Back in 1986, an ecologist on a research trip to Fiji reportedly coined the term “greenwashing” in an essay critiquing a beachfront resort’s towel reuse policy. Four decades later, greenwashed marketing claims, did not, it turns out, come out in the wash. They’ve permeated nearly every product category, from “carbon neutral” burgers and disposable cola bottles made with “plastic from the sea” to net-zero oil companies and ESG labels slapped on trillions of dollars in poorly regulated investment funds.

But the Wild West era may be coming to an end. As The Atlantic put it in March, “The world is finally cracking down on ‘greenwashing.’”

On May 11, the European Parliament voted to ban carbon-neutral claims that are based on carbon-offsetting schemes. At the same time, the U.K.’s Advertising Standards Authority also said it would begin stricter enforcement of “unqualified” carbon-neutral, nature-positive and net-zero claims; companies will now have to prove that offsets, which have come under heavy fire, are effective. Meanwhile, Gucci dropped the use of the term “carbon neutral” from its website this spring. EasyJet and JetBlue backed away from carbon offsetting schemes in December.

“Climate-related claims have been shown to be particularly prone to being unclear and ambiguous, misleading the consumer,” EU Environment Commissioner Virginijus Sinkevičius told The Guardian. “We need to set things straight for consumers and give them full information.”

In North America, both agencies in charge of overseeing marketing claims are retooling their approaches. For the first time in a decade, the U.S. Federal Trade Commission (FTC) is revamping its Green Guides, guidelines for environmental advertising and labelling claims. The FTC first published the Green Guides back in 1992 to “help marketers avoid making misleading environmental claims,” which had flourished.

The agency only issues greenwashing fines every few years. In 2022 the FTC went after Walmart and Kohl’s for deceptively marketing rayon bedding, clothing and towels as being “eco-friendly and “made from bamboo” (the U.S. Textile and Wool Act requires that they be labelled as “made with rayon,” since bamboo is converted to rayon using hazardous air-polluting chemicals). The companies agreed to pay the FTC US$3 and $2.5 million, respectively, in penalties. Now environmental and consumer groups want the agency to go after a wider array of claims, including plastic companies claiming that their “advanced” and “chemical” recycling methods are sustainable, as well as financial products purporting to be net-zero or “Paris aligned.”

“The explosive rise of the ESG investment space has raised new questions about what constitutes fair and faithful marketing and disclosure around financial products and services,” said Americans for Financial Reform in an April letter to the FTC.

Across the border, the federal Canadian government has launched a review of the Competition Act after it became clear that the Competition Bureau, like its American cousin, has been hamstrung by limited enforcement powers and funding. In the meantime, the regulator has been more active than ever on the greenwash file. After fining Keurig $3 million for misleading coffee-pod-recycling claims last year, the Competition Bureau is currently investigating the climate claims made by Canada’s largest bank (RBC), six largest oil companies (operating under their umbrella organization Pathways Alliance) and the Canadian Gas Association, as well as a greenwashing complaint against North America’s largest forestry certifier (Sustainable Forestry Initiative).

“The Canadian government should set standards and enforce against greenwashing, not only for the good of consumers and the planet, but also so our marketplace is not distorted by false or confusing green claims.”

 

–Former environment minister Catherine McKenna

Still, agencies on both sides of the Atlantic have been accused of using a whack-a-mole approach to a widespread problem. While multiple studies have found that more than half of green claims are misleading, vague or unfounded, in Canada investigations are opened only after complaints are formally lodged by groups such as Ecojustice, Greenpeace and the Canadian Association of Physicians for the Environment.

The EU’s proposed Green Claims Directive would deliver a stricter framework, one that former Canadian environment minister Catherine McKenna wants Canada to emulate in tackling greenwashing “head on.”

“The Canadian government should set standards and enforce against greenwashing, not only for the good of consumers and the planet, but also so our marketplace is not distorted by false or confusing green claims,” McKenna said in a press release.

In the U.K., industry insiders are hopeful. One senior brand advisor told The Guardian that “the era of unspecific claims such as ‘environmentally friendly’ is over.”

Depending on how this year in regulatory overhauls shakes out around the globe, they may be right.

Adria Vasil is managing editor of Corporate Knights and the bestselling author of the Ecoholic book series.

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Even as environmentalists slam soccer’s World Cup for fudging its green credentials, one obscure English team is winning applause far and wide for its eco-friendly practices.

