How Major Companies are Getting Serious About Climate Change
We’ve written previously about how important sustainable development strategies are for employee retention. Turns out that companies are increasingly getting serious about concrete plans to mitigate climate change through their activities.
Earlier this year, Larry Fink of Blackrock’s annual letter to shareholder made news because of its aggressive insistence that the companies the firm invests in much do a lot more to combat climate change. While prior editions of the yearly letter had focused on encouraging businesses to be more values-based, this year’s pledged to hold companies accountable for specific actions.
Among a number of efforts aimed at encouraging companies to make specific sustainability pledges, Blackrock plans to:
- Create new funds that exclude fossil fuel stocks
- Vote against management teams who put sustainability efforts on the back burner
- Press companies to disclose their plans for aggressive impact on climate change, as defined by the standards set by the Paris Climate Agreement
The impact of the Blackrock letter
Coming close on the heels of the Blackrock letter were several major announcements by major corporate players on how they planned to address the environmental impact of their business operations in the coming years. Within their initiatives, we see a strong trend by companies of being more transparent with their data, and more concrete in their planning on the climate.
How are corporations responding to the climate
For a long time, the corporate response to the climate crisis could be classified as tepid at best and “greenwashing” (that is, pretending to care about the climate for marketing reason) at worst. But times have changed and one recent survey found that Fortune 500 companies with concrete, ambitious carbon targets quadrupled in the past four years, to 23%.
Those carbon targets vary widely of course, but some of the major trends we are seeing include:
- “Carbon neutral” goals: Delta Airlines and BP have both announced ambitious goals to become “carbon neutral” in the coming years. “Carbon neutral” usually entails a reduction in carbon emissions, investment in technology that takes carbon out of the atmosphere, and efforts that “offset” the impact of carbon emissions (examples include restoring wetlands and planting forests).
- “Carbon negative” goals: IKEA and Microsoft are setting the bar even higher for their operations. Microsoft has pledged that by 2050, it will “remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.” IKEA has pledged to invest in both technology (green energy and carbon storage projects) as well as reforestation to the tune of hundreds of millions of dollars.
Will other money managers follow suit?
Without governmental regulation, all of these activities are voluntary, and that begs the question: will any of these efforts really matter? Time will tell if other money managers and investment firms like Blackrock will find it advantageous to pressure the companies that work for them. What is clear, however, is the positive effect of such measures on employees of these companies.
The impact on employees
Our previous survey found that sustainable development strategies was a strong driver of overall employee satisfaction, a critical metric for attracting and retaining top talent. If you don’t yet have a strong sustainability pledge, check out these low-cost options: 6 Eco-friendly Strategies that Your Employees Will Love (And Will Save You Money)