Are corporations fighting climate change the wrong way?
We will reach soon the milestone of 1,000 companies committing to a science-based target to cut their emissions in line with a 1.5C future, but is this strategy effective? I suggest that there is one critical piece missing from this strategy that needs to be addressed or else we lose the war on climate change.
Senate Democrats unveiled last month their plan to tackle climate change. The 255-page report paid close attention to the connections between politics and business. One of the key points in the report could be found on its last page: “The Environmental Defense Fund (EDF) has pointed out that corporate America’s most powerful tool in the fight against climate change is its political clout. Internal corporate sustainability measures alone will never avert the crisis.”
This sentiment was also echoed in a 2019 report of the watchdog group InfluenceMap, which assessed the impact of influential companies on climate policies worldwide. It suggested that “corporation’s influence over policy and regulations may have a far more profound impact on climate change than physical emissions associated with operations, suppliers & products”.
The point these two reports make about the climate impact of companies is very important as companies’ response to climate change focused so far mainly on reducing their greenhouse gas (GHG) emissions. According to a 2020 GreenBiz report more than 90% of the companies addressing climate risks have GHG emissions reduction projects in place. A growing number of these companies pursue ambitious net-zero targets as part of an overall effort to shift to a zero-carbon economy. The ‘gold standard’ of all of these corporate efforts is considered to be the pursuit of a science-based target (SBT), which is aligned with the latest climate science. To have their SBT approved companies need to follow rigorous protocols and their reduction commitments are reviewed and validated by a third-party (the Science-Based Targets initiative — SBTi), which adds to the credibility of the whole process. As of today, 992 companies have committed to SBT and 463 out of them have already been approved by SBTi.
This, however, may be an inadequate strategy that could lead us in the wrong direction.
Let me explain: While companies’ efforts to decarbonize their business by pursuing SBT may be credible from a strict carbon accounting standpoint and even successful on a micro-level (i.e. on a company’s level), there is the question of the effectiveness of this strategy on the macro level. In other words: To what extent do the current scope of corporate climate targets and strategies contribute to the war on climate change? Can the current SBT approach be a winning strategy?
Looking at the bigger picture, as the aforementioned reports do, it seems that even the science-based guidance on how companies should pursue net-zero targets in line with the imperative to limit global warming to 1.5C could fall short of reaching this target because it ignores a key part of companies’ climate impact: Their influence on climate policy and politics. As Victoria Mills of EDF and co-author of “The Blind Spot” report pointed out: “The urgency and magnitude of the climate challenge demand a bigger response from business than reducing their own greenhouse gas emissions. Companies must also support policies that drive down emissions across the entire economy.”
I would go even further and suggest that the issue is not just about getting companies to ‘do more good’, i.e. support bold climate policies but also, and probably first and foremost, about getting companies to ‘do no harm’, i.e. stop contributing directly or indirectly to efforts to block climate legislation.
None of this is new to the business world. In 2019 ten leading NGOs presented the AAA framework for climate policy leadership, calling companies to advocate “policies consistent with achieving net-zero emissions by 2050”, align “trade associations’ advocacy with the net-zero emissions goal”, and allocate “advocacy spending to advance climate policies, not obstruct them”. A year earlier, We Mean Business, a coalition of more than 1,300 companies that are committing to bold climate action, called together with other organizations to create “a positive feedback loop of accelerating and reinforcing government policies and private sector leadership”. On the companies’ end, this loop will include for example “responsible policy engagement (individually and through trade associations)”.
These suggestions reflect good intentions but de facto offer nothing more than a polite request from companies “to embrace and execute a science-based climate policy agenda”. Not surprisingly, companies seem to ignore this request. As Veena Ramani of Ceres, a sustainability advocacy organization, wrote last month (regarding the AAA framework): “Despite these efforts, influential companies have continued to lobby against climate policy efforts, both directly and through their trade associations. During the COVID-19 pandemic, this included efforts to change regulation in a way that is misaligned with climate science.”
To some extent this is not only the companies’ fault — if they can pursue a SBT with no or very little attention to their impact on climate politics and policy agenda, why shouldn’t they do that?