On the very day that Dale Vince took over as owner of the Forest Green Rovers in 2010, he moved to ban the sale of beef burgers at the team’s stadium in Nailsworth, a village in the Cotswolds, the rolling hills of central-southwestern England. Even bigger changes followed, and not all to the liking of local fans.

The stadium menu soon featured only vegan items, and single-use plastics were banned. Fans were told that if they didn’t like what the stadium served, they were welcome to bring their own food. The pitch is now kept green with seaweed and captured rainwater instead of pesticides, and it’s mowed by a solar-powered robot. The team often travels in an electric bus. Charging stations have been installed at the stadium for fans who drive electric vehicles.

Forest Green competes in the lowly third division of the four-tier professional English football league, yet it has won recognition from the United Nations as the world’s first carbon-neutral football club and been honoured with a “momentum for change” climate action award.

The team was close to bankruptcy when Vince arrived, but, as he told Bloomberg earlier this year, “we’ve attracted a lot of sponsors in the last couple of years that other clubs at our level don’t get.”

Vince, 61, has been an ardent environmentalist most of his life. He quit school at 15, becoming a New Age traveller with a windmill mounted on his trailer. He went on to start a wind energy business, set up the U.K.’s first electric-vehicle charging network, and formed a vegan food company.

While his activism initially drove some fans away, many more new ones have arrived. What’s more, Vince says, “Our fans come here. They see what we’ve done. They go home and they start to change the way they live.”

Forest Green is also winning more matches. A local village team for most of its 133-year history, it was promoted to the third tier of the English league earlier this year.

“I just don’t think there has to be a conflict between the environment and economics and ethics,” Vince says. As if to make the point, work is due to start soon on a new stadium for the team, made entirely from timber. It will be named Eco Park.

Zeros: LIV Golf Investments

Serena Williams, Billie Jean King and Colin Kaepernick are among a growing band of brave sports stars who have shown that sport and politics do – and indeed should – mix. Sadly, that message is taking far too long to percolate into the cloistered world of golf.

It was not until 2012 that Augusta National, home of the Masters, admitted its first women members. Now, LIV Golf Investments, led by the retired Australian star Greg Norman, is thumbing its nose at human rights activists by launching an international tour in competition with the long-established PGA.

Doling out super-generous contracts and prize money, LIV – the Roman numeral for 54, the number of holes played in its events – has signed up almost a dozen of the world’s top 50 players, among them Phil Mickelson and Dustin Johnson.

LIV might deserve some credit if the new tour was just about ending a long-standing monopoly. However, it likely would not even exist without the backing of Saudi Arabia’s Public Investment Fund (PIF), which has put up US$2 billion of its oil-generated wealth to lure golfers away from the PGA. With assets of US$620 billion, the PIF is the world’s fifth-largest sovereign wealth fund.

Outsiders can only guess at the Saudis’ motivation. Is it their love of golf? A craving for power in the sports world (they also bought control of England’s Newcastle United Football Club in October 2021)? Or part of a wider strategy to flex their muscles on the international stage?

The widely held suspicion is that LIV is above all an egregious case of “sports-washing,” designed to distract from Saudi Arabia’s human rights violations, including the dismemberment of Washington Post journalist Jamal Khashoggi, the war in Yemen, and the repression of Saudi women and the LGBTQ2S+ community.

Referring to Khashoggi’s murder, Norman told Sky Sports News, “We’ve all made mistakes.” The Saudis, he added, “want to change that culture and they are changing that culture, and you know how they’re doing it? Golf.”

We’re not so sure. As recently as August, a Saudi court sentenced Salma al-Shehab, a doctoral student and mother of two, to 45 years in prison for spreading “rumours” and retweeting dissidents.

Not that Canada is in a position to judge. This country exported more than $1.7 billion in arms to Saudi Arabia in 2021, according to Global Affairs Canada. Most of those exports were combat vehicles. No word on whether Canada is also exporting golf carts.

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So it’s worth noting – and applauding – the decision in early April by Geneva-based Vitol, the world’s number-one independent oil trader, to stop handling Russian oil products by the end of 2022. Researchers at Yale University have counted almost 1,000 companies like Vitol that have voluntarily curtailed or halted dealings with Russia in protest against the invasion of Ukraine.

