A new decade demands new leadership in climate policy advocacy

As BlackRock Chairman Larry Fink writes in his latest letter to CEOs, "Climate change has become a defining factor in companies’ long-term prospects." He’s right: the impacts of climate change on businesses are hard to overstate.

According to the federal reserve, climate-related events already have cost the U.S. economy over $500 billion in the last five years, and could shrink GDP by as much as 10.5 percent by the end of the century. More disturbingly, recent studies show we may be significantly underestimating climate risk, which makes managing that risk difficult for businesses indeed.

Climate risk management requires climate policy

A growing number of companies are responding to the climate crisis by setting science-based greenhouse gas reduction targets, committing to use 100 percent renewable energy, changing the way they operate to improve resilience and even developing new products and services to thrive in a carbon-constrained world.

These actions are important, as they give companies a compelling story to tell about why reducing emissions makes business sense. Yet by themselves, they are insufficient to insulate businesses and investors from climate risk. Only public policy can deliver the speed and scale of reductions needed to limit the worst impacts of climate change. That’s why advocacy for climate policy is an essential part of corporate sustainability leadership.

Andrew Winston, author and adviser to some of the world’s largest companies on sustainability, recently wrote, "The climate crisis is upon us, and there’s no time to wait for voluntary corporate action to tackle the challenge. We need the collective will that government provides. Many in business will rebel against this idea, but we are long past the point where free markets alone could solve the challenge in time (if such a possibility ever even existed)."

A new standard for corporate leadership in 2020 and beyond

Until now, sustainability leadership has been measured through various reporting frameworks and sustainability rankings. Most of these approaches fail to address what a company is doing to advance public policies that drive down emissions in a meaningful way. In the face of the climate crisis, they are woefully inadequate.

We need a new benchmark to define leaders and laggards in 2020 and beyond: climate policy advocacy. In this critical decade for climate action, the real measure of business leadership will be willingness to use the most powerful tool companies have to fight climate change: political influence. 

Corporate America has an essential role to play in raising the urgency and ambition for policymakers to act. Well-designed, predictable climate policies at the national, subnational and sectoral level have the dual benefits of reducing climate risk while creating regulatory certainty that encourages investment and innovation. Forward-thinking companies understand this and recognize that the costs of inaction on climate change far exceed the costs of policy solutions.  

Rising stakeholder expectations

In the 2020s, investors, employees and consumers will be watching corporate leaders more keenly than before. These stakeholders expect business leaders to go beyond rhetoric and take meaningful action on climate change — including advocating for climate policy.

Stakeholder pressure will only increase in this hyper-transparent era: a company can no longer publicly be "for" climate action when its lobbying and political spending tell another story. Groups such as InfluenceMap and Open Secrets monitor companies’ climate lobbying, and recent media stories have highlighted the disconnect between some companies’ climate positions and financial contributions.

What leadership looks like

Thankfully, a growing number of companies are stepping up to the plate on climate policy advocacy. These businesses are at the vanguard of a larger movement calling for climate action in Washington, D.C. and around the country. But the fact remains that to enact the policies that will achieve net-zero emissions by 2050 — what the science says is necessary to limit the worst impacts of climate change — corporate advocacy on a much broader scale is needed.

As Fink noted in his letter to CEOs, "While government must lead the way in this transition, companies and investors also have a meaningful role to play."

And as the heads of 11 environmental and sustainability groups wrote in an open letter to the CEOs of corporate America, leadership means advocating for policies that achieve net-zero emissions, aligning trade associations’ lobbying with the same goal and allocating political spending to advance climate action, not obstruct it. 

This decade is make-or-break for the climate. It’s time for businesses to step up to a new level of leadership, making climate policy a top advocacy priority and driving it from the C-suite.

By embracing this leadership role, businesses can help get us where we need to go: to a new climate policy framework that mitigates climate risk while growing the economy, building resilience and protecting public health, thus creating the low-carbon future we all want to live in.

Editor's note: Victoria Mills will moderate a session about how companies can use policy advocacy to support their climate strategy during the GreenBiz 20 conference, Feb. 4-6 in Phoenix.