How
Business Can Take the Lead on Combating Climate Change
President Trump’s announcement that the U.S.
intends to withdraw from the Paris climate accord has focused a wide array of government and business
interests on meeting the goals of the accord — with or without involvement of
the current administration. At last count, mayors of nearly 300 U.S. cities and
more than a dozen states — representing 40% of the U.S. economy — have said
they will continue to work toward reducing fossil fuel emissions. The 2015
accord signed by 195 countries seeks to limit global warming to two degrees
Celsius – 3.6 degrees Fahrenheit – above pre-industrial times.
Business is taking a leadership role. Amazon, Apple, Target and
other large companies are pledging to work toward the metrics established by
the Paris agreement. Can state and local government fill the void left at the
federal level? Or is this a job best left to business?
It’s not an either/or proposition, says Eric
W. Orts, Wharton professor of legal studies and business ethics and faculty
director of the Initiative
for Global Environmental Leadership. He
notes that even before Trump decided to make a statement with respect to the
Paris agreement, the answer to this question has been known for some time:
“Both business and government have to play a role in addressing climate change
— which is probably the most complex and challenging question of our time, with
the possible exception of reducing the proliferation and risk of use of nuclear
weapons,” says Orts. “The Paris agreement in fact contemplates a need for
business and consumers, as well as government and citizens, to step up to the
plate and contribute solutions. In the last few decades — in a trend that
culminated in the Paris agreement — experts have been increasingly accepting of
the view that government alone cannot solve the problem of climate
change. The problem is simply too large, and the forces of government —
and particularly international law — are too weak.”
The Trump administration’s intention to
withdraw means that a greater share of responsibility now falls on businesses,
says Brian
Berkey, a Wharton professor of legal studies and business
ethics. “The statements that many have released express a commitment to the
moral leadership that is necessary,” he says. “But what really matters is
whether they act on the commitments that the statements express over the coming
years. Businesses have an opportunity to take the lead on this important issue,
and they should.”
Orts points out that former New York City mayor Michael
Bloomberg’s proposal to the United Nations on behalf of mayors, governors,
university presidents and business leaders to be a party to the Paris accord
would not be a case of substituting for government. “It is that
forward-thinking and science-believing businesses will partner with state and
local governments, as well as other organizations such as environmental groups,
to coordinate actions so that the U.S. can meet its targets expressed by the
Obama Administration. In other words, the idea is to do an end-run around
Washington and the Trump administration. A large majority of Americans
believe that climate change is real — and that we’ve got to do something about
it.”
A silver lining to Trump’s decision to withdraw from Paris “may
be that he helped to galvanize a broad-scale social movement that is necessary
for long-term progress in any event,” says Orts.
Toward a Moral Imperative
The need for government involvement in climate change is
critical, many argue, and other parts of government are indeed stepping into
the void left by the Trump administration. Hawaii became the first state to
pass a law committing to the goals of the accord, and at least 12 states and
Puerto Rico have so far joined the U.S. Climate Alliance, a coalition that
pledges to adhere to the accord.
But there is much at stake for the federal
government, too. The U.S. military is concerned about global climate change,
since “climate change is likely to carry significant and destabilizing
geopolitical impacts, contributing to poverty and food and water scarcity, and
thereby increasing the likelihood of armed confrontations between nations over
access to resources,” writes Sarah E. Light, Wharton professor of legal studies
and business ethics in “The
Military-Environmental Complex,”
published in the Boston College Law Review. “The exceptional
alignment between the military mission and the need to conserve energy, address
climate change, and develop renewables, brings equally exceptional potential:
for stimulating the development of new technologies, providing large-scale
commercial support for existing technologies, and helping to drive behavioral
changes on a grand scale.”
Wharton professor of legal studies and
business ethics Robert Hughes points out that in their Business &
Professional Ethics journal article titled “Business,
Ethics and Global Climate Change,”
Denis G. Arnold and Keith Bustos “have made a compelling argument that when
governments fail to regulate emissions adequately, firms have a moral
responsibility to limit their emissions voluntarily. Emitting greenhouse gases
affects everyone,” says Hughes. “For many people, including many of the world’s
poor today and many people who will live in the future, the harms of climate
change resulting from high emission levels greatly outweigh the benefits of
economic production methods that produce high levels of emissions.” The
economic preferences of people currently living in the U.S. and other rich
countries do not justify large net harms to future people and to the world’s
poor, Hughes notes. “How much firms are morally required to limit their
emissions is a difficult question that is a topic of debate in environmental
ethics,” he adds. “One aspect of the debate: Do firms with a long history of
producing greenhouse gases have a greater responsibility than other firms to
limit emissions going forward?”
Government regulations, in fact, have not
offered easy solutions to many of today’s most challenging environmental
problems, write Light and Orts in “Parallels in
Public and Private Environmental Governance,”
published in the Michigan Journal of Environmental & Administrative
Law. They argue that climate change, biodiversity loss, deforestation, loss
of arable land, nitrogen over-fertilization, destruction of the ocean’s fisheries,
and fresh water shortages require multi-faceted legal approaches that combine
local, regional, national and international public law. “Recognizing the
parallel forms of public and private governance is important in the quest for
solutions to global environmental problems because they represent a diverse set
of tools, the contemplation of which may lead to new and even surprising
approaches. These tools include such options as private emissions trading
systems, private carbon fees, private supply chain management, and private
insurance, as well as their corollaries in public law.”
