The NPR Politics Podcast - Businesses, Governments Clash Over How To Tackle Climate Change

Episode Date: July 10, 2023

Companies are making investment decisions based on environmental, social and corporate governance factors, also known as ESG. Those financial choices can include backing greener technologies, which rankles leaders in some Republican-led municipalities and states, who are skeptical of climate change.This episode: White House correspondent Tamara Keith, climate and corporations correspondent Michael Copley, and senior political editor and correspondent Domenico Montanaro.The podcast is produced by Elena Moore and Casey Morell. Our editor is Eric McDaniel. Our executive producer is Muthoni Muturi. Unlock access to this and other bonus content by supporting The NPR Politics Podcast+. Sign up via Apple Podcasts or at plus.npr.org. Connect:Email the show at [e-mail] the NPR Politics Podcast Facebook Group.Subscribe to the NPR Politics Newsletter.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hi, this is Tabitha and TK. Two weeks ago, we were visiting the Library of Congress in Washington, D.C. Today, we're standing on top of Parliament House in Canberra, Australia. This podcast was recorded at 1.06 p.m. on Monday, July 10th. Things may have changed by the time you hear it. Okay, here's the show. Wow. So were they on vacation here and then they went on vacation there or were they working here and then they went on? I don't know. But what they didn't tell you is that the time that it took them to get from the capital to Australia is the amount of time it took between those takes. Which is to say it's a long flight. It takes a long time.

Hey there. It's the NPR Politics Podcast. I'm Tamara Keith. I cover the White House. And I'm Domenico Montanaro, senior political editor and correspondent. And NPR's Michael Copley is with us. He covers the intersection of climate change and corporations. Welcome to the pod. Thanks, Tam. Good to have you here with us. And even though summer is only just technically getting underway, it has already been a hot one. July 3rd through 6th were the hottest days the planet has recorded since maybe ever, at least since people started keeping track of that. And as the effects of climate change become more prominent, big business has gotten into the effort to find solutions. But their focus on environmental issues doesn't

always sit well with local and state politicians where those businesses are located. So that is what we are talking about today. And Michael, let us just start at the beginning. Why would big corporations choose to prioritize the environment? What a lot of them will say is that the biggest reason, the top reason, is it's what their customers want. Their customers want fewer emissions in the products that they buy from them. Frankly, they're also under pressure from big investors like BlackRock and Vanguard, who have their own reasons for pushing these sorts of initiatives. And then the companies themselves see a real business case for operating more sustainably, whether it's to bring down costs and operate more efficiently, and also avoid some

of the physical risks from climate change. Okay. So let's go to this opposition that we talked about. Why would politicians oppose private companies doing something that is good for the environment? So first and foremost, what they will say is that it's a distraction, right? That it is distracting companies from trying to make as much money as they can right now for their shareholders. So if you're a chemicals company or a concrete maker, do that as well as you can and make as much money as you can doing that. Emissions are not your job to worry about. I think there's a wrinkle here where the attacks that we're seeing aren't really directed at sort of the concrete maker or the chemicals company right now.

What they're doing is they're going after big Wall Street investors. And what they're saying is you shouldn't be rewarding those kinds of activities. And you mentioned investor pressure before. That gets to a term that we're hearing a lot, which is ESG. Yes. So ESG is, it really just refers to environmental, social, and governance factors, corporate governance factors. It's a framework essentially that investors are using to evaluate what companies are doing to try to be more sustainable. So there's this idea that like over the longterm, investors stand to make more money if they account for risks and opportunities

that aren't accounted for in traditional financial models. So that's all it's trying to do. And so these investors are looking at what companies are doing to try to cut their emissions or get diversity on the boards because, in theory, you get to better outcomes by considering those kinds of things. Dominico, this issue really jumped into the public consciousness in a way when Republicans in the House and a few Senate Democrats joined them, voted to make it so that big investment firms couldn't make investments based on ESG. And President Biden ultimately vetoed that. It was his first veto as president. But this is something that people are starting to talk about more, that this has become part

of the conversation. It's a fascinating thing because politically, it's really become something that's lived on the campaign trail quite a bit. We know that human-caused climate change is a real thing. We know that companies can make choices the way that they want to invest. They have disclosures and disclaimers about their ESG policies. You can see them pretty much on any company website when you try to look to invest. But the real thing here when it comes to climate change is the difference between how people feel about whether or not

they want to prioritize the environment or prioritize short-term economic growth. And when you look at the numbers when it comes to that, even though broadly people say that they favor a lot of specific climate change policies and that they are in favor of the government doing more to protect the environment, Gallup found earlier this year that there's been now the widest gap between Republicans and Democrats on which should be more prioritized, protecting the environment or short-term economic growth. 78% of Democrats said the environment. Only 20% of Republicans did. That 58-point gap is the widest they've ever seen. And for context on this, if you were to look back to the 1980s or early 1990s, the two

parties were basically even and more than 50%, 60% saying that you should do more to protect the environment. Where we really saw this divergence is in the mid-90s where we saw the a la carte social media and cable news development like Fox News and people really being able to get their news where they want to. And now these views seem to be pretty locked in. I mean, there's a parallel to that with the companies that we're seeing where a lot of big businesses are saying, we want greener products. The question, though, is are they willing to pay the premium that still comes with those greener products? And

