A post by guest blogger Leo E. Strine, Jr.
Ambitious goals for company emissions reductions. Rolled back. Pledges to reach net zero by a target date. Rolled back. Bold rhetoric when joining alliances to address climate change and big talk at Davos. Rolled back. Pledges to reduce purchasing carbon-based energy. Rolled back. Pledges to reduce lending to carbon-based energy projects. Rolled back. Pledges by institutional investors to make company climate change policies central to their stewardship efforts. Rolled back.
One thing we know about the wind: It does not blow in the same direction all the time
How should corporate leaders address the recent controversy about so-called “ESG” and about corporate consideration of social and political issues? What lessons can corporate leaders draw from the current moment and put into practice, to avoid looking like situational sycophants, driven less by a principles-based concern for their corporation’s long-term success, and more by a desire to ingratiate themselves with whatever political forces are currently powerful?
Corporate leaders should not repeat past mistakes by over-reacting to the current moment, and instead learn from this moment, and develop corporate policies and deliberative strategies that are more sustainable, because they relate those strategies more closely to the company’s specific business, and the impact that a social issue, and climate change in particular, has on the company’s stockholders, workers, consumers, and communities of operation. Focus on making money the right way.
Instead of giving business leaders credit for highfalutin talk unmatched by real action, holding them accountable for running their companies in a manner that takes into genuine account the real business risks of climate change is more valuable, if more difficult.
In his new working paper, Leo E. Strine, Jr. surfaces some of the genuinely important lessons that corporate leaders can draw from the current moment. These lessons are highly relevant for companies on both sides of the Atlantic. We are therefore grateful for the opportunity to publish this working paper on Corporate Finance Lab.
Leo E. Strine, Jr.
Michael L. Wachter Distinguished Fellow at the University of Pennsylvania Carey Law School; Senior Fellow, Harvard Program on Corporate Governance; Of Counsel, Wachtell, Lipton, Rosen & Katz; former Chief Justice and Chancellor, the State of Delaware
Corporate Finance Lab 