Next week – April 22, 2020 – brings the 50th anniversary of the inaugural Earth Day, a public awakening inspired and promoted by Wisconsin U.S. Senator Gaylord Nelson that prompted over 20 million Americans (at that time 10% of the national population) to participate in events and activities around the country to demonstrate for government and corporate policies to end environmental degradation and promote a healthy and sustainable environment.
The establishment responded remarkably 50 years ago. Within the twelve months following the first Earth Day, a Republican President and Democratic Congress created the Environmental Protection Agency and enacted the Clean Air, Clean Water and Endangered Species Acts and the corporate community’s Ad Council began running its iconic “Crying Indian television commercial” with the tag line “People Start Pollution; People Can Stop It.”
As the annual Earth Day celebrations have spread to over 190 countries and 1 billion people, Earth Day 2020 was planned to engender large public demonstrations across the globe calling for strengthened political and corporate commitment to environmental sustainability and climate action. But with COVID-19 mitigation shuttering college campuses, arenas and other public gathering places, physical events to mobilize crowds of demonstrators will not occur. However, open invitations abound for opportunities to participate in digital Earth Day events and Earth Day social media engagement.
Against this backdrop, governments and corporations are rightly focused on immediate needs to grapple with public health, safety and economic crises inflicted by the COVID-19 pandemic. However, as these near term issues eventually begin to subside, a watershed question will be looming – perhaps to be addressed during the virtual Earth Day. Will the corporate and public policy agenda return its focus to the sustainability and climate issues that captured momentum earlier this year through events such as January’s World Economic Forum (centered on “Stakeholders for a Cohesive and Sustainable World”), February’s Net Zero Announcement by BP (pledging to transform BP’s business model and policy advocacy focus to achieve a carbon net zero business by 2050 or sooner) and March’s planned, but cancelled due to COVID, CERAWeek gathering of the global energy industry (themed “Waves of Change: Charting the Energy Transition”)?
Some considerations as to how individual corporations might address this question include the following:
- Investor Expectations for Corporate Sustainability Focus Remain – On March 29, writing as the pandemic’s impact battered financial markets, BlackRock’s CEO, Larry Fink, issued his letter to shareholders acknowledging the pressing need for companies to navigate the immediate crisis, but admonishing that “companies and investors with a strong sense of purpose and a long-term approach will be better able to navigate this crisis and its aftermath.” He reaffirmed sustainability as BlackRock’s new standard of investing and investment stewardship as detailed in his January Letter to CEOs and Letter to Clients. And he predicted, “when we emerge from this crisis, and investors rebalance portfolios, we have an opportunity to accelerate into a more sustainable world.”
- COVID-19 Impacts on Corporate Sustainability Reporting – The drastic decline in economic activity due to COVID-19 mitigation will significantly reduce global greenhouse gas (GHG) emissions for 2020. Projections of annual reductions from 2019 range from 0.3% to 1.2% in an article by the Atlantic Council to 5% or more forecasted by Rob Jackson, a Stanford University professor who chairs The Global Carbon Project. The reductions for specific industry sectors (such as the airline and hospitality industries) or individual corporations are apt to be more dramatic. But it is also clear that without continued investment in decarbonization technologies and business methods this COVID-caused emissions reduction will be short-lived. As companies with Science Based Targets and other published GHG reduction goals prepare sustainability reports for 2020 and set future GHG reduction goals, careful attention to transparent disclosure regarding COVID impacts on their emissions should be expected by investors and other stakeholders that are focused on these disclosures. Companies should take advantage of, but not claim credit for, windfall emissions reductions caused by COVID mitigation.
- Corporate Engagement in Public Policy Advocacy for Sustainable Stimulus — Prescriptions for government actions to stimulate post-pandemic economic recovery are proliferating. Former U.S. Treasury Secretary, Henry Paulson’s Seven Principles for COVID recovery and Columnist Tom Friedman’s recent piece titled How America Rises Again offer different approaches for investment in sustainable infrastructure that will spur economic recovery and mitigate climate change. The World Resources Institute has embarked on a series of Build Back Better webinars focusing on the opportunities globally to direct forthcoming stimulus packages to sustainable economic transformation and analyzing the strong job creation and economic accelerations stimulated by clean energy investment programs following the 2008 great recession. At the same time, some conservative groups and certain oil companies are reportedly aligning to use the next US Congressional stimulus package to block recovery aid to the renewable energy industry. Whether and how corporations that are focused on sustainability will engage in public advocacy to shape recovery packages in support of sustainable economy objectives remains to be seen. With investment in long-lived infrastructure as a focus of such legislation, this may be a pivotal moment for the future prospects of sustainability.
Although the pandemic still commands attention to immediate needs, as next week’s Earth Day comes into view, corporations and investors may well begin to turn attention back to prominent themes of climate change and sustainability that were resonating loudly only a few weeks ago before COVID became an all-consuming focus.