ESG in Action
Reporting from the GreenBiz 22 ESG Conference
Editor’s Note: It's difficult not to be distracted and discouraged right now by the terrible war underway in Ukraine. Our hearts go out to everyone in harm's way, including Yuliia, our illustrator. We must do everything we can to support efforts to end this aggression ASAP. At the same time, our environmental work continues to ensure that one crisis does not compound another. In that spirit, please find below this week's issue of our newsletter.
Last week I was delighted to attend the GreenBiz 22 conference in Scottsdale, Arizona. The conference is a huge annual gathering of the ESG leaders who drive positive business practices. Not only was it nice to actually talk to people face-to-face again, but it was great to see that, with a little goodwill and cooperation, events like these can take place safely in the COVID era. A big congratulations and thank you to GreenBiz founder and chair Joel Makower and team.
Overall, I left Arizona less tanned than I would like but optimistic as ever about the determination of US business leaders to accelerate ESG initiatives over the next few years.
But I also worry that there may be too much wishful thinking about voluntary corporate action and not enough emphasis on getting public policies right. We have to be realistic about what will move corporations to the kind of action – and scale – required to make headway toward fully addressing the tough environmental challenges we face. I believe we need more rules and that we should focus more of our effort on that front.
More on that in a bit.
In the meantime, here are my main takeaways after three very engaging days spent hanging out with great corporate ESG leaders.
ESG professionals are stronger than ever. These leaders are skillful and determined. They are showing the private sector that business can execute ambitious sustainability efforts in ways that make great commercial sense. I’ve always admired sustainability professionals. Their job is not at all easy but they keep pushing forward. Getting companies to change their ways is no small feat, but these pros successfully tackle that challenge every day. Bravo. Please keep up the great work. And CEOs – please pay close attention to your ESG teams. Make sure you engage them in all of your big decisions.
When it comes to ESG, consumers care most about how companies treat their employees. Having mostly dealt with the environmental priorities of investors, I did not fully appreciate how different the concerns of consumers were. I learned that consumers care most about how companies treat their workers. Get this wrong and your reputation will be ruined, no matter how strong your environmental record. The next top concerns for consumers: plastic in oceans and recycling.
Investors, on the other hand, are most concerned with climate. Although investors got less attention at the conference, my take is that their ESG priority remains laser focused on climate. They are also delving into how best to work with ESG rating services, how issuers should address upcoming and complex disclosure rules (see below), the circular economy, and a long list of other challenges.
Participants in the carbon offset market are getting ever more savvy. The conversation has progressed from whether to even engage in these markets to more sophisticated topics: talking about the “durability” rather than “permanence” of carbon offsets; enhancing verification processes (especially via technology and the blockchain); and the defense of offset projects that protect nature (i.e., avoided-emission projects) even if they don't fully align with the net-zero framework and where additionality can be more difficult to prove. This last topic even got me rethinking my previous arguments on why removal deals should be the top focus.
Diversity is powerful. Conference participants comprised a remarkably diverse group of people. It was great to participate with everyone. Conference dialogue benefitted from a wide and exciting range of styles, opinions, experiences, backgrounds, and strategies. It may have seemed especially striking to me because I've mostly been working from home during Covid, but I found hanging out and discussing ideas with an especially diverse group of highly engaged people to be very energizing. It left me feeling optimistic!
So lots to be excited about. But to achieve the overall progress we seek, I think we should be putting more emphasis on closing the gaping holes resulting from inadequate public policy.
I wonder if voluntary initiatives, well-intentioned though they may be, are ill-fated as they become increasingly difficult and costly to enact and maintain.
For example, one airline executive at the conference described their very positive decarbonization plan. The airline intends to decarbonize by purchasing more efficient aircraft, using more sustainable aviation fuel, and buying many more carbon offsets. All of this is laudable from an environmental perspective. I asked whether it would be viable for the company to take on these added costs if competitor airlines didn't do the same. After all, the industry is very competitive, consumers care a lot about ticket prices, and profit margins can be thin. I think the same kind of obstacles may thwart many other voluntary moves.
Please don’t get me wrong – I’m in favor of all of the voluntary initiatives now underway. After all, you have to start somewhere. And they lead to many very positive outcomes. But I hope we don’t take our eye off the ball concerning the need for regulations and mandates. As business leaders and ESG professionals manage their voluntary corporate initiatives and identify where policy would materially accelerate progress, I hope they will speak up more and lobby boldly for such policy. NGOs can and should do the same.
RMI’s Oleksiy Tatarenko’s recent argument for Europe to address energy and climate by doubling down on renewables is even more timely now.
Gernot Wagner goes further: Rip off the band-aid and cut off Russian gas once and for all.
Energy News’ Elizabeth Ouzts asks: Are plans for net-zero supersonic jets too good to be true?
Tim Mohin provided good insight about emerging ESG accounting standards at the GreenBiz conference. He pointed to this good article by Robert G. Eccles and Bhakti Mirchandani.
Speaking of the need for rules and regulations, here is news on an encouraging industry-led effort for recycling mandates underway now in Maryland.
One of our favorite authors – Saul Griffiths – explains the bold bid to buy out Australia’s big coal burning power company AGL and replace coal with clean energy. The Instigator anticipated deals like this and approved.
One Last Thing
Sylvia Boorstein offers an easy-to-do practice for sustaining peace of mind and goodwill during stressful times. Timely. Ommm.