Pressure builds on CEOs to navigate climate action: It's a new reality for corporate America
The days when business leaders could dodge social or political issues are coming to an end. CEO engagement on issues such as health care, sexual harassment, gun control and immigration have been steadily on the rise.
In a U.S. House committee meeting in April, lawmakers “grilled [bank] executives more on social issues than business fundamentals,” according to Reuters, and probed them about fossil fuel investments.
And as a recent Axios Trends piece suggests, pressure on CEOs to address social issues is increasing ahead of the 2020 political campaigns. In particular, demands that they act on climate change are heating up.
Push by 7,100+ Amazon workers signals change
More than 7,100 Amazon employees signed a letter this spring to their CEO Jeff Bezos and his board of directors, asking for broad action to fight climate change.
This followed a move in late 2018 where Amazon employees, who are also shareholders, filed petitions asking the company to release a comprehensive plan on climate change. Amazon announced in February that it will, at last, disclose its carbon footprint later this year.
This latest letter to the Amazon CEO shows that employees are becoming a powerful advocate for business leadership on climate.
Investors and millennials demand change
The investor community is increasingly recognizing that climate change poses a major risk to business performance – and is asking companies to act now.
Environmental issues, mostly focused on climate change, and demand for corporate disclosure on lobbying and election spending, now make up 46% of this year’s shareholder resolution proposals.
At the same time, a groundbreaking survey earlier this year found that nearly 40% of millennials, who will represent one in three workers by 2020, have chosen a job because of its approach to corporate sustainability. This young workforce expects employers to have a strong environmental agenda, and want CEOs to take a leadership role.
As BlackRock CEO Larry Fink wrote in his annual letter to executives, “contentious town halls” where employees speak up about the importance of corporate purpose are becoming a fact of life.
“This phenomenon will only grow,” Fink predicted, “as millennials and even younger generations occupy increasingly senior positions in business.”
No company is immune to the pressure
In other words, it’s no longer enough to post values on a company intranet. Executives need to publicly and visibly put them to work.
Oil and gas giants ExxonMobil, BP and Shell did when they spoke out in favor of methane regulations – despite the Trump administration’s efforts to roll back such policies. It’s a milestone that could change the course of methane regulations for good.
It still remains to be seen if oil companies’ actions will match their rhetoric, but these developments show a remarkable shift in social and environmental pressure on CEOs.
How CEOs can navigate it all
With pressure mounting on corporate America to wield its influence to address climate change, more businesses need to get off the sidelines and take charge. It’s not just the planet that demands action; every business stakeholder does.
The timing would be right: There’s now roadmap with four specific steps to help them to get started.
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