The Truth Shall Set You Free
Not to mention deflect criticism, build goodwill, and accelerate progress.
I had a meeting last week that I think makes for an interesting (and important) parable.
I met with the CEO of an excellent environmental NGO — one that I very much respect and am pleased to advise. The organization is planning to initiate some new strategies that I believe will be positive. But the CEO is concerned that some of his traditional supporters might disapprove of the new initiatives, as the projects would engage a few corporate partners that left-leaning environmentalists might view as bad guys. To stave off any opposition, his team had devised a plan to “hide” these potentially unpopular moves in a complicated web of subsidiaries. He wanted to know what I thought.
I said I thought it was a terrible idea.
The activities he was considering were good ones in my view. More importantly, the CEO believes they make sense. They are things he wants his organization to do. So what exactly is he afraid of?
If some supporters doubt the wisdom of his strategy, so what? That should make for some good discussion with them — discussion where they might come to better appreciate his approach. Or they might persuade him to improve his plan. Both good outcomes. If the criticism generates some controversy along the way, that's not necessarily so bad either — the buzz would shine a spotlight on important new initiatives for the organization. And if the NGO does lose some supporters along the way, the organization can probably pick up enough new ones to more than offset the loss. Donors admire bold organizations who take on promising but risky initiatives.
Hiding any activities, on the other hand, would not only miss such an opportunity for increased visibility and healthy debate, but also look quite suspect if they were to come to light, which in all likelihood would eventually happen.
I learned all of this firsthand when I led TNC. We did a number of things that supporters questioned and criticized. We learned that in such circumstances the best thing to do was to say to our critics, “Thank you for engaging with us. We want what you want — better outcomes for nature. That's why we're doing XYZ. Here is why we think our strategy will work. We will keep everyone posted every step of the way by being totally transparent. If you think we’re missing something, or if you see opportunities for us to do better, please let us know.”
This approach always seemed to work. We got credit for our new ideas. Sometimes we got input from outsiders on things we missed, which led us to refine and improve our plans. We got attention for doing new, big things (most of which worked out quite well). And the criticism eventually dissipated, usually sooner rather than later.
This advice — to commit to full transparency and disclosure — applies to everyone in the climate arena: NGOs, activists, government agencies, corporations and institutional investors. But my main focus here is the private sector.
In general, companies today are doing more on the environmental front than they get credit for. But at the same time, because they disclose such activities in vague and glitzy ways, they end up being accused of greenwashing. This is a crazy outcome.
Furthermore, since voluntary decarbonization and net-zero pledging by companies are now such critical climate strategies, improving everyone’s understanding of what is underway is important. We all have a lot riding on the private sector’s environmental commitments. Even landmark legislation like the recent IRA bill is mostly an effort to incentivize more voluntary private sector action.
So what should corporations do? Just tell the truth.
Explain what you're doing and why. Make the business case for your plans as best you can. Acknowledge where things are not going as well as you would like and explain why. Such honest disclosures will boost your credibility, and likely stimulate new dialogue and new good ideas from outside parties.
Follow this golden rule and you will rest easier at night. But sleeping well is not the only reason to commit to complete transparency and full disclosure. It should lead to a healthier and more constructive dialogue.
Take your decarbonization and net-zero goals, for example. Achieving these goals will be difficult. There are very few easy wins ahead. Acknowledge where you are stuck, where next steps look expensive, risky, or likely to hurt your competitive position. Challenge your critics. They say they want what you want — decarbonization that aligns with positive business outcomes. How exactly do they propose you do that? Spell out your plan to move forward. Explain what you’re hearing from shareholders. If critics disagree and have well-developed ideas, good! Let's hear them. That will allow for nuanced debate about the merits and drawbacks of specific actions rather than the issuance of blanket statements back and forth about who should do what and ultimately talking past one another.
This should be straightforward to do. Be clear about your net zero goals, disclose what you’ve learned along this journey, explain what looks difficult to achieve, and outline how you’re taking on such challenges. You’ll get more credit for your efforts. You will avoid the dreaded label of greenwashing. You’ll probably save money on PR. And you will likely shift attention to your competitors when they don’t aim quite as high.
Regardless of whether this argument has persuaded you, disclosures are not just nice-to-dos. Requirements are coming. The US, EU and UK all have regulations in the works. So just take my advice and don’t waste your time and money fighting them. Embrace them. It will give you a competitive advantage and give us our best shot at making meaningful environmental progress.
Extra Credit: Occasionally, I hear CEOs lament shareholder interest. “Mark, you don't understand – our shareholders don't care enough about this stuff.” They point to their quarterly earnings calls as evidence. They explain that they are not asked many questions, for example, about plans to reach net zero.
I have two main responses. First, don't wait for the questions. Frame the narrative. Tell your audience why you strongly believe your climate initiatives make compelling business sense. Explain how they introduce new business opportunities and top line growth; reduce costs; manage risks; and energize stakeholders.
Second, please be aware that the analysts asking questions on those calls are not your actual shareholders. They are usually research analysts from the big Wall Street firms whose job it is to forecast earnings over the next few quarters. But you do have long-term shareholders. Go see them. Tell them why you are excited about the positive business results that flow from your sustainability efforts. Get them on your side. I think you’ll find them open to the possibilities.
More Extra Credit: Check out our prior report on lessons to be learned from Apple’s clear communications about its ambitious net zero plan.
Transparency is best! If you haven't seen the film Wild Life about Doug Tomkins and Patagonia, check it out, it's excellent!
Excellent post. Transparency is crucial.