Some pulled out earlier than others. Vitol’s move was revealed more than a month after the invasion began. For most of the companies – which include such household names as American Express, Apple and Uber – the pain of withdrawal is minimal. Russia’s economy has shrunk to the point where, measured in U.S. dollars, it is not much bigger than many states’. And most Russians outside the main cities are still too poor to afford Western brands.

Even so, some companies have made substantial sacrifices. The London-based oil giant BP has incurred charges as high as US$25 billion by abandoning its 19.75% stake in Rosneft, the Russian energy group. PepsiCo took a write-down of almost US$500 million on its Russian drinks and snacks business.

Putin threatened to auction off shares in any foreign company that refuses to resume operations, in what it calls “the first step toward nationalization.” In McDonald’s case, the burger giant sold its stores to a Siberian businessman, Alexander Govor, in May, who says he paid “far lower than market price.” Govor quickly rebranded the chain under the name Vkusno & tochka and reopened over a dozen locations in June. McDonald’s said it wrote down up to $1.4bn to cover the exit.

Two of the Yale researchers, Jeffrey Sonnenfeld and Steven Tian, wrote in The New York Times that “while it’s impossible to say whether all of these companies are motivated by purely moral concerns, they’ve all gone above and beyond what is legally required by international sanctions.

“We realize that some companies already do business with many other repressive and murderous regimes around the world. But now there’s a chance to draw a line with one country, over one unprovoked war of aggression, and make a difference.”

Acting alone, even corporate giants like BP and Vitol have little hope of hurting Putin, and it’s unlikely that their actions have slowed the invasion. But by joining forces, they have helped isolate his regime and put principle above profit.

Zero: Walt Disney Company

Some companies limply refuse to take sides on the hot political issues of the day. Others bravely speak up. Walt Disney has recently tried to have it both ways but has ended up angering almost everyone.

The first signs of trouble at the entertainment giant emerged in March when word leaked out that executives at Pixar Animation Studios, a Disney unit, were censoring scenes in movies showing “overtly gay affection.” Pixar employees walked off their jobs to protest a decision to cut a same-sex kiss from a movie about Buzz Lightyear, a fictional character from the Toy Story movies. The Pixar bosses quickly backtracked.

Meanwhile, Disney was trying to keep its distance from a growing uproar over Florida’s Parental Rights in Education bill, which forbids instruction on sexual orientation and gender identity for young students and limits it for older ones.

The law, dubbed the Don’t Say Gay bill, is the brainchild of Florida’s governor, Ron DeSantis, who is using cultural wedge issues in an apparent bid to promote his as-yet-unannounced ambition to seek the Republican presidential nomination in 2024.

Disney has a vast presence in Florida and is the state’s largest private-sector employer. Its CEO, Bob Chapek, initially responded to the Don’t Say Gay bill by asserting that he didn’t want the company to become “a political football.” But, once again, a chorus of protest from employees, the LGBTQ community and other critics persuaded him to change his mind. Within days, Chapek had done a U-turn, acknowledging, “You needed me to be a stronger ally in the fight for equal rights and I let you down. I am sorry.” Disney suspended political donations in Florida and pledged to step up its fight against similar legislation in other parts of the country.

If it thought that was the end of its problems, it was wrong. DeSantis promptly accused Disney of hypocrisy for raking in money from family entertainment but then opposing a law designed, in his view, to protect parents’ rights.

The state’s Republican-controlled legislature has rushed through a law that stripped Disney of a special tax status under which it was able to run a vast area around the Magic Kingdom almost as it wished without interference from local municipalities.

Disney executives have no doubt learned a hard lesson: trying to please everyone is typically not a winning strategy.

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If we have any chance of heeding the Intergovernmental Panel on Climate Change’s repeated warnings and meaningfully reducing global CO2 emissions by 2030, the business community will have to get serious about the task at hand. 

This will require a momentous paradigm shift – a societal reshaping of our view of business. Somehow, we’ll have to collectively learn to see companies as more than one-trick ponies designed to generate financial profits, and instead as vehicles to enhance and support the greater good. 

This, inevitably, will involve some frank and open conversations. 

Before you can address a complex problem, you need to talk about it first. Just look at #MeToo, the reckoning on race after the murder of George Floyd, pronoun usage or body neutrality. Widespread conversations – at home and at work – are critical to exposing harmful societal behaviours. Discourse is the fuse that ignites paradigm shifts.

And yet, right now, this is a conversation most businesses aren’t having. At least not in a productive way.

