That's So Sustainable
The Inevitable Corporate Challenge of Talking About the Future
“See how we’re on track to becoming a net zero company by 2050.”
“We’re decarbonizing our energy consumption so that by 2030, we’ll operate on carbon-free energy, everywhere, 24/7.”
In the age of sustainability and greenwashing jargon, you may be de-sensitized to garden-variety statements like these. But have you ever stopped to think what it actually means to be “on track” for climate action targets?
To answer this question, I defer to a lesson I first learned from the show That’s So Raven, a sitcom about a high-school girl named Raven Simone born with hidden psychic abilities:
Making assumptions about the future usually leads to unexpected and often undesirable outcomes.
In practicality, statements about sustainability should be taken with a big grain of salt—because if dedicated climate scientists and environmental experts preface all their findings with a healthy douse of uncertainty, how can corporations market the success of their “earthy initiatives” as unequivocal?
Turns out, they don’t (entirely). They may not use big, bold, illuminated font to announce their messaging on sustainability is largely speculative, but they are legally required to disclaim their potential inability to achieve such outcomes, albeit in the footnotes of their advertisements and reports.
Nonetheless, even if this information is technically accessible, the warnings are about as publicly visible as a speakeasy. In flying below the radar, these disclosures can create real consequences for the consumer, whose purchasing decisions are influenced today with no assurance that corporate promises to the planet will actually be fulfilled.
The ‘Catch 22’ is that aspirational language around future impact is a requirement for communicating “sustainability.” The definition itself indicates “meeting the needs of the present without compromising the future.” Forward looking statements, though they can be both hopeful and disheartening, are necessary for companies to express and act on their goals, which suggests the importance for consumers and marketers to learn to communicate and interpret such language responsibly.
If You Gaze Into the Future
According to Cornell’s Legal Information Institute, a forward-looking statement is:
“a statement of the plans and objectives of management for future operations.”
According to Raven Simone, these short visions of future events are a recipe for trouble.
In any case, we can flag a claim as “forward-looking” when it includes words like: “aim,” "expect," "anticipate," "believe," "estimate," "intend," "plan," and "project." In the context of sustainability, you can commonly find forward-looking statements (and their associated disclosures) at the beginning or end of a company’s environmental, social, and governance (ESG) report or on the sustainability page of their website.
By adding this safeguard that all statements are based on assumptions, they protect themselves against any obligation to update or fulfill projected results—usually related to net zero, zero waste, net-positive impact on biodiversity, 100% renewable energy, or the elimination of plastic from the supply chain.
Forward-looking statement disclosures traditionally apply to financial projections and information; the U.S. Securities and Exchange Commission (SEC) requires companies to include them in all investor-facing information on public management. Since modern investors are increasingly making decisions based on the current and projected impacts of private companies on the planet, the communication of their ESG goals and targets is held to the same standard.
It’s The Future I (Can’t) See
In corporate defense, using aspirational language is the only way to openly and honestly communicate. Companies cannot be expected to predict the future, whether or not that future is under the control of their operations. They know that technological innovation and the evolution of corporate disclosure requirements, among other factors, can change the ESG landscape at the drop of a hat. Therefore, describing targets in a dogmatic or surefire stepwise manner could in fact be less responsible than saying nothing at all. Consumers might set higher stake expectations, and investors might make riskier decisions without full knowledge of the breadth of uncertainty. There is safety in ambiguity.
Herein lies a challenge.
Speaking on what companies are doing for the environment and society without a reasoning as to why or to what end or to what extent, while it is important, dilutes the “sustainable” message. At the same time, making commitments without taking action is just lip service, ushering environmentalists to beg for:
“A little less conversation, a little more action.”
Seeing Trouble From A Distance
While stepping into the future tends to be characteristically burdensome for teenage psychics, forward-looking statements and sustainability commitments are critical and necessary for corporate ESG. However, there is one fundamental issue with trusting them at face value: they require a long-term lens in order to be fulfilled.
Both the practical “uncertainty of things” and the innate human struggle to focus on longer-term goals, which compounds over time, decreases the likelihood that sustainability targets will actually be achieved. Amazon has admitted this shortcoming on their sustainability page, saying outright:
“Actual results could differ materially due to a variety of factors, including assumptions not being realized, scientific or technological developments, evolving sustainability strategies, changes in carbon markets, evolving government regulations, our expansion into new products, services, technologies, and geographic regions, or other changes in circumstances.”
