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Commentary
What's Missing In Our Fight Against Climate Change
If the smoky air drifting from coast to coast and the floods tormenting the globe had left any doubt, the latest sobering report from the Intergovernmental Panel on Climate Change (IPCC) has washed it all away. We are living in a sirens-blaring global climate emergency, and the only way to keep this bad situation from getting much worse is to move fast.
And we have to do it together.
No single person, institution, or country can solve this problem alone. It requires an all-hands-on-deck response, with everybody—especially companies, investors, and officials at all levels of government—pulling in the same direction to prevent the worst impacts of the climate crisis.
Unfortunately, this level of collaboration is lacking where it is needed most—between corporations and government. It is true that we’re seeing America’s biggest companies increasingly turn their attention to our climate needs, and that many have set ambitious goals to reduce emissions.
But most companies and investors need to take the next step that will help them reach those goals: lobbying for strong government policies that will guide the entire economy toward a sustainable future.
This disconnect was made clear in our recent analysis of the S&P 100.
First, the good news. We found that the overwhelming majority of companies have begun planning to cut their own corporate emissions. More than three-quarters acknowledge climate science, and about that many consider climate change to be a risk to their assets. These promising findings show that large companies take the climate crisis seriously, and are working to mitigate it.
But things got more ominous from there. Just 40% of the companies we analyzed are actively pushing for government climate action. Another 18% have lobbied against climate policies even though they are planning internal emission cuts—a discrepancy that, at best, sends mixed signals about their commitments. Put simply, many of the same organizations that want to slash their own pollution are failing to recognize that they can—and must—play a critical role in setting policies that will help them achieve their own goals and clean up the entire economy.
This would be like acknowledging that fire represents a dangerous risk of property damage, and responding by keeping some water buckets in the basement while failing to support the creation of a local fire department. Indeed, at a time of intensifying wildfires and squelching drought, that metaphor may be too apt.
With the Biden administration focusing on addressing climate change through legislation and policy, the tide may be shifting. Some companies are openly acknowledging they will have a hard time meeting their own climate goals—and reaping the windfalls of the multi-trillion dollar shift to a clean-energy world—without strong government policy to back them.
Smart companies, investors, and governments each know they have a role in preventing an unfolding climate catastrophe that will pull out all of the supports our businesses and economic prosperity are built on.
The dynamic was on display in early August, when U.S. automakers joined President Joe Biden to announce an aggressive goal for electric vehicles to represent up to 50% of the market by 2030. In unveiling that target, they noted that success will require Congress to approve new federal investments in charging stations and consumer incentives that are included in the two infrastructure packages lawmakers are considering this summer.
The same is true across other industries. Without policies to promote clean energy, transportation, and buildings, it will be extremely difficult for many companies to meet their bold climate commitments. Even if they could succeed by going it alone, they wouldn’t be able to escape the economic disaster posed by a warming planet without the kinds of economy-spanning efforts that can only be achieved with government policy.
That is why powerful investors who see the risks to both individual companies and the economy at large are increasingly pushing corporations to build their lobbying efforts around climate action. This past spring, shareholders won votes at major companies including ExxonMobil, Phillips66, United Airlines, and Delta intended to get their lobbying efforts in step with the goals of the Paris Agreement. And some leading companies from industries across the country are already effective advocates for setting robust government climate policy—from Apple to Exelon to PepsiCo.
But as our analysis shows, this is still far too rare, and there is little time to waste for corporate America to prioritize climate lobbying as the business imperative that it is. The climate crisis is happening here and now, and it is already having a significant impact on businesses. Last year, the U.S. endured an unprecedented $22 billion in disasters, shattering the previous record of 16 billion in 2011 and 2017. Combined damages totaled $95 billion, nearly double the amount in 2019. And that’s just a hint of what’s to come. Moody’s has pegged the U.S. as the third most exposed country to climate risks, behind China and the Philippines, by 2040.
And now, the IPCC is signaling code red. Smart companies, investors, and governments each know they have a role in preventing an unfolding climate catastrophe that will pull out all of the supports our businesses and economic prosperity are built on. Now it’s time for them to act together, before it’s too late.
