How Companies are using the ESG Climate to their Advantage

Microsoft and BlackRock Lead the Way

It’s been an incredible beginning to the New Year with both BlackRock and Microsoft making significant promises to promote sustainability and take environmental action.

BlackRock has made a pledge to put climate change central to its investment strategy, while Microsoft has said it will be carbon negative by 2030.

While the U.S. needs to lead as a nation, a few companies are promoting environmental action as part of their PR. BlackRock Inc. will ditch investments with high sustainability-related risk as climate concerns drive a sweeping change in the way the world’s largest asset manager invests its US$7 trillion in assets.

Microsoft has been working towards achieving carbon neutrality since 2012, mostly by investing in offsets that avoid emissions rather than actively removing carbon from the environment. Microsoft has pledged to remove “all of the carbon” from the environment that it has emitted since the company was founded in 1975.

To do so, the company aims to become “carbon negative” by 2030, removing more carbon from the environment than it emits. That goes beyond a pledge by its cloud-computing rival Amazon, which intends to go “carbon neutral” by 2040. While this might satisfy some of the employees at these companies, there has to be a more united front by Big Tech and how investments are made. It has to be more than promises and PR moves.

“By 2030, Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.” – Brad Smith

In a blog post on Thursday, January 16th, 2020, the company’s president Brad Smith said, “While the world will need to reach net-zero, those of us who can afford to move faster and go further should do so”.

Is Corporate America Serious about the Environment?

BlackRock meanwhile, the nation’s leading money manager, is sure to be closely watched by its rivals and the rest of corporate America. It probably has the most invested in the fossil fuel economy.

The reality, of course, is even the Davos elite is more talk than action.

At Davos, politicians and executives will likely talk about “stakeholder capitalism,” a movement that redefines a company’s purpose from serving only its shareholders to all stakeholders, including customers and communities.

There’s so much corruption in politics and business leadership, that without collective quotas, carbon taxes and global action, we are sort of doomed. Isolated promises take away from the necessity for national pledges and more serious action.

Some investors are changing their focus toward corporate good. So are companies. But with profit an end goal for most, change has its limits. It’s a bit like what “women in tech” was a few years ago, a talking point about diversity and inclusion.

The world’s most influential executives will soon swarm the World Economic Forum in Davos, Switzerland, where they will embrace the idea that corporations no longer exist simply to funnel profits into the pockets of shareholders. Nice idea, to be sure, in the age of ESG, environmental, social and corporate governance. The idea of powerful firms doing social good is not new of course.

With BlackRock, it was supposedly an “emotional” letter. “Climate change has become a defining factor in companies’ long-term prospects,” Chief Executive Officer Larry Fink wrote in his annual letter to corporate executives on Tuesday. “Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”

Microsoft’s PR announcement in an interview with CNBC was impressive . The announcement was largely welcomed by environmentalists, who said it showed Microsoft was thinking about the bigger climate change picture and not just its own role.

“It’s a hat trick of sustainability leadership,” said Elizabeth Sturcken from the Environmental Defence Fund.

“But to really shift the needle on climate change, we need 1,000 other [companies] to follow suit and turn rhetoric into action.”

It’s cool to make environmental pledges for your brand reputation, but you need to lead collective action for it to amount to something real.

Issues like climate change are more tangible, due to disasters like the wildfires in Australia. Environmental pledges become part of the politics and PR of business, but let’s not forget the U.S. is among the great escapists and losers when it comes to taking responsibility for environmental issues. The U.S. has consistently put capitalism ahead of all social responsibility for global issues.

Let’s not forget Tech companies’ manufacturing and data processing centres create large amounts of carbon dioxide.

According to the BBC, by one estimate, the sector will account for up to 3.6% of the world’s greenhouse gas emissions this year, more than double the level in 2007. And it has been forecast that in a worst-case scenario, this could grow to 14% by 2040. While Microsoft becomes a Cloud champion, the reality is it’s likely contributing more to the problem.

Similar Posts