The sustainability challenge: The aspect environmental ratings fail to consider
According to an article by Auden Schendler and Michael Toffel in MIT Sloan Management Review environmental rankings of businesses often fail to take into account advocacy activities by corporations that impact environmental regulations, despite the global scope of the climate crisis and the need for climate regulation.
Corporate political activism can bring about real change Tweet This!Most environmental rating organizations, agencies or systems continue to focus on businesses’ operational impacts – for example, pollution levels – or environmental management practices. Public support activities that influence environmental regulations are not taken into consideration. This happens despite the fact that corporate political activities (like, for example, campaign funding) can be more effective in fighting climate change and promoting environmental protection, given the urgent need – worldwide – for far-reaching policy solutions.
Examples of advocacy activities, include:
- over one thousand business leaders who joined the We Can Lead group, which supports strong climate policy, and
- twenty companies that joined Business for Innovative Climate & Energy Policy, an important corporate policy advocacy group
Taking public support activities into account
Corporate responsibility ratings that influence buying decisions by consumers, employment decisions by jobseekers or investment decisions by socially responsible investors, should seriously consider political activities by corporations. Such activities may include support for climate action, including political contributions, and engagement or collaboration with non-governmental organizations. Effectively integrating such factors into their ranking procedures, is highly important for rating agencies and organizations. They will become more competitive and more valid, when evaluating and deciding on environmental leadership.
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