When It Comes to the Environment, Do Good Guys Finish First?

Jeremy Hance, a leading environmental journalist and ALERT contributor, has some pithy thoughts about the ways we treat corporations today.

At an Eco-Business event in Singapore in February, a corporate CEO rocked the audience by pointing out the environmental equivalent of the Emperor having no clothes.

He argued that, despite all the hoopla over “sustainability” in recent decades, financial markets around the world do almost nothing to reward corporate progress on the environment.

Is the CEO right?  Are we failing to punish corporate sinners and reward the good guys?

Critical Question

One complication is that “sustainability” has become a buzzword—used so often and broadly that it’s lost much of its meaning, diluted by corporations and governments eager to jump on the green bandwagon.

Such confusion aside, at least some conscientious companies are being rewarded by the financial markets. 

For example, a 2014 study found that corporations listed on the Standard and Poor’s 500 Index—which tracks the performance of the biggest U.S. companies—were apparently rewarded for their sustainability efforts.  On average, companies trying to reduce climate change received 18 percent more return on their investment than did those that did not.

But there are also cases where companies trying to do the right thing are apparently being punished by investors, or at least not rewarded. 

Indeed, some of the worst corporations on the planet are getting richer.  Recent research shows that environmental black-hats such as Chevron and Exxon Mobil have been raking in cash—with stock valuations rising by hundreds of percent in recent decades.

Despite using a tiger for its logo, Malaysia's Maybank is considered one of the world's worst forest-destroying financial institutions.

And many highly profitable Chinese companies and state-owned enterprises have been bad corporate citizens, often treating developing nations as “pollution havens” where they wreak environmental havoc, according to a major World Bank study.

The blackest of all black hats are worn by the coal industry—and there the message is a mixed bag.  Coal giants like Peabody Energy have seen their stocks collapse.  But Australian coal giant BHP Billiton has seen its stock triple since 2000, albeit with lots of ups and downs.

Mixed Signals

Such mixed signals prove one thing: There is no overriding force in the global market pushing companies toward more-sustainable efforts.  Good guys are getting rewarded in some cases but not in others.

What should we do?

For starters, we need to keep the pressure up on industries that have big impacts on the environment—including agriculture, fossil fuels, mining, forestry, fisheries, and infrastructure construction.  Such industries need close and continuous scrutiny.

We must also keep pushing to divest—to force our universities and other institutions to put their money where their mouths are, and favor eco-friendly corporations and industries.

Further, we need to identify the ‘greenwashers’—the companies that pretend to be green but really are just environmental wolves in sheep’s clothing.

Regarded by many as pure greenwashing, Indonesia's Sustainable Palm Oil Certification.

And finally, we need better laws and enforcement.  Putting a real price on carbon emissions, for instance, would immediately transform the unfair economic logic that allows eco-sinners to make more profits than eco-winners.

Bottom line: The CEO in Singapore is partly wrong: environmentally conscientious investors are making a positive difference in the world today. 

But the CEO is also partly right: we need to do a lot more. 

Corporations are smart.  They’ll only become truly sustainable once they taste the carrots we are offering them to behave well, or feel the sticks we're smacking on their backs when they behave badly.