While it’s true that sustainability reports and goals are now common practice for the world’s largest companies – with more than 2,000 businesses adopting science-based carbon targets and two-thirds of the world’s emissions covered by net-zero pledges – the communication around these new initiatives has been, in too many cases, vague, misleading and incomplete. 

Whether it’s because of a fear of legal ramifications (like the 2021 Dutch court ruling that ordered Shell to slash its greenhouse gas emissions by 45% by 2030), public backlash or the fact that their efforts aren’t yet advanced enough to share, many companies are loath to talk about their sustainability initiatives. 

Before you can address a complex problem, you need to talk about it first.

Those that do are telling only part of the story: 40% of websites feature misleading environmental statements, while 50% lack sufficient information to allow readers to judge the accuracy of their green claims, according to two recent surveys by a British competition regulator and Sustainable Brand Index.

The silence and half-truths – commonly referred to as green blushing and greenwashing – are slowing climate progress. Consider that 30% of Nordic consumers say they simply don’t believe business sustainability claims – while 53% of consumers in the United States say the same. And only about one-third of investors, on average, believe that the quality of ESG (environmental, social and governance issues) reporting these days is adequate, according to a Canadian survey conducted by PricewaterhouseCoopers. 

This means human beings that want to do something positive for the planet with their money are finding it difficult to do so, because it’s nearly impossible to differentiate between the companies that are genuinely supporting real climate action and those that are pretending to be.

These statistics speak nothing of the impact poor sustainability communication has on business progress. Sustainability works only if everyone is along for the ride. We need a free exchange of information and ideas – and the communications infrastructure to connect complex systems and industries. We need to eradicate siloed thinking and start sharing sustainability best practices. 

And for that to happen, we need to start talking louder and more transparently about sustainability – and recognize that our individual actions have value only if viewed in the context of the greater whole.

Tell the full story

To “win” at the sustainability game – to leverage it to engage and attract employees, earn customer loyalty and trust, and convince green investors you’re the real deal – you need to demonstrate that your motives are genuine. And that you have your eye on the bigger prize: a habitable planet. That requires a different type of communications strategy.

For one thing, telling only the positive side of the story doesn’t work in this space. Consider Keurig Canada, which was recently slapped with a $3-million fine for false and misleading claims around the recyclability of its K-Cup pods. In this instance, the Competition Bureau determined that, while the pods were technically recyclable, they were widely recyclable only in Quebec – meaning the rest of their Canadian customers, who thought they were recycling their pods, were actually inadvertently tossing them in the trash.

Similarly, fashion brand H&M received serious public backlash and a slap on the wrist by Norway’s consumer watchdog in 2019 when its Conscious Collection of “sustainable” fashion was called into question. The watchdog said that the clothing company provided insufficient information about its “sustainable style” collection and that there was no way to know if a garment was made of 100% sustainable materials, or 5%. The company has rebranded the collection to Conscious Choice, and its website states that “at least 50% of each piece is made from more sustainable materials, like organic cotton or recycled polyester. The only exception is recycled cotton, which, for quality reasons, can only make up 20% of a product.”

In both of these scenarios, a little transparency could have gone a long way and curbed some of the resulting reputational damage. As of yet, no business is 100% sustainable, so instead of trying to convince stakeholders otherwise, companies have to find a way to emphasize progress over perfection, acknowledge missed benchmarks when they inevitably occur, and explain their plan for course-correction.

Lastly, companies that genuinely prioritize sustainability have a lot to win by sharing their progress with others – and creating more educated stakeholders. So rather than hiding behind the numbers in a chart or making vague claims, one way to win stakeholder trust is to tell ESG stories in a way that honestly outlines and dismantles an organization’s path to net-zero.

The silence and half-truths – commonly referred to as green blushing and greenwashing – are slowing climate progress.

Understandably, this can be challenging, particularly at this early stage, without a robust regulatory framework to guide the way. But, according to EcoVadis, many companies are finding success (and avoiding litigation) by setting a solid foundation in place, acquiring senior-management-level support, introducing meaningful policies and metrics, facing adverse impacts head-on, and substantiating all positive sustainability claims. 

The firm also recommends integrating ESG reporting processes into a “coherent, company-wide system of sustainability governance” and finding ways to extract insight and skills from all members of an organization to ensure reports offer real value to stakeholders.

