Corporate Activism, CPR, ESG, Carbon Border Tax & Socks

Giles Gibbons

Good Business - Sustainability | Strategy | Impact

November 17, 2023

1. The Corporate Activist  

Last week our CEO and founder, Giles Gibbons, sat down with Siri Trang K. for the Corporate Activist Podcast to discuss the shifting roles and responsibilities of businesses and how this has informed Good Business’ approach over the last 25 years. 

The Corporate Activist is a podcast that explores the role of the business sector in today’s complex social and political landscape. Giles and Siri begin by discussing the shifting landscape of corporate activism, which has moved away from CSR and marketing to the emergence of purpose and values and the role of sustainability in authentically delivering on them. This culminates in a fascinating moment for corporate activism. 

In a wide-ranging discussion Giles and Siri rove from business management approaches to purpose to the ever-growing debate about when businesses should take a public position and espouse a point of view. On which point he also gives a shout out to our client Avon for its authentic approach to corporate activism - using their on-the-ground sales reps across the world to communicate and engage the community on pertinent issues such as breast cancer education and awareness and violence against women and girls.

We highly recommend a listen. And not just to Giles – many of the previous episodes are fascinating too, taking on the reinvention of corporate philanthropy, the power of partnerships, and the role of business in policy and politics – which leads us neatly onto our next story... 

2. CPR: saving corporates in a politicised world 

Building on the theme of corporate activism, the concept of Corporate Political Responsibility (CPR) is rapidly gaining traction in the United States and beyond. CPR focuses on businesses’ external engagement on social and cultural issues, and current affairs, through public statements, advocacy, and donations. At its core, companies are encouraged to take a non-partisan, principled and systematic approach to weigh up whether and how to engage in on these topics, and enhance their social and environmental sustainability by doing so. 

Although historically arguments against business engaging in political (with a small “p”) debates have prevailed, business is as much a part of these debates as any other organisation, and employees, investors and customers are increasingly calling for companies to speak out on political issues. This has come at a time of polarised, complex and dynamic issues, such as the Israel-Hamas war (see our previous Friday 5 on this). A temptation for business may be to say nothing to avoid criticism; however, saying nothing, while sometimes wise, can alienate stakeholders and expose organisations to financial and reputational risks. 

Companies therefore need frameworks and guidelines to navigate these challenging times and exercise more consistency and responsibility in their statements on social and cultural issues. This is where CPR comes into play. The University of Michigan’s Erb Institute proposes a series of four principles - legitimacy, accountability, responsibility, and transparency - to help companies better align their engagement on such topics with their purpose and values. These principles, which share much in common with the decision-making rubric we shared in our Israel-Hamas post have been adopted by widely adopted by corporate America.  

We’re all for the overall aim: moving away from a reactionary approach to individual issues, towards a more coherent and proactive engagement in the political arena, where companies make considered choices about when and where to engage, and do so meaningfully.  

3. ESG? Win, win, win! 

ESG has received some push back recently, with queries over whether it really adds value to businesses. However, research from Investec shows the danger of under-valuing sustainability strategies for mid-size businesses, especially when it comes to Net Zero commitments, those suppliers that cannot keep up will lose business and investors. In other words, it pays to be a responsible business! We won’t say we told you so… 

So, what are the stats? Well 70% of companies surveyed were already implementing sustainability strategies, with the vast majority seeing revenue growth as a result. Of those implementing sustainability, benefits cited are improved brand reputation (44%), operational improvements and efficiencies (39%) and a stronger risk management strategy (37%). This isn’t a surprise; we are constantly advocating for businesses to implement green strategies that make sense for them and their customers.  

And how will it impact investment over time? Well, large UK banks who have Net Zero pledges are going to increasingly direct financing towards greener companies to help them reach their own commitments. This means that by having sustainability strategies and effectively implementing them you are likely to be increasingly attractive to investors – one survey found that 93% of UK-based lenders expect sustainability- related lending to increase in the next few years. Not only this, but in PwC’s 2022 Global Investor survey, it was found that more than 25% of investors would accept a lower rate of return for companies which provided a positive impact to society or the environment.  

Although we would argue they won’t have to – because purpose and profit go hand in hand, rather than one coming at the expense of the other. And the results of this survey are further evidence that it is so.  

4. BAM and the carbon’s gone 

This week there was a specific but important piece of news about UK trade policy: the UK is likely to introduce a tax, called a carbon border adjustment mechanism (CBAM), on imports of carbon-intensive goods from countries with weaker climate legislation than ours. This will come into action in 2026 and mirrors EU plans to address emissions associated with international trade.  

But to understand why this measure is important, it’s useful to start with the economics of climate change. Climate change is considered a market failure, where the negative impacts of GHG emissions are felt broadly, but the costs are not borne by the emitters. This is the issue that carbon taxation seeks to solve: by adding a cost per unit of emissions. 

Despite its long history and popularity among economists, one of the reasons carbon taxation hasn’t yet taken off in a big way is the need for coordination globally. Without this, goods from countries without carbon taxes or with lower carbon prices would be cheaper, which could result in  shifts in manufacturing and hence emissions to these countries, without any overall reduction in emissions – an effect called ‘carbon leakage’. 

This is where a CBAM comes in, by adding taxes on imports of emissions intensive products (steel, for example) that haven’t already had a carbon tax applied in their country of manufacture. These means manufacturers in countries with higher standards are not penalised. It’s therefore unsurprising this has good support from UK manufacturers. 

With coordination and cooperation being central to the effective implementation of a very powerful tool for reducing emissions, it’s reassuring to see the UK following in the footsteps of the EU on this measure, despite our ever weakening ties. 

The Goods: Power rangers 

In vulnerable ecosystems around the world, wildlife rangers play a critical role protecting nature from illegal logging and poaching, saving some of our planet’s most iconic animal and plant species from extinction. It’s a herculean task, and one that is made more challenging by lack of adequate equipment and supplies. For over half of rangers, this includes even their most basic gear – the uniform and boots that they wear every day.  

To help support those on the front line of conservation, RangerLab, a UK-based charity, is raising funds to deliver essential kit for rangers around the world. And they’re doing so by selling essential kit for you: their very own RangerLab socks. Made in the UK from 76% recycled materials, the socks are stylish and comfortable (something we can personally testify to), and above all help to fund RangerLab’s mission to equip and empower wildlife rangers.  

RangerLab’s conservation partners include organisations based everywhere from sub-Saharan Africa to Asia. Recent projects have included providing period products to women in the field in Zimbabwe and supplying a range of equipment, including thermal clothing and kitchen facilities, to those working in India and Kyrgyzstan.  

If you’re in the market for a new pair of socks, look no further.