How much faith can we place in corporations to save us from climate change?
The following is extracted from An Inconvenient Truth: How Organizations Translate Climate Change into Business as Usual, by Christopher Wright and Daniel Nyberg and Why corporate promises to cut carbon can’t be trusted by the same authors.
“Climate change represents the grandest of challenges facing humanity. In the space of two centuries of industrial development, human civilization has changed the chemistry of the atmosphere and oceans, with devastating consequences. Business organizations are central to this challenge, in that they support the production of escalating greenhouse gas emissions but also offer innovative ways to decarbonize our economies. In this paper, we examine how businesses respond to climate change. Based on five in-depth case studies of major Australian corporations over a 10-year period (2005–2015), we identify three key stages in the corporate translation of climate change: framing, localizing, and normalizing. We develop a grounded model that explains how the revolutionary import of grand challenges is converted into the mundane and comfortable concerns of “business as usual.” We find that critique is the major driver of this process by continuously revealing the tensions between the demands of the grand challenge and business imperatives. Our paper contributes to the literature on business and the natural environment by identifying how and why corporate environmental initiatives deteriorate over time. More specifically, we highlight the policy limitations of a reliance on business and market responses to the climate crisis.”
Christopher Wright and Daniel Nyberg: “How much faith can we place in corporations to save us from climate change?
In a recently published paper, we explore how major business corporations translate the grand challenge of climate change into strategies, policies and practices over an extended period of time. Our research involved a detailed cross-case analysis of five major corporations operating in Australia over ten years, from 2005 to 2015. During this period, climate change became a central issue in political and economic debate, leading to a range of regulatory, market, and physical risks and opportunities, and each of these five companies were leaders in publicly promoting their engagement with this issue.
However, despite different industry contexts (banking, manufacturing, insurance, media and energy) we found a common pattern over time in which initial statements of climate leadership degenerated into the more mundane concerns of conventional business activity. A key factor in this deterioration of corporate environmental initiatives was on-going criticism from shareholders, the media, governments, and other corporations and managers. This ‘market critique’ continuously revealed the underlying tensions between the demands of radical decarbonisation and more basic business imperatives of profit and shareholder value.
The corporate translation of climate change into business as usual involved three phases. In the first framing phase, senior executives presented climate change as a strategic business issue and set out how their businesses could provide innovation and solutions. Here, managers associated climate change with specific meanings and issues such as “innovation,” “opportunity,” “leadership’” and “win-win outcomes,” while ruling out more negative or threatening understandings (e.g. “doom and gloom,” “regulation,” “sacrifice”).
In a classic expression of this win-win ethos, the global sustainability manager of one of our case organisations (and one of the world’s largest industrial conglomerates) argued: “We’re eliminating the false choice between great economics and the environment. We’re looking for products that will have a positive and powerful impact on the environment and on the economy.”
While these general statements of intent responded to the inherent tension between corporate and environmental interests, convincing stakeholders of the benefits of “greening” initiatives was never assured, and critiques evolved amongst stakeholders and customers who felt their organizations’ environmental efforts either lacked sincerity or failed to satisfy profit motives.
In a second localizing phase, managers sought to make these initial framings directly relevant by implementing practices of improved eco-efficiency, “green” products and services, and promoting the need for climate action. Internal measures of corporate worth were developed to demonstrate the “business case” of climate responses (e.g. savings from reduced energy consumption, measures of increased employee satisfaction and engagement, sales figures from new “green” products and services, and carbon pricing mechanisms).
Companies also sought to communicate the benefits of these initiatives both to employees through corporate culture change initiatives, as well as external stakeholders such as customers, clients, NGOs and political parties.
However, over time these practices attracted renewed criticism from other managers, shareholders, the media, and politicians and in a third normalizing stage, climate change initiatives were wound back and market concerns prioritized. In this stage, the temporary compromise between market and social/environmental discourses was broken and corporate executives sought to realign climate initiatives with the dominant corporate logic of maximizing shareholder value.
Examples here included declining corporate fortunes and new CEOs who promoted a “back to basics” strategy, the shifting political context which unwound climate-focused policy measures like the Clean Energy legislation, new fossil-fuel related business opportunities, and the dilution of climate initiatives within broader and less specific “sustainability” and “resilience” programs.
As one senior manager in a major insurance company : “Look, that was all a nice thing to have in good times but now we’re in hard times. We get back to core stuff.”
Our analysis thus highlights the policy limitations of relying on market and corporate responses to the climate crisis. We need to imagine a future that goes beyond the comfortable assumptions of corporate self-regulation and “market solutions,” and accept the need for mandatory regulation of fossil fuel extraction and use.
In an era in which neoliberalism still dominates political imaginations around the world, our research thus highlights ‘an inconvenient truth’ for political and business elites; the folly of over-dependence on corporations and markets in addressing perhaps the gravest threats to our collective future.”