the 2020 political campaigns. In particular, demands that they act on climate change are heating up.

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Top 3 corporate sustainability trends all business leaders should be watching in 2019

Credit: Wendy Palmer

Last year, I identified the top corporate sustainability trends of 2018. Six months later, I revisited those trends and shared company-specific examples that pointed to their growing traction.

I decided to repeat this process again for this year. But, before I share the top trends for 2019, let me first explain how they are identified.

The growing and changing field of corporate sustainability

I work with hundreds of companies each year to help them determine sustainability projects that make the most sense for their unique business and goals. Through one-on-one conversations with companies participating in EDF Climate Corps, which hit a record high for the second consecutive year, I get a close up look at how businesses across industries – from big tech companies like Google and Amazon, to food and beverage giants like McDonald’s and Danone Waters North America – plan to reduce their environmental impact.

Here are the top trends in corporate sustainability for 2019 that I’ve identified by analyzing the data from this year’s EDF Climate Corps host applications:

  1. Mobility projects will gain popularity as a strategy to reduce emissions. Transportation is the leading cause of U.S. emissions. So it’s understandable why mobility-focused projects are everywhere right now – from transitioning corporate fleets into EVs to reducing the use of single-occupancy vehicles thanks to ridesharing and micro-mobility alternatives, like e-scooters. Companies are looking to mobility-related projects as a solution to reduce their operational, supply chain, and transportation-related greenhouse gas emissions. In fact, planned IPOs from Lyft and Uber have made headlines recently with some believing that this could lead to more aggressive actions on carbon emission reductions from ride-hailing apps, due to shareholder pressure.

What the data shows: This year, 15% of EDF Climate Corps projects are related to mobility issues, two times as many as last year.

  1. Longstanding sustainability champions will be joined by the majority. We’re in an exciting transition period: Sustainability is no longer being championed by only the early adopters, but rather the majority. Companies, from well-established corporations to growing medium-sized enterprises, are formally establishing sustainability programs and climate strategies for the very first time. For example, in Barron’s second annual ranking of the 100 Most Sustainable U.S. Companies, one-third of the companies were ranked for the first time this year.

What the data shows: This year, one out of six new EDF Climate Corps hosts are establishing their first-ever official sustainability program.

Project Manager, EDF Climate Corps

  1. Science-Based Targets will see greater diversity from industries. Last year, I identified the rapid growth of companies setting Science-Based Targets (SBTs) as a trend. Since then, the number of companies that have publically committed or already set a SBT – including Hershey and Iron Mountain – has more than doubled. There are a number of public, voluntary commitments to initiatives around GHG emissions (We Are Still In, RE100), but the SBT Initiative has become an industry best practice. In the year ahead, we will see more industry diversity in SBT commitments, and more collaboration between companies to tailor and adapt methodologies to their specific industry.

What the data shows: Companies participating in this year’s EDF Climate Corps program with a focus on Science-Based Target projects have tripled compared to last year’s cohort.

Congratulations to all of the companies that are redefining what it means to be a corporate sustainability leader this year.

Stay tuned for an update on these trends this fall using real-world projects from this summer.

* Infographic: see what this year’s EDF Climate Corps hosts are tackling  


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The new rules of business leadership

The job of a CEO has always been challenging. Today it is tougher than ever, because the pressure to deliver rising valuations and ROI is matched by a new set of demands as investors, customers, employees and other business leaders call for profits to be balanced with social purpose.

After 20,000 of Google’s employees staged a walkout last November, the company overhauled its sexual harassment policies. Amazon was pulled into the spotlight late last year, when employees leveraged their stock options to submit petitions asking the company to create a plan to reduce its dependence on fossil fuels. And when high school survivors of the Parkland massacre helped make gun control a subject of national debate, Kroger, Walmart, Dick’s Sporting Goods and LL Bean put new restrictions on their retail firearm sales.