Ultimately, to succeed at this exercise, organizations will have to zoom out, reconnect with that bigger mandate of reducing the world’s carbon emissions, and begin to view themselves as champions of a cause. This will be substantially easier if they’ve already clearly connected their purpose to their broader values and vision – and started to view sustainability communications as a form of advocacy, education and community-building.

This shift will make it possible to squeeze sustainability-speak into regularly scheduled content marketing – or bring corporate social responsibility and ESG stories to the foreground of company websites. This, in turn, will help differentiate the green businesses from the greenwashers, allow them to earn a reputation for sustainability leadership and, most importantly, bring people and businesses together to facilitate faster climate action.

Communication, on its own, can’t save the world. But saving the world without better communication will be downright impossible.

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One disturbing consequence of the pandemic has been the mountains of single-use plastic it has generated.

In January, Tennessee-based Eastman Chemical unveiled a bold initiative to tackle this problem with plans for a US$1-billion plant in France that each year will turn up to 160,000 tonnes of plastic waste currently sent to landfills or incinerators into brand-new packaging and textile materials. Some of the world’s largest users of plastic containers, such as Procter & Gamble, Estée Lauder and Danone, have signed up as suppliers.

The French plant – like a smaller one under construction in Tennessee – will use Eastman’s polyester renewal technology, which breaks down hard-to-recycle carpets, textiles and containers into their molecular building blocks, then reassembles the material into new plastics. The company claims that the process can be used repeatedly on the same materials with no loss of quality. It estimates that the combination of its technology and France’s renewable energy resources will cut greenhouse gas emissions by 80% compared with other recycling methods.

The company’s head of plastics, Scott Ballard, told a Tennessee TV station: “What we’re trying to do is make it easier … for governments to create infrastructure to recycle.

Because with this technology, that waste becomes valuable, [so] we can pay money for it as a feedstock, as opposed to them having to pay to dispose of it.”

Eastman’s project, which will benefit from French government incentives, is an encouraging sign that the fight against plastic pollution is gathering steam. Last November, a study for the U.S. National Academy of Sciences estimated that the pandemic has generated more than eight million tons of plastic waste, mostly from hospitals.

More than 70 prominent consumer-goods companies came together in January to call for a global treaty to fight plastic pollution. The signatories, including Unilever, Walmart, Ikea and Coca-Cola, urged governments to adopt a wide range of policies to “keep plastics in the economy and out of the environment, reduce virgin plastic production,” and decouple plastic-production fossil fuels.

Such initiatives are sure to face pushback from powerful fossil-fuel and chemical industries that supply the raw materials for plastics. They would be wise to recognize, however, that the tide is not moving their way. Projects like Eastman’s will hopefully persuade businesses in many other sectors that the future lies in ever more efficient recycling.

Zero: Keurig

Speaking of recycling… Coffee-machine maker Keurig boasts on its website that by using its K-Cycle program, corporate customers can fully recycle every one of its single-use coffee pods. By 2020, the Massachusetts-based pioneer of single-serve coffee makers had diverted 136 million pods, weighing more than 2.7 million kilograms, from landfills by composting the grounds and filters and recycling the plastic and aluminum packaging.

But there’s a snag for those of us who use Keurig pods at home. The company reached a settlement with Canada’s Competition Bureau in January over what the bureau described as “false or misleading” claims about the recyclability of K-Cup pods. Under the deal, Keurig agreed to pay a $3-million penalty, donate $800,000 to a charity focused on environmental causes, and cover the costs of the bureau’s investigation. It must also reword its claims about the pods’ recyclability, and change their packaging accordingly.

Within a few weeks of the settlement, Keurig Canada had put up a banner on its website, noting that “Keurig K-Cup pods may not be recyclable in your area; check with your local municipality for more information.” A link gave more details of the settlement.

Alerted by researchers at the University of Victoria’s Environmental Law Centre, the bureau found that Keurig pods are not widely accepted by municipal recycling programs outside British Columbia and Quebec. It also concluded that Keurig’s claims give the impression that coffee drinkers can prepare the pods for recycling simply by peeling off the lid and emptying out the grounds, when, in fact, some recycling programs require more steps.

“False or misleading claims by businesses to promote ‘greener’ products harm consumers who are unable to make informed purchasing decisions,” noted Commissioner of Competition Matthew Boswell. Such claims, he added, also hurt suppliers of rival products that are less environmentally damaging.

