How Leaders Can Move Beyond Greenwashing Toward Real Change

How Leaders Can Move Beyond Greenwashing Toward Real Change

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Businesses should be ready to defend what they’re doing about the climate crisis and how they’re taking meaningful action. If they don’t, they could face challenges from many directions, from the SEC to activists to litigators. This is more important than ever, especially when there’s a growing and justified anger directed at those who are “greenwashing”: saying all the right things but failing to deliver. How can business leaders step up to this moment to take action and ultimately build trust with the generation that is coming up quickly? How can they respond to youth activists who are demanding that they prove it? The authors present five “business activism” practices that can help leaders move beyond greenwashing and do their part to affect real change.

At the 2021 UN Climate Change Conference (COP26), former President Barack Obama asked those gathered and tuning in to consider the question: “How do we close the gap between what’s necessary for our survival and what seems politically possible right now?” The solution, he added, will require collective action: “We are going to have to muster the will and the passion and the activism of citizens, pushing governments, companies, and everyone else to meet this challenge.”

Businesses should be ready to defend what they’re doing about the climate crisis and how they’re taking meaningful action. If they don’t, they could face challenges from many directions, from the SEC to activists to litigators. Take Shell, for example, which is being held legally liable by a Dutch court for its contributions to climate change, with a judge ruling that the company’s current climate strategy is “not concrete enough and full of caveats.” They could also face the consequences of consumer activism — data shows that half of U.S. adults have stopped buying goods or services in protest of a business.

This is more important than ever, especially when there’s a growing and justified anger directed at those who are “greenwashing”: saying all the right things but failing to deliver. How can business leaders step up to this moment to take action and ultimately build trust with the generation that is coming up quickly? How can we respond to youth activists who are demanding that we prove it?

When it comes to climate, the business and the political lines blur, and we all need to be activists. What does this word mean though? An everyday dictionary will tell us that an activist is someone who is “an especially active, vigorous advocate of a cause, especially a political cause.” Being a business activist (Charmian) or a capital market activist (Robert) is still relatively new, but it’s catching on. For example, in a recent interview, Emmanuel Faber, former CEO of Danone, said, “I’ve defined myself as a business activist. I’m an activist of business being part of the solution, being the fundamental solution, the solution.” Considering the stakes of climate change, business activism isn’t just necessary — it’s urgent.

With this new frontier of leadership in business building momentum, we’ve been tracking five “business activism” practices that can help leaders move beyond greenwashing and do their part to affect real change.

Engage with your critics

In the past few years, hundreds of companies have declared a climate emergency. But acknowledging the crisis is only the first step — meaningful, urgent, and radical action needs to go along with it.

For example, to help them on their journey, The Body Shop recently hosted a Boardroom 2030 activation (a campaign created by Charmian’s organization, B Lab UK) where they invited a group of young people, including youth activists, to participate in a live conversation designed to reflect the company’s boardroom in 2030. Some participants called on the company to rethink the entire consumption-based model of our economic system. It was uncomfortable, but the leadership team of The Body Shop leaned into the challenge and “truth telling” rather than resisting it. The company has also invited activists, such as those from Extinction Rebellion (XR), to speak with their team and is taking a public stand by opposing the UK’s policing bill, which will make it much harder for people to join protests.

What would telling the truth mean for your business?

Acknowledge the full impact of climate change on your company’s long-term viability. Identify your constructive critics and commit to listening to and engaging with them. It’s not hard to find out who your critics are — many activists and NGOs are increasingly effective at making their voices heard. People in your investor relations, public relations, and sustainability functions will likely already know who they are and have a list. The trick is to identify the ones who are willing to engage rather than those who just want to throw stones. Work with those constructive critics to identify actions that can be monitored and review progress on a regular basis. Part of the agreement should be that the critics acknowledge when you’re making progress, but also accept that they’ll call you out if you fail, just as investors call you out when you don’t meet their financial expectations.

Act with others

Addressing the climate emergency will require business model transformation and cooperation with a broad network of partners — including competitors. Take Toast Ale, which is on a journey to becoming a regenerative business by brewing beer with surplus bread and investing all profits in environmental charities. For COP26, Toast partnered with 24 other breweries — competitors in their industry — to create the Companion Series collection of beers, and in an open letter, together they called on governments to take similar collaborative action.

What would working with new partners look like for your business?