we're seeing sort of a mixed bag on that as well. So let's get to the state and local politics, I guess, on this. We got the national a little bit, but I just want to make sure I understand this. There are lawmakers, many of them Republicans, in states and cities saying, hey, company, if you prioritize the environment in your business decisions, we'll stop investing in you or stop giving you tax breaks or do something essentially to punish them for setting their priorities. But they're private companies, right? The distinction is what we're not seeing yet is state or local officials going after individual manufacturers, for instance. What they're doing is they're targeting big investors like BlackRock and Vanguard. What we've seen is states pulling a lot of money from BlackRock is sort of a favorite target right now. It's the world's biggest investment manager. It's been pretty outspoken on the issue of ESG, pulling money, state money from BlackRock. We've also

seen attempts to pass laws, state laws that essentially say if you manage state funds, state pension funds, you can't consider environmental factors when you're making investment decisions. Is that having an impact? Is it changing the behavior of these big investment firms? It's hard to tell right now. I think what we have seen is companies have been a lot less eager to talk about what they're doing publicly on this stuff. By all indications, it's not changing how they're thinking about investment decisions and what they consider to be a real material risk for a company. But they're talking less about it publicly. And what we've also seen is in the insurance industry, a lot of insurance companies quitting a group that was set up initially to try to drive down emissions in the economy.

So there is pullback around the edges about what companies are going to do publicly. All right. We're going to take a quick break. And when we get back, how some companies are going ahead with their plans, despite facing opposition from politicians. And we're back. And Michael, you recently traveled to South Carolina, where a company called Nucor is betting big on more environmentally friendly practices, but also sort of dealing with the politics along the way. Tell us about that. Yeah. So I went down to South Carolina and visited a steel mill that's owned by Nucor. It's there

about an hour's drive north of Charleston. Nucor is based in North Carolina. It has plants and mills really all over North America. So I went there to get a sense of what it looks like to make this stuff that is sort of a backbone of the modern society. Greg Murphy is an executive vice president there at Nucor. And what he says is, we live in a world where we need steel, and it doesn't make a whole lot of sense to build solar fields and wind farms with steel that has a lot of pollution attached to it. And so what they're doing is a bet on sort of the direction of industry. I think the goal is that if you recognize the world needs steel,

then the steel that you use and how it's produced really does matter. Nucor, like a lot of these companies that I talk to, sees climate change and the threats from it as sort of an existential issue, as the way that Tansi Whalen at NYU, the New York University, put it. And it's twofold. They're trying to mitigate risks associated with climate change. So droughts, if you use a body of water to move goods or move water to cool your machines, that's a real risk. But as we've seen with Nucor, there are big business opportunities to appeal to customers that want greener products. I think it's fascinating. These companies want to say that they're not playing politics, but a company like Nucor, obviously, is doing quite a substantial bit

of lobbying on this point. I mean, they've spent more than $2 million in lobbying since 2016, for example. Three quarters of that money, by the way, going toward Republicans. We know South Carolina, a pretty strongly Republican state, Nikki Haley was the governor there was really always trying to woo companies of this type. So it's really fascinating that they're actually having to kind of go against the grain when it comes to Republicans, because they're trying to stand out in the marketplace, and hoping that they'll be able to sell their wares, so to speak, based on the fact that there'll be lower carbon steel. It kind of reminds me back to the Obama administration when companies were trying to have some of these more environmentally friendly practices or at least create companies that would go in that direction and be incentivized potentially by the administration. Certainly a little bit different now after the Trump administration.

Yeah, I mean, I wonder, is this like a hedge on future regulation? Or is this, you know, as you say, like marketing their steel to people who want LEED certified building and get that stamp of approval that it's a more environmentally friendly building? I think it's all of the above, right? I think they are hedging against future regulation. But Nucor said to me, is there what their consumers want, what their customers want? So I talked to David Weber. He's a law professor at Boston University. And what he said is a lot of these ESG issues are really important to younger generations, which gives these companies a real business incentive to do something. That is a powerful, countervailing economic force that the anti-ESG crowd is going to have to assemble an enormous economic counterforce to push back against that.

Politically, it is probably pretty easy to go after a BlackRock because they are like, you know, this big, evil, globalist company based in New York making decisions based on liberal ideas. But when it's a company in your backyard creating jobs, that might be harder. It is harder. It is harder. The other explanation that I've heard about it is if you are a politician who genuinely objects to some of these corporate initiatives, by going after BlackRock, because BlackRock has so many investments spread across the entire economy, if you can start to make a difference with the way BlackRock operates, it can have sort of a bigger impact than going company by company. But I think you're exactly right. It's tough to go after a company in your backyard that's employing neighbors.

All right. That is a wrap for today. Michael Copley, thanks so much for bringing your reporting to the pod. Thanks, Tam. And we will be back tomorrow. I'm Tamara Keith. I cover the White House. And I'm Domenico Montanaro, senior political editor and correspondent. And thank you for listening to the NPR Politics Podcast.