Activist CEOs: A new reality for corporate America - Smart Energy Decisions

GHG Emissions, Commercial, Industrial, Sourcing Renewables  -  May 31, 2019 - By Tom Murray, EDF + Business

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 a few weeks ago, 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.

Action by 6,500 Amazon workers signals change
More than 6,500 Amazon employees have signed a letter to their CEO Jeff Bezos and his board of directors, asking for broad action to fight climate change, with more workers adding their names daily.

This followed a move in late 2018 where Amazon employees, who are also shareholders, filed petitions asking the company to release a comprehensive plan on climate change. Amazon announced in February that it will, at last, disclose its carbon footprint later this year. This latest CEO letter shows that employees are becoming powerful advocates for business leadership on climate.

The investor community is increasingly recognizing that climate change poses a major risk to business performance – and is asking companies to act now. Environmental issues, mostly focused on climate change, and demand for corporate disclosure on lobbying and election spending now make up 46% of this year’s shareholder resolution proposals.

At the same time, a groundbreaking survey earlier this year found that nearly 40% of millennials, who will represent one in three workers by 2020, have chosen a job because of its approach to corporate sustainability. This young workforce expects employers to have a strong environmental agenda and expects CEOs to take a leadership role.

CEO activism is on the rise
As BlackRock CEO Larry Fink wrote in his annual letter to executives, “contentious town halls” where employees speak up about the importance of corporate purpose are becoming a fact of life. “This phenomenon will only grow,” Fink predicted, “as millennials and even younger generations occupy increasingly senior positions in business.”

In other words, it’s no longer enough to post values on a company intranet. Executives need to publicly and visibly put them to work. For example, last month oil and gas giants ExxonMobil, BP and Shell spoke out in favor of methane regulations – despite the Trump administration’s efforts to roll them back. It’s a milestone that could change the course of methane regulations for good.

It still remains to be seen if oil companies’ actions will match their rhetoric, but these developments show a remarkable shift in social and environmental pressure on CEOs.

How CEOs can navigate the pressure
With pressure mounting on corporate America to wield its influence, more businesses need to get off the sidelines and take charge on climate change. It’s not just the planet that demands action, it’s every business stakeholder.

Here’s a roadmap for how to get started:

1. Commit to corporate sustainability leadership. Deciding to take action and setting science-based climate goals are the first key steps in any company’s sustainability journey. Many companies lack the resources or expertise to get started, but programs like  EDF Climate Corps help companies set – and meet – climate and energy goals.

2. Collaborate for scale and impact. Partnering across industries and supply chains, and with nonprofits, can lead to transformative change. The urgency of the climate challenge has shifted the needle toward crowdsourcing for sustainability solutions and connecting uncommon bedfellows.

3. Advocate for smart environmental policy. Only public policy can deliver the emissions reductions necessary to avoid the worst impacts of climate change. Business voices matter in the climate debate – and lawmakers need to hear them. That’s why four major food brands – Nestlé, Danone, Mars, and Unilever – just backed a price on carbon.

If you’re interested in learning more about EDF Climate Corps, click here. This column was originally posted on the EDF+Business blog.

Tom Murray is vice president of EDF+Business at Environmental Defense Fund, a leading international nonprofit organization that links science, economics, law, and innovative private-sector partnerships to solve the most serious environmental problems. Tom spearheads EDF’s work with companies and investors to catalyze environmental leadership and collaboration across organizations, industries, and supply chains. EDF+Business has been at the forefront of this change for 25 years, bringing cutting edge solutions to high-impact companies – including McDonald's, Walmart, and KKR – to transform business as usual in their products, operations, and advocacy.

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