by Bob Leonard and David Houle
The major problems we face today are global in scope: our climate crisis, wealth inequality, immigration, over population, access to clean air and clean water. While nation states may always exist, they cannot successfully face these global issues alone.
The only entity that operates inside and outside the nation state is the multinational corporation. Given that climate change is a planetary issue, the multinational corporation is the only organization (other than the U.N.) that correlates to global issues. As governments reach their limits of functionality and authority, corporations can step into the void.
“Saving Civilization!” is not a bad tag line for any multinational corporation.
In a time of increasingly dysfunctional governments, corporations can swing into action more quickly and efficiently. Our climate crisis is forcing humanity to take escalating actions to deal with it. Why not take the lead and earn customer loyalty and respect for actions taken?
Companies have long allowed a chasm to open up between their own statements and actions on climate and what their government relations and lobbying teams are doing in the halls of power. Most of these companies have also conveniently ignored that their own industry and trade associations have generally been fighting climate policy every step of the way.
The single most difficult thing for all corporations will be to relinquish Legacy Thinking. Legacy Thinking argues for the status quo, for the way things have been done, for the old order of things. The metrics of the past (shareholder value and quarterly profits) will not be relevant in the future. They are a major contributor to global warming and our climate crisis.
With increasing transparency, it’s much harder to hide the disconnect between what companies are saying they’re doing and what they’re actually advocating for behind the scenes. Given a high degree of inevitability, either we move to a Finite Earth Economy or corporations lose their customer base. Stakeholders (customers, employees and communities) are demanding more action and are less tolerant of inconsistencies on this issue.
Why not embrace it? Why not leverage all that high price talent inside corporations to carve out a leadership role and competitive advantage? Not greenwashing, but real transformative leadership, with real actions backing up mission statements.
Corporations currently do four things that they will have to fundamentally alter in the move to a Finite Earth Economy:
Corporations must make the measurement of their GHG emissions, CO2 in particular, their top priority. To measure is to know. Stating the problem and framing the magnitude of it is the first step. The ability to collect data from terrestrial sensors and from satellites currently exists. We now have the technological tools to measure emissions down to single factories and small geographical areas. Rapid deployment will occur when corporations are taxed and fined based on their emissions.
Corporations will then move to overall measurements of emissions and waste. They will identify their levels, locate them, quantify them and work to reduce them.
Note to those who think ‘big bad corporations don’t care’ about our climate crisis and their responsibility in helping to create it: this is why we must move to a carbon emissions/carbon footprint tax base. Corporations work hard and spend significant resources to lower their taxes which are based on income and profits. Taxing emissions will cause them to work as hard on lowering those emissions.
I’d love to see companies also think about their communications and efforts with other key stakeholders beyond government. They can engage customers and employees to change their behaviors and encourage them to use their political voices as well. They can talk to investors more bluntly about what our climate crisis means for their business and why they need policy that helps move things along.
Profits will be addressed by taxes on emissions. If corporations do not cut emissions, their profits will suffer. Stockholders will pressure corporations to lower emissions because share prices are affected by earnings per share.
In a world where reducing emissions is the top priority, doing so will be good corporate governance. We will be moving from a focus on shareholders to a focus on stakeholders. Successful corporations will be the ones that focus on stakeholders by valuing the well-being of people and nature.
Sales as a profession will continue, but it will undergo a major transformation. In the business-to-business world where salespeople play a central role, touting a product’s ability to cut costs and improve productivity will no longer be enough. Because the customer will have to pay taxes on emissions, they will require low or zero emission products. Their cost of ownership of a product will increase significantly if that product emits GHGs. So corporations will invest in the research and development of non-emitting products. Resulting in a flood of innovations.
Selling with the new metrics of the Finite Earth Economy creates an entirely new sense of collaboration between seller and buyer, between company and customers.
Advertising exists to persuade people to buy things… more and more products and services. Our consumer society is a major driver of GHG emissions and global warming. In a Finite Earth Economy, we want more clean energy, and products and services that decrease GHG emissions.
As now constituted, advertising and marketing are in direct conflict with saving civilization. By design, they make the situation worse not better. They must evolve to creating messaging about strides in cutting emissions, and about innovations that deliver products and services with zero carbon footprints. An educated populace will make buying decisions based on the actual amount of carbon emitted in a product’s manufacture and use. Brand loyalty will depend on the percentage the company has lowered carbon emissions over the prior year.
Buying used is better than buying new in a Finite Earth Economy. Companies and industries that create business models based on the resale of items will benefit with products that have no carbon production footprint.
In a Finite Earth Economy there will be plenty of opportunities for organizations that produce tools to measure emissions and waste… and can quantify the composition of those emission and waste streams at a granular level. Consumer Reports magazine has been successful for decades by providing consumers with quality and price comparisons. Those rankings will grow to include analyses of emissions and waste in production and in use. Being an informed buyer around these issues will become the norm as people develop crew consciousness (becoming active crew members on Spaceship Earth), and understand how critical these stats are to civilization’s survival.
In a Finite Earth Economy, governments will measure the carbon footprint and emissions of every company and base their tax rates on those numbers. This data can then be used to inform citizens which companies are in fact reducing emissions by migrating to clean energy sources.
Unfortunately, the past decades have shown the hypocrisy of companies that advertise their ‘greenness’. This is called greenwashing and it is the type of undocumented and misleading claims that have always plagued advertising.
Given a widespread ignorance of the dynamics of emissions and sustainable product design, companies have taken advantage with green marketing campaigns that are nothing but window dressing. It is annoying to see fossil fuel companies pitching their environmental efforts. “Hey, look at this initiative we are funding! We are paying people in white lab coats to find a better way to convert algae into energy.” These are small investments done for the PR value. Meanwhile the companies are investing billions to extract oil and gas from deep in the ocean or by dredging tar sands. This type of disingenuous and even fraudulent advertising will no longer be tolerated.
The natural gas industry has launched campaigns declaring their product ‘clean’ energy. It is not! Natural gas generates CO2 emissions when it is burned (much less than coal or oil, but still CO2 emissions). Gas leaked during extraction and transport emits methane, a much more powerful GHG than CO2. Natural gas is not clean. It is only less dirty than oil or coal. Doing less bad is not the same as doing good.
In a Finite Earth Economy it will be law that the only way a company can promote itself as being concerned with the environment, is if it has achieved zero emissions, or it can verify that it has a carbon neutral footprint. Advertisers could say they have, for example, “lowered our emissions last year by X% or by X tons”, but they cannot say they are environmental in any way unless they are carbon neutral.
Finite Earth Economy non-consumer groups will publish and promote the actual tonnage of GHG emissions of every public company and as many private companies as possible. Facing a climate catastrophe occurring because of GHG emissions, companies that are found to misrepresent emissions will be both fined and punished in the marketplace. Just as many informed consumers do not buy products from companies that use child labor, customers will not buy from companies that do not cut emissions.
If this is not enough, every ad will be required by law to show the total tonnage of GHGs that the advertiser company emitted the prior year. And the amount that it declined over the last two years. They will not be allowed to do this in fine print. Following the example of warnings on cigarette packages, these emission numbers will be prominently visible. This will drive corporations to decrease their emissions year over year.
The companies that will really succeed are the ones – most likely in the technology sector – that create products or services that capture, drawdown or cleanse atmospheric carbon. Corporations that create technologies that contribute significantly to saving civilization will be lavishly rewarded.
In a Finite Earth Economy, successful corporations: