What do many better-managed companies have? Lots of climate-related jobs

“The cost of inaction brings a lot more risk than the cost of action," says Guy Grainger, the company’s global head of sustainability services. Over the past couple of years, Jones Lang LaSalle has doubled the ranks of those who are tackling issues stemming from climate change to about 900. In addition, Grainger says, the company has invested millions of dollars to train the bulk of its other 100,000 employees, including its on-site facility managers, on “how they can bring sustainability into their day-to-day jobs."

All sorts of companies from different industries have been staffing up to help their customers meet carbon-emissions and waste-reduction targets and comply with a welter of environmental regulations, as well as ensure that they meet their own climate goals and that their supply chains aren’t disrupted by extreme-weather events and energy shortages.

What’s notable is that, according to our research, these businesses are generally better managed than those that aren’t dedicating the same level of resources to such matters.

Our findings are derived from a measure of corporate effectiveness created by the Drucker Institute at Claremont Graduate University. The institute’s statistical model, which rests on the core principles of the late professor and author Peter Drucker, forms the basis of the Management Top 250, an annual ranking produced in partnership with The Wall Street Journal. Bendable Labs, a private firm, works with the institute to make the calculations and interpret them.

In all, we use 34 metrics to evaluate how companies perform, using standardized scores with a typical range of 0 to 100 and a mean of 50, across five areas: customer satisfaction, innovation, social responsibility, employee engagement and development, and financial strength. These categories then roll up into a score that indicates a company’s total effectiveness. Drucker defined effectiveness as “doing the right things well."

The Management Top 250 for 2023, published in December, was culled from a bigger universe of 794 large, publicly traded U.S. companies.

Climate connection

In our most recent analysis, we wanted to determine whether there was a connection between the number of climate-related jobs that a company has, relative to the size of its overall workforce, and how well-managed it is by our reckoning. 

The data on climate jobs was supplied by Revelio Labs, which tracks hundreds of millions of public employment records, such as online professional profiles, and then adjusts for positions and locations that are underrepresented. It tallied employees in a variety of roles—including those who assess climate risk, forecast the weather, prepare for disasters, promote energy efficiency and much more—by searching for keywords in job titles and descriptions.

To see what, if any, links there might be between how a company scored in last year’s Drucker rankings and its share of climate jobs, we divided the 733 firms for which Revelio Labs had head-count information into quartiles.

Strikingly, those with the greatest share of climate jobs outscored those in the bottom quartile in each of our five categories. And in several cases, the gap was sizable. (In some areas, those in the second and third quartiles scored best.)

Corporations with the largest portion of climate jobs outpaced those with the smallest portion, on average, by 4.3 points in customer satisfaction, 3.5 points in innovation, 8.4 points in social responsibility, 5.3 points in employee engagement and development, and 1.4 points in financial strength.

The difference in overall effectiveness was 7 points—an average score of 52.9 versus 45.9 on our 0-100 scale. The higher score would have landed a company in the top 40% of our rankings in 2023; the lower mark would have relegated it to the bottom third.

On the whole, more companies are paying attention to the elements. A study by Revelio Labs in April showed that the demand for jobs mentioning climate response or extreme weather has tripled between 2018 and now. “You’d have to be living under a rock if you don’t think climate change is important," says Lisa Simon, the chief economist at Revelio Labs.

Yet not every company is equally attuned. Of the capital-goods companies in our analysis, for example, 17 were in the top quartile with respect to climate jobs and 16 were in the bottom quartile. The spread in their average total effectiveness was huge: 53.5 compared with 44.4.

‘Proxy for good management’

That those in the top tier tend to rank significantly higher in terms of their management prowess doesn’t surprise Trevor David, client solutions director at Sustainalytics, which provides data for our social responsibility category. He points out that the institutional investors with which he works have started to use climate-related patents as “a proxy for good management."

What’s less obvious—and what we can’t account for from a data-science standpoint—is why this nexus exists. Are well-managed companies concentrating on climate because they’re naturally “future-focused," as David puts it? Or is there something about taking on sustainability initiatives that helps to drive results?

Those in the trenches say it’s a bit of both.

This month, Jones Lang LaSalle announced a partnership with International Business Machines to deliver a platform that commercial properties can use to capture sustainability data for decision-making and public reporting. From the Jones Lang LaSalle side, it’s an extension of a strategy launched three years ago to expand aggressively into what Grainger calls one of “the most disruptive areas in real estate"—climate change.

But it’s also the kind of project that is exciting for the company’s employees to be involved with—especially those from Gen Z, “who want to work at a business that has a purpose," Grainger says. This, he adds, helps with recruitment and retention, “and that, in itself, brings success." In last year’s rankings, Jones Lang LaSalle finished at No. 109.

Mike Colarossi, head of enterprise sustainability at Avery Dennison, a materials science and digital-identification company that finished at No. 122 in the 2023 rankings, has witnessed the same phenomenon. “Well-managed companies are forward-looking," he says. “They see the opportunities and challenges that climate change brings."

All the while, with Avery Dennison offering climate-related products—such as RFID technologies, which can help its customers cut down on food and apparel waste that would otherwise end up in landfills, belching methane—employees feel like they’re part of something that’s affecting them personally. Those at Avery Dennison’s operations have had to deal this year with flooding in Brazil, drought in Mexico and stifling temperatures in Bangladesh, the U.S. and elsewhere.

“Employees are very interested in climate," Colarossi says, “and that drives innovation. That drives engagement. We start to see the flywheel take hold."

Where the action is

Few believe the trend will reverse, at least soon.

At Honeywell, some 60% of the industrial conglomerate’s revenues are from sustainability products, including emissions sensors, heat pumps, industrial carbon-capture and energy-storage systems, and low-carbon aviation fuel. “That’s where the action is," says Gavin Towler, the chief sustainability officer at Honeywell, which was No. 27 in last year’s Drucker rankings.

Last month, the International Energy Agency forecast that global investment in clean energy technology and infrastructure is set to reach $2 trillion this year, twice the amount going into fossil fuels. “If you’re a company," Towler asks, “wouldn’t you want a piece of that?"

He, too, has observed the pride that employees take in trying to slow climate change. “It really attracts people who want to have an impact," he says.

For some, the sense of urgency may be particularly acute. Towler notes that Honeywell has factories and offices in Phoenix, where the thermometer hit 110 degrees Fahrenheit or above 14 days in June.

In Chicago, where Towler lives, it hasn’t been as bad. Still, warmer-than-average temperatures have brought out the spiders, ants and other insects. “We got a lot of bugs this year," he says.

For the best-managed companies, however, that has come to look more like a feature.

Rick Wartzman is co-president and Kelly Tang is chief data scientist at Bendable Labs. They are also both senior research fellows at Claremont Graduate University.