Climate Action for Associations reposted this
New Harvard Business Review article out today with Solitaire Townsend! *Is Impact Out of Scope?* (Excerpt, full article linked!) In June, Elon Musk took to Twitter to complain that his electric car company did not have a higher ESG rating. Tesla had a lower ESG score than fossil fuel companies such as Shell and Exxon. In fairness to the ESG ratings, Tesla had not made enough efforts to clean up its manufacturing emissions. But it highlighted how the current carbon compliance regime fails to reward systemic efforts by entrepreneurial companies — whether they be producers of electric cars, wind turbines, plant-based food, or firms that advise clients cutting emissions Today’s standards are designed to evaluate companies’ ability to reduce the carbon emission “inventory”. But these often fail to tell the full story of a company’s most spectacular or courageous climate work. This leads many industries to tinker around the edges. For example, airport sustainability strategies that emphasize waste management but say nothing about dealing with fossil fuels burned during flights, or consulting firms fretting about office lightbulbs instead of how they advise clients. Current frameworks weren’t designed to offer companies a separate way to talk about their ‘societal’ solutions. To be sure, organizations must urgently reduce their carbon emissions inventory. But, we must also have a way to separately recognize, incentivize wider impact. Like-minded thinkers have proposed inventing new inventory categories (like scope 4). But this risks conflating societal impact with operational reductions. We propose a new track for corporations reporting across their’ spheres of influence: 🌎Sphere A: Product influence: Developing products or services that replace carbon-intensive activities and/or help customers avoid or reduce emissions. EV’s are a good example. 🌎Sphere B: Portfolio influence: Investments & purchases, such as credits, philanthropy, and catalytic finance. 🌎Sphere C: Policy influence: Advocacy for policies (or removal of barriers) to enable climate transition. We recognize that “sphere of impact” reporting could open up new avenues for greenwashing. Companies, struggling to reduce their emissions may prefer to emphasize “wider contributions” to distract from missed targets. Tesla shouldn’t be off the hook for its own emissions because it produces a green product. But this only underscore the need for guidance as to how companies can credibly claim impact beyond inventories, so they don’t run wild with claims. The far greater risk is failing to mobilize companies as system-level actors. For too long we’ve told businesses they are only part of the problem, rather than incentivizing them to find the solutions. Sphere reporting can ask companies not just what footprints they will leave behind but what their climate legacies will be. https://lnkd.in/dbKfczxE