Undeniably, much has changed since the first Earth Day, held on today’s date exactly half a century ago. Twenty million people gathered across the United States for grassroots rallies, sporting handwritten signs and mops of long hair. It was the flagship event of a social and political movement that sparked a wave of environmental reforms: the Clean Air Act, the Clean Water Act, the Endangered Species Act. The list goes on.
Fifty years later, the anniversary of the first Earth Day comes at a surreal time, at the height of the COVID-19 pandemic. The air in the U.S. is cleaner than ever before, but Americans are wearing masks in public spaces. Youth-led environmental activism once again has surged, but large in-person gatherings are discouraged. Hair is long not because it’s in vogue but because salons and barbershops are closed.
Amidst these unprecedented changes, CEOs and other leaders convened virtually last week for the Yale Business Sustainability Summit. They addressed an audience of over 700 webinar participants to muse on the past, present and future of corporate sustainability.
Three key themes stood out from the discussion:
1. The private sector is evolving from adversary to advocate
During the first Earth Day, industry was cast unequivocally as the enemy. Corporations were the ones spewing smoke into the air and dumping sludge in waterways. Business leaders did little to shy away from this villainous role. Just a few months after Earth Day, economist Milton Friedman wrote his infamous essay arguing that "the corporate social responsibility of business is to increase its profits."
Today, bad actors remain a problem, but many corporate attitudes fundamentally have shifted.
Dan Esty, one of the Yale professors who organized the summit, observed that the CEOs at the event struck a very different tone from the business leaders of the past. "That Milton Friedman world, what we sometimes call shareholder primacy, has now given way to a stakeholder business model," he said, "where almost every business recognizes that, yes, it needs to make a profit and deliver for its owners, but it also should deliver for its suppliers, its customers, its employees and the communities it operates in."
This shift towards a more holistic view of the bottom line was particularly apparent in remarks from Mike Lamach, CEO of Trane Technologies. "We’ve taken on the goal that purpose is more important than profitability," he said. "Because we believe at the end of the day, purpose is what engages our people. It’s our people who stay with the company who create experiences that matter, which creates shareholder returns."That Milton Friedman world, what we sometimes call shareholder primacy, has now given way to a stakeholder business model.
Of course, greenwashing has become a greater concern since the first Earth Day, as some companies adopt the language and imagery of sustainability without substantially reducing their negative impact. But many leaders are ready for truly transformative change.
Alan Jope, CEO of Unilever, a company that has long aimed to put itself ahead of the curve on sustainability, pushed for a new model of capitalism. "We believe that the companies of the future will need to take a stand, act on the big social and environmental issues, move from shareholder first to stakeholder first," he said. "And those that don’t will, quite simply, fail."
2. The pandemic is a warning sign of further risks, and an opportunity to address them
Given that the summit transitioned from an in-person gathering to a Zoom webinar, the COVID-19 pandemic was naturally top of mind. Many speakers began their remarks with expressions of sympathy for those affected, and they drew important learnings from the crisis, as well as parallels with the looming threat of climate change.
Steve Voorhees, CEO of packaging company West Rock, observed that 50 years seemed like a particularly long time, because even the past 50 days have felt like an eternity. "The pandemic is the ultimate sustainability event," he said. "It’s here, it’s now, and much like other issues that dominate the sustainability headlines, it’s going to change our world in ways we have yet to fully contemplate."
The emergence of the novel coronavirus that causes COVID-19 shows the strain in the relationship between humans and the natural world. The virus jumped from animals to humans due to human trade and consumption of exotic species, most likely including endangered and illegally trafficked pangolins.
"Not only do we have to put an end to consumption of wildlife in those high-risk categories," said Carter Roberts, CEO and President of the World Wildlife Fund in the U.S. "But also we need to think about human health in communities around the world and how their future relates to the diminishment of the environment and nature. We are all interconnected."In a post-corona world, there will be a bigger awareness and a bigger demand for change on these issues. And I think that’s going to come from young people.
The global pause offers companies a chance to reflect and improve. In the short term, some sustainability initiatives may be on hold, but in the medium and long term, many companies are doubling down on their commitments or even shifting their strategies to better address systemic risks.
Kyung-Ah Park, head of environmental markets and innovation at Goldman Sachs, said, "As companies look to dial-up ambitions, it provides an opportunity to think much more systemically and to integrate climate change and sustainability much more holistically, to have a lasting impact on our economic recovery and put the foundations in place to ensure it’s greener and more sustainable."
3. A new generation of leaders is demanding even greater action
Younger generations deeply value sustainability and a desire for impact drives where they direct their talent and purchasing power. The younger the consumers, the more likely they are to pay a higher price for products that they perceive to be sustainable.
Young people are not just showing these preferences with their dollars. They’re also doing it through relentless and clear-eyed activism around the world, and business leaders are taking notice.
Unilever's Jope predicted that younger generations will continue to be the strongest voices pushing for sustainability, particularly after they’ve lived through a global crisis. "In a post-corona world, there will be a bigger awareness and a bigger demand for change on these issues," he said. "And I think that’s going to come from young people."
A key message at the sustainability summit was one that remained largely unsaid. Jope was the eighth in a series of 10 white male speakers older than 50 who started off the summit and took up the large majority of the air time. The leaders of the next 50 years are likely to look very different from this group, and they’re likely to approach sustainability with even greater urgency and resolve.
The challenges ahead demand nothing less.