We need to see a clear shift in the narrative of corporate action, like the one we saw with individual action, where we better understand now that lifestyle changes are not a sufficient response to the climate crisis unless they are part of a greater effort to change the system. We need to help companies move away from the “I reduce my emissions by X percent, therefore I fight climate change” mindset and accept that true solution, as Michael Mann says, “requires policy change”.
To do so we should take a very different approach to shaping corporate efforts, one that is built on the strength of SBT as a credible mechanism to achieving corporate net-zero targets, while addressing at the same time the impacts companies have on climate policy and politics. In other words, SBT should be used to make companies accountable for all their climate impacts, or else it may evolve into a compass guiding them (and us) in the wrong direction.
How do we do it in a way that will be effective rather than just another polite request that companies will ignore? Here’s one option to consider — an approach that I believe can be relatively easy to integrate into the current SBT structure. Right now, SBT requires companies to reduce their GHG emissions, which are categorized into three scopes (scopes 1–3). My suggestion is to add one more scope — scope zero, which will cover companies’ impact on four key forces that are critical for shaping climate policy: Politicians, trade associations, media outlets, and fossil fuel companies. Companies will have to meet the requirements of scope zero to have their SBT approved.
The idea is to take a systemic and holistic approach that is not only saying ‘climate policy matters’, but is also looking under the hood to check what are the key forces that shape climate policy as well as the connections between them (see my sketch below). Besides, we should embrace the KISS principle, designing scope zero in a way that won’t require the equivalent of a complex life cycle analysis to figure it out.
Scope Zero
Let me review the four elements of scope zero and what companies will be required to do about them.
1. Politicians
we need legislators who are willing to write, promote, and fight for policies that are aligned with the latest climate science. Unfortunately, we still have too many politicians who work hard to block, or even worst, reverse any meaningful action on climate change. Even more unfortunate is the fact that companies donate money to these politicians through their PACs, providing them not only with financial means but also with credibility that helps normalize positions that should be unacceptable in the era of climate crisis. Take for example Microsoft — not only it is committed to a science-based target, but it also has an ambitious plan to become carbon negative by 2030. At the same time, Microsoft’s PAC donates money to politicians like Senator James Inhofe, who called climate change the greatest hoax and other Republican legislators who oppose climate bills, including Senate leader Mitch McConnell. This is the kind of corporate behavior that scope zero wants to stop when one hand (usually the public one) claims to do good, while the other hand (usually the quiet one) does more harm.
Scope zero requirement: Companies won’t give money directly or indirectly to politicians whose policy positions are not aligned with science-based climate policies, i.e. policies that are consistent with what science says is necessary to limit global warming to 1.5C above pre-industrial levels.
2. Trade associations
According to a 2019 report of InfluenceMap trade associations worldwide, but particularly in the U.S., have a very influential role in blocking, undermining, and weakening climate policy. The Senate Democrats’ report explains the scope of the work done by these groups: “Trade associations do not just lobby. Some spend big money in political elections, some send lawyers to challenge agency rulemakings in agencies and courts, and some sponsor public relations campaigns to improve the public image of an industry. Some do all of the above.” Another 2019 report of InfluenceMap suggests that while many companies are not directly engaged in climate policy, they “remain funders of some of the most oppositional and influential trade groups opposing climate policy, such as the U.S. Chamber of Commerce”. This, the reports adds, “may effectively undermine any positive impact the companies might have in their own climate policy engagement”. Companies should stop being a member of any trade association, whether it is industry-specific (e.g., API) or cross-sector (e.g., US Chamber of Commerce, National Association of Manufacturers), that is opposed to science-based climate policies. This seems to be the only way to pressure these groups to stop acting as a negative force on climate policy.
Scope zero requirement: Companies won’t be a member of any trade association that does not support science-based climate policies.
