Principles of environmental justice for sustainable innovation

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Senior Director and Principal Analyst

Environmental justice is not a new concept: The first calls for it were in the 1980s when protesters tried to block the construction of a landfill for toxic waste in Afton, North Carolina. That effort failed, but the ideals have spread to the halls of power: The first U.S. Presidential action on environmental justice was in 1994 under then-president Bill Clinton, and President Joe Biden has continued to expand these efforts. However, the adoption of environmental justice principles has done little to slow the progress of climate change, which is the most catastrophic environmental justice failing in human history. A lot has been written about the environmental justice impacts of climate change and possible remedies, but I want to tackle the underserved issue of the potential environmental justice hazards (and opportunities) of sustainable innovation, in particular. These decisions are being made today, often in a less-open way: Environmental justice tends to play out in the public in courts and legislatures, while sustainable innovation decisions are playing out largely in corporate boardrooms and on investment committees — often without environmental justice considerations. It’s also worth discussing why this is important. Often, environmental justice will be a smart business move, especially in the long term. Some of the recent settlements around contamination with per- and polyfluoroalkyl substances show that long-term thinking about environmental justice issues could have avoided major financial pain down the line. Some of that thinking would be useful today, with issues like microplastics coming to the fore. But beyond that, making a genuine attempt at limiting environmental justice harms is the right thing to do morally, and that should motivate your decisions.

There are three general principles I think innovation leaders need to keep in mind. First: Almost all sustainable innovations have tradeoffs. Building solar panels and wind farms creates waste, electric vehicles require mining (often in horrible conditions), bioplastics with low-carbon footprints still contribute to microplastic waste (and may have negative land-use impacts), and so on. While these sorts of issues are often used to impugn sustainability efforts, that’s not the right conclusion. Progress is certainly possible, but managing these tradeoffs will be a core task of sustainable innovation going forward. 

The second basic principle is that because global warming is already set to disproportionately impact vulnerable populations — especially those with low incomes and in the global south — any actions that prevent climate chance are very likely to be a net good environmental justice outcome. Reducing carbon emissions should generally be your north star, and the flipside of this is also true: Failing to reduce carbon emissions is an environmental justice harm, a moral wrongdoing (and every year, more likely a legal wrongdoing too). 

The final principle: Concrete impacts and decision-making processes both matter. If a company’s sustainable innovation negatively impacts a specific community, that’s clearly an environmental justice issue. But if a company fails to consider environmental justice in its decision-making process and just gets lucky that negative impacts don’t arise, that’s still bad. Just as a leader wouldn’t overlook poor safety procedures during factory turnover simply because an accident fortunately didn’t occur, getting a good outcome this time doesn’t excuse a poor process. There’s a lot more to say about what a good decision-making process for environmental justice issues looks like, which is more a subject for a future piece, but striving to have one is key.

I think these three principles — recognizing that there are always tradeoffs, prioritizing emissions reduction, and targeting good processes and outcomes — will take a lot of companies pretty far. Still, there are three specific hazards I want to call out that are specific to sustainable innovation.

  1. Failures in prioritization: This follows our first principle pretty closely, but where companies tend to fail is in setting boundaries for what impacts they consider in this prioritization, usually either by failing to consider their entire supply chain (i.e., Scope 3 emissions) or by failing to consider the global impacts of their actions. This may seem basic, but plenty of major companies take the position that Scope 3 emissions are not their problem, if put somewhat more diplomatically. In reality, any company that doesn’t have concrete Scope 3 emissions targets and a plan to get there is not much better. Those targets also need to reflect the global reality: For instance, the cost of the global impact of carbon emissions is roughly 7× the cost in the U.S., in part because the impacts of climate change will be more severe in other parts of the world and in part because the U.S. has the resources to proactively mitigate those effects. If a U.S. company uses the U.S. value to decide how quickly it should decarbonize, it is effectively ignoring the harms it is doing to all non-U.S. persons, a clear failure of environmental justice. 
  2. Impacts from resource acquisition: Resource extraction has long been a cause of environmental justice harms — from the very first conquistadors building silver mines to oil extraction from Native American land in the U.S. (an issue that is ongoing). The sustainable transition will require resources — traditional ones, like steel and nickel, but also relatively new resources, like lithium, or lands with good sites for wind and solar. Some resources like water will also become scarce in new areas as the climate changes. The goal with the sustainable transition should not just be to avoid the worst effects of climate change, but also to avoid as much as possible having the harms that come with resource extraction and ownership fall on poorer populations. Already, firms are worrying about making sure their supply chains are free from some of the more egregious abuses like conflict minerals or child labor, but this concern will need to broaden. Some of the issues are physical, such as addressing working conditions in nickel mines, but financial measures like revenue sharing with local communities may be needed for environmental justice.  
  3. Unjust ownership structures: Wealth and capital ownership are highly concentrated today in ways that reflect past injustices: In America, for example, the long history of slavery and Jim Crow practices like redlining have created marked disparities and wealth ownership disfavoring Black people. These injustices are already being replicated in the new sustainable industries that are emerging: iIn America, majority black communities have 61% less rooftop solar installed than the average community. Sustainable innovations are going to be a huge driver of wealth creation over many decades to come, and the benefits should not just accrue to those who’ve already benefitted from historical injustice — instead, the goal for the sustainable transition should be to reverse these harms. What this means in practice could take many forms, from public ownership of key assets to targeted programs that encourage and support entrepreneurship among marginalized communities. While this issue in particular is much bigger than any one company, and will generally be addressed by government action, clients should be cognizant of these issues so they can be prepared. 

Much as addressing diversity, equity, and inclusion within their own walls has come to be seen as a must for forward-thinking firms, considering environmental justice will be a must for firms credibly seeking to build a sustainable future. Clients are undoubtedly swimming in murky waters: With early stage technology, the consequences of adoption and scale-up are difficult to predict. But that does not mean leaders can throw up their hands: Even if mistakes will be made, not making the effort is sure to guarantee failure, and we all share a responsibility to build a more just future as we build a more sustainable one. 

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