UCLA Anderson’s Magali Delmas Sheds Light on the New Climate for Corporate Environmental Responsibility

July 26, 2018 at 06:25PM UCLA Anderson School of Management Blog UCLA Anderson’s Magali Delmas Sheds Light on the New Climate for Corporate Environmental Responsibility

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UCLA Anderson Magali Delmas Warren Olney

By Carolyn Gray Anderson

UCLA Anderson Professor Magali Delmas asserts the most important component to slowing climate change is information. “In 20 years we will all have a lot of information about everything we consume,” she says. “We’ll know the impact of the meat we eat … we’ll know the impact of our electricity usage in real time. Once we have this information, what will we do with it? We can’t change our behavior if we don’t know our impact.”

Delmas, who holds a joint appointment at the UCLA Institute of the Environment and Sustainability and is also director of the UCLA Center for Corporate Environmental Performance and president of the Alliance for Research in Corporate Sustainability, has studied — and encouraged — conservationist consumer behavior for the last 20 years. She recently spoke to a public audience about her research trajectory and her new book The Green Bundle: Pairing the Market with the Planet (co-authored with David Colgan). Host Zocalo Public Square framed the question as “Does environmentalism need to make peace with capitalism?” and put veteran broadcast journalist Warren Olney in the moderator’s seat to hear Delmas’ answer. But the more-to-the-point question the book poses is whether capitalism can, for its own good, make peace with environmentalism.

 


 

Such a mandate is doubly true, Delmas says, for corporations and governments as it is for individual consumers because supply chains often hide their dirt, from extraction of raw materials to finished goods delivery. In The Green Bundle she cites venerable environmental movements like 1970s product boycotts that took damage to wildlife into account but overlooked other steps in production and supply chain that were hidden from view.

Now, Delmas says, as corporations and investors pay attention to their ESG (environmental, social and governance) ratings and obligations, they find they can less and less often skirt the scrutiny of publics that demand accountability and transparency, including around the human costs of manufacturing. She remarked to the Zocalo audience that companies face common risks, after all; and permitting them to report voluntarily results in great variation in their measure of environmental impact.

The U.S. EPA’s Emergency Planning and Community Right-to-Know Act (EPCRA) of 1986 requires industry to report on the storage, use and releases of hazardous substances. EPCRA requires federal, state and local governments to use the information to prepare their communities for potential risks. From EPCRA came the Toxics Release Inventory (TRI), a resource for learning about toxic chemical pollution prevention activities reported by industrial and federal facilities. Data from TRI has fueled Delmas’ research because it measures pollution in standardized pounds rather than bespoke units (say, per shoe manufactured or glass bottle produced), enabling direct comparisons between companies emitting greenhouse gases or creating chemical runoff.

Delmas observed early in her career that corporations are largely oblivious to their effects on the natural environment and that governments are oblivious to how corporations conduct their businesses. “I realized there are incentives where it’s possible to do the right thing from a business perspective and also to better the environment,” she says.

Imposing standards, Delmas says, ensures that the data collected can more accurately and credibly gauge what we, as “convenient environmentalists” who need compelling incentives to change our behavior, are doing right and what we’re doing wrong. She says, “We need to frame the information in ways that ‘talk to us’ — not just (about) the environmental benefits but also ‘co-benefits.’” For individuals, these include brand prestige or personal health advantages even more so than the fairly paltry financial incentives for reducing our water and power consumption. And for corporations, finding a “win-win” solution, Delmas says, will garner approval by a savvier public with greater expectations for product quality and responsible, humanitarian business practices.

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