|
The history of American environmentalism is extensive and in many ways well documented. The history of corporate attention to environmental concerns is less so. This essay identifies what I consider the key milestones in corporate attention to environment and climate change over the past 50 years. Some authors, including Ann-Kristin Bergquist of the Harvard Business School, argue that concern for polluted cities earlier in the industrial age constitutes a first wave of corporate environmentalism, but I believe companies paid almost no attention to the environment until the end of the 1960s. Corporate concern was generally limited to incidents in which visible pollutants, often noxious waste, was spilled without warning near company manufacturing plants and facilities. Longer term environmental problems—coal dust, oil and chemical seepage into groundwater, and smokestack emissions—were accepted as the price of industrial progress. Smokestacks were even featured on stock certificates and in municipal promotions as evidence of progress and economic health. Rachel Carson’s Silent Spring, published in 1962, was the first exposé to put American society and business, in particular, on notice that man-made corporate products (DDT) and corporate industrial activity could harm humans. The late 1960s saw several environmental incidents that directed public attention to environmental concerns. Among the most symbolic was a burning oil slick on the Cuyahoga River in Cleveland on June 22, 1969. Similar river fires had occurred before, but this one was featured prominently in Time Magazine and other media, as well as in a special issue of the National Geographic in January 1970. Public awareness of air and water pollution increased dramatically. The U.S. Congress approved the creation of the Environmental Protection Agency in January 1970, and environment champion Senator Gaylord Nelson of Wisconsin recruited Denis Hayes, a former Stanford’s student body president and a classmate of mine, to head what was called Earth Day in May of 1970. That same year, Congress also passed the first Clean Air and Clean Water legislation, with Republican President Nixon supporting these measures. Leading companies responded by creating their first environmental staffs, primarily dedicated to compliance with new environmental regulations. They also sought to burnish their reputation for environmental action. Some of these efforts backfired. Potlatch Forests, a leading paper company, took out national advertisements with a picture of a pristine river. The ad asked readers “would you believe there is a paper plant on this river?” There was, but the plant was some miles downstream from where the photo was taken, cementing Potlatch’s negative reputation. With automobile companies seen as the primary source of air pollution, particularly in California, corporations were challenged by new standards for tailpipe emissions and new standards for corporate average fuel economy (CAFÉ) which were initially adopted in California and then nationally in 1975. This focused companies for the first time on the design and manufacturing processes that produced their products. Over the next 50 years, both emissions and CAFÉ standards were ratcheted up, creating a continuing demand for corporate management of efforts to meet environmental standards. Concern for oil and chemical spills led to the passage of the Toxic Substances Control Act of 1976 (TSCA) which tightened regulation of how environmentally sensitive materials were handled. The concern for toxic substances exploded globally after the 1984 explosion of a chemical plant in Bhopal, India, which killed thousands. Companies added staff to manage compliance with toxic substances laws adopted at the local, state and national levels. During the 1980s and 1990s, a few companies came to question the sole focus on compliance, taking instead what has been called a “strategic approach” to environmental concerns. The forerunner of this approach was the 3M Company, a Minnesota-based conglomerate. In 1975, 3M launched what they called their 3P effort, Pollution Prevention Pays. 3M argued that companies could save money by engineering out the pollution caused by 3M products and manufacturing. 3M and other companies came to promote both the environmental progress made and the economic benefits of doing so. In the 1980s, corporate efforts to manage pollution and other environmental impacts were joined with concerns for the health and safety effects of corporate operations on all employees. Environment, Health and Safety (EHS) officers were appointed by many firms. Typical of this era were more comprehensive efforts to evaluate all stages of the product life cycle. A growing number of companies adopted “life cycle analysis” of the total environmental burden of sourcing, production, distribution, use and disposal of their products. Environmental specialists were added to many corporate functions. Concern for global warming and climate change became prominent in the 1990s and 2000s. A growing scientific consensus that global warming was caused by human activity led the U.N. to set up the Intergovernmental Panel on Climate Change (IPCC) in 1988. Since that time, IPCC global meetings have dramatized the impacts of climate change, including rising seas, desertification and increasingly violent weather events. Pressure on countries and companies to limit global warming has grown increasingly strident, serving as a strong encouragement to companies to consider their responsibility for heading off a climate disaster. Many companies have participated in IPCC meetings through the first part of this century. As a result of growing environmental concerns, a new wave of U.S. federal legislation occurred in the 1990s to tighten all environmental regulations. Corporate resistance also increased, particularly from fossil fuel companies which were primarily blamed for the global warming trend. Oil companies funded significant public relations efforts to deny the growing consensus that human activity and the burning of fossil fuels caused global warming. This “climate denial” movement challenged both environmental regulations and the policies in a growing number of other companies to aggressively address climate change. By the first decade of the 21st century, corporate management of environmental matters became highly professionalized. In the U.S., Marc Epstein’s book Making Sustainability Work: Best Practices for Managing and Measuring Corporate, Social, Environmental, and Economic Impacts, documented the most advanced and integrated practices of American companies. Virtually every corporate function—product design, sourcing, manufacturing, distribution, marketing, sales, finance, strategy, accounting and public affairs had an environmental dimension. Specialists in the environment emerged in each of these areas to address the growing impact of environmental change and regulation. In Europe, several books by John Elkington documented the same progression, which was arguably more advanced than in the U.S. In both the U.S. and Europe, the term sustainability became the preferred term for environmentalism, and in some cases took on a broader meaning that included almost all dimensions of corporate responsibility towards all its stakeholders. With the U.S. unable to pass even stricter environmental standards due to the opposition of some powerful industries, particularly coal and oil companies, the leadership in environmental management shifted to Europe. From a much earlier era gasoline was more expensive in Europe and automobiles were generally smaller and less polluting. European countries embraced the environmental movement more thoroughly than did the U.S., articulating and then championing the concept of sustainability. EU legislation also leapt ahead of U.S. requirements. EU regulators and companies more quickly embraced the need to respond to global warming, and to incorporate into the concept of sustainability the broad swath of environmental and social objectives outlined in the UN Millenium Development Goals (2000-2015) and Social Development Goals (2015-2030). To address this broader agenda, European companies began to appoint chief sustainability officers in the 2000s. In the U.S., companies were slower to accept responsibility for the broad definition of social goals in the MDGs and the SDGs. Symbolically, the appointment of chief sustainability officers has proceeded much more slowly in the U.S. Only in the 2020s were there even a small group of such officers. As noted in my last newsletter on the measurement of responsible business action, the EU adopted and now seems poised to weaken its Corporate Sustainability Reporting Directive (CSRD) which was designed to promote more rapid corporate progress on this extensive environmental and social agenda. The Trump era has now raised many challenges to corporate management of the environment. State treasurers in several conservative states, denying that climate change is real, banned the use of environmental criteria in their own investing, and made investment banks using ESG criteria ineligible to manage state debt offerings. The new Trump Administration, from January 2025 on, has sought to weaken and even repeal many federal environmental standards. Denying climate change and calling corporate environmental programs a “scam,” they have intimidated many companies into cutting their environmental staff and programs significantly. One consulting firm that has continued to emphasize the importance of environmental management, Boston Consulting Group, has suggested companies use the term resilience to describe efforts to mitigate the impact of global warming, rising sea levels and increasingly severe weather events. The real impact of the Trump Administration’s policies on responsible business activity will emerge only over the next four years.
|
