IT’S NOT EASY BEING GREEN: Corporate Environmental Activism in an Era of American Climate Policy Stagnation

Abstract

The effects of climate change are clear: the frequency and severity of climate-related events around the world have brought attention to the irreparable impacts of a warmer planet. Scientists and governments concur that keeping the rise in global average temperature to 2°C and below, the goal set by the Intergovernmental Panel on Climate Change, will avoid the worst impacts of a severely-altered climate; but action towards this goal is imperative. In order to save our natural systems, our communities and our economies, we need steep reductions in greenhouse gas (GHG) emissions. Emission curtailment has, for too long, been the responsibility of international governing bodies and national governments. This thesis seeks to examine the underpinnings of governmental inefficiency on climate change, but even more deeply challenges the assumption that governments should be the primary agents of emissions reductions. Instead, United States corporations should be placed at the center of the climate decision-making process. To contribute to the literature on corporate strategies for sustainability, this thesis examines the most pervasive corporate environmental practices in the financial services sector. Throughout this thesis, I use the phrase “corporate sustainability” or “corporate environmentalism” to encompass private sector, environmental initiatives and actions in pursuit of emissions reductions. To evaluate the effectiveness of these strategies, this thesis analyzes the impact of sustainability strategy on environmental and financial performance. I hypothesize that incorporating sustainability metrics into executive compensation plans is the most effective corporate sustainability strategy. Though I did not find conclusive evidence in support of this hypothesis, I do find evidence to support the effectiveness of environmental goal setting in a corporate environment. The methodology developed in this thesis can be used as a means to evaluate the impact of corporate sustainability strategies on environmental and financial performance. Bridging the gap between top-down policy proscriptions and bottom-up emissions reductions will help to hold global warming to below 2°C. With the proper financial incentives, the disparity between policy proscriptions and action can be met by the private sector.