The businesses that are and are not leading on climate change
When President Trump announced his plans to withdraw from the Paris Agreement in 2017, businesses spoke out en masse in opposition to this plan conveying that long-term, global competitiveness demands climate action. Soon after, the We Are Still In Coalition was born to showcase widespread commitment to the Paris Accord. This week, as the Trump administration cedes global leadership on climate by formally withdrawing from the Paris Agreement, We Are Still In membership now stands at more than 2,200 businesses and investors including big names like Walmart, Hewlett Packard, Dropbox, and Apple. Continued commitment to the Paris Accord is critical but it’s also only one part of what is needed to fill the climate leadership void, build the clean energy economy, and remain “in.”
Achieving net-zero emissions no later than 2050 will require businesses to step up to a new level of leadership, and will demand both words and actions: setting science-based targets and making the necessary investments to meet those goals; collaborating across industries and supply chains; adopting and deploying technologies to accelerate sustainability; and, leading on climate policy.Below are some recent examples of companies leading on climate, as well as a few places where business leaders are falling short.
Setting and Investing in Science-Based Targets
The science on climate is clear and more than 680 companies are responding by setting science-based greenhouse gas reduction targets.Just yesterday, McDonald’s announced the first-ever signing of large scale virtual power purchase agreements, which will support wind and solar projects. The combined 380 MW in expected renewable energy generation is the equivalent taking over 140,000 cars off the road for one year. With this announcement, McDonald’s is demonstrating progress against its Scale for Good climate commitments announced last year, and setting an exciting example for other restaurants to follow. During Climate Week, Microsoft upped its renewable portfolio to more than 1,900 MW enough to power 1.5 million U.S. homes. This brings the company one step closer to meeting its science-based target. That same week, Google announced the largest-ever renewable energy procurement deal, to purchase a 1.6-gigawatt “package” that makes its total clean energy portfolio large enough to power Uruguay. While this is an exciting demonstration of leadership, it’s not enough to satisfy employees, who, according to Alan Murray at Fortune, are “demanding the businesses they work for step up to the plate.” Earlier this week, Google employees called on the company’s executives to “commit to and release a company-wide climate plan,” noting that “These demands have been set by workers across the tech industry, including Amazon and Microsoft.”
Collaborating for Scale
One of the most powerful examples of collaboration for scale is Project Gigaton, an initiative between Walmart, environmental groups and over 1,000 suppliers to cut a billion tons of greenhouse gas pollution from the company’s global supply chain by 2030. This transformational effort has already resulted in nearly 94 million metric tons of avoided emissions. Just last week, Tyson Foods announced a new partnership with Proforest, an organization focused on sustainable natural resource management, to help the company assess deforestation risk across its global agriculture supply chain. Given that commodity production is a major driver of deforestation globally, it’s essential for companies like Tyson to measure deforestation risk so that they can appropriately manage it and build a more sustainable food system. As investors are increasingly demanding transparency on climate risk, Tyson’s move is also just smart business.
Accelerating Environmental Innovation
A new Environmental Defense Fund report found that 92% of business leaders believe emerging technologies can boost ROI and sustainability yet only 59% of executives are making investments in these technologies. One in three leaders surveyed for the report said their organization lacks awareness on specific technologies a clear contributing factor to this 33-point opportunity gap.Insufficient knowledge about emerging tech may be why many leading companies are looking to entrepreneurs to close that gap for them. AB InBev, for example, established the 100+ Accelerator program to provide funding to start-ups to help the company solve sustainability challenges and make progress toward its 2025 climate goals. Participants in the accelerator’s inaugural year included companies that are using blockchain to empower smallholder farmers and predictive tech to maximize trucking loads. Just this week, Google announced a similar program “to help and encourage startups working on sustainability products.” Other companies are choosing acquisition as a way to deploy tech for sustainability. Moody’s, for example, announced it acquired a majority stake in Four Twenty Seven, a company that provides “data, intelligence, and analysis related to physical climate risks.” The deal will boost Moody’s efforts to incorporate climate risk into economic modeling and credit ratings.
Climate Policy Leadership
While voluntary actions to reduce emissions are important, only public policy can deliver the pace and scale of reductions needed to limit the worst impacts of climate change. And because of their power to shape public policy, businesses have a vital role to play in building bipartisan support for climate action. Unfortunately, the vast majority of American businesses have been silent on climate policy, or even opposed to it.A number of leading companies are reversing that trend, using their collective influence to build momentum for Congressional action on climate change. This week, the CEOs of BASF, Dow Chemical, and LafargeHolcim were on Capitol Hill, talking to Senators about the need for legislation that puts prices and limits on carbon emissions. These companies are also members of the recently established CEO Climate Dialogue, a group of 20 major companies working to advance federal climate policy based on its Guiding Principles.At the other end of the spectrum are General Motors, Fiat Chrysler and Toyota. These companies joined the Trump administration’s attack on states’ authority to carry out their own vehicle pollution standards and the public outcry was immediate. Strong clean car standards advance American innovation and help reduce our dependence on foreign oil. These companies’ opposition to state clean car authority under the Clean Air Act will put them on the wrong side of history and fails to meet the stakeholder expectations for climate leadership. Fortunately, other major automakers Ford, Honda, Volkswagen and BMW recognize that strong clean car standards advance American innovation and help reduce pollution, reduce our dependence on foreign oil and secure a more stable climate.
Leadership on climate and energy is driven by long-term economics, not short-term politics. Climate policy leadership also means putting an end to funding climate deniers. The bottom line is that businesses can’t be “for” climate action if their political spending and trade association memberships tell the opposite story.
Raising the Bar
The business case for climate action is clear: 35 countries, including the U.S., experienced economic growth in the past fifteen years while reducing their emissions. And according to a report by the New Climate Economy, smart climate choices over the next few years could unlock benefits worth $26 trillion from here to 2030, and create 65 million new low-carbon jobs.If those figures aren’t persuasive enough, companies should listen to their own stakeholders, including investors, employees, and customers’, whose calls for climate action are louder than ever before.
Follow Tom on Twitter, @tpmurray.