After 20 years of working in Big Tech, I can say from firsthand experience that it’s quite unusual for this industry to ask to be regulated—regulated by anyone, let alone by government. Yet that is exactly what is happening when it comes to climate change.
Notoriously tight-lipped Apple was first to step up when it publicly called for the U.S. Securities and Exchange Commission (SEC) to mandate climate disclosures for companies, rationalizing that consistent, audited emissions reporting is necessary for real progress. With the most valuable brand in the world, a former Environmental Protection Agency administrator at the helm of its environmental programs, and a $2 trillion market cap, Apple speaks with a very strong voice.
Soon after the Apple announcement, Salesforce—another global tech giant with a massive brand—joined in with its own call for mandatory climate disclosures. To be sure, both companies have established leadership sustainability reputations, but calling for government mandates is a level above managing your own impacts.
Unlike Apple, Salesforce has been working on sustainability disclosure policy for some time through its engagement with the World Economic Forum. CEO Mark Benioff has participated in the “stakeholder capitalism” initiative, identifying how business leaders, investors, and governments can work together to implement nonfinancial disclosures.
Not to be outdone, Uber has now joined the chorus in asking the SEC to mandate climate reporting. While its sustainability reputation is not as well established as that of Apple or Salesforce, Uber has already committed that 100% of its vehicles will be zero-emission by 2040.
What’s going on here? Why are companies volunteering for new regulation?
One answer is that these organizations are among a growing number of companies that have already done the hard work of measuring and managing their carbon footprints, and now want to rope in the companies that have yet to tackle this issue.
Another is that their executives are concerned about access to capital. The number of institutional investors who have committed to investing responsibly, as per the Climate Action 100+, has doubled in just 24 months to $52 trillion in assets under management—or roughly half—of the world’s total.
A more virtuous answer is that these companies have genuine concern for our collective future and see the value in protecting that future. Ten years ago, Harvard business professor and management guru Michael Porter laid out a vision for corporate purpose that explains this view. A quote from Porter hints at why companies are asking for new regulation:
“Companies . . . remain trapped in an outdated approach to value creation . . . that ignore[s] the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of suppliers, and the economic distress of the communities in which they produce and sell.”
Porter’s argument is that sustainability concerns have now crossed a threshold from being nice-to-do reputational matters to must-do threats to core business. This is a far cry from the more traditional shareholder primacy view, in which companies avoid regulation to maximize profit. It’s nothing less than a paradigm shift where companies see promoting sustainability being in their own core self-interest. And while pure virtue may motivate some companies, shared value will rope in many more.
To be clear, these are well-financed companies with big brands to maintain. What about the rest?
MOMENTUM IS BUILDING
As with any change, there are leaders and laggards. It will be some time before the plurality of businesses call for new regulations. Nevertheless, there are signs that more companies are joining this movement, including the 80 companies that joined Ceres to call on the Biden administration to address the climate crisis and advance environmental justice.
While the bigger names in this group are known sustainability leaders, even some of the less-usual suspects are now stepping up. General Motors made headlines earlier this year with its ambitious goals of selling only electric cars by 2035 and becoming fully carbon neutral by 2040. This is a fundamental shift in policy from siding with the Trump Administration to roll back vehicle emissions standards in 2019. Even the reliably conservative American Petroleum Institute has now come out in support of a price on carbon.
These are high-profile examples of what could become a historical movement toward industry and government collaboration in service of the environment. Still, it’s important to recognize that most companies are still lying in the weeds, hoping the storm will pass. It won’t.
Apple, Salesforce, Uber, and others are correctly forecasting the coming wave of regulatory changes on greenhouse gas impacts and wisely getting out in front. Case in point: With backing from the European Central Bank, the EU Commission is rapidly moving ahead with new disclosure mandates for climate and other “nonfinancial” issues. And all of these new disclosures will have to be assured. The U.S. will be next.
As the former CEO of the largest sustainability standard—the Global Reporting Initiative, or GRI—I am often asked which reporting standard will emerge as the foundation for the coming mandates. For example, both Uber and Salesforce support the recommendations of the Task Force on Climate-Related Financial Disclosures as their unifying climate framework.
Any movement toward a converged global standard is positive, and there are several good standards to draw from. However, in my view, it’s exponentially more important that policymakers agree to use one standard than it is which standard they ultimately choose.
While standards are a complex, and perhaps even boring, topic, getting this right today is essential to securing future success, and it requires political leadership. Regulators must not be allowed to duplicate the confusion that already exists regarding which standards companies should adopt. Meaningless arguments of which standards are best will only delay this all-important work and give companies more excuses to drag their feet.
Today’s confluence of political momentum and industry support creates a unique, but fleeting, opportunity to deploy a global common language that will help protect our climate and economic stability. The last four years of impasse have taken a toll that will burden future generations. Political leaders must step up now to end the squabbling and move forward. Each day we waste makes the problems worse.
Tim Mohin is the chief sustainability officer for Persefoni AI. Formerly, Mohin served as chief executive of the Global Reporting Initiative; he has also held sustainability leadership roles with Intel, Apple, and AMD and worked on environmental policy within the U.S. Senate and EPA. He is the author of Changing Business From the Inside Out: A Treehugger’s Guide to Working in Corporations.