How to Convince CEOs to Support Climate Action at the Expense of Profits

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Businesses require a thriving, stable society to operate, and cannot survive in a failing world.

There is now widespread consensus that limiting the global temperature increase to 1.5℃ requires fundamental changes in sectors like energy, food, transport, construction, and finance towards more environmentally friendly production and consumption. This could include, for example, shifting towards a 100 percent renewable energy system, or replacing fossil fuel-powered vehicles with electric ones.

Government action is seen as crucial to helping support and coordinate this transition. But one key barrier has been lobbying by powerful corporate interests, who are concerned that government intervention might increase their costs and perhaps even eliminate their industries altogether. The millions spent on lobbying against climate policies by the oil and gas industry is a prime example.

We call this action in response to being challenged by others “the echo of conscience.”

But as the world warms, growing numbers of CEOs are pushing for more ambitious policy interventions to tackle the climate emergency. To investigate why the corporate lobby might be changing its stance, we looked at business involvement in the development of the UN sustainable development goals between 2012 and 2015.

Several high-profile multinational companies were involved in developing the goals, including Unilever, Nestlé, GSK, Aviva, and Pearson. Many advocated strongly for which specific goals should be achieved, and what role governments should play in achieving them. 

We reviewed 25 documents communicating corporations’ views, and observed nine meetings between business leaders and policymakers. We also conducted 57 interviews with 45 CEOs and senior executives representing 30 companies involved in this process.

We found that many companies were making strong calls for ambitious government intervention toward fighting climate change, through a mix of public investment, financial incentives, and regulation. 

For example, many were calling for governments to introduce carbon taxation (taxing greenhouse gas emissions to help low carbon alternatives become cheaper) and to move toward banning certain high-carbon activities (such as putting a date on when petrol cars or gas boilers can no longer be sold). Many companies also pushed for government subsidies for fossil fuels to be ended and given to renewable energy projects instead.

Corporate goals

Conventional wisdom tells us that corporate lobbying tends to be focused on weakening government intervention. However, the leaders we spoke to justified their lobbying for increased government intervention by arguing that the world sorely needed sustainability transitions across multiple industries.

Many leaders felt they had a responsibility to use their influence to encourage these transitions. This included calling for more ambitious intervention from governments, even if that added costs in the short term. 

Others argued that businesses require a thriving, stable society to operate, and cannot survive in a failing world. And in some cases, increased public investment, incentives, and regulation could grow markets, encouraging companies to align environmental responsibility with commercial incentives.

For example, renewable energy subsidies helped grow the market for solar panels on roofs; regulations banning the sale of petrol cars increase the market for electric cars; and taxing carbon could help grow the market for low-carbon alternatives like LED lighting.

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Life experiences

So why don’t all companies devote time and energy to lobbying for more government action? When pressed on this point, many CEOs took the conversation in a different direction, citing personal life experiences as a cause of their lobbying. 

These included being personally exposed to climate-related suffering, having been the target of NGO campaigning, and being challenged to engage by others: from other CEOs and non-executive directors, senior political figures and public intellectuals to their own children. 

Often these experiences were linked to participation in climate networks, such as the UN Global Compact—a non-binding pledge encouraging businesses to commit to sustainability. We call this action in response to being challenged by others “the echo of conscience.”

As the public continues to hold corporate leaders to higher and higher standards, our work suggests how we can encourage more CEOs to push governments toward radical climate action. People involved in working towards sustainability transitions must enlist CEOs to positively influence one another’s decisions through sustainability-focused CEO networks. 

We must create opportunities for CEOs to have first-hand experiences of the problems caused by their industry’s impact on climate—as well as opportunities for CEOs to be personally challenged by respected figures and people they care about, especially their children. Finally, we need to encourage corporate HR departments to focus on these elements in leadership selection and development, to make sure those who lead the world’s companies are also leading the world towards a brighter future.

Matt Gitsham is Professor of Sustainable Development and Human Rights at Hult International Business School.

Ajit Nayak is Associate Professor in Strategy at the University of Southampton.

Jonathan Gosling is Emeritus Professor of Leadership Studies at the University of Exeter.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

This story is part of The Conversation’s coverage of COP26, the Glasgow climate conference, by experts from around the world. Amid a rising tide of climate news and stories, The Conversation is here to clear the air and make sure you get information you can trust. Read more of our U.S. and global coverage.