Employee groups see through greenwashing
ATTRACT ACTIVISM
There is growing interest within management to recruit green activists to support the climate agenda
BUSINESS MATTERS
Executives are aware that climate change is an issue for employees but may disagree over the best ways for the firm to address the problem
KEY QUOTE
Companies may suffer from substantial reputational damage if they don’t address the legitimate concerns of their employees
In October 2021, more than 1100 employees at McKinsey, a US consultancy, signed an open letter to the managing partners of the company urging them to disclose the level of carbon emitted by their clients. “Inaction on (or perhaps assistance with) client emissions poses a serious risk to the companies, clients and ability to hire and retain qualified employees,” the letter read. The dissension started after it was revealed by The New York Times newspaper that McKinsey has advised at least 43 of the world’s 100 biggest corporate polluters, including BP, Exxon Mobil, Gazprom and Saudi Aramco, generating significant revenue for the firm. This is just one out of several examples in the last couple of years of employees putting pressure on business decisions and driving their bosses to do more in regards to climate action. According to Esben Lanthén from consultancy Nordic Sustainability, pressure from employees has become a catalyst for climate action and decisions for many businesses. “All of the companies we are involved with say that employee pressure… is part of the reason for stepping up in regards to climate ambitions and action,” he says. Torsten Geelan, a fellow at the Department of Sociology at the University of Copenhagen agrees that employee activism is a growing trend, assisted by social media. “The shift to remote online working during the Covid-19 pandemic coupled with the Intergovernmental Panel on Climate Change’s (IPCC) starkest warning yet means this is likely to be accelerating. Companies may suffer from substantial reputational damage if they don’t address the legitimate concerns of their employees,” he says.
EMPLOYEE ACTIVISM The instances of employees putting pressure on their companies to make changes in response to the climate catastrophe are growing in number and no company is safe. In 2020, thousands of employees at Google signed an open letter demanding that the company take more aggressive action on climate change. Elsewhere, the threat of industrial action by employees at Amazon in 2019 led to a “climate pledge” from the management at the online retailer, committing the firm to be net-zero by 2040 and use 100% renewable energy by 2030. In addition, then-Amazon CEO Jeff Bezos announced a $10 billion fund to fight climate change. A year later, more than 350 workers once again criticised Amazon’s contribution to climate change despite threats of job termination. A tweet from the Climate Justice group, a climate activist group formed of Amazon employees, said, “Hundreds of us decided to stand up to our employer, Amazon. We are scared. But we decided we couldn’t live with ourselves if we let a policy silence us in the face of an issue of such moral gravity like the climate crisis.” “These examples show that greenwashing, the practice of marketing a company so they appear more environmentally conscious than they actually are, is no longer tolerated by activists and will increasingly be called out,” says Geelan. “This is not only true for the biggest and most well-known companies but also holds true for small and medium-sized companies—especially those making highly visible climate pledges that don’t hold up to scrutiny,” he adds. One area where the climate agenda is being taken more seriously is within trade unions, Geelan says. They argue that the energy transition needs to be both sustainable and socially just. HK, Denmark’s largest union for salaried employees, recently launched courses where members and union representatives can learn to become “climate activists” with the stated argument that employees in Danish workplaces play a crucial role in ensuring a greener and more climate-efficient workplace.
