Contrary to popular belief, corporations often proactively address climate issues, ASU professor says
The desert near Phoenix at sunset. iStock photo by Jonathan Ross
While many believe profit-motivated corporations only act on climate issues when forced by government, a new book from an Arizona State University economics and public policy professor provides evidence to the contrary.
School of Public Affairs Associate Professor Lily Hsueh’s book "Corporations at Climate Crossroads: Multilevel Governance, Public Policy, and Global Climate Action" was released Sept. 2 by MIT Press. In it, Hsueh discusses ways corporations are proactively dealing with environmental concerns both before and after the 2015 Paris AgreementRepresentatives of nearly 200 nations gathered at the 2015 United Nations Climate Change Conference in Paris approved the Paris Agreement on Dec. 12, 2015, in an effort to address the impacts of climate change. See https://www.un.org/en/climatechange/paris-agreement .
Hsueh said corporate executives’ actions regarding climate are shaped by incentives, how they interact with each other and by engaging with the regulatory process, global governance authorities and outside pressures from the public.
Read on to learn more about her book and how corporations act on climate issues.
Note: Answers have been edited for length and clarity.
Question: Many people might be unaware of how and under what conditions the world’s largest corporations have taken proactive action on climate change. Why do you think this is so?
Answer: A common belief among the public is that corporations are not always proactive on climate change unless they're made to do so by government authority or if it is profitable — and not often would they necessarily do it just for environmental reasons. And I absolutely understand that sentiment.
What I do in my book is open the black box of the corporation and link managerial leadership to regulation at the domestic level and global governance. I follow corporate climate action and performance of a census of global businesses, namely Global 500 and S&P 500 companies between 2011 and 2020, five years before and five years after the 2015 Paris Agreement.
Q: What did you find?
A: I argue and show that, amid climate uncertainty, effective corporate responses emerge from a combination of strong managerial leadership, the smart use of complementary capabilities and a proactive approach to regulation and global governance.
Companies are shaped by bottom-up and top-down incentives and institutions. Executive leaders responsible for climate change perform three tasks.
First, they attract climate-conscious employees. Second, they align beliefs of employees with incentives that are inside the firm. And third, they form governing coalitions that comprise of stakeholders across ranks. They facilitate these various incentives and coordinate efforts through corporate social responsibility, through climate mitigation, through investments in renewable energies and proactive corporate climate disclosures.
With that, they are engaging and taking advantage of complementary capabilities that often already exist inside companies.
Q: Please give an example of this.
A: I begin my book with the case of Intel, which for many decades has been an engine of regional and national growth, in particular regional economic growth in the Phoenix Valley.
One of those complementary capabilities is green chemistry, for example, which helped to establish the company as an early mover on climate action. Intel articulated a “handprint” approach to climate action for the world. The idea is that their customers, even for climate leaders like Microsoft, would not be able to reduce carbon footprints without Intel, because Intel’s chips, its notebooks, its data centers, its Internet of Things power computing worldwide. The handprint is a counterbalance to the footprint, which primarily measures negative environmental impacts.
Q: What else motivates corporations here?
A: So now, let's add regulatory pressure. We know that companies are profit-seeking entities. They think a lot about costs. But they are also thinking about costs beyond operations, beyond products. They're thinking about the costs of private and public politics. What I mean by that is that companies will act preemptively to deflect bad publicity if threatened by activism, or when they are trying to get ahead of expected regulation and how much effort they will put into substantive performance.
Q: Your book suggests something that happens when there is an interplay of internal leadership, complementary capabilities and strategic engagement with regulation and global governance. Can you say more about that?
A: Between 2011 and 2020, numerous climate change-related proposals in the U.S. Congress failed or died. What we know from that experience is that the private sector can make meaningful steps on climate, even when government action stalls. In my book, I tell the story of the Clean Power Plan (CPP). First introduced by the U.S. Environmental Protection Agency as part of the Clean Air Act, the CPP set emissions performance standards for new power plants. Although the Obama-era Clean Power Plan never went into effect, many power sector and other companies viewed it as a harbinger of regulatory stringency in the U.S.
Companies responded to the CPP with proactive climate action. U.S. companies were close to 10% more likely to engage in voluntary climate disclosure through CDP — a global nonprofit that surveys companies on behalf of institutional investors — than non-U.S. companies that did not face similar regulatory pressure. For U.S. companies that had appointed a senior or executive-level officer responsible for climate risks, the odds that they participated in CDP (data collection) was over 50% greater than those that did not. Companies that disclosed to CDP on average reduced their carbon emissions intensity.
This preemptive behavior in anticipation of a more stringent regulatory environment resulted in a “race to the top.” By 2023, close to two-thirds of the companies listed in the S&P 500 index participated in voluntary climate disclosures. Consequently, they have been amply ready to comply with California’s mandatory disclosure rules. More than a dozen major corporations endorsed the rules, including Apple, Microsoft and Salesforce.
Find out more
Hsueh will talk about her book at noon on Wednesday, Sept. 10, in the Biodesign Auditorium (B105) at the Biodesign Institute on ASU’s Tempe campus. The talk is hosted by the ASU School of Public Affairs and the ASU School of Sustainability.
Q: Are corporations doing these things because they are simply the right thing to do? Or are there motivations that are either profit-related or that foster better relationships with government, as you've mentioned?
A: My research shows that it is a combination of all those motives and that is why my book is about the interplay of what's happening inside the firm, looking at these managerial organizational capabilities and factors and linking them to public policy and global governance.
Since 2016, investments in clean energy have outpaced that of fossil fuels globally and this trend has only hastened to nearly twice as much in 2025. This is because there are profits to be made, with myriads of new business opportunities for multinational companies and startups alike. Lately, they involve AI and clean energy procurement and development.
While there are political headwinds, companies continue to face more stringent reporting requirements elsewhere in the world, most notably in the European Union — despite a recent pause in implementation there. Moreover, companies continue to face demands to be better stewards of the planet by their employees, investors and customers, including university students. In the concluding chapter of my book, I highlight and tell the story of a student-led fossil fuel dissociation movement to underscore that bottom-up and top-down interactions also characterize companies’ relationships with diverse stakeholders.
The School of Public Affairs is part of the Watts College of Public Service and Community Solutions. Read more about Lily Hsueh's book in its entry on Sun Devil Shelf Life.
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