As BlackRock CEO Larry Fink wrote recently in his annual letter to executives, “contentious town halls” where employees speak up for “the importance of corporate purpose” are becoming a fact of life. “This phenomenon will only grow as millennials and even younger generations occupy increasingly senior positions in business. In a recent survey by Deloitte, millennial workers were asked what the primary purpose of businesses should be – 63 percent more of them said ‘improving society’ than said ‘generating profit.’”

It’s no longer enough to post your values on the company intranet. You need to publicly and visibly put them to work.

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The 4 critical steps to climate leadership

Business leaders can no longer afford to look the other way on climate change. The recent National Climate Assessment revealed that regional economies and industries dependent on natural resources are increasingly vulnerable to the impacts of climate change – as are energy systems. Warmer climates will increasingly disrupt international trade, prices, and supply chains, and costs could reach hundreds of billion dollars per year by the end of the century. Climate change doesn’t just threaten ecological balance, it threatens corporate balance sheets.

In light of these findings I’m encouraged by a recent survey of corporate leaders, 82 percent of whom said companies need to advocate for or take a stand on environmental, social and governance issues and that “climate and environment” was one of the three highest priorities for their organizations.

Knowing that a company should take action, however, is a long way from actually taking action on climate. While there are a growing number of cases where leading companies and major investors are ahead of the federal government on climate action, it’s simply not enough, and many more U.S. businesses need to step up.

The role that CEOs and companies play in global governance is changing. Leaders and laggards, winners and losers, will all be defined by how they respond to climate change. The leaders will surface based on their ability to take these four critical steps. Read more

Can top retailers make safer chemicals commitments tangible for consumers?

The Mind the Store campaign recently released their third annual Who’s Minding the Store? report, which ranks retailer action on the removal of toxic chemicals from products. Many of this year’s top performing retailers are familiar. Apple, Walmart, Target, and CVS, all in the top 10, are companies that EDF considers to be safer chemicals leaders. Importantly, several retailers received much improved scores – Amazon, Walgreens, and Rite-Aid are the most improved retailers compared to 2016. We’ve previously blogged on Amazon and Rite-Aid’s new chemicals policies (see here and here, respectively). Walgreens is the newest face in this crowd, releasing its chemicals policy earlier this month. With more and more retailers making commitments, the market demand for safer chemistry in products is now undeniable.

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Amazon joins Walmart, other major retailers on safer chemicals

Retail demand for safer products is not only here to stay – it’s now a source of competition in the evolving marketplace. Amazon is the latest retailer to join Walmart, Target, CVS Health, Home Depot, and Rite-Aid by publishing a chemicals policy and a public Restricted Substances List. Amazon and several of the above-mentioned retailers represent half of the top ten retailers in the US. Amazon’s new policy is a big deal: not only is Amazon the third largest retailer by sales in the US, it is the first primarily ecommerce retailer to create a chemicals policy. Ecommerce represents a challenge in terms of implementing such a policy, but as shoppers increasingly turn to online retailers for many of their purchasing needs, this also presents a major opportunity to increase the availability of safer products.

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Scaling for good: can McDonald’s raise the bar for sustainable food?

At Environmental Defense Fund, we believe that environmental progress and economic growth can and must go hand in hand. EDF+Business works with leading companies and investors to raise the bar for corporate sustainability leadership by setting ambitious, science-based goals; collaborating for scale across industries and global supply chains; publicly supporting smart environmental safeguards; and, accelerating environmental innovation.

This is the 10th in a series of interviews exploring trends in sustainability leadership as part of our effort to pave the way to a thriving economy and a healthy environment.

Let’s turn back the clock to 1990. It was a milestone year for McDonald’s, as the company opened its first restaurants in Moscow, mainland China and Chile. It was also when the largest restaurant company in the world joined forces with Environmental Defense Fund to launch a groundbreaking partnership that would find ways to reduce McDonald’s solid waste. The results? $6 million in savings, more than 300 million pounds of packaging eliminated, and 1 million tons of corrugated boxes recycled.

