Who Are the Corporate Sustainability Leaders?

And what are they doing that matters the most?

It’s interesting how frequently many climate activists criticize companies for wrongdoing, but how seldom they give credit for positive initiatives or highlight big accomplishments. Why is that? 

Many of us — including me — are counting on private sector organizations to be important leaders in addressing the climate emergency. Specifically, we want the private sector to do what it does when it's at its best — invest, innovate, and scale the most effective strategies. 

The stakes are pretty high. If we’re sincere about wanting private sector climate efforts to succeed, I think we should acknowledge positive outcomes when they happen. That way we can highlight good examples for others to follow, and try to encourage more of them. 

Time magazine recently did something along these lines. They ranked the World’s Most Sustainable Companies of 2024. I’m curious what you think of their list and the criteria they use to determine their selections.

I give them kudos on the initiative, but I think their list turned out a bit weird. The truth is most companies get some things right and others wrong (just like their human counterparts), so a definitive ranking is tricky to do. I think it might be more useful to identify the different kinds of activities that will likely make the biggest difference and highlight the leaders in each category.

My goal here is to get some discussion underway, so do let us know what you think. What in your view are the best private-sector climate activities? 

To get the discussion started, I’ll note here three categories I think are important, some of the companies that do best in each area, and some implications for others who wish to follow suit. 

1. Net Zero by 2030

Coming out of the Paris Climate Conference back in 2015, most of the world agreed to make achieving net-zero emissions by 2050 the top climate goal. That’s the world’s climate priority, and it’s the right place for the private sector to focus too.

Accordingly, many companies have announced goals to reach net zero — usually by 2040 or 2050. Not bad. They’re trying to do their part. But it’s hard to take such goals very seriously when the time horizons are so long. 

Some companies, however, are going much further by promising to act faster.

Leaders: Microsoft, Google, and Apple have all shortened their net-zero timeline… by a lot. These three companies (and others) have committed to getting there by 2030. I think this is hugely positive. We're in the race of our lives — emission reductions now are more valuable than ones in the future. 

Challenges: With AI bursting onto the scene, these companies’ ghg emissions are soaring, making it far more difficult than they originally expected to achieve the 2030 goals. 

But the companies haven’t backed away from their targets yet. A good role for environmental activists is to make sure they don’t. 

These companies are well-positioned to lead. They can accelerate and scale clean energy buildout, make dynamic energy management happen, improve storage, and help optimize carbon removal.

Implications for Others: How can your company accelerate its climate goals? What can you accomplish by 2030? (Net-zero is likely not practical, but how far can you get by that date?) How can you use your company’s unique set of capabilities to decarbonize now in ways that make business sense? Can you better disclose your decarbonization strategy? What milestones will you use to measure your progress? When will you use carbon removals?

2. Carbon Removal 

Yes, carbon removal remains controversial. But legitimate issues notwithstanding (and I think progress on resolving them has been good), it seems pretty obvious to me that we’ll need to remove enormous amounts of carbon from the atmosphere to get anywhere close to net-zero targets. Do you agree?

Some companies are showing admirable leadership by moving early to get the removal flywheel turning. 

Leaders: Stripe, for example, now allows businesses to purchase carbon removal tons or use an API to offer it to their customers. More importantly, Stripe also leads a coalition of companies — organized under the name Frontier — that has committed $1 billion to purchase removal credits. And, of course, many other companies have started purchasing removals.

Challenges: It’s expensive being an early adopter, voluntarily taking on all of the challenges and costs of removals. Also, as the saying goes, good deeds like this sometimes don’t go unpunished. Some environmentalists criticize companies that voluntarily purchase removals. 

I don’t agree with such criticism. It’s fine to encourage companies to prioritize emission reductions. (But remember — the atmosphere doesn’t distinguish between an emission reduction and a high-quality removal. If a company can buy quality removals at a cost below their marginal cost of emission reduction, that would allow for more decarbonization for any given investment.) And, of course, it’s also fine to push very hard to ensure that removals actually work as promised. But discouraging companies from voluntarily investing in these products seems counterproductive to me.

Implications: When and how will carbon removal make sense for your company? Can you pass some of the cost on to customers? Can you persuade your shareholders to support your efforts? Can your industry organize itself to require decarbonization across the sector (like global airlines are trying to do)?

3. Supply Chain/Scope 3 Emissions 

Most climate players agree that it’s critical for companies to measure and then reduce their Scope 3 emissions, i.e., those that are beyond the company’s operational control but result from their value chain. Of course this is not easy to do. It’s not even easy (yet) to accurately measure Scope 3 emissions.

But some companies are leading the charge.

Leaders: Walmart’s Project Gigaton has already removed 1 billion metric tons of ghg emissions from their value chain. Mars is a member of the Supplier Leadership on Climate Transition, which helps suppliers measure their ghgs, set reduction targets, and develop strategies for realizing them. General Mills has created a central climate team, as well as ghg lever teams, to deal with Scope 3 emissions. Apple has warned its suppliers that it wants net-zero supply by 2030. 

There is a long list of companies that say they are seeking to reduce Scope 3 emissions. But here it’s hard to evaluate who is doing exactly what. I encourage everyone with an ambitious Scope 3 effort to disclose as much as possible regarding how they measure Scope 3 emissions, what it costs to reduce them, how they partner with suppliers on such efforts, and what they can accomplish by 2030.

Implications: Map out and disclose your Scope 3 emissions as best you can now. Identify where they can be reduced most quickly and at lowest cost, and then get on it. Favor suppliers with the best climate strategies (i.e., ones with net-zero goals, and good decarbonization disclosure) and (ala Walmart) help them as much as you can.

4. Special Category: All-Around Environmental Heroes 

A small number of companies go way beyond setting a goal and making reasonable efforts to reach it. They’ve made environmentalism a core value that influences every aspect of their business. 

Leaders: Patagonia is my favorite example, and we have written about them before (see here and here). IKEA may just fall into this camp as well, but I have very little direct experience with them so cannot be sure. 

Challenges: It’s tricky to optimally balance environmental and shareholder value. Patagonia has done it exceedingly well, but that’s a tough act to follow. Case in point — none of their competitors go as far as they do (in my view).

Implications: What can you learn from the Patagonia example? How can you embed a more environmental mindset into the business? Are there areas where you can make being environmentally minded a differentiator? 

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The above list is not meant to be exhaustive. Please let us know what you think are the most important things to do, as well as who you think does them best.

We’ll definitely have more to say about all this in future issues. Next time we will tackle the edgier topic of who is doing a good job among high-emitting companies.

Onward,