How the climate crisis is transforming the meaning of ‘sustainability’ in business

In his 2021 letter to CEOs, Larry Fink, the CEO and chairman of BlackRock, the world’s largest investment manager, wrote: “No issue ranks higher than climate change on our clients’ lists of priorities.”

One notable example is Heinz. The ketchup maker announced a cap for its ketchup bottle that is 100% recyclable. It was the outcome of $1.2 million invested and 185,000 hours of work over eight years, according to the company.

Climate change requires a new approach

While companies appear to grasp the magnitude of the climate crisis, they have been trying to address it mainly in a sustainability-as-usual fashion—one ketchup bottle cap at a time.

Consider emissions reductions. Companies have been slow to commit to reducing their emissions to zero no later than mid-century, a target that the Intergovernmental Panel on Climate Change considers necessary to limit global warming to 1.5 degrees Celsius—roughly 2.7 degrees Fahrenheit—and avoid the worst effects of climate change. Only about one-fifth of the major companies have 2030 goals that are in line with reaching net-zero goals by 2050 at the latest.

The companies that do set net-zero targets often do so in ways that lack the necessary robustness, allowing them to continue emitting greenhouse gases, as recent reports point out. One concern, for example, is their dependence on carbon offsets, which allow them to pay for potential carbon reductions elsewhere without making any real changes in their own value chain.

How to transform business sustainability

Companies have tried to rebrand their efforts in ways that sound more sophisticated, moving from terms like “corporate social responsibility (CSR)” to “environmental, social, and governance (ESG),” “purposeful companies” and “carbon-neutral products.”

But when companies don’t put actions with their words, they increasingly meet resistance from activists, investors, and governmental and regulatory bodies. One example is the growing scrutiny of companies that promote themselves as climate leaders, but at the same time, donate money to politicians opposing climate policies. Public relations and advertising employees called out their own industry in a report exposing 90 agencies working with fossil fuel companies.

Business is at a strategic inflection point, which Andy Grove, the former CEO of computer chip-maker Intel, described as “a time in the life of a business when its fundamentals are about to change.”

This transformation could evolve in different ways, but as I suggest in my book, fighting climate change effectively requires a new mindset that shifts the relationships between profit maximization and sustainability to prioritize sustainability over profit.

Early signs of evolution

There are early signs of evolution, both within companies and from the forces that shape the environment in which companies operate.


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