Of course, Keurig is not alone in promising more than it delivers. The University of Victoria group found that Toronto’s solid-waste department recovers about 90 tonnes of coffee pods annually from a variety of brands that clog its recycling system.

The Competition Bureau’s statement announcing the settlement ended on a note of appreciation for the company’s “voluntary cooperation in resolving this matter.” Even better, Keurig and other pod makers could avoid the problem by making only refillable pods.

The post Heroes and Zeros: Eastman Chemical vs. Keurig appeared first on Corporate Knights.

Jeff Bezos

CEO of Amazon
Net worth:* $201 billion
True tax rate:** 0.10%
Average warehouse worker salary: $31,329
Average worker tax rate (federal):*** 14%

Elon Musk

CEO of Tesla
Net worth: $297 billion
True tax rate: 3.27%
Tesla technician salary: $62,520
Worker tax rate: 18%

Warren Buffett

CEO of Berkshire Hathaway
Net worth: $100 billion
True tax rate: 0.10%
Worker salary at Coca-Cola:**** $46,532
Worker tax rate: 34%

Michael Bloomberg

CEO of Bloomberg
Net worth: $70 billion
True tax rate: 1.3%
Average reporter salary: $101,664
Worker tax rate: 22.54%

Mark Zuckerberg

CEO of Meta (formerly Facebook)
Net worth: $116.1 billion
True tax rate: unknown
Meta employee salary: $124,000
Worker tax rate: 24.17%

Tim Cook

CEO of Apple
Net worth: $1.4 billion
True tax rate: unknown
Apple software engineer salary: $174,369
Worker tax rate: 25.36%

*All dollar amounts are U.S.
**To calculate CEOs’ true tax rates, ProPublica compared the federal taxes they paid from 2014 to 2018 to how much Forbes estimated their wealth grew during that time.
***Average worker tax rate includes federal income tax, social security and medicare taxes.
****Top holding

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The exchange took a step in that direction in December with a proposal that at least two members of most listed companies’ boards cannot be straight white men. Small boards with five or fewer members will be allowed to have just one “diverse” director.

The move has drawn praise from the American Civil Liberties Union – hardly known as a friend of big business. “By pushing its listed companies to address racial and gender equity in corporate boards, Nasdaq is heeding the call of the moment,” said Anthony Romero, the ACLU’s executive director. “Incremental change and window-dressing isn’t going to cut it anymore as consumers, stakeholders and the government increasingly hold corporate America’s feet to the fire.”

Critics accuse Nasdaq of trying to set quotas for corporate boards, but the exchange has noted that more than two dozen studies have found links between diverse boards and improved financial performance and corporate governance.

Under the proposal, all Nasdaq-listed companies will have between two and five years to comply with the new rules, or explain in writing why they have not. The Securities and Exchange Commission is set to rule on the proposal this summer.

Quartz estimates that the move will add at least 570 women to corporate boards, plus at least the same number who identify as Black, Hispanic, Asian, Indigenous, LGBTQ or other minorities.

Welcome as Nasdaq’s move is, it is not the first – nor the most aggressive – push for boardroom diversity. California passed one law in 2018 and another last year stipulating that, among other requirements, companies with nine or more directors must include at least three from under-represented groups. Goldman Sachs, a Wall Street powerhouse, said last July that it would take a company public only if the board includes at least one woman or member of a racial minority.

Such initiatives are bearing fruit. A record number of women took the reins of Fortune 500 companies last year, including at UPS, Clorox, Gap and Citigroup. Forty-one Fortune 500 companies now have female CEOs, up from 24 in 2018 and just two at the start of the millennium. The ball may be rolling more slowly than many would like. But at least it is rolling – and in the right direction.

Vanguard Group and Fidelity Investments are not putting their climate-change mouths where their money is.

The two asset-management giants, which together manage close to US$10 trillion, clearly recognize the benefit of investing in companies with strong environmental records. Fidelity’s vast stable of mutual funds, for example, includes a water sustainability fund centred on new technologies to improve the availability of safe and affordable water.

“Investors are increasingly seeking to meet their financial goals while contributing to positive social and environmental outcomes,” Fidelity proclaims in its promotional material. “As stewards of our clients’ capital, we endeavour to satisfy these aspirations.”

One may be forgiven, however, for wondering whether these endeavours amount to much. Neither Vanguard nor Fidelity Investments signed a pledge by 30 mostly European money managers last December to invest only in companies with net-zero carbon dioxide emissions by 2050. (One signatory is Fidelity International, which was spun off in the 1980s.) Nor have they joined Climate Action 100+, a five-year global initiative by 400 investors to prod the largest corporate greenhouse-gas emitters to mend their ways.

