When It Comes To Climate Change, Executive Optimism Doesn't Mean Corporate Action

In a recent post to On Earth, Ian Wilker wrote about how the boards of major corporations are creating committees in increasing numbers to address environmental challenges. In the pages of The Wall Street Journal, and elsewhere, this news has been greeted as a sure sign of the greening of corporate America.

But I wonder –- do more committees mean more action on behalf of the environment? In other words, do more committees necessarily mean more substance?

The answer? Not necessarily.

According to a new survey of global CEOs, released by McKinsey, and called “How companies think about climate change,” the numbers of global CEOs concerned about climate change is higher than the number of companies doing anything about it.

The profile of executives' attitudes is best profiled by five separate figures, taken from the survey:

“Fully 60 per cent of global executives surveyed…regard climate change as strategically important, and a majority consider it important to product development, investment planning, and brand management.”

"Sixty-one percent expect the issues associated with climate change to boost profits – if managed well."

"A remarkable 82 per cent of executives expect some form of climate change regulation in their companies’ home country within five years."

And yet, “more than one third of executives say their companies seldom or never consider climate change when developing overall strategy.” Elsewhere, the study notes that “44% percent of CEOs…note that climate change isn’t a significant item on their agenda.”

The conclusion is simple: the majority of global companies aren’t translating knowledge into action.

Numbers like this paint an uncomfortable portrait for business. Beholden to promoting the best economic interest of the corporations they manage, there is a gap –- and a large gap at that –- between the knowledge behind corporations, and the actions driving them.

The question, then, is why would the corporations managed by executives lag behind their executives' better judgment?

After all, the signs point to increased opportunities for rapid economic growth, and the ability, according to a now renowned McKinsey study, the ability of U.S. business to abate 3 gigatons of greenhouse gasses at no net cost to the economy, assuming a mid-range investment scenario.

But the reality is more nuanced. Uncertainties in regulation make corporations less likely to act. Large industry often has a slow economic changeover, making rapid change historically difficult. Meanwhile, the environmental community has historically been hostile to business, often with little understanding of the reality of financial, and strategic, demands.

The questions at this point begin to pile up:

What are the barriers to corporate action?

How can the NGO community work with them?

And how can you, as a citizen, make money on the economic gains of climate change?

These are all questions I hope to begin to address in the coming weeks. If anyone has any ideas, please, by all means, I’d love to hear your thoughts.