SHARM EL-SHEIKH, EGYPT - Just a few years ago, much of the business community viewed climate advocates with indifference or skepticism. Today, companies representing 40% of the stock market have committed to science-based targets around reducing their greenhouse gas emissions in line with the Paris Agreement.
These companies are not run by wide-eyed idealists. In many cases, these businesses are already making billions of dollars supplying climate solutions to the market. Even corporations that are less directly implicated in the economic upside of climate action recognize the imperative for a low-carbon economy, because no business can profit in an environment of climate chaos.
Yet, despite this reality being clear as day, a handful of laggard companies and their pliant industry associations continue to advocate for business as usual. Worse, some have publicly pledged to be net-zero while actively blocking much-needed climate policies on an international scale.Fossil fuel companies make up a good portion of this laggard group, and yet, with their diminished economic clout representing a small fraction of today’s economy (less than a 10th), you’d think their collective voice would be no more than a distant echo. It’s not.
As the U.K.-based non-profit InfluenceMap has detailed, these powerful laggards include the likes of Exxon Mobil, Chevron, Toyota and BASF SE. These companies’ minority views unduly dominate the megaphone of major industry associations like the U.S. Chamber of Commerce (which has opposed climate legislation, such as Build Back Better and the Inflation Reduction Act) and the Federation of German Industries, which actively opposed the 2035 zero-emissions vehicle standard proposed by the European Commission
These companies have well-developed policy muscles formed from living in highly regulated industries for the past 100 years, and now they are fighting for their lives. They have greenwashed their way into the climate conversation and have hijacked the voice of business, according to research by InfluenceMap.
While policy-blocking industry associations are a big part of the problem, equally problematic are those companies sitting on the sidelines. As their government relations departments and industry associations take the bench, they’ve left a wide-open field for fossil fuel interests to dominate.
If we are to preserve any chance of meeting the targets agreed upon in the Paris Agreement, companies that care about climate change – and its economic impacts – need to get off the sidelines and into the game. They need to make a point of “outsizing” and “outvoicing” the 10% of business clinging to a bygone era. This near-term course correction is already underway with the launch of the Corporate Knights Action Declaration on climate policy engagement, an initiative by Corporate Knights and the Global 100 Council that has garnered the support of more than 50 global companies representing some US$900 billion in annual revenues (almost 1% of global GDP).
Acting as the initiative’s secretariat and using real-time policy intelligence from InfluenceMap, Corporate Knights and the Global 100 Council (which includes CEOs from among the Global 100 Most Sustainable Corporations in the World) have mobilized some of the world’s most powerful actors to align their policy engagements and those of their industry associations with the Paris Agreement.
This is only the start of what will be a series of big wins in the race to a low-carbon future.
Transformation won’t happen overnight, but it’s clear that a vanguard and major contingent of companies from every sector and continent are now committed to shifting the culture of their industry associations so that the voice of business will be loud and proud in favour of speeding up effective climate policy.
Action Declaration on climate engagement
To move the needle, the Action Declaration takes a three-pronged approach. By signing on, signatories are committed to:
- Supporting climate action aligned with the Paris Agreement when engaging with policy-makers
- Working with their major industry/trade associations to advance alignment with the Paris Agreement
- Monitoring and disclosing climate policy alignment for their companies and their major industry/trade associations
Number three is especially important, as it reinforces the management theorist Peter Drucker’s maxim that “what gets measured gets managed” (a core pillar in Corporate Knights’ philosophy). The more we know about what companies and industry associations are (or aren’t) doing, the faster we can either replicate and deploy good solutions or redirect away from bad apples.
Furthermore, the initiative will identify opportunities for this newly aligned group to work together. Collectively, they have a much better chance of driving change within specific industry associations that have been particularly problematic when it comes to climate policy blocking.
With corporate leaders in sustainability taking a pronounced stand, we can begin to influence the shift toward a more constructive, aligned dynamic between business, major industry trade associations and government.
Toby Heaps is the co-founder and CEO of Corporate Knights.
