Business magnate and CEO of Berkshire Hathaway, Warren Buffett, faces a vote from shareholders this weekend — on a proposal from investors for his conglomerate to revamp its approach to climate risk. Buffett has so far resisted calls to be more transparent about greenhouse gas emissions, but the shareholder vote this weekend may increase the pressure.
Christopher Marquis is a professor in sustainable global enterprise at the Cornell SC Johnson College of Business, and author of Better Business: How the B Corp Movement Is Remaking Capitalism. Marquis says Buffett’s resistance to sustainability practices and transparency tarnishes his reputation.
“Buffett is clearly trapped in the past. The days of companies being able to buttress their profits by passing costs of their pollution onto society are numbered. Investors, governments and consumers are increasingly demanding not only more transparency on emissions, but also for companies to come up with credible net-zero commitments. The longer he holds out, the more and more this will tarnish his reputation as an investor and citizen.”
Glen Dowell is a corporate sustainability researcher and professor of management and organizations at the Cornell SC Johnson College of Business. He says Buffet’s resistance is indicative of Berkshire’s governance, which is more like a private company than a publicly traded one.
“This is consistent with Buffet’s approach all along. While Berkshire is a publicly traded company, it is, in many ways, run like a private one, and gets generally low grades for the Governance part of the Environmental, Social, and Governance (ESG) evaluations.
“In the end, how a company is governed – who controls its operations, what they are incentivized to do, and what they care about – has a significant impact on how it behaves on social and environmental issues. Berkshire has nearly half of its directors who are either executives of the company or have links to management in some way. Contrast that to Blackrock, where only 17% of its board have that classification – it creates a very different perspective.”