To really be greener , businesses need to look to the boardroom

Greenwashing, the act of misleading the public about environmental efforts, is increasingly prevalent as the climate crisis worsens. This deceptive practice hinders the achievement of global climate change objectives. A notable instance of greenwashing involved the Paris 2024 Olympic organising committee, which aimed to create the most eco-friendly games by reducing plastic waste. However, concerns arose due to the continued use of plastic bottles and cups by Coca-Cola, a major sponsor. Other high-profile cases include oil giant Shell, airlines AirFrance, Etihad, and Lufthansa, and bank HSBC, all of which faced ad campaign bans in the UK for allegedly misleading the public about their climate efforts. Shell disputed the claims, while Etihad and Lufthansa revised their advertisements post-ruling. HSBC pledged to better engage customers in the low-carbon economy transition. These incidents raise questions about board directors effectiveness in driving environmental change. Boards, elected by shareholders, are responsible for overseeing corporate activities and ensuring alignment with climate change goals. A study of large US companies revealed that co-opted boards, where directors are appointed after the chief executive s tenure begins, can decrease greenhouse gas emissions intensity in industries affected by climate change. However, this relationship varies over time, and emissions may decline more slowly with increased research and development investments. Co-opted boards can also lead to over-investment in inefficient research and development projects, such as poorly designed carbon-reduction programs or unproven renewable technologies. This misalignment with financial and ESG goals can result in approving projects that do not support the company s objectives. To address these issues, several steps can be taken. First, prioritizing the appointment of independent directors with no ties to top executives or major stakeholders can provide objective oversight and hold managers accountable for their environmental actions. Regulators can establish clear guidelines for board composition and independence. Investors can use their influence through resolutions and votes to push for more climate change

Source: theconversation.com
Published on 2024-10-03

Thomas Delille »

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