Every big enterprise needs to talk about climate change. Even in the absence of final U.S. rules requiring disclosures (if they ever happen), Deloitte found that a full 97% of the Fortune 500 mentioned some climate related risk in their annual reports. And it’s simply common sense. Climate change has impacts everywhere; low-end estimates of its net cost are in the trillions and concern over the issue means that companies face political pressure to act regardless of their own assessment of the impact of climate change on their long-term strategy. While the number of companies making climate commitments still appears to be rising, both political and financial pressures have also resulted in backsliding. In June, following a social media campaign from conservative activists led by music video director and sometime Congressional candidate Robby Starbuck, the Tennessee-based agricultural/outdoors retailer Tractor Supply announced it would “withdraw its carbon emissions goals” entirely while also giving up on its DEI goals. To our knowledge, this was the first time a Fortune 500 company (it ranks 293) had set climate goals and then walked away from them entirely.

Looking at Tractor Supply’s own statements on climate change and comparing them with those of other companies provides insights into how companies should and shouldn’t talk about climate change. The problem wasn’t the goals themselves which Tractor Supply announced in 2021. The company’s stated desire to comply with high standards for monitoring and realizing its climate goals was commendable. Instead, we think that Tractor Supply made three major errors.  It set goals without tying them to clear business objectives; it overstated what it could do about this problem; and it discussed climate change in a way inconsistent with its brand and divorced from political reality. This combination of actions proved the death knell for the company’s ability to sell its positions to both investors and its customer base. Avoiding these errors will be key to companies maintaining voluntary climate commitments in the face of political pressures from both the left and the right.

A look at the white paper Tractor Supply issued to sum up its climate goal illustrates the heart of the problem. While it sets an ambitious climate goal (net zero by 2040) and commits to rigorous monitoring by complying with high accounting standards, it does nothing to show how meeting this goal will improve its financial performance. Indeed, reasonable observers could make the case that certain things the company promises could hurt its business. For example, Tractor Supply is committed to an everyday low price strategy and talks about controlling its Scope 3 emissions–supply chain impacts that the company doesn’t own or control––without explaining how it can do so while continuing to meet its brand promise. While a few scattered references to topics like LED light installation and efficient, environmentally-friendly freight shipping imply lower costs, Tractor Supply makes no explicit descriptions of how these efforts will improve profits or service.

While many companies will benefit in a variety of ways if they reduce carbon emissions, Tractor supply never explains the benefits it expects to achieve. United Airlines’ 2023 annual report provides a clear contrast. It mentions “climate” 46 times and covers everything from the company’s investments in sustainable aviation fuels to its support for the Biden administration’s climate goals. It begins with a clear tie to its business–fuel efficiency.This is exactly right  since fuel makes up between 25 and 35% of the airline industry’s total cost. Anything that increases fuel efficiency will have a material impact on its business. United says it “is focused on improving fuel efficiency and reducing GHG emissions in its operations. Its main focus in realizing this objective is reducing its conventional jet fuel consumption, which is both the largest contributor to its environmental footprint and a sizable expense for the Company.” Not even someone who believes climate change is a hoax can contend that increased fuel efficiency and the lower greenhouse gas emission that result would be anything other than a good business move.

Second, Tractor Supply repeatedly overstated what it could do by setting climate goals. In a pull quote near the top, CEO Hal Brands vacuously promises to create “a regenerative future through our commitment to helping farmers, ranchers and all those who enjoy living the rural lifestyle.” What exactly is a “regenerative future”? (It’s hardly a term in common use, especially amongst conservatives.) How is America’s 33rd largest retailer going to build the future for everyone involved in any aspect of “rural lifestyle”? And, for that matter, how will the energy and supply-chain practices of a company like this going to somehow rewrite the future by investing in off-the-shelf technologies, monitoring its operations, and reporting the results?

Most importantly, setting a broad but vague goal skips talking about goals that the company could reasonably achieve. Since it sells many goods–seed, animal feed, and garden and farm tools–that are impacted by the weather, shouldn’t it be devoting attention to ways that a warmer world might change its product mix and consumer demand? For that matter, can it maximize profits and help its own customers by getting ahead of long-term change in demand that climate change might help drive? But it leaves all of these questions unanswered in its investor-facing materials, preferring to focus on much more nebulous issues.

These Tractor Supply issues are about “financial materiality.” How will climate change affect the company’s ability to deliver value to its shareholders? There is also the issue of “impact materiality.” To what extent can the company help address the system level challenge of climate change. The answer for Tractor Supply is next to nothing.

In contrast, consider the oil giant Chevron. While many in the environmental movement might criticize the company as insincere or “greenwashing,” there’s no doubt that Chevron has the ability to significantly impact greenhouse gas emissions, sequester CO2 and, by virtue of its $200 billion yearly revenue and production of three million barrels of oil a day–over 3% of the world’s production–it is certainly capable of having an impact. Even so, the company’s promises are decidedly modest (“a lower carbon future at the least cost to society”) while still meeting the world’s energy needs. This may be too modest a goal for many people’s taste and it’s possible to argue that any fossil fuel production hurts the cause of climate change, but there’s no doubt that Chevron is capable of doing what it sets out to do.

Finally, while all large companies must deal with the political and civil society pressures on both the left and the right, with its concomitant implications for engagement, they make a mistake when they unnecessarily emphasize the political aspect of their response to climate change. Tractor Supply, of course, needs to comply with myriad laws covering everything from investor relations to labor standards, but there are very few if any federal regulations that apply to farm, pet, and garden retailers in particular.

A company may still, of course, have a reason to engage in a political issue. It may think that a specific political change will have positive or negative business impacts on it in particular, have a corporate ethos that is strongly committed to a cause or belief, face employee pressure or believe that supporting it will improve its brand. But Tractor Supply’s engagement on climate didn’t have any of those justifications. Like other retailers, Tractor Supply faces little industry-specific regulation and its historic core customers, farmers, do, on balance, not attribute climate change to human activity.

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