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The climate crisis is upon us, and there’s no time to wait for voluntary corporate action to tackle the challenge. We need the collective will that government provides. Business needs to, in the words of Environmental Defense Fund president Fred Krupp, “unleash the most powerful tool they have to fight climate change: their political influence.” Using a full-page ad in The New York Times, a group of nonprofits is calling for business to advocate for policies, at all levels of government, that are consistent with what climate science is telling us we need to do, or what they’re calling a “science-based climate policy agenda.” Companies may be more likely to heed this call today for three reasons: they’re seeing very real and massively expensive disruptions to operations, supply chains, and communities due to climate change; it’s harder to hide the disconnect between what they’re saying they’re doing and what they’re actually advocating for; and stakeholders — customers, employees, and communities — are demanding more action.
The business world has recently started acting on climate change in earnest. Hundreds of the world’s largest companies have agreed to use 100% renewable energy and set targets that commit them to reduce emissions at the pace that science demands. Companies are buying many gigawatts of renewable energy, slashing their own energy use, and innovating to create products that help customers reduce their emissions.
But it’s not nearly enough.
The climate crisis is upon us, and there’s no time to wait for voluntary corporate action to tackle the challenge. We need the collective will that government provides. Many in business will rebel against this idea, but we are long past the point where free markets alone could solve the challenge in time (if such a possibility ever even existed). Business needs to, in the words of Environmental Defense Fund president Fred Krupp, “unleash the most powerful tool they have to fight climate change: their political influence.”
This is the logic and imperative behind an announcement today from 11 environmental and sustainability organizations that have significant influence on the world’s largest companies and on policymakers. Using a full-page ad in The New York Times, the group is calling for business to advocate for policies, at all levels of government, that are consistent with what climate science is telling us we need to do — what they’re calling a “science-based climate policy agenda.” The statement also calls for companies to adjust their trade associations’ advocacy to align with climate science. (The signatories are the heads of BSR, C2ES, CDP, Ceres, Conservation International, Environmental Defense Fund, The Climate Group, The Nature Conservancy, the Union of Concerned Scientists, World Resources Institute, and WWF U.S.)
In support of this public plea, the Sustainable Food Policy Alliance — which includes food and consumer products giants Nestle, Unilever, Mars, and Danone — is running the same letter in Politico with the message “we agree.” The new statement is also building on a similar call to action last month from 200 investors with more than $6 trillion in assets.
It’s about time. Companies have long allowed a chasm to open up between their own statements and actions on climate and what their government relations and lobbying teams are doing in the halls of power. Most of these companies have also conveniently ignored that their own industry and trade associations have generally been fighting climate policy every step of the way.
It’s an important discussion to have right now and this initiative could have an impact. I want to offer some thoughts on the context and where the policy discussion could, or should, go.
This isn’t the first attempt. In 2006, some of these same NGOs formed the U.S. Climate Action Partnership with notable business partners such as Alcoa, BP, Caterpillar, Dupont, and GE. While the call to action was vague, it was an important message from some heavy industry players that they wanted pro-climate policies. But when the Waxman-Markey cap-and-trade climate bill failed in the U.S. Senate in 2009, and climate policy entered the wilderness for years, the partnership petered away.
Over the last decade, the nonprofit Ceres, a signer on this latest statement, has convened the Business for Innovative Climate and Energy Policy, or BICEP, to bring company leaders in to talk to legislators. And more recently, a group of scientists and former high-ranking government officials (mostly Republican), launched the Climate Leadership Council, which is pushing for a package of policies that includes a carbon fee and “dividend” that returns most of the revenue to citizens.
But none of these have really gotten the kind of traction we need.
This time could be different. A few shifts in the world may make this push more effective. First, climate change is real and affecting businesses today. We’re not just discussing a model of future weather and costs; we’re seeing very real and massively expensive disruptions to operations, supply chains, and communities.
Second, with increasing transparency, it’s much harder to hide the disconnect between what companies are saying they’re doing and what they’re actually advocating for behind the scenes. A just-released analysis of corporate lobbying shows that major auto companies, while talking up their efforts on electric vehicles, have lobbied aggressively to fight any real climate policy.
Third, stakeholders — customers, employees, and communities — are demanding more action and are less tolerant of inconsistencies on this issue. Recently Microsoft employees staged a walkout for climate, and almost 8,700 Amazon employees have signed an open letter calling on their CEO to lead on the issue. (Amazon then announced it would go climate-neutral by 2040 and buy 100,000 electric vans). There’s clearly pressure on business to take a broader role in society, which is why about 200 big-company CEOs signed a statement from the Business Roundtable pledging that they would focus on stakeholder needs, not just shareholder value.
But we need to get specific about aggressive climate policies. The current statement is a starting point, and I’m sure the signatories will come forward with more specifics later. In the meantime, here are some suggestions for what science-based climate policies could look like:
- A price on carbon, rising aggressively over time
- Phase-outs (yes, bans) on internal combustion engines in the next 10 to 20 years. A handful of countries have done this already: Norway’s ban starts in 2025, Sweden and Denmark in 2030, France and Sri Lanka in 2040.
- Aggressive standards for building energy efficiency to mandate net-zero buildings and/or renewable energy use on rooftops (e.g., California’s requirement for solar on all new homes starting in 2020).
- Investments in smarter design and development of cities (where 50-60% of humanity lives already) including higher density building, access to public transportation, light rail, and so on.
- Significant investments in clean infrastructure such as a high-capacity electric grid (the lack of which is actually slowing China’s amazing growth in renewables).
- Incentives for “circular economy” processes and innovation, such as material innovation, cutting edge recycling and repurposing, and repair and reuse.
- Tariffs on goods from countries with lower carbon standards, or what the Climate Leadership Council calls “border carbon adjustments.”
- Adaptation plans and investments for those being physically displaced by the sea level rise, with a focus on a just and smooth transitions.
- Retraining and relocation money for workers in key sectors who will be displaced by the transition to the clean economy.
While this is a laundry list of key ideas, there are obviously more holistic plans floating around, such as the Green New Deal proposal in the United States. Companies may not feel ready to embrace a complete package of society-shifting policies, but perhaps can get behind some of the individual ones.
As important as policy is, it’s not everything. I’d love to see companies also think about their communication and efforts with other key stakeholders beyond government. They can engage customers and employees to change their behaviors and encourage them to use their political voices as well. They can talk to investors more bluntly about what climate change means for their business and why they need policy that helps move things along.
In my book The Big Pivot, published in 2014, I laid out 10 strategies to shift business fundamentally toward sustainability. One was about setting science-based goals. Another chapter asked companies to “Become a Climate Lobbyist.” Over the last