How Bold Corporate Climate Change Goals Deteriorate Over Time
One response to today’s climate crisis has been a belief that markets and corporate innovation will provide the solution. As Richard Branson has proclaimed, “our only option to stop climate change is for industry to make money from it.” So while businesses are major contributors to escalating greenhouse gas emissions, they are also presented as offering innovative ways to decarbonize our economies. But how much faith can we place in business to save us from climate change?
Read the entire article at the Harvard Business Review.
In a recently published paper in the Academy of Management Journal, we explore how major business corporations translate the grand challenge of climate change into strategies, policies, and practices over an extended period of time. Despite operating within different industry contexts (energy, manufacturing, banking, insurance, and media), we found a common pattern of response over time: initial statements of climate leadership degenerated into the more mundane concerns of conventional business activity. In other words, talk of addressing climate change because it was the right thing to do eventually became a conversation about how climate change initiatives affected the bottom line.
A key factor in this deterioration of corporate environmental initiatives was ongoing criticism from shareholders, the media, governments, and other corporations and managers. This “market critique” continuously revealed the underlying tensions between the demands of radical decarbonization and more basic business imperatives of profit and shareholder value.
Climate change initiatives were eventually wound back and market concerns were prioritized. The temporary compromise between the market and social/environmental concerns was broken, as corporate executives sought to realign climate initiatives with the dominant corporate logic of maximizing shareholder value. Catalysts for this change included declining corporate fortunes, new CEOs who promoted a “back to basics’ strategy,” a shifting political context which unwound climate-focused policy measures, new fossil-fuel related business opportunities, and the dilution of climate initiatives within broader and less specific “sustainability” and “resilience” programs.
Our research highlights an inconvenient truth for politicians and business people alike: we can’t simply depend on corporations and markets to address one of the gravest threats to our collective future.