By Aaron Ziulkowski
From the Summer 2014 Edition of Values
Mad Men watchers surely flinched the first time the show’s protagonist, ad executive Don Draper, exhaled a plume of cigarette smoke in an airplane or a movie theater. Fortunately, smoking in enclosed public places reached a tipping point years ago and is now largely a thing of the past. Walden’s climate change campaign aspires to catalyze a similar break from the status quo in the way energy producers and consumers address greenhouse gas (GHG) emissions. Last summer, we described the focus of our engagement with climate “leaders” and “learners.” We are encouraging companies to integrate climate change into their business strategy and set meaningful goals to reduce emissions. Additionally, we are strongly advocating that companies support smart climate-related policy and regulation. Finally, we underscore the need for comprehensive transparency for the benefit of all stakeholders.
We knew the campaign was a bold one, and a recent report details the size of the challenge. In April, Ceres released Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability. Analyzing 600 of the world’s largest corporations, the report finds that more than two-thirds of the companies are taking steps to reduce GHG emissions, but only 35 percent have established time-bound targets, a three percent increase from the previous assessment two years ago. Thirty-seven percent of companies are working on renewable energy, but only six percent have quantitative targets to increase sourcing of renewable energy.
What follows is a description of how Walden’s engagement contributed to meaningful progress over the past year.
More Sustainable Policies and Practices
Walden asked more than 30 companies to improve their policies on climate change, specifically to reference the Intergovernmental Panel on Climate Change (IPCC) and climate science, and set goals that align with the Copenhagen Accord (i.e., reducing emissions sufficiently to limit temperature change to 2 degrees Celsius). Specific success stories this year include:
- Colgate announced it will reduce its GHG emissions by 25 percent by 2020 and 50 percent by 2050, in line with the Copenhagen Accord.
- Intel updated its climate policy, which now details the scientific consensus regarding climate change; links its GHG reduction goals to targets endorsed by climate scientists; and discusses the company’s views on climate policy and describes related lobbying and advocacy efforts.
- McDonald’s developed its first-ever climate change position statement, which references the IPCC and states clearly the need for action; it shared McDonald’s approach to managing its own direct carbon footprint as well as engaging key suppliers to address the climate impact of the company’s massive supply chain.
The politicization of the climate change debate has made many companies reluctant to speak specifically about climate science for fear of alienating customers or political leaders. However, on the other side, an increasing body of research makes a compelling near-term business case for energy efficiency and, to a lesser extent, renewable energy. In the year to come we will continue to press companies to ground their climate change strategies in scientific understanding of the issue, and to follow the example of leaders like Colgate that have committed to make the reductions deemed necessary to avoid the worst impacts of climate change.
Influence on Public Policy
Corporate influence on the political process has been a significant obstacle to meaningful climate and energy legislation here in the United States. To turn this dynamic on its head, we are asking companies to use their voices to support smart regulation and legislation. We were pleased that Apple, Disney, and Intel signed the Climate Declaration, which states unequivocally that America needs to act on climate change (See Partnerships at Work: BICEP, page 3). Intel played an active role at a recent launch of a White House initiative leveraging technology to help address climate change. And Campbell Soup spoke out this past fall in support of renewable portfolio standards in Ohio for electric utilities.
While we helped more companies take small but meaningful steps toward public support of climate related regulations or legislation, many companies we spoke with stated that climate and energy policies are not a high enough priority for them to spend their political capital on. Similarly, few companies, as yet, have expressed willingness to speak out regarding the Environmental Protection Agency’s regulatory work on climate change.
Progress is even more elusive in changing the behavior of companies that block meaningful regulation or legislation. While we did discuss the issue extensively with ConocoPhillips and Exxon Mobil, our efforts do not appear to have contributed to any specific change in either company’s approach. Further, no companies have specifically committed to asking their trade associations, such as the U.S. Chamber of Commerce or the National Association of Manufacturers, to stop opposing legislative and regulatory action on climate change.
Walden’s work challenging the incongruence of company commitments to renewable energy and addressing climate change while participating in the American Legislative Exchange Council (ALEC) continues to make progress. To date, approximately 85 companies have withdrawn from ALEC. This year Walden clients filed resolutions with Occidental Petroleum, Pfizer, and Time Warner Cable, specifically highlighting ALEC’s initiatives opposing climate change policies and asking companies to evaluate their membership. The resolution received 28 percent support at Occidental, 6 percent at Pfizer, and a challenge forced its withdrawal at Time Warner Cable. Walden and several non-governmental organizations pressed Google on lobbying disclosure and ALEC. At the company’s annual general meeting, Google emphatically expressed disagreement with ALEC on a number of issues and agreed to review the resolution.
Walden’s work asking companies to evaluate their trade association memberships and political spending is just one part of a broader effort to advocate for increased transparency in how companies are addressing all material environmental, social, and governance issues. Our advocacy this year contributed to numerous companies agreeing to increase transparency related to climate risk, including Advance Auto Parts, AptarGroup, Apple, Cabot Oil & Gas, Denbury Resources, Cincinnati Financial, Lincoln Electric, Mettler-Toledo, Ross, and Stryker.
The CDP investor survey on climate change is the gold standard for climate disclosure. Mettler-Toledo, which had previously responded to CDP, committed to continue to do so; Cabot Oil & Gas, Denbury Resources, and Lincoln Electric are considering completing the survey in the future. In the case of Denbury Resources, we are pleased to report the company did commit to developing its next sustainability report in accordance with the Global Reporting Initiative (GRI) standards, which are harmonized with the CDP questions on climate change. Responding to the CDP survey continues to be seen as too time- and energy-intensive an undertaking for many companies. Walden will continue to press the case for responding to CDP.
In our efforts to reach a climate tipping point, we work with numerous investors, researchers, and activist organizations. This proxy season was one of the most active for investors on climate issues. Shareholders filed more than 150 climate-change related resolutions. These resolutions were filed by 37 “lead” filers and included a threefold increase in proposals focused on GHG emissions. Walden joined in engagement and shareholder resolutions led by others on numerous issues including fugitive methane emissions, hydraulic fracturing, and financed emissions, among others.
Based on Ceres’ findings and our efforts over the last year, Walden would say the tipping point is visible on the horizon. Companies like Colgate and Intel are leading the way. Others are following in their footsteps. Yet much remains to be done. We will continue to look for allies within companies that understand the importance of sustainability, and simultaneously continue the effort to remove the obstacles that impede progress.