72 Time January 31/February 7, 2022
B U S I N E S S
climate talks last fall, when corporate executives
and government officials converged in Glasgow for
the biggest such negotiations ever. In advance of
the gathering, hundreds of companies raced to de-
clare commitments to environmental and social is-
sues, and to set net-zero targets.
Net zero is a mammoth job. Take, for exam-
ple, the oil major BP, whose CEO Bernard Loo-
ney became one of the first fossil-fuel executives,
in February 2020, to declare a net-zero goal for
the company (its target date is 2050); BP alone
adds a huge 415 million metric tons of carbon to
the atmosphere each year, all of which, according
to Looney, the company intends to zero out with
oil-production cuts, ramped-up renewable en-
ergy and the use of carbon capture— technology,
with still uncertain results, that removes car-
bon from the air. “We’re reallocating
capital, we’re restructuring the com-
pany,” Looney told TIME during a No-
vember interview in his London of-
fice. “We are all in on the transition.”
It is easy to dismiss the procla-
mations of corporate executives like
Looney—and many surely do. After
all, their hugely profitable business
operations have clashed with envi-
ronmentalists for decades; in the
run-up to COP26, organizers told oil
and gas executives, including Loo-
ney, that they could play no formal
role in the talks because it was “un-
clear whether their commitments
stack up yet.”
Plus, despite all the talk of
purpose- driven business, the world
has yet to invent any sure way to mea-
sure whether companies in fact make
good on their environmental com-
mitments. “There is no universally
agreed system,” says Ian Goldin, pro-
fessor of globalization at Oxford University. “The
counting relies on self-reporting.” That system is
deeply faulty at a time when companies are mak-
ing promises about limited solutions like car-
bon capture or committing to planting billions of
trees in order to “offset” their emissions. “You say
you’re planting a forest, or the airline is offsetting
your air miles,” Goldin says. “Is anyone tracking
if that forest is there? Has someone also claimed
that forest? There is no system in place that has
accountability to it.”
And yet the fact that so many corporate execu-
tives feel compelled to make such statements sig-
nals just how drastically the climate crisis and so-
cial upheavals have impacted business decisions
within a very brief period of time.
The onrush seemed to begin in earnest inJanuary 2020, when Larry Fink, head of Black-
Rock, the world’s biggest asset-management com-
pany, announced in a letter to CEOs that “climate
change has become a defining factor in companies’
long-term prospects.” Though that fact seemed ob-
vious to climate activists, the statement was widely
regarded in the financial world as a game changer.
Fink—whose firm manages close to $10 trillion in
assets—was telling companies, and their poten-
tial investors, that those without a climate strat-
egy faced a shaky future. “We are on the edge of a
fundamental reshaping of finance,” he wrote.
It is no surprise that companies have since
rushed to put climate policies in place. “We have
seen quite significant commitments made,” says
Paul Polman, co-author of the book Net Positive
and co-founder of IMAGINE, a sustainability-
focused business consultancy based in
London. Until three years ago, Polman
was CEO of Unilever, the $135 billion
consumer-goods behemoth, where he
drove a dramatic overhaul of the com-
pany, implementing environmental
commitments and lobbying officials
on issues of poverty and climate.
In a move that was hugely contro-
versial at the time, Polman scrapped
Unilever’s quarterly earnings
reports —standard for publicly traded
companies —on his first day in office
in 2009, saying the practice forced
CEOs into short-term decisions in
order to push up share prices, at the
expense of longer-term social issues.
Although that angered some inves-
tors, Polman told Harvard Business
Review, “I figured I couldn’t be fired
on the first day.”
Now, principles for which Polman
fought a relatively solitary battle for
years have been adopted by count-
less other business leaders. “There has been more
progress in the last year and a half than the previ-
ous five years,” he tells TIME.even emmanuel faber still thinks purpose-
driven capitalism brings with it more reward than
risk. By his telling, his firing had little to do with
his environmental commitments. In his mind, it
resulted from the intense financial pressure the
pandemic brought, which prompted him to im-
pose layoffs and cuts; Danone’s shares sank 27%
on the French stock exchange in 2020. Activ-
ist shareholders from two funds in London, who
together owned less than 4% of Danone, blamed
the company’s difficulties on Faber’s management,
and they pressed board members to fire him. “The
mess in the Danone boardroom is a reminder that‘Profits and
purpose are
fully linked
together. We
cannot be
about just
maximizing
our profit
next quarter.
We need to
be part of our
societies.’
DAN SCHULMAN,
PRESIDENT AND CEO
OF PAYPAL