2018 is shaping up to be a big year for McDonald’s too, with a packaging waste goal set in January and an announcement to reduce emissions across its supply chain in March. Led by Executive Vice President and Chief Supply Chain and Sustainability Officer Francesca DeBiase, McDonald’s has raised the corporate leadership bar with these ambitious sustainability targets. But now, the difficult and complex work of meeting these goals begins.

I caught up with Francesca ahead of the Global Climate Action Summit this week to ask her about what the roadmap to meeting these goals looks like, and how they’ll collaborate with their suppliers and the industry to prioritize action on the areas where McDonald’s has the biggest opportunity to reduce greenhouse gas emissions, including responsible beef production

Here’s an edited transcript of our conversation.

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Here’s why EDF Climate Corps’ network-based approach is a game-changer for corporate sustainability

You know that feeling when you’re cheering for your team to win, and they do? That’s the feeling I get to experience every day in my job as Manager of the EDF Climate Corps network (aren’t I lucky?!) Yesterday GreenBiz announced it’s “30 Under 30″ – a global search for emerging leaders who are shaping the next generation of sustainable business. To my delight, I saw Kayla Fenton, a 2015 EDF Climate Corps fellow, included in this impressive group. This was exciting, but not surprising; the EDF Climate Corps network is filled with inspiring leaders, just like Kayla, who are tackling corporate sustainability issues every day.

I first met Kayla when she was preparing for her summer with Nestle Waters NA. In just ten weeks, she managed to surpass everyone’s expectations. “Kayla’s detailed analysis and cross-company collaboration created the internal engagement and buy-in to move forward with a Power Purchase Agreement (PPA) for my last company. Her great work inspired me to bring on an EDF Climate Corps fellow in my new role with Danone Waters of America to advance carbon reductions in North America for our carbon neutral brand, Evian.” Recalled Debora Fillis-Ryba, Kayla’s former supervisor at Nestle, now with Danone Waters of America. 

Now, with Amazon, Kayla manages programs to minimize the company’s footprint by eliminating packaging waste. Her efforts save the company money and energy, and optimize delivery by reducing material across the supply chain. It’s innovative, it’s sustainable and it’s economic – it’s winning!

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Amazon’s big opportunity: Transparency in sustainability

At Environmental Defense Fund, we believe that environmental progress and economic growth can and must go hand in hand. EDF+Business works with leading companies and investors to raise the bar for corporate sustainability leadership by setting aggressive, science-based goals; collaborating for scale across industries and global supply chains; publicly supporting smart environmental safeguards; and, accelerating environmental innovation.

This is the fifth in a series of interviews exploring trends in sustainability leadership as part of our effort to pave the way to a thriving economy and a healthy environment.

Over the past few years, Amazon’s sustainability team has been busy setting ambitious goals on renewable energy, making their voice heard on smart environmental policies, and leveraging their expertise in technology to drive innovation that can benefit the planet – and boost profits.

I recently chatted with Kara Hurst, head of worldwide sustainability at Amazon and former CEO of The Sustainability Consortium, about how innovation and environmental goals intersect at Amazon, the launch of the new Amazon Sustainability Question Bank, and how sustainability issues could play a role in deciding the next Amazon headquarters (HQ2).

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We’re thankful for…companies setting climate goals!

Target has joined other retailers on the right path to developing a robust science-based policy for tackling greenhouse gas emissions in its operations and supply chain, creating more momentum toward action on climate by leading companies.

At COP23 in Bonn, Germany, we heard leaders at some of the world’s largest companies share their commitments to step forward on climate issues. This year we’ve also seen American companies like Mars Inc., Walmart, Hewlett Packard Enterprise and Amazon set ambitious goals during a time when our government is stepping back. At EDF+Business, we see time and time again why our world needs healthy environments and healthy businesses in order to truly prosper.

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