Climate & Business: Are Net Zero Targets Enough?
Download MP3One fifth of the world’s largest companies have committed to net zero emission targets, but who is holding them accountable? Brian Goebel and Sonia Sharma of Emory University’s Goizueta Business School join to discuss the climate crisis, greenwashing, and how climate-smart decisions can drive measurable growth.
Despite huge hurdles, we are seeing traction in the climate space. In his 2020 letter regarding corporate governance, BlackRock CEO Larry Fink turned heads when he asserted that “climate risk is investment risk”. In 2021, money held in ESG and other sustainability focused funds rose globally by 53% to $2.7 trillion. This past March, the SEC proposed new requirements for publicly traded companies to report detailed information on greenhouse-gas emissions and risks related to climate change.
Suffice it to say, climate change is and should be front and center as a key business issue for a diverse set of stakeholders across all sectors including leaders, investors, and regulators.
Brian Goebel and Sonia Sharma joined The Goizueta Effect Podcast to discuss climate change and business, including the enormous influence and responsibility business holds in driving toward a climate-smart world.
Brian is the Managing Director of Goizueta’s Business & Society Institute. Through the Institute, students, faculty, staff, and partners focus on addressing complex challenges confronting people, the planet, and the business community through academic discovery and purposeful action.
Sonia is a second-year MBA student at Goizueta Business School. She’s also a Social Enterprise Student Fellow and future consultant at McKinsey. She recently attended the ClimateCAP Global MBA Summit, along with hundreds of leading students across the nation to dig in on these issues.
This episode of the Goizueta Effect was co-created in partnership with MBA students and ClimateCAP delegates Sonia Sharma, Vaishali Nijampatnam, Margot Merwin, and Carlos Vazquez.
Suffice it to say, climate change is and should be front and center as a key business issue for a diverse set of stakeholders across all sectors including leaders, investors, and regulators.
Brian Goebel and Sonia Sharma joined The Goizueta Effect Podcast to discuss climate change and business, including the enormous influence and responsibility business holds in driving toward a climate-smart world.
Brian is the Managing Director of Goizueta’s Business & Society Institute. Through the Institute, students, faculty, staff, and partners focus on addressing complex challenges confronting people, the planet, and the business community through academic discovery and purposeful action.
Sonia is a second-year MBA student at Goizueta Business School. She’s also a Social Enterprise Student Fellow and future consultant at McKinsey. She recently attended the ClimateCAP Global MBA Summit, along with hundreds of leading students across the nation to dig in on these issues.
This episode of the Goizueta Effect was co-created in partnership with MBA students and ClimateCAP delegates Sonia Sharma, Vaishali Nijampatnam, Margot Merwin, and Carlos Vazquez.
Defining the Climate Issue
Climate Change
In 1992, the UN held a framework convention on climate change. The UN determined that climate change is attributable directly or indirectly to human activity and that human activity has altered the composition of the global atmosphere. In addition to natural climate variability, human activity has accelerated the change by adding more carbon and impacting the environment.
Sustainability
In order to promote sustainability, we must ask ourselves, “how do we integrate our future generation into our decision today?” In 1987, the UN defined sustainability as meeting the needs of the present without compromising the ability of future generations to meet their own needs.
ESG
ESG (Environmental, Social and Governance) is a set of metrics that helps investors and organizations prioritize making a positive impact on the planet and its people in addition to generating profits. Environmental metrics help corporations refine their practices that affect the environment. For example, companies have begun examining how their supply chains and carbon footprint impact the environment. Social metrics involve serving the community of which the corporation is a part. How much does the corporation support the people in their community, especially with regard to diversity, equity, and inclusion? Lastly, governance metrics involve how the company, its board, key directors, and employees make decisions and how to hold themselves accountable.
Climate Justice Should Be Front & Center
Dr. Adrian Hollis is a senior climate justice and health scientist at the Union of Concerned Scientists. She explains that minority communities are harmed “worst and first” when it comes to the impact of climate change both globally and here in the United States. To promote climate justice, we must shift beyond a business mentality that only considers decarbonization and shift to a system that recognizes and challenges the disproportionate effects the climate crisis has on diverse communities.
