Contributor, Korn Ferry Institute
This Week in Leadership
Teaming Up for Purpose
Best-selling author Daniel Goleman highlights how some high-profile partnerships can move the needle on purpose.
Daniel Goleman, author of the best seller Emotional Intelligence, and co-developer of the Goleman EI online learning platform, is a regular contributor to Korn Ferry. His latest book, Altered Traits: Science Reveals How Meditation Changes Your Mind, Brain, and Body, is available now.
It’s worse than we think. Global warming, that is.
According to a study released in January, the planet’s ice loss has soared from about 760 billion tons per year in the 1990s to more than 1.2 trillion tons per year in the decade following 2010. From Greenland to Antarctica, the earth lost 28 trillion tons of ice between 1994 and 2017.
“It is no surprise that the ice on our planet is melting,” says Robin Bell, an expert on the polar ice sheets at Columbia University’s Lamont-Doherty Earth Observatory. “We have turned up the temperature, and just like you can watch an ice cube in your glass melt on a hot summer day, our actions are melting our planet’s ice.”
In other words, our actions are what got us into this situation. So, what do we need to do in order to get out?
One answer comes from Larry Fink, chief of the investment firm BlackRock. In his latest annual letter to shareholders, he pressured companies to go further with their efforts to address the climate crisis.
BlackRock has $8.7 trillion in assets under management, making it the largest such firm in the world. In his 2020 letter, Fink’s wrote that climate change would be “a defining factor in companies’ long-term prospects,” and stated that “we are on the edge of a fundamental reshaping of finance.” That letter prompted a swift response with companies such Microsoft, Salesforce, and Delta Air Lines publicizing aggressive goals to reduce and/or offset their carbon emissions.
In this year’s letter Fink upped the volume. He called on all companies “to disclose a plan for how their business model will be compatible with a net-zero economy,” which he defines as eliminating net greenhouse gas emissions by 2050 and limiting global warming to no more than 2 degrees Celsius above pre-industrial averages. He expects companies to disclose how their goals fit into their long-term strategy and to share how the board of directors will review them.
As the New York Times pointed out, this letter is more than a call to action. Given Fink’s influence and power, it’s closer to a demand. In the year ended June 30, 2020, BlackRock focused on 440 carbon-intensive companies. This year, 1,000 companies will be added to that list.
“We have become more impatient in using our votes around issues relating to climate. We believe there’s a real urgency in addressing these issues,” said Geraldine Buckingham, head of BlackRock’s Asia-Pacific business. “If we don’t believe a company has a plan or they’re not implementing that plan effectively, we will vote against management, against the board, to ensure the change we think is needed does take place.”
Last year, BlackRock voted against 69 companies and another 64 directors for climate-related reasons and put 191 companies “on watch.”
While some have argued that Fink’s environmental concerns are a marketing ploy and that in the face of a financial crisis, sustainability programs would be the first things to go— this hasn’t exactly proven true.
“Covid put sustainability at the top of our agenda,” Javier Quinones, president and chief sustainability officer of the US division of Ikea Retail, recently told Forbes. The world’s largest furniture retailer has invested in hundreds of thousands of solar panels and more than 100 wind turbines, and it has plans to go completely LED in its lighting over the next five years. They have even begun selling a meat-free version of their famous Swedish meatballs. “There’s a belief that sustainability goes against profits, but that’s just an excuse,” said Quinones, “We see that unless you believe in this change you won’t be here in the future.”
Meanwhile, in January New York City’s pension fund said it would divest $4 billion in fossil fuel-linked assets in its portfolios. City Comptroller Scott Stringer said, “The divestment from fossil fuels is possible and necessary…. Smart investment policy and smart climate solutions go hand in hand. And we are putting our money where our mouth is.”
In his recent letter, Fink spotlighted the upsurge, sharing that last year, during the worst moments of the pandemic downturn, sustainable funds still outperformed the market. “The more your firms are seen to embrace the climate transition and the opportunities it brings, the more the market will reward your firms with higher valuations,” he wrote.
There is an urgent and compelling call for companies to embrace sustainability as part of their purpose. As Buckingham stressed, and as we see from the melting ice caps, “The realities of climate change don’t feel hypothetical. They are happening now.”
Click here to learn more about Daniel Goleman's Emotional Intelligence Coaching Certification.