Corporate Responsibility and Accountability

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When it comes to responsibility for climate change, corporations—especially fossil fuel giants like ExxonMobil, BP, and Shell — play a massive role. These companies have been major contributors to greenhouse gas emissions, not just from extracting fuels but also from the emissions generated when those fuels are burned. The figure below highlights some of the biggest corporate sources of greenhouse gases, underscoring their significant impact on the planet's energy budget.

2023 missions from a variety of companies in millions of tons of CO₂ equivalent. Scopes 1 and 2 cover emissions from drilling/fracking/mining operations and power supply to operations. Scope 3 includes the actual use of fuels, such as combustion, to produce energy. Click here for a larger version.

Credit: Big Oil's 2023 Greenhouse Gas Emissions. Reuters. November 12, 2024.

Even more troubling, internal documents dating back to the 1970s reveal that many of these corporations were fully aware of the devastating consequences of burning fossil fuels. They had access to research predicting rising global temperatures, melting ice caps, and more extreme weather events. Instead of acting responsibly, these companies made a calculated choice: they funneled money into misinformation campaigns aimed at casting doubt on climate science and delaying meaningful action. For example, check out the graph below. Each gray line predicts climate change from internal ExxonMobil models that were available to company leadership but not the general public. You could actually make an argument that their models of climate change in the 1970s and 1980s were as good, if not better, than some of the leading research models at the time!

Global warming projections (shown as gray lines ) by ExxonMobil scientists (1977–2003) are compared to observed temperature changes (red). Solid lines represent ExxonMobil's own models; dashed lines are reproductions from third-party sources. Shades of gray indicate model start dates, from lightest (1977) to darkest (2003).

Credit: Exxon disputed climate findings for years. Its scientists knew better. The Harvard Gazette. 

Through funding think tanks, lobbying against regulations, and crafting misleading ads, these corporations actively sowed doubt, framing the science as "unsettled." This calculated approach didn’t just delay action—it amplified the climate crisis. The result? Vulnerable communities are now bearing the brunt of intensifying disasters, collapsing ecosystems, and rising seas, all while the clock keeps ticking.

Case Studies in Corporate Accountability 

In recent years, efforts to hold these corporations accountable have gained momentum. Climate litigation has become a powerful tool for seeking justice. For example: 

• New York City v. ExxonMobil (2021): New York City sued ExxonMobil, Chevron, and other fossil fuel giants, alleging they misled investors and the public about the risks of climate change. While the case faced legal challenges, it brought critical attention to corporate deception.
• Royal Dutch Shell in the Netherlands (2021): In a landmark ruling, a Dutch court ordered Shell to cut its carbon emissions by 45% by 2030, emphasizing its responsibility to align with the Paris Agreement. This case marked the first time a court held a corporation legally accountable for reducing its emissions.
• Climate Liability Cases in the Philippines (2022): The Philippine Commission on Human Rights found fossil fuel companies legally and morally responsible for climate harms, setting a global precedent for corporate accountability in human rights contexts. 

How much all of these lawsuits will actually have teeth remains up for debate. For example, Shell appealed the ruling in the Netherlands, arguing that it was not the court's role to enforce emissions targets. But beyond legal means, other strategies have become a powerful tool for holding corporations accountable.

Environmental, Social, and Governance (ESG)

A newer development in corporate accountability is the integration of Environmental, Social, and Governance (ESG) criteria into business practices. ESG criteria measure how well companies address environmental sustainability, social responsibility, and ethical governance. Investors increasingly prioritize ESG-compliant companies, recognizing that long-term profitability is tied to sustainable practices. For instance, companies like Unilever and Microsoft have committed to achieving carbon neutrality in their operations, while the Task Force on Climate-Related Financial Disclosures (TCFD) has encouraged businesses to disclose climate risks and outline strategies for mitigation. Even major financial companies like BlackRock have pledged to align their portfolios with net-zero emissions by 2050, signaling a shift in the financial sector’s approach to sustainability.

Meanwhile, divestment campaigns have become another powerful tool for holding corporations accountable. Divestment is the process of withdrawing investments from companies or industries, often as a form of protest or ethical stand, to pressure them to change practices deemed harmful or unethical. In other words, rather than apply legal pressure like we talked about above, apply financial pressure instead! Universities, pension funds, and cities are divesting billions from fossil fuel investments, signaling societal disapproval of the industry’s environmental impact. For example, New York City and London have committed to moving their funds out of fossil fuel companies, and prestigious institutions like Harvard and Oxford have followed suit, citing both moral and financial risks. These efforts not only create financial pressure but also reshape public perceptions, positioning fossil fuel investments as increasingly unacceptable. The graph below demonstrates the rapid increase in divestment from fossil fuel companies -- the black line is the dollar amount, and the red bars are counts of "institutions," which are composed of all sorts of entities from colleges to non-profits to other companies to even religion organizations/churches!

Graph of number of institutions (red bars) and assets under management (black lines) that have been pledged to be divested from climate change-causing corporations over time. Click here for a larger version.

Credit: Divestment Growth from Wikimedia (Public Domain). Accessed Nov. 13, 2024.

Shareholder activism is amplifying these trends. Investors are demanding greater transparency and genuine commitments to sustainability, using their influence to push for internal change. In 2021, activist investors secured board seats at ExxonMobil to advocate for stronger climate action—a move that underscored the growing dissent even within major corporations.

Note that both ESG practices and divestment campaigns do face criticism. In particular, one can make an argument that ESG business criteria can be used as a "marketing tool" to make companies look good (and investors feel better) without any meaningful action -- a form of virtue signaling. Likewise, some argue that divestment has a limited financial impact, even though the graph above above indicates $40 trillion US dollars in divestments. It's a bit misleading because the divestment total reflects the total value of the institutions' assets, not the specific value of fossil fuel investments. For example, a university endowment committing to divest might be worth $5 billion, but only $50 million of that could be tied to fossil fuels.

However, ESG business criteria and divestment do represent significant shifts in how society and financial markets hold corporations accountable. Together, these strategies highlight an evolving expectation: that businesses must align with global climate goals and take responsibility for their role in the climate crisis.