The Business-Policy Nexus: The Next Frontier for Corporate Sustainability Leadership

As we approach the 25-year anniversary of EDF’s work with the corporate sector, it’s an opportune time to reflect on our successes and plan for the work ahead.

Over the years we have worked with McDonalds, Walmart, FedEx, KKR and many others to integrate sustainability into their operations, strategy, and supply chain management. Together, we have kick-started market transformations in sectors including fast food, shipping, retail, private equity and commercial building energy efficiency. While we’ve made great strides, there remains a huge distance to go in order to fully protect our natural resources, clean up our dirty energy system, and turn the corner on global greenhouse gas emissions in time to avoid the worst impacts of climate change.

Looking ahead, the opportunity and need for more aggressive private sector leadership has never been greater. Moving from environmental progress today to full scale solutions tomorrow will require a new type of corporate leadership. This next step will require a willingness to align corporate sustainability operations, strategy AND policy.

Voluntary corporate efforts have made a difference and will continue to be a critical pathway for innovation. But this is not sufficient to meet the size and scale of the challenges we face. Businesses must take the next leadership step helping to shape and support the smart regulatory and policy changes required to preserve the natural systems that people, communities and companies need to thrive.

Simply put, the bar is now higher for companies that want to lead on sustainability.

The greatest need for this kind of leadership is on climate and clean energy, where a price on carbon and effective policy are needed to protect public health, the environment and the economy from the worst impacts of climate change. In the days and months ahead, there will be several opportunities for companies to put this type of leadership to the test in support of the Clean Power Plan and Phase two of the fuel-efficiency and GHG standards for trucks.

Power plants are the largest single source of carbon emissions in the U.S. The Clean Power Plan requires that we cut pollution by 30 percent. These new carbon pollution standards are rolling out on a state-by-state basis, giving room for custom implementations that fit the needs of the state’s specific economic, corporate and energy sectors. The private sector needs to step up and weigh in now on how carbon reduction goals are met in their states.

This state by state approach is laid out under Section 111(d) of the Clean Air Act. In the coming weeks, we’ll be looking at ways for business to specifically engage on this policy in key states.

Also, just over the horizon in early 2015, The EPA and NHTSA will announce new fuel efficiency and GHG emissions standards for medium- and heavy-duty trucks. Business needs to step up and support stringent new standards, not only for the potential 40% reduction in fuel consumption and reduction in emissions, but also to drive a lower per-mile cost of heavy truck operations. We will continue to explore and educate how these standards can benefit and be influenced by business.

By engaging in a meaningful way, companies can help shape these policy decisions and others to benefit the economy and the environment.

To be sure, EDF is not alone in this work. Nor are we alone in coming to the conclusion that the next wave of business leadership must include leadership in the policy arena. The important connections between business and policy made by BICEP and We Mean Business have highlighted this very issue.

Just this week, there are great examples of businesses stepping up and taking a stance. Google Executive Chairman Eric Schmidt publicly severed ties with the American Legislative Exchange Council (ALEC) for its opposition to U.S. action on climate change. Microsoft also recently ended ties with ALEC due to its opposition to renewable energy, and Facebook looks to be following suit.

So how can EDF help? We bring to the table not only 25 years of corporate partnership experience but 45 years of history and expertise on the policy side. We’re well-positioned to play the role of collaborating with the industry leaders to understand what policy means to them and make the environmental and business case for engaging.

We’ve challenged companies to set and track aggressive sustainability goals for their operations and supply chains. We will continue to do that. But expectations have grown alongside the urgency of the environmental challenges facing us.

In the coming months, we’ll be exploring this next frontier of corporate leadership and what it means for companies that want to lead the way.