InfluenceMap, a London-based climate-action advocacy group, notes in its latest Asset Managers and Climate Change report that the two firms lag their main U.S. rivals, BlackRock and State Street Global Advisors: “Their transparency on the climate engagement process is poor with minimal references to transitioning companies in line with Paris goals or governance of lobbying practices.”

Fidelity was the worst performer of 30 groups assessed by InfluenceMap in 2020, prompting the rebuke that it “continues to show limited to no evidence of engaging on climate.”

In contrast to the water sustainability fund, the report singles out Fidelity’s Contrafund as “particularly misaligned” with the goals of the Paris Agreement, given the fund’s holdings in oil production and the lack of investment in electric vehicle technology.

Vanguard supported just 21% and Fidelity 23% of all climate-related shareholder resolutions that they voted on during the 2020 proxy season. Together with Los Angeles–based Capital Group, they opposed every resolution related to climate policy lobbying – as they had in the previous two years. By contrast, most leading European asset managers backed the vast majority of such resolutions.

As InfluenceMap puts it, “The lack of support from the world’s largest asset managers on resolutions relating to lobbying, energy transition plans, and other key climate issues remains a barrier for forceful stewardship by investors on the climate emergency.”

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Thankfully, others – including some in the business community – have been moving forcefully in the opposite direction. One notable example is Storebrand, Norway’s largest private fund manager, which last August became the first sizable investor to divest from businesses that continue to lobby against tougher environmental rules.

“Climate change is one of the greatest risks facing humanity, and lobbying activities which undermine action to solve this crisis are simply unacceptable,” said Jan Erik Saugestad, Storebrand’s CEO. InfluenceMap, a U.K.-based think tank, estimated in March 2019 that the world’s five largest oil and gas companies measured by market value – BP, Shell, ExxonMobil, Chevron and Total – spend almost US$200 million a year on efforts to delay, control or block policies designed to tackle climate change.

“The Exxons and Chevrons of the world are holding us back,” Saugestad noted, referring to two of the five companies whose shares Storebrand has dumped. The other three are Anglo-Australian miner Rio Tinto, German chemicals manufacturer BASF and Southern Co., an Atlanta-based electric utility.

Storebrand, which manages more than US$90 billion in assets, has also sold its stakes in another 22 companies – mostly power utilities, chemical companies and oil producers – that fall short of a tougher slate of climate policies that it recently adopted. Among the new criteria is a commitment not to invest in companies that derive more than 5% of their revenues from coal or oil sands.

Storebrand’s moves reflect mounting pressure on institutional investors to take a stand on climate change. A majority of Chevron shareholders supported a resolution at the company’s 2020 annual meeting that sets tougher disclosure standards on climate-related lobbying activities. Proxy Insight, which tracks corporate governance issues, reports that shareholder support for climate-lobbying resolutions averaged 47.2% last year, more than double the 21.4% recorded in 2019.

Saugestad put it well: “Investors need to be responsible and proactive in accelerating the green transition. We are not passive actors awaiting the pending systemic harm that climate change will unleash.”

Zero:

There is much to admire about the gig-economy companies that have woven themselves into our everyday lives over the past decade. Uber and Lyft have revolutionized urban transport. Instacart enables us to shop for groceries without ever leaving home, while DoorDash delivers tasty restaurant meals to our front doors, a special boon during the pandemic.

When it comes to labour practices however, these companies belong more in the 19th century than the 21st. Their drivers and personal shoppers work long hours for precious little reward. Because these workers are classified as independent contractors, they receive few if any of the normal workplace benefits, such as minimum wages, health or unemployment insurance, and parental leave.

Researchers at the University of California, Berkeley, estimate that Uber and Lyft saved US$413 million in their state alone between 2014 and 2019 by not paying unemployment insurance premiums. More recently, the companies have been accused of violating a law passed by the state legislature last January that tightens the criteria for classifying workers as contractors.

None of that has stopped Uber and other app-based companies from fighting to preserve their workers-come-last business model. Indeed, they cranked up the pressure ahead of last November’s U.S. elections by pouring close to US$200 million into backing a California ballot initiative, known as Proposition 22, that would dilute the worker gains contained in last January’s law.

