Consistency between a company’s advocacy on social and environmental issues and their practical action and impacts on these issues has long been essential.
Ensuring that a company’s words and brand line up with its approach to business is vital for maintaining trust with its stakeholders, securing competitive advantages and ensuring a company can operate productively. It is also the foundation on which “credible, enduring and impactful” advocacy can occur. Leading companies such as Unilever, IKEA and Patagonia consistently satisfy stakeholders, keep ahead of regulation, and manage longer term and less predictable risks, catalyzing the opportunities that follow. Companies that function inconsistently open themselves up to reputational, financial and operational risks. Recent cautionary tales include:
- Corporates acknowledging climate change but continuing to lobby against progressive climate policy and corporates adopting ambitious climate targets for themselves but still continuing to hold back regulatory progress by lobbying directly and/or indirectly through trade groups such as the US Chamber of Commerce and National Association of Manufacturers;
- Energy companies continuing to explore for new fossil fuel reserves and maintaining relationships with influential climate deniers;
- Financial companies being called on by elected representatives to stop blocking disclosure regulations designed to hasten the sustainable future that they publicly endorse in other contexts;
- Reports demonstrating superficial and sluggish responses to climate risks and opportunities from banks despite their outward endorsement of the Task Force on Climate-related Financial Disclosure (TCFD) guidelines;
- An outcry from investors and environmental activists regarding Siemens’ contract with Carmichael coal mine in Queensland just weeks after inviting a young climate activist to join their supervisory board;
- Daimler’s projected €1.5 billion loss in profits in 2019 due to legal costs associated with their alleged diesel emissions manipulations; and
- The spoof of Larry Fink’s annual letter published by reputable media outlets in early 2019 that drew attention to commitments and actions notably absent from his actual letter.
A company that aligns its advocacy with its core strengths — areas in which it demonstrates best practice and leadership — is more likely to be taken seriously and so to have impact.
How can companies be credible advocates?
1. Focus advocacy on material issues and the biggest impact opportunities
A company’s advocacy efforts should flow logically from its conduct in all other areas of business leadership. Before taking a public stand on an issue, a company should identify areas that are important to its business, on which it performs well and around which there have not been (nor are likely to be) any negative revelations recently that could undermine their position. Identifying these “material” topics through a materiality assessment or business model mapping process will also help the company to work out the areas through which they can have the greatest impact whilst supporting the long-term interests of the company. A company that aligns its advocacy with its core strengths — areas in which it demonstrates best practice and leadership — is more likely to be taken seriously and so to have impact.
2. Make advocacy context based and grounded on sound science
A company wishing to make a stand on a particular issue must ensure its existing and planned actions to address the issue are sufficient to make its advocacy credible. In this new decade of action, there is increasing focus on the speed and impact of a company’s efforts to address an issue. Both in relation to the “total change we need to see” (e.g. see Future-Fit Benchmark) and in comparison to peers (e.g. see World Benchmarking Alliance).
Taking climate action as an example, in October 2019, eleven non-profits wrote an open letter to American CEOs urging them to adopt a science-based climate policy agenda in line with achieving net-zero emissions by 2050. These stakeholders are demanding that targets are at least as ambitious as IPCC recommendations. Relatedly, the concept of “new denialism” has arisen in activist circles to encompass organizational activities that are arguably stalling progress rather than catalyzing it. Activities include incremental policies and arguments that an as-yet undeveloped technology will “save” us.
These developments and others mean that credible advocates on climate can no longer simply acknowledge the problem and set a target. Instead, to meet stakeholder expectations, they must set context-based goals based on sound science and be disclosing progress on their goals through verified third parties.
In other words, credible business advocates must be able to demonstrate that they are doing all they reasonably can to maximize their contribution to advancing progress.
3. Review corporate memberships
In April 2019, Shell announced it would not renew membership of the American Fuel and Petrochemical Manufacturers body due to “material misalignment” on climate policy. In response, the co-lead of the influential coalition of institutional investors Climate Action 100+ commented: “This is an industry first. With this review Shell has set the benchmark for best practice on corporate climate lobbying not just within the oil and gas sector but across all industries.”
That Shell has taken this action puts pressure on other companies and associations that continue to lobby against progressive climate policies, including the latest 47 companies that Climate Action 100+ judge to have inconsistent trade association memberships and those that organizations such as Influence Map continue to highlight.
With this precedent set, companies that wish to advocate on any issue can now expect pushback if they do not align their corporate memberships with their publicity.
In whatever position a company finds itself, transparent communication through digital channels, reports and more targeted engagement is essential for demonstrating credibility on an issue because it enables stakeholders to hold a company to account.
4. Involve stakeholders
Finally, while some companies overstate their achievements in relation to social and environmental issues and are accused of “greenwashing,” other companies can lose value by not communicating the good work they are doing well enough. In whatever position a company finds itself, transparent communication through digital channels, reports and more targeted engagement is essential for demonstrating credibility on an issue because it enables stakeholders to hold a company to account.
When a company is deciding on which topics to advocate, stakeholder engagement can also be particularly useful to uncover areas for improvement, identify longer term and less predictable risks, and even build support. External engagement with investors can deepen understanding of expectations and any concerns (e.g. Shell’s trade association review was a response to investor pressure). Moreover, external engagement with civil society can present opportunities for powerful partnerships as Yvon Chouinard and others have demonstrated through their 1% For the Planet initiative.
An enticing future for all
This article has argued that consistency is a fundamental precursor to sustainable business leadership and successful corporate advocacy, and outlined four ways that companies can achieve it. While it is notoriously difficult to predict the future, we can be confident that a world in which companies direct their words and actions consistently towards progressing the Sustainable Development Goals will be a rich and enticing world in which to live.