Orts argues that dreams of a comprehensive
centralized policy solution to climate change are too utopian. In “Climate
Contracts,” published in the Virginia
Environmental Law Journal, he writes: “The dynamic complexity of the
climate change problem suggests that the best solutions will leverage
broad-based social movements favoring the production and maintenance of many
kinds of legal, economic, and political agreements involving many institutions
— not just nation-states negotiating international treaties, but also other
agreements involving regional and municipal governments, non-profit
organizations (including educational, religious, and environmentalist groups),
business firms, and consumer groups.”
Still, he says: “It’s true that the path toward meeting U.S.
Paris targets without the help of the federal government makes the going much
more difficult.”
Needed: More Than Just Great Public Relations
Is it already too late? Former U.S. Secretary of State John
Kerry, who helped to shape the Paris accord, says that with the participation
of businesses, states and cities, the U.S. will achieve the goals set forth in
the accord, despite Trump’s announcement. “We will meet the Paris standards, I
believe, in the United States,” he said in Oslo recently. “So, I want people
not to be dismayed.”
The Montreal Protocol on Substances that Deplete the Ozone Layer
is a helpful reminder — of both what can be achieved with a strong
government-business response to a seemingly insurmountable problem, as well as
the resiliency of Earth. In 1987, alarmed that the ozone layer was becoming
depleted, nearly every country in the world signed onto the protocol, which
banned the use of chlorofluorocarbons, the source of atmospheric chlorine
eating away at the ozone layer. It worked. A team of MIT scientists recently
found that the Antarctic ozone hole has shrunk by more than four million square
kilometers since 2000, when ozone depletion was at its worst.
“Science was helpful in showing the path, diplomats and
countries and industry were incredibly able in charting a pathway out of these
molecules, and now we’ve actually seen the planet starting to get better. It’s
a wonderful thing,” lead scientist Susan Solomon told MIT News.
What matters now on global warming, says Berkey, is action. “The
response from much of the business community is, at least to some extent,
encouraging,” he says. “A number of companies have released fairly strong
statements opposing the administration’s decision and announcing their
commitment to working to limit greenhouse gas emissions.”
If firms can reduce their own emissions, or those deriving from
their supply chains, they should be doing that – even if doing so would cut
into profits somewhat, says Berkey. “They also ought to support government
efforts to implement policies that would contribute to addressing the threat of
climate change, where these efforts exist. At the very least they ought to
refrain from lobbying against such efforts.”
In some cases, big money from big business is getting behind
ideas to combat climate change. Bill Gates and a group of more than two dozen
billionaires have banded together to form the Breakthrough Energy Coalition to
invest in research on new energy technologies. The group – which includes Jeff
Bezos, Richard Branson, Jack Ma, and Mark Zuckerberg and Priscilla Chan – has
pledged billions of dollars, and will work with Mission
Innovation, a consortium of 22 countries, including the U.S. plus the
European Union, that will increase spending to $30 billion a year on clean
energy R&D by 2021.
In other cases, though, the corporate responses may not be much
more than PR moves, he notes. Public support for the Paris agreement is high,
and opposition relatively low. Expressing support for the agreement, without
committing to doing anything in particular, is costless for many companies,
given public sentiments. “Some of the companies that have expressed support for
the Paris agreement, however, continue to oppose regulations that would also
help to address the threat of climate change, such as stricter emissions
standards for vehicles,” Berkey points out.
Others, like Exxon, have strong reasons to appear friendly
toward addressing the threat of climate change, given that the company is
currently under investigation in New York on climate change-related matters, he
notes. “It will be very interesting to see what all of the companies that have
released statements supporting the agreement do over the next few years,”
Berkey says. “Some have clear economic interests that align with efforts to
mitigate climate change, but others may be faced with decisions that require
prioritizing either greater profits or reduced emissions. If the Administration’s
actions make it more appealing for companies to forego efforts to reduce their
contributions to climate change, then at least some business leaders will face
challenging moral choices, and their actions will indicate how committed they
are to the support that many have expressed recently to working to fight
climate change.”
Many scientists and other experts believed that the Paris
agreement was too lax to begin with, and that the world should commit to even
more rigorous targets for transitioning away from fossils fuels to a low-carbon
economy, says Orts. “I don’t think that the overall consensus about the
severity of the climate change problem will change,” he says. “The U.S. will be
seen as an outlier….”
Orts believes that President Trump’s position on Paris will be
seen as a minor aberration in the long run. “The Paris agreement will go
forward, and the U.S. will eventually rejoin it. As for whether it is too late?
Perhaps. But we learn from Penn professor Martin Seligman that it pays to
be optimistic and to work as best we can for a better tomorrow for our children
and grandchildren. And the way forward in the U.S. right now on climate
change is to look to states, cities, and businesses — as well as environmental
nonprofits — for leadership.
http://knowledge.wharton.upenn.edu/article/business-can-take-lead-combatting-climate-change/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2017-06-20
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