The companies contended that regulators should treat app-based businesses as technology platforms, not transport providers or food delivery services, because their workers have the flexibility to log into or out of the employer’s app at will. Uber warned that it would have little choice but to raise prices and limit services if Proposition 22 failed to pass.

Voters ended up approving the proposition by a 16-point margin. But that doesn’t make it fair on the workers.
Critics predict that Proposition 22 will reinforce the inequalities that have become a tinderbox of modern society, especially in the U.S. The UC Berkeley researchers concluded that, under the proposal, Uber and Lyft drivers would earn a mere US$5.64 an hour after factoring in down-time and expenses such as fuel and maintenance. Proposition 22 could also set a troubling precedent by encouraging deep-pocketed companies to take their cases directly to voters when they come up against laws they don’t like.

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That new reality is evident in the business world’s response to the snowballing Black Lives Matter movement. Polling indicated that most Americans were opposed to BLM when it started taking hold in 2013. But in the weeks following the police killing of George Floyd in Minneapolis in May, BLM supporters had come to outweigh opponents by 28 percentage points, according to a survey by Civiqs, an online research firm.

Business reaction has hardened from feel-good statements against racism to more tangible measures with a longer-lasting impact. Netflix has promised to earmark 2% of its cash holdings – up to US$100 million – for banks to “directly support Black communities in the US.” That’s in addition to the US$120 million that Netflix CEO Reed Hastings donated to historically Black colleges and universities two weeks prior. Netflix has also added a Black Lives Matter genre to its lineup, celebrating the work of Black artists and Black history.

The power of social media has undoubtedly played a key role in shaping the response. Three of the United States’ biggest retailers – Walmart, Walgreens and CVS – said they would no longer display African-American beauty products behind locked glass after Twitter lit up with images of juxtaposed photos: one of easily accessible generic beauty products, the other of locked-away items aimed mainly at Black customers. One month later, Walmart also committed US$100 million over five years to create a new centre on racial equity.

Several companies have set specific targets for broader representation in their senior ranks.

Google, for example, has pledged to boost its leadership diversity by 30% within the next five years, in addition to pledging US$175 million to Black businesses and start-ups.

There is still a long way to go. While Black people make up about 13% of the U.S. population, they hold just 3.2% of executive and senior management positions and fewer than 1% of Fortune 500 CEO spots, according to the Center for Talent Innovation. Corporate Knights found that less than 1% of corporate leaders at TSX 60 companies are Black.

Zero

Yes, it is possible to go from Hero to Zero in a few short months. Just ask the workers at Walmart, Loblaws – Canada’s biggest supermarket chain – and the U.K.’s Tesco and Marks & Spencer, among others.

As the COVID-19 pandemic broke in early spring, food retailers lauded the contribution of cashiers, shelf-stackers and warehouse staff by jacking up their pay and benefits as compensation for the risks they were taking to get food to our tables. The typical raise was 10 to 15%, or about two dollars an hour.

Alas, Hero Pay did not last long.

By June, most of the companies had rolled back the increases. Loblaws chairman Galen Weston justified cancelling the “temporary pay premium” on the grounds that “things have now stabilized in our supermarkets and drugstores. After extending the premium multiple times, we are confident our colleagues are operating safely and effectively in a new normal.”

Some employers sought to soften the blow with other benefits. Loblaws added a one-time $160 bonus to workers’ July pay, pro-rated to a 40-hour work week. Walmart offered extra counselling services and higher staff discounts on purchases.

Not surprisingly, the workers, many of them at the bottom of the pay scale, are nonplussed. “The pandemic is not over,” noted Jerry Dias, the president of Unifor, Canada’s biggest private-sector union. “The danger has not passed. These workers are no less at risk and are no less essential today than they were yesterday.”

It’s not as if the employers could no longer afford to be generous. Empire Co., the Canadian group behind the Sobeys, FreshCo and Safeway chains, hiked its dividend less than a week after chopping its Hero Pay program. The company reported a 47% jump in net earnings for the quarter ended August 1.

Two dollars an hour may not be a huge amount of money – either for those giving or receiving it. But the extra wages did signal respect and appreciation for a group of workers who enjoy few other perks of corporate life and have exposed themselves to greater risks than most others outside the healthcare sector.

This was a perfect opportunity to narrow the widening gap in pay between those at the top and the bottom of the corporate ladder. Too bad that the grocers weren’t heroes for long.

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