Work with your board to craft the necessary transformational strategy. Appoint an internal, intergenerational, and cross-functional “business model transition team” with the task of setting a new strategy for the business, which includes setting science-based targets and implementing business model changes using clearly defined business transformation metrics.

Executive compensation should be tied to results in a meaningful way. If the company is really serious about the business model transformation, it should also be included in conversations at the board level — including those where resources are allocated. Externally, engage with your investors and other stakeholders to get their commitment to it  by making it part of your reporting and tying the work directly to your financials, and be ready to be held accountable for “walking the walk.” To make this a team sport, consider approaching others in your industry, including competitors, to partner and advocate for higher ambition and action together.

Support employees who engage in social movements

A key lever of change is activism. To support their team in participating in protests, Ecosia, a Berlin-based search engine, pays the legal fees for their employees who are arrested due to non-violent civil disobedience. This really matters — as Erica Chenoweth’s research has shown, “no government can withstand a challenge of 3.5% of its population without either accommodating the movement or (in extreme cases) disintegrating.”

Finisterre, a UK-based clothing brand, hosted an ocean activist training camp during the G7 meetings earlier this year in the UK, sharing why and how to engage in activism to protect the oceans.

How can you support your people to engage in movements of change?

Work with your board and HR team to establish principles and policies for how you will support your employees who choose to engage in social movements. This includes how you define what constitutes activism your business will support and activism that might go against your company values. For example, requiring that a movement be underpinned by science is a helpful way to draw these lines.

Take a stand — and codify it

One of the most powerful things a business can do is stand up for the issues that matter to them — and make them public. Patagonia, an “activist business” pioneer, has had plenty of experience with this. Not only do they fund direct-action organizations focused on the root causes of the environmental crisis through their Patagonia Works initiative, they’re also willing to speak out on issues where they hold strong opinions. Like The Body Shop, they recently publicly opposed the UK’s policing bill, and earlier this year, they pulled their advertising from Facebook and renewed its calls on other firms to boycott the platform until Facebook can make sure its products do no harm.

What would taking a stand look like for your business?

Work with your board to establish principles and policies about who you will and will not do business with. For example, Beth Thoren, director of environmental action, EMEA at Patagonia, told us:

At Patagonia there is, of course, internal debate around speaking out on complex issues — for example, our boycott of advertising on all Facebook platforms. This decision has affected our business and the environmental nonprofits that we support. However, we resolve these discussions by staying true to our purpose — “We are in business to save our home planet” — and also by being clear that we can speak from a place of authenticity. Team members are empowered to question the positive impact of every decision they make. The decisions to speak publicly are made fast and locally, with support wherever needed from the team in our HQ.

Public benefit corporation (PBC) status and B Corp certification can enable these types of actions. In the traditional “C Corp,” which is the legal structure nearly every listed company in the U.S. uses, directors may take account of stakeholders’ interests for the long-term benefit of shareholders; in a PBC, directors must do so, and shareholders will hold them accountable for it.

The PBC doesn’t undermine shareholders’ interests. Rather, it enables directors to ensure they’re taking account of relevant stakeholders for the benefit of long-term shareholders instead of being pressured by shareholders only interested in short-term gains. Consider the issues you want to take a stand on as a business and as a leader. Be bold and share what you think both internally and externally to help bring others along with you.

Advocate for system change

Leaders need to change the rules of the game. In the B Corp movement, we’re working to advance fundamental economic system reform. For example, B Lab UK is pushing for the Better Business Act, which would make it mandatory for all businesses to advance the benefit of both shareholders and stakeholders. And many business leaders are supporting the Global Assembly, a group of people that includes scientists, representatives of institutions and social movements, and ordinary citizens dedicated to creating a “bottom-up” voice for 10 million people from all over the world by enabling anyone to organize community assemblies.

How can your business support fundamental systems change?

Use the B Corp standards and consider becoming certified. Convert your business to a PBC if this structure is available in your jurisdiction. If it isn’t, join forces with others who want to make it happen and push for legislation together. In any case, sign the Leaders for Global Assemblies letter to make it clear you see the value of engaging citizens in key decisions.

If some of these practices sound hard, that’s because they are. But taking this kind of action is possible, and the companies we’ve talked about (which all happen to be Certified B Corps)  are modelling what business activism looks like in practice.

This time calls for radical collaboration and action. We must remember the origin of the word “radical,” which is the Latin radix, meaning root. Let’s address the root causes, root our actions in what we know is needed, and grow in the direction of a future we can all be proud to leave for future generations. Senior executives owe this to them.

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