Last October, signatories to a letter to Congress requesting the inclusion of the full slate of climate provisions in the Build Back Better Act included fossil fuel companies bp America and Shell, energy provider Exelon, and more than a dozen other large, energy-intensive corporations, such as Carrier, Unilever and Cummins, in the HVAC, food and beverage, and manufacturing industries, respectively. In early February, not long after the collapse of negotiations around the Build Back Better Act, another letter to Congress was signed by 27 companies in businesses including steel, power generation, manufacturing, and the automotive industry, requesting that Congress refocus on Build Back Better’s climate provisions. Added to a handful of signatories from the prior letter were now a dozen power companies and utilities, including Duke Energy, automaker Ford, and tech companies such as Salesforce. Just last month, yet another letter added scores of newcomers to the call, with nearly 50 large, corporate signatories.
The timing couldn’t be more critical. The consensus in the environmental movement is that the next three months will be the last chance for the US to pass meaningful climate legislation in time to meet its upcoming targets under the Paris Agreement, and in turn help avoid the most drastic effects of climate change. Senators are reportedly contemplating compromise legislation that would pair Build Back Better’s climate provisions with short-term commitments to increase the production and distribution of oil and natural gas, helping relieve the twin pressures of inflation and the war in Ukraine. The sense of urgency is such that even the most environmentally-minded in Congress appear open to this approach.
Based on conventional wisdom about corporations, however, the level of support evidenced by these repeated, public letters to Congress seems far from given. So as we watch the next legislative push unfold, it seems worth asking: why are so many companies in effect asking to be regulated?
A close reading of the letters’ signatories is instructive. Shell and bp America are the only two major oil companies with a presence in the US that have set net zero emissions targets (both for 2050). As European energy companies staking out a leadership position in the ultimate move away from fossil fuels, both have much to gain from US regulations that point in the same direction. Likewise Carrier, Daikin, Danfoss, Johnson Controls, Siemens, and Trane Technologies, all signatories to the October letter, are already in some form or other jockeying to use energy efficiency as a competitive advantage. Something similar could be said of Ford, the only automaker to sign any of the letters, which has begun making massive investments in electric vehicles.
Another class of signatories may not be as readily positioned to take rapid advantage of climate legislation, but nevertheless craves the certainty it would provide: certainty that government is committed to supporting the transition to sustainable energy through incentives and, potentially, penalties. Foremost among these are utilities and power companies, many of which are already heavily regulated and seemingly fearful of making new investments without the guardrails of further legislation to point the way. Food and beverage companies also fall into this category; even leaders like Unilever must still confront massive Scope 3 emissions in their supply chains, a task which becomes much easier when upstream suppliers are playing by the same rules.
Other corporations, notably in the tech sector, have long made climate commitments part of their corporate culture. It’s true that for many large tech companies, the values equation is simplified by having lower emissions to contend with in the first place. Nevertheless, companies like Salesforce or Intel continue to play a critical role in expanding the horizons for corporate climate action, raising awareness among consumers, shareholders, competitors and yes, governments.
But while each of these groups may have aligned around climate legislation for slightly different reasons, we believe the underlying motivation is much simpler: that of collective conscience. Corporations are pursuing a new energy paradigm because the executives and directors who lead them now acknowledge that the old one will destroy us. Those who don’t, face intense and ever-increasing pressure from their stakeholders, including employees, customers, shareholders and wider communities. The conventional understanding of a corporation, in which externalities like environmental destruction are someone else’s problem, is being rapidly eroded, such that companies are now outpacing the will to act of political institutions including the United States Congress. We can only hope their collective conscience is fast-acting enough.