- CEOs and business executives enjoy talking a big game about social responsibility and climate change.
- Executives at the World Economic Forum, in Davos, Switzerland, are focusing on this issue, but it’s time for them to take substantive action rather than just paying it lip service.
- Ibrahim AlHusseini is the founder and CEO of FullCycle, an investment firm focused on addressing the climate crisis.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit Business Insider’s homepage for more stories.
When top business leaders gather this month at the World Economic Forum, in Davos, Switzerland, they’ll applaud the work they’ve done over the past year to embrace “stakeholder capitalism” and address climate change.
In the past year, many prominent executives called on businesses to redefine the purpose of a corporation. Most recently, BlackRock, the world’s largest asset manager, signed on to the Climate Action 100+, an initiative encouraging companies to become carbon-neutral by 2050.
And 181 CEOs of the Business Roundtable, chaired by JPMorgan Chase CEO Jamie Dimon, announced in the fall that they were committing to “leading their companies for the benefits of all stakeholders – customers, employees, suppliers, communities, and shareholders.”
Those words are promising. Especially in the absence of presidential leadership, I’m pleased to see companies pledge to play a role in creating a more sustainable company. But doing less harm is still not the same as doing no harm.
The need for more substantive corporate change is already in front of us. While these CEOs are talking up commitments to social good on the conference circuit, wildfires are ravaging an area of Australia larger than Switzerland. Dozens of people have lost their lives, and 1 billion animals have died.
The stakeholder that matters most is the climate. And on that front, all corporations must take more even more targeted action.
Walking the walk
A century ago, the goals of CEOs and other stakeholders — including surrounding communities — were much more closely aligned than they are today.
In 1914, the public philosopher Walter Lippmann called on CEOs to be stewards of the country: “The men connected with large corporations cannot escape the fact that they are expected to act increasingly like public officials.”
And as the US economy grew after World War II, corporate interests sought many of the same goals as the broader society. “What was good for our country was good for General Motors,” General Motors CEO Charles Wilson said in 1953.
That changed in the 1970s, when CEOs began subscribing to Milton Friedman’s theory that corporations were beholden only to shareholders and should therefore prioritize maximizing profits above all.
With 2019 concluding the hottest decade on record, CEOs must once again evolve their thinking — and they cannot simply talk the talk. There are three initial ways these executives can make an impact.
Stop pouring money into fossil-fuel companies
First, financiers must act boldly to stop financing the expansion of fossil-fuel extraction and infrastructure and should commit to phasing out fossil-fuel financing altogether.
While many banks have declared support for the Paris Agreement, they’ve continued to perpetuate the climate crisis by investing in fossil fuels, which means lending and underwriting the coal, oil, and gas sectors globally.
In fact, the six largest US banks — JPMorgan, Wells Fargo, Citi, Bank of America, Morgan Stanley, and Goldman Sachs — each made the list of the top “dirty dozen” bankers of climate change. The 100 companies most aggressively expanding fossil fuels received $600 billion from global banks since the Paris Agreement was signed, while JPMorgan alone has provided $196 billion in financing for fossil-fuel companies in the past four years.
Support candidates who will fight climate change
As we kick off an election year, companies and CEOs should also publicly support climate-smart candidates and policies. Deep-pocketed families like the Kochs have long funneled “dark money” into climate-change denial, powering climate deniers’ rise to new political heights.
Now, businesses that claim to prioritize the climate should openly support candidates who will put this issue atop their own agendas. This is especially important because many corporate responses are likely to be woefully short of what’s needed to combat climate change. So by supporting these candidates and policies, the companies can effect even larger and more substantial change.
Patagonia chairman Yvon Chouinard says his company is already leading the charge for 2020: “We’re going to spend a lot of money and basically say, vote the climate deniers out. They are out to destroy our planet, and we’re not going to stand for it.”
Make real investments in technologies
Finally, companies can invest in new ideas and technologies that have the potential to reverse the climate crisis.
A report from the Environmental Defense Fund found that 92% of business leaders say emerging technologies can boost both sustainability and ROI, but only 59% of executives are investing in those opportunities.
AB InBev, for example, has launched a 100+ Accelerator program to fund startups helping the company solve its sustainability challenges. And Google’s parent company, Alphabet, is launching an infrastructure holding company, Sidewalk Infrastructure Partners, designed to invest in large-scale sustainable infrastructure projects. FullCycle, the firm I founded, invests in market-ready technologies that will accelerate solutions to the climate crisis.
The bottom line: When we gather in Davos, what we need from business leaders is not impassioned speeches offering vague promises, but concrete action on the climate crisis.
We need more dollars flowing towards climate-restoring technologies. Because at the start of this new year, marking a new decade, we need more companies stepping up to tackle the greatest challenge facing our world.
Ibrahim AlHusseini is a venture capitalist, entrepreneur, and environmentalist. He is the founder and CEO of FullCycle, an investment firm harnessing proven technologies that accelerate solutions to the climate crisis.
This is an opinion column. The thoughts expressed are those of the author(s).
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