Time - USA (2022-04-25)

56 Time April 25/May 2, 2022

Cracking the

Corporate Code

Over The pasT decade, The way ThaT busi-

nesses have spoken publicly about climate change

has unmistakably changed. It’s become standard

for companies to, at the very least, pay lip service

to the problem—though of course what a business

says in press releases and what executives say be-

hind closed doors, let alone what a company actu-

ally does, can differ dramatically. One way to get

insight into the hearts and minds of business lead-

ers is to look at large firms’ 10-K fil-

ings—financial documents that pub-

lic companies are required to submit

annually to the Securities and Ex-

change Commission (SEC). While a

10-K can’t put you inside the board-

room, it amounts to the best public

record of the obstacles a company

foresees to future profitability.

TIME analyzed thousands of

these documents from the past 10

years and found that general terms

relating to climate change had al-

ready crept in by 2012, suggesting

that companies have long perceived

climate change to be a threat to their

operations. However, it is only recently that spe-

cific terms relating to corporate climate goals and

initiatives have become part of companies’ think-

ing about the crisis.

Experts say that this shift—from speaking the-

oretically about climate to talking more practi-

cally—tracks with what they’ve noticed in board-

rooms and company operations, and indicates

A TIME ANALYSIS OF PUBLIC FILINGS REVEALS WHAT

BUSINESS LEADERS REALLY THINK ABOUT CLIMATE

BY EMILY BARONE AND CHRIS WILSON

FINANCE

that companies are rushing to at least make in-

vestors feel they are working to mitigate climate-

related risks. Patrick Callery, a professor at the

University of Vermont who studies corporate cli-

mate disclosures, notes that this progression is a

bit like processing an emotional shock. “First we

deny it, then we accept it, and then at some point,

we actually do something about it,” he says. “I

think at this point we’re kind of at the acceptance

stage and companies are talking about doing

things, but I don’t think to a large extent compa-

nies are actually really doing things quite yet.”

Indeed, TIME’s analysis found that 48% of

companies mentioned climate change or simi-

lar phrases in their 2012 10-Ks. In 2021, that fig-

ure was 91%. Sustainability soared from 27%

to nearly 80%. However, words relating to cli-

mate measurement and offsets, which include

terms documenting companies’ specific plans for

achieving their climate goals, are still fairly un-

common, despite a recent uptick. Renewable en-

ergy more than doubled, from 15% to 37%, while

environmental impact went from 14% to 26%.

Deforestation went from being mentioned in a

single 10-K to 15, or 5% of filings.

To come up with these numbers, TIME cu-

rated a list of about 200 climate words, phrases,

and acronyms with input from experts at the Uni-

versity of Vermont. We took the 300 companies

that have been consistently part of the S&P index

since 2012 and extracted from the SEC’s data-

base all the 10-Ks covering the corporations’ past

10 fiscal years—a total of 3,000 documents—and

Companies

previously

acknowledging

only the reality

of climate

change now

admit they

played a role in

causing it