MANAGEMENT AGENDA Growing employee activism is also something that is recognised at a management level. A 2019 survey with 375 global executives conducted by multinational law firm Herbert Smith Freehills shows that climate change is considered a catalyst of workforce activism. Four out of five of the executives predicted a rise in workforce activism over the next three to five years ― with sustainability and climate change as motivation. At Danish brewery, Carlsberg—one of the first Danish companies to sign up to the Science-based Targets initiative—employee engagement and pressure in regards to climate action is growing throughout the organisation. “It matters to our employees and it is something that they support and that many across departments and work areas want to become a part of,” says Simon Boas Hoffmeyer from Carlsberg. He underlines that the brewery has not experienced what he calls a “negative push” from employees. “Looking at for instance our town hall meetings 10-15 years ago hardly any employees asked questions about our environmental, social and corporate governance (ESG), and sustainability efforts, now our management is asked about this every time and they are often met with positive pressure to accelerate local efforts,” says Boas Hoffmeyer. In connection with the formulation of Carlsberg’s sustainability strategy in 2017, over 7000 employees were consulted. The company’s management was met by criticism about the use of coal from employees at Asian breweries. “This concern led us to incorporate a goal to phase out all coal in our production by 2022,” Boas Hoffmeyer says. The company currently has one brewery in India left that still sources electricity from coal generation but plans to alter this by the end of 2022.
ATTRACTIVE JOBS A company’s climate action—or lack of—is also becoming a decisive factor in retaining and attracting employees. Several studies from the past couple of years show that companies with a green and sustainable profile are considered more attractive and that employees are willing to jump ship to other firms that are more appealing because of their green credibility. In a 2021 global survey by the IBM Institute for Business Value, 71% of employees and employment seekers said that environmentally sustainable companies are more attractive to work for. Additionally, the survey showed that more than two-thirds of respondents would be more likely to accept a job at environmentally responsible organisations. Almost half of the surveyed also said they would accept a lower salary to work for these organisations. “Having a clear and credible green profile is considered a very important factor in regards to retaining and attracting employees,” says Nordic Sustainability’s Lanthén. Research shows that younger generations particularly value green profiles and actions as an important factor when looking for their new job. Another survey, this time from UK health insurance company Bupa from 2021, found that 64% of surveyed 18-22-year-olds consider it important for employers to act on environmental issues, while 59% would remain longer with responsible employers. “Typically 15-20% of all of our new graduates at our headquarters ask me if they can become involved in our ESG efforts—and it is graduates from all departments,” says Boas Hoffmeyer from Carlsberg. According to John Higgins, co-author of a major new study into employee activism published in the Sloan Management Review from the Massachusetts Institute of Technology (MIT), there is a growing interest at management levels in recruiting green activists as a way for companies to show that they support the climate agenda. One recent example is the new CEO for US consultancy Boston Consulting Group, Christoph Schweizer, who publicly said he wants to hire climate activists to work for the consultancy. Higgins says that despite the recruitment of “green talent”, the research also shows that companies often struggle when it comes to real climate action and living up to employee expectations because the majority of senior people still have a short-term shareholder mindset. “The pressures of the day-to-day often result in business priorities staying the same in practice,” he says.
LACK OF ACTION It is not without costs when employee activism is invoked or when companies fail to meet employee expectations. Geelan says recent examples such as Google and McKinsey show that companies are exposed to reputational damage because of this. “Doing nothing, too little or saying that you do more than what you in fact do is high risk for companies. The management has to take this very seriously and adapt to the fact that employees are becoming much more focused on climate efforts,” he says. The survey by Herbert Smith Freehills also shows that a lack of climate action could come with a price tag due to a loss of legitimacy, employee engagement and attraction of talents. Executives foresee that workforce activism could cost organisations up to 25% of their global revenue (between £121 million and £177 million) per year. Higgins says there is a risk that many companies recruiting green activists “understand that climate action matters to them, but still won’t be able to deliver on their promises.” He points to management’s response to the McKinsey letter as an example. In the public answer to the letter, McKinsey leadership wrote that they had initiated a dialogue with colleagues but that the company believes meeting climate reduction targets, “Requires engaging with high-emitting sectors to help them transition. Walking away from these sectors might appease some critics, but it would do nothing to solve the climate challenge,” the company wrote. McKinsey declined to be interviewed for this article. “This clearly demonstrates the discrepancy that is often predominant between management level and employee level in regards to climate action,” Higgins says. •
TEXT Anna Fenger