How can businesses work to combat climate change and other environmental crises?
It is obvious to say that all leaders have power — power to influence, get things done, and make things happen. Milton Friedman’s concepts on the social responsibility of business influenced and launched a generation of leaders that saw a “profit is all” mentality which went on for almost 30 years until the worldwide financial collapse in 2007–2008. As one of the leading economic voices of the 20th century, Friedman popularized many economic ideas that are still employed today — most importantly, free-market capitalism and monetarism.
However, in recent years, we have seen a rise in using business as a force for good, which is the antithesis of the “profit is all” concept. Corporations have never been more concerned with aligning their values with those of their stakeholders and leading with a purpose. Research findings show that 85 percent of global consumers report shifting their behaviors to be more sustainable, and a McKinsey & Company survey found that 72 percent of respondents believe purpose should receive more weight than profit.
The expansive developments in business have greatly benefited people overtime, but at the same time contributed heavily towards increasing rates of climate change and social instability. We can no longer support economic concepts that have led us to where we are today. Like any system, there is utter need to assess and course correct capitalism as we know it. We need the business sector to fully join and support the climate action movement. Moreover, meeting the United States’ goal of 100 percent clean economy by 2050 will need all-hands-on deck.
For this large-emitting sector to reduce emissions, create good paying jobs, increase social wellbeing and reduce social unrest, we will need to cultivate a network of leaders that believe that creating positive impact for planet and people is just good for business, to empower and support business leaders with actionable tools, pathways and a shared narrative to support Environmental, Social, and Governance (ESG) practices and implementation, and to advocate for stronger federal and state regulations to support sustainable business practices and justice and equity for frontline communities. Companies that have implemented ESG frameworks into their business model continue to demonstrate that we can have both good paying jobs and a clean environment.
What actions can businesses take to fight climate change?
1. Build and grow a network of values aligned business leaders
There has never been a more important time for business executives to provide critical values-based leadership to their internal and external stakeholders. This leadership style allows business executives to draw upon their own values, organizational values and that of their stakeholders for direction, motivation and decision making. It is likely that a value-driven leader will use their power to address calamities such as climate change. Encouraging business leaders to join existing movements such as Conscious Capitalism, B Corporations, ASBC, and others will help improve cohesiveness and the willingness to work towards fighting climate change. We also need to cultivate these types of leaders through our education system to establish a pipeline of purpose-driven leaders. Business schools need to reimagine discipline and have stakeholder governance at its core.
2. Climate action planning at the core of your business strategy
The U.N. Intergovernmental Panel on Climate Change (IPCC) indicates that we must limit global warming to 1.5°C. Achieving this target will require the transformation of business models and operations to integrate climate action policies and practices. These actions should strive to drive innovation and open new revenue streams supporting sustainable economic growth while combating climate change. Business leaders can start the process by making a public commitment, strategically map out a net-zero vision of their company, establish a price carbon tag to include climate action as a fundamental pillar of your investment procedures.
3. Influence behavior change and climate action throughout your eco-system
Individual contributions towards more sustainable lifestyle choices can help reduce our overall impact on the environment. Business leaders have a huge opportunity to use their company’s influence, network and marketing dollars to accelerate the adoption of climate action measures by their stakeholders. To start, companies can establish sustainable supply chain standards, support public facing net-zero campaigns, advocate for climate action policies, integrate climate goals into job training, employee evaluation, and satisfaction.
4. Stronger public-private-people partnerships and collaborations
Most emission reduction commitments are typically met with significant challenges; the financial costs of emission reduction, changing the long-standing and “well-known” operating methods, and proper infrastructure, knowledge and tools to formulate and optimize climate solutions. Strong partnerships between the people, private, and public sector need to be established to support resource allocation, education and training, policy advancement, behavioral change management, research, technology advancement, and innovation. This provides a holistic approach needed to move us into a low carbon society. At the moment, the passing of the IRA and BIL is very significant as it allows the government to divert the flows of investments from the dangerous path that we are headed with business as usual.
5. Standards and Verification
After all is said and done, our past revolutions have taught us that we should have systems in place to implement the checks and balances needed to assure all stakeholders of the credibility, agility, inclusivity, evolution, and prosperity of an economic system centered on people and planet. Establishing ESG frameworks provides the guiding principles for climate action success. Business leaders should be able to back up their climate action claims through a holistic verification process that is centered on prosperity for all. At present, business leaders can lean on the B Corp framework — the only third-party verification standards designated for business’ meeting high standards of verified environmental and social performance, accountability, and transparency on factors from employee benefits and community development to supply chain practices and input materials. It is a consistent cross-culture, globally-used, governance framework for businesses to align profits with purpose.