Let’s dive into some of these unforeseeable “changes in circumstances” to sharpen our critical consumer filter as we encounter sustainability promises and forward-looking information.
Technological Advance
As Amazon calls out, swift technological advance makes it difficult to predict a company's future environmental impact. Putting quantitative milestones around the impact a company will have on the environment 30 years into the future requires many assumptions. The only way to logically hypothesize is to extrapolate based on the way a company currently functions, which doesn’t always make sense, especially in industries that are quickly evolving.
Consider that Apple was founded in 1976. Today, they are carbon neutral in their operations and plan to have all their products carbon neutral by 2030, but imagine if Wozniak and Jobs were plotting out their emissions expectations back when the company was founded. Their projections for the footprint of their products on both the world and the planet would probably have been nanoscopic in comparison to today’s reality, as the largest company in the world by market capitalization.
Besides manufacturing changes resulting from massive production volume, the invention of rechargeable lithium ion batteries, the power source of modern mobile electronics, did not occur until about 10 years after Apple was founded. This evolution would have significantly impacted the company’s projection of future emissions, making their initial targets obsolete. For all we know, a cornerstone technological advance revolutionizing the emission of carbon could be right around the corner (*knock on wood*), which would completely alter the relevance of our current carbon accounting. The same applies for all industries and companies setting ESG targets.
Organizational Shifts
Shifts in company leadership and employee workforce can also make it difficult to uphold ESG commitments for the long run. In many Fortune500 companies, including Amazon, AFLAC, and Google, the average employee turnover rate is about one year. The tenure of C-suite executives in the 1,000 largest U.S. companies by revenue is less than 7 years on average.
With many carbon neutrality and other ESG targets being pawned off to 2030 or even 2050, that means 4-5 generations of CEOs, CSOs, COOs, CCOs, and CFOs will need to agree with the environmental impact strategy and targets being set. Far and above leadership preferences, ESG is a culture game. With employees turning over faster than hotcakes, creating an enthusiastic and informed culture around internal sustainability becomes much more difficult.
Sustainability Best Practice Evolution
Science and regulations around sustainability are also constantly evolving, so goals set today may be outdated by the time they reach their maturity date. ESG reporting standards evolve year-after-year as reporting organizations refine their best practices and companies become increasingly adept at gathering and analyzing their sustainability data (i.e., carbon footprint, waste footprint, workplace diversity).
For instance, while the term “carbon neutral” was first popularized in the 90’s, the evolution of what the term means for reporting is still heavily debated today. The SEC’s Proposed Climate-Related Disclosure Rule requires stricter carbon disclosures than ever before, and we can anticipate that even stricter guidelines will be set in the future. With each passing year, our expectations for corporate conduct become increasingly ethical and transparent, which could change the way companies establish and talk about their targets, even one year from when they are set.
Trying to Save the Situation
At the end of the day, sustainability targets are being increasingly demanded by investors, consumers, employees, and our planet. Not a single one of the aforementioned challenges with setting long-term commitments is reason for companies not to do so, despite inevitable uncertainty in both corporate will and external advancements.
Citing wisdom from Raven Simone’s experience, although she often miscalculates the way that future events will pan out, her visions tend to create a self-fulfilling prophecy. Similarly, the fact that companies are investing time and money into their environmental impact is a promising step in itself. Even though change might not come at the pace or trajectory that we would like, conscious awareness and continuous effort toward our end goal will help us get there. We must keep in mind that sustainability is a marathon, not a race.
I present this information to set expectations for consumers and marketers encountering and relaying these company promises. Each of us is responsible for approaching future-bound sustainability claims with an informed and reasonable expectation and recognition that our purchasing choices might be influenced by promises that simply cannot be met.
Setting concrete sustainability targets is like shooting a moving arrow at a moving target, but if we look beyond the face value of potentially misleading, flashy claims, we can experience hope knowing that continuous improvement has resulted from consumer, governmental, and investor demand.
P.S. As a sustainability buff, I know that this space is somewhat siloed and constantly evolving. Being said, I welcome your fact-checking and feedback! Working together to improve our collective understanding of sustainability is the goal of my page!
P.P.S. The views in this article are my personal perspectives and do not necessarily reflect the view of my employer or any other person or entity.
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