3. Media
The diffusion of climate misinformation/disinformation (in both cases we talk about spreading misleading information, only in the latter there is intent to deceive) in media outlets is a key obstacle to any meaningful progress on climate change. As Andrew Hoffman points out in his book “How Culture Shapes the Climate Change Debate”: “The media, both mainstream and social, is a critical factor in how the public debate on climate change takes place”. Consider Fox News, News Corp, Facebook*, YouTube, and others spreading climate misinformation and/or disinformation and their impact on the discourse on climate change in the U.S., Australia, and elsewhere. Companies have one important leverage over media companies — advertising money — and they need to use it to influence media outlets to stop spreading misleading information on climate science. While the history of such efforts shows “the effectiveness of an ad boycott varies”, I believe companies still need to show that the truth matters and stop advertising in media outlets spreading misleading climate information. Such effort (see #StopHateforProfit campaign against Facebook for example) could hurt media outlets’ reputation and eventually their social license to operate, which will get them to understand that the cost of continuing spreading climate misinformation is just too high.
As a side note, consider the case of News Corp, the media empire of the Murdoch family that has been criticized for many years for its misleading coverage of climate change (see here and here for example), but at the same time is pursuing a science-based target. Just to put things in perspective: News Corp’s carbon footprint is negligible compared to the carbon footprint of a country like Australia, for example, where the company has a considerable impact on the political agenda, including the response to climate change. This example shows how the current SBT system may be damaging by helping companies like News Corp claim they are part of the fight against climate change when this couldn’t be further from the truth.
Scope zero requirement: Companies will not advertise on media outlets (including social media) that spread climate misinformation.
4. Fossil fuel companies
Oil and gas companies have a long history of climate obstructionism as we can learn from a long list of media investigations, reports, books, and lawsuits. As Harvard Prof. Naomi Oreskes suggests, the efforts of fossil fuel companies to spread disinformation and block meaningful action on climate change have succeeded to “beat science, big time”. If we want to stop it we need to fight to make fossil fuel companies as powerless as possible until they stop their obstructionist behavior. To do so every company interested in fighting climate change should stop selling them products/services for fossil fuel projects, until oil and gas companies stop organizing, supporting, and funding the efforts to stop or slow a transition to a fair and low carbon economy. Companies should pressure not only fossil fuel companies but also the banks financing their fossil fuel projects, given that this avenue could be an effective lever of change on fossil fuel companies. Thus, all banks financing fossil fuels in billions of dollars should be held accountable, especially those that claim to take climate change seriously.
Scope zero requirement: Companies won’t sell products or services that support fossil-fuel projects and/or work with financial institutions supporting these projects.
We are reaching very soon the important milestone of 1,000 companies committing to a science-based target. This is the moment to not just congratulate SBTi for the impressive work done so far, but also to consider how to make SBT a more effective and impactful tool. My suggestion is pretty straightforward: If a company supports politicians, trade associations, media outlets, or fossil fuel companies that are not aligned with science-based climate solutions then it should not be eligible for a science-based target.
Applying scope zero can be very simple — companies now have up to 24 months to have their targets approved, so within this timeframe they need to work on all four dimensions of scope zero, ensuring that by the end of this period they answer “no” to all four questions. Otherwise, they cannot have their SBT approved by SBTi.
Companies have an important role to play in the fight against climate change, especially given the role many of them played in sustaining the unsustainable status quo for so long. We need to hold companies accountable and demand that they will pursue a holistic strategy that addresses all their climate impacts, not just the ones they may feel more comfortable to deal with. I hope SBTi will use its standing to lead this effort, recalibrating SBT to become a truly effective tool to fight climate change.
*Facebook announced on September 14th that it is “stepping up the fight against climate change”, including a commitment to a science-based target and the launch of a new Climate Science Information Center on Facebook “to connect people to factual and up-to-date climate information”. It is yet to be seen if Facebook is indeed moving away from its current practices that allow for misinformation on climate to spread on the platform. You can see here comments from Brian Kahn of Earther who provides an important perspective on this move.
Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons School of Design — The New School in New York. He is currently working on a new book focusing on redefining corporate sustainability in the era of climate crisis. Feel free to connect on Twitter and LinkedIn.
