The Boardroom Business of Corporate Social Responsibility (CSR) & Climate Change

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I haven’t participated in any climate marches. I’ve got big carbon feet. At one time, my carbon footprint was more than 8x the global average. I earned the nickname “Big Foot” from a company focussed on renewable energy. It may seem like a disconnect that someone like me would be invested in sustainability. I’ve spent most of my career as a senior executive. But it’s precisely this juxtaposition that led me down the path of establishing a personal crusade to tie corporate profitability to investments in improving the world in which we lived over ten years ago. Unfortunately, the need hasn’t diminished. Serious commitment is needed more than ever. 

We’re living in an unprecedented time where the entire world is heeding government and World Health Organization (WHO) advice around how to stay home to stay safe during the pandemic.

We’re being treated to glimpses of how fundamental shifts in the daily patterns and activities of humans can move the environmental needle. 

Remember that giant hole in the ozone layer everyone was worried about now and again not so long ago? It’s mending. Smog and air pollution that hung heavy over major cities around the globe and had been visible from space has diminished to healthy levels.

With people staying home due to COVID-19, we’re seeing even more traction. Horizon lines have gone from smoggy to majestic, revealing mountain ranges that had been hidden from view for the past 30 years. Wildlife is emerging from forested areas and exploring urban terrain that they usually avoid. Some sea animals that typically begin their lives with a struggle to make it from their nests across the beach to the ocean have been uninterrupted by humans. Others are exploring coastal waterways again, safe from harm.

But the question remains:  what’s going to happen as movement restrictions retract and the world’s rat race starts up again?   

Consider taking action now to look at your organization’s view of climate change:  not just the legacy, obligatory checkmark version, but rather to update it. And to be sure, if your protocols don’t involve them already, it’s got to start with the Board of Directors.                          

The first fundamental:  CSR and Directors

Corporate Social Responsibility is defined for Canadian Businesses at the Director’s College as, “a company’s commitment to operating in an economically, socially and environmentally sustainable manner while recognizing the interests of its stakeholders including investors, customers, employees, business partners, local communities, the environment and society at large.” What does this mean? Well, it’s about the triple bottom line of Social, Economic or Environmental impacts.

Another way to look at it is through the lens of People, Planet, and Profits.

Boards of Directors have to act honestly and in good faith, serving the best interests of the corporation. Directors must consider all aspects of many stakeholder groups simultaneously. Consequently, Corporate Social Responsibility and Canadian Directors align in both practice and law. 

Ten years ago, research conducted by Forrester showed that of the Global 100, of which 97 published CSR reports on their websites, only 91 had dedicated sections focussed on their environmental responsibilities, energy, resource management, waste, pollution and conservation.

Today, it’s table stakes.

A company that isn’t transparent about its actions and accountability on that front is a veritable pariah. This tone-deaf position can cost companies dearly, not just in their financials, but also with their peers and potential workforce. People expect companies to have established CSR agendas that are meaningful and measurable.

The Science of Climate Change

Since the start of the industrial revolution, concentrations of Green House Gasses (GHG) in our atmosphere have been contributing to increases in the Earth’s temperature by trapping heat that is reflected off the Earth’s atmosphere.  The main GHGs are reported as Carbon Dioxide (C02) equivalents: CO2, methane (CH4), nitrous oxide (N2O), water vapour, and ozone. While these gasses do occur naturally in our atmosphere, it’s human activities like burning fossil fuels and mass deforestation that are accelerating the increased presence and thrusting the climate into further crisis. Scientists who monitor the effects of climate change have been raising the alarm for years, indicating that temperature increases of only 2°C will have critical implications for our planet and humanity.

We’re already experiencing this regularly.

• Weather patterns have shifted, and intensified storms – floods, hurricanes and blizzards  – are happening more frequently. 
• Sea levels are rising as ice packs melt, changing the thermal dynamics of our oceans. 
• Water shortages are occurring. Droughts are more prolonged and more severe. There is an intensified desertification happening over large swaths of land. Glacial melt is affecting water sources. 
• Ecosystems are stressed and disrupted due to air and water pollution. 
• And outbreaks of deadly diseases such as cholera, malaria, Ebola, and now, COVID19, expand their geographic distribution with previously unthinkable consequences. 

What we are experiencing right now is the full effect of the GHG blanket on our planet from the 20-40 year lag of what industry released into the atmosphere in the 70s and 80s. 

What do Directors need to pay attention to? 

For many companies, sustainability, environmentalism, climate change, and CSR have been deeply embedded in their DNA. Others have ended up the spotlight as a direct result of a significant environmental crisis.

The social implications of either action or inaction are not insignificant.

Think about the public’s recollections to this day of the Exxon Valdez tanker spill in Prince William Sound, and BP’s Deep Water Horizon oil spill in the Gulf of Mexico. Many documented cases that have resulted in public relations nightmares for companies. These issues forced their Boards to state and address their environmental and social implications. Wouldn’t it be wonderful to be proactive instead of reactive?

There are four critical reasons for a Director to care, outside of the context of crisis management: 

1. Positive economics:  unique value propositions, employee recruiting and retention and product innovations.
2. Brand: the intangible that makes up the difference between your physical assets and your market cap.
3. Pending regulation:  climate change regulations, such as the Kyoto Accord, continues to be an issue at the forefront of the global economy.

4.     Risk Management:  on several fronts

• Marketplace – consumer boycotts of unsustainable or harmful packaging
• Balance sheet 
• Operation costs
• Capital – additional equipment needed to reduce carbon output during manufacturing or general operations
• Sustainability – increased regulation
•  Director liability

In the past, it was easy for Directors and Companies to de-emphasize its importance. It’s not so any longer. Excuses like the issues being too complicated, the pace of business is too rapid to find time to address it, and lack of competent leadership are inexcusable. If avoidance is motivated by fear of consequences, modesty, financial challenges, lack of visible rewards and perception of limited value, then your company is merely irresponsible. 

You must have passionate leaders who will invest in the issue at the top of your house, supported by the Board. 

Directors are charged with acting in the best interests of corporations and associated stakeholders. It’s time now to measure your carbon footprint and see exactly how big your shoe size is. If you aren’t pleased with what you’ve done to date, it’s time to take charge and do something about it. Start the process with a discussion about the potential branding, economic and social gains your company could realize, let alone the benefits our world will gain.