Too often, companies claim to care about climate change, yet they are only involved in greenwashing. Greenwashing is a form of deception: it’s when companies spend time, money, and resources marketing their products, aims, and policies as environmentally conscious, but in reality, they are not doing anything to minimize their environmental impact. For example, Starbucks released straw-less lids in 2018 but the lid contained more plastic than the old lid and straw combined. Greenwashing reflects a broader accountability challenge for companies and governments. For more examples of corporate greenwashing click here.
On the positive side, 20% of the world’s 2,000 largest publicly-listed companies have announced commitments to reach net zero emissions in the coming years. Keeping companies transparent and accountable is the key for tracking their progress toward environmental goals.
Too often, companies claim to care about climate change, yet they are only involved in greenwashing. Greenwashing is a form of deception: it’s when companies spend time, money, and resources marketing their products, aims, and policies as environmentally conscious, but in reality, they are not doing anything to minimize their environmental impact. For example, Starbucks released straw-less lids in 2018 but the lid contained more plastic than the old lid and straw combined. Greenwashing reflects a broader accountability challenge for companies and governments. For more examples of corporate greenwashing click here.
On the positive side, 20% of the world’s 2,000 largest publicly-listed companies have announced commitments to reach net zero emissions in the coming years. Keeping companies transparent and accountable is the key for tracking their progress toward environmental goals.
Climate-Conscious Decisions Drive Growth
Climate-conscious business can be broken down into four different areas: growth opportunities, justice issues, leadership imperatives, and accountability challenges.
MBA Edge, a resource developed by Duke University, provides an insightful report called, “Climate Change in Business-What Every MBA Student Needs To Know Today.” The facts in this report speak to how climate-conscious business decisions can promote growth. The report notes that 225 of the world’s 500 biggest companies estimated that climate-related opportunities represent a financial impact totaling over $2.1 trillion across all industries.
For example, General Motors has been a successful company for many years, but recently began losing revenue. Now, GM is reinventing itself with electric vehicles (EVs) and different forms of mobility. GM is committing by investing billions in EVs and planning to go all-electric by 2035.
Further, Inland Empire Energy Center in California, a fossil fuel power plant, is being demolished years ahead of schedule because it cannot compete economically with electricity generated from wind and solar. In fact, in the last decade, wind energy prices have fallen 70%, and solar has fallen about 90% on average in the United States. Globally, the cost of solar has also fallen 99% in 40 years. Now, solar is a cost competitive option and is leading the renewable energy field.
MBA Edge, a resource developed by Duke University, provides an insightful report called, “Climate Change in Business-What Every MBA Student Needs To Know Today.” The facts in this report speak to how climate-conscious business decisions can promote growth. The report notes that 225 of the world’s 500 biggest companies estimated that climate-related opportunities represent a financial impact totaling over $2.1 trillion across all industries.
For example, General Motors has been a successful company for many years, but recently began losing revenue. Now, GM is reinventing itself with electric vehicles (EVs) and different forms of mobility. GM is committing by investing billions in EVs and planning to go all-electric by 2035.
Further, Inland Empire Energy Center in California, a fossil fuel power plant, is being demolished years ahead of schedule because it cannot compete economically with electricity generated from wind and solar. In fact, in the last decade, wind energy prices have fallen 70%, and solar has fallen about 90% on average in the United States. Globally, the cost of solar has also fallen 99% in 40 years. Now, solar is a cost competitive option and is leading the renewable energy field.
New MBA Graduates and the Potential for Meaningful Change
There are many ways that new graduates can move the needle. While in the past, specific environmentally-focused roles were siloed or did not exist, now climate work is embedded across all core functions, as well as management. Companies that commit to driving positive climate change stand to benefit as many students are looking for companies that match their values.
Goizueta’s Business & Society Institute
Goizueta’s Business & Society Institute asks tough and important questions and engages in in-depth research on topics including climate, equity, economic empowerment, policy, and management practice. While research is a large part of the institute, developing Goizueta students is also fundamental to its mission. The Institute develops current students by preparing them to become change-makers in their industries and helping them create meaningful networks.
To learn more about Goizueta Business School and how principled leaders are driving positive change in business and society, visit goizueta.emory.edu.
