They say history doesn’t repeat itself, but it does rhyme. Twenty one years ago, I traveled to The Hague for the sixth United Nations Climate Change “Conference of the Parties,” better known as COP6. There was a circus-like atmosphere in the streets, with protesters from around the world demanding politicians and corporations radically reverse their negative impact on the planet, and huge hopes for market-based solutions to tackling climate change.
Fast forward to COP26, starting Sunday, and much remains the same. What is fundamentally different from two decades ago, however, is that much of the activist rhetoric is now embraced by corporate leaders and investors.
“Our goal is to make HP the most sustainable and just technology company,” HP CEO Enrique Lores told me on Tuesday, in the latest Quarterly JUST Call. He was expressing a core sentiment of his tenure, and he can point to its success. 2020 was the second year in a row that HP drove over $1 billion in revenue from products directly tied to its sustainability initiatives. Lores also explained that his company’s ongoing work in this space has been critical to employee recruitment and retention.
The world’s most influential investors are also in the spotlight. As BlackRock CEO Larry Fink said this week at the Future Investment Initiative Forum in Riyadh, “We have to re-imagine how to bring finance forward to effectuate the change of climate change risks.”
The majority of Americans are in favor of this direction for business. Our polling from last month shows that over 70% of respondents were concerned about climate change, and that around three quarters believed companies can have a moderate or high impact on slowing it. Other polls show that majorities across both red and blue states support a large-scale energy transition from fossil fuels to clean energy as long as jobs are prioritized. Most Americans are not wedded to oil, gas, and coal – it’s that they want their livelihoods protected.
The big questions are all about the specifics of this transition: what does it look like? How quickly will it happen? Are corporate actions real? Fink put it into context at the Saudi conference: “We have these visions we could go from a brown world and we could wake up tomorrow there’d be a green world. That is not going to happen.” The Science Based Targets initiative’s net-zero corporate standard, announced Thursday with supporters like CVS and JLL in the US, is one small but important step in that long journey.
We shall see if COP26 gives us any answers.
This Week in Stakeholder Capitalism
Citibank is the first Wall Street bank to agree to a racial audit to investigate if, and how, it contributes to racial discrimination.
Costco is raising its minimum wage to $17 an hour following an increase to $16 an hour in February.
HP announces a $80 million expansion of its partnership with World Wildlife Foundation to sustainably manage, conserve, and restore nearly one million acres of forest.
Microsoft has become the first major technology company to commit to “right to repair,” making it easier for customers to independently repair its devices and launching a study to understand how this might lessen environmental waste.
Target is investing $100 million through 2025 to improve economic prosperity in Black communities across the country.
What’s Happening at JUST
Ahead of the COP26 UN Climate Summit, we spoke with HP CEO Enrique Lores for our latest Quarterly JUST Call, discussing the company’s outstanding work on climate action, digital equity, and how its sustainability initiatives have led to the generation of more than $1 billion in revenue for two years straight. Read the takeaways and watch the replay here.
How do the philanthropic efforts of public companies impact returns? Uncommon Givingleveraged our unique data in the construction of the Uncommon Generosity Index, which tracks the most generous companies across industries. This week, S&P DJI’s Michael Mell explores the Index with Earl Bridges, CEO of Uncommon Giving Corporation and Claire Gaudiani, Board Member at Uncommon Investment Funds Trust and author of The Greater Good: How Philanthropy Drives the American Economy and Can Save Capitalism. Watch the full video here.
JUST director Peter Georgescu pens an editorial in Corporate Board Member urging readers to recognize that the transition to stakeholder capitalism is not only urgent, but requires the backing of board directors across America.
Martin joins The Conference Board’s ESG Views and News podcast to discuss why companies are having an unparalleled moment to tell their “economic opportunity and fairness” stories. Listen to the conversation with Executive Director Paul Washington here.
“This is now a critical priority for us not only because it’s the right thing to do but also because our customers, our partners, our investors, are demanding we move in this direction. We are creating new business every year because of that…this is very different from where it was just 24 months ago.”
- Enrique Lores, CEO of HP, speaking on how the company’s commitment to ESG has accelerated during our Quarterly JUST Call.
“Measurement and transparency are important components of the work we are doing to advance diversity, equity and inclusion. We’re demonstrating our ongoing support for measurement and transparency by committing to conduct a racial equity audit.”
- Edward Skyler, executive vice president at Citigroup, on the firm’s major DEI initiative around a racial equity audit.
“[CEOs] told us absolutely clearly that the physical risks that they were expecting to see in 2025 or 2030, are happening now. One insurance company CEO told me that there will be regions of the world they simply will not be able to insure very, very soon.”
- Peter Lacy, Accenture’s global sustainability services lead, speaking to the company’s latest CEO survey which showed that many corporations are dealing with the effects of climate change on their supply chains years earlier than anticipated.
Must-Reads of the Week
Indeed’s latest job seeker report shows which industries are struggling to hire and recommends the best lever for low-wage, in-person sectors to pull is to raise wages.
SHRM releases its latest pay equity research, showing that of the companies that conduct pay equity analyses, 83% adjust employee pay afterwards.
The Financial Times explains why raising the minimum wage won’t suddenly alter the trajectory of “The Great Resignation” – many workers leaving their jobs would need significantly better working conditions to stay, regardless of a pay increase.
The Wall Street Journal discusses how tech companies that touted transparency and open discussion as cultural cornerstones are in conflict as internal employee debates and grievances continue to leak to the public.
Chart of the Week
This chart comes from Mercer’s 2021 Inside Employees’ Minds study seeking to help employers navigate “The Great Resignation.” Its top recommendation for employers? Prioritize hourly, front-line, and low-wage workforces. “Perks and other benefits won’t matter if these employees can’t address basic needs. Pay is one priority employers should consider, as well as other benefits that enhance the take home pay of this workforce, such as affordable healthcare and resources to enhance their financial wellness such as retirement savings programs and budgeting tools.” Dig into the details here. And check our Worker Financial Wellness Initiative if you’d like to join a community of practice on this critical issue.