MIT Sloan Executive Education Blog

A carbon commitment worth keeping

Advocate for Carbon Tax

It’s Earth Day. Like New Year’s Eve, it’s an occasion that often results in resolutions, some harder to keep than others. Maybe you resolved to eat less meat, recycle more, bike to work, or install solar energy. These actions can reduce your personal footprint, and it feels great when you make concrete progress in your own life and community. With advancements in technology and falling costs, it’s becoming increasingly easy to go “off grid” or “net positive” as MIT alumni have done, including Congressman Thomas Massie (R-KY) and Mark Doughty (President, Thoughtforms). Through a series of such commitments and actions, MIT Sloan Professor John Sterman now generates 50% more energy than he consumes in his home in Lexington, Massachusetts, with no use of fossil fuels at all.

Even with these bold and inspiring actions, however, it’s easy to feel that your actions aren’t enough. And you’re right—they are necessary but not sufficient. Our personal footprints are a tiny percentage of the global challenges we face.

“Our fight against climate change depends on both personal and collective action,” says MIT Sloan Senior Lecturer Jason Jay, who is also Director of the Sustainability Initiative at MIT Sloan. “To make a measurable difference, we need to catalyze change at the level of companies, cities, states, and nations.”

Before you get discouraged, there are ways that you can leverage your action to achieve the largest possible impact. Instead of thinking about your actions solely at the individual level, think about how what you do can foster change at the organizational and institutional levels. The private sector, as a major contributor of greenhouse gas emissions, has a crucial role to play in the transition to a low carbon economy.

Set a greenhouse gas emissions target for your company

Many companies are already demonstrating the commitment and ingenuity to simultaneously reduce their footprint and become more successful. Internally, they are cutting costs by slashing energy use, waste, and environmental impact in their operations. Externally, they are engaging suppliers, customers, key stakeholders, and policymakers, publicly reporting emissions and energy-usage data, and declaring support for policies like the Paris Agreement (#wearestillin).

Perhaps most promising is the wave of businesses setting Science Based Targets (SBT) for their carbon emissions. This is a commitment by companies to do their part in moving toward a safer climate. SBTs are consistent with the basic physics governing climate change. Because climate change is driven by total greenhouse gas emissions, that means your target should be a reduction in total emissions, not emissions per dollar of sales, per employee, or per unit sold. You could have an impressive-sounding reduction in emissions per dollar of sales, but if you grow faster, your total emissions will still grow, worsening climate change.

According to the latest tally by the Science Based Targets Initiative (SBTi), the main platform driving SBT adoption, 380 companies are taking science-based climate action and 103 companies have approved science-based targets. New companies are coming on board every day.

Many companies committed to lessening their footprint are also adopting internal carbon pricing—assigning a price to carbon emissions attributable to the business so their actions are consistent with the true costs of the energy they use. More than 1,200 companies worldwide are either pursuing or preparing to pursue this approach within the next two years. These firms will not only drive emissions reductions and lower their operating costs faster than others, but will also be better prepared to compete as carbon pricing continues to spread in states, provinces, and nations around the world.

If you’re ready to level up your Earth Day commitment, add your company to the list of organizations making a commitment to cutting their greenhouse gas emissions. Encourage your company to set an SBT—and to treat that target like a resolution. Here’s how.

1. Understand the business case for SBTs. SBTs are a great driver for innovation, as they generate cost reductions and technological advancements, freeing up resources that can be reinvested in further improvement in a virtuous cycle. Companies that adopt SBTs have seen reduced operational costs and improved their long-term competitiveness and resilience, while cutting greenhouse emissions—win-win benefits for firms and the world.

2. “Your next course of action should be to ask yourself, ‘who is the one person in my organization who is most likely to help me advance this agenda?’,” advises Jay. “Decide when and how you are you going to talk to them.” If you anticipate this being a difficult conversation, Jay’s new book, Breaking Through the Gridlock is a field manual for navigating such challenging and often polarizing dialogues.

3. Thankfully, when it comes time to calculate your company’s targets, MIT Sloan’s SHIFT website has a guide to setting science-based targets, building on SBTI’s methodologies. It starts with a set of principles for setting science-based targets by MIT Sloan Professor John Sterman.

4. Ultimately, even corporate action will be insufficient, unless states and nations correct the basic market failure of climate change: it is free to emit greenhouse gas emissions, yet we all bear the costs. Use your political clout as a business leader and as a company to advocate for market-friendly climate policies like a carbon tax, supported across the political spectrum. Here is a guide to carbon tax efforts across the US.

“To really make sustainability work at the organizational level, we must think about it at all the levels,” says Jay, referring to the PROMISE framework, which forms the basis for MIT Sloan’s systemic approach to sustainability strategy. PROMISE stands for Personal, Relational, Organizational, Market, Institutional, Social, and Environmental action.

“On the Relational level, for example, how do we engage people in effective conversations towards making organizational change? At the Institutional level, what policies are needed to achieve economic, social, and environmental goals? Environmentally, how well do we understand the natural systems that are necessary for our business to thrive? For business leaders, the basic question is, what risks do we run in our business by being part of the problem, and where can we create opportunities by being part of the solution?”

At MIT Sloan, this framework is the centerpiece of the three-day program Strategies for Sustainable Business. Participants of this program learn how to place current business practices in a socioeconomic context and walk away with well-grounded strategies for making sustainability a reality in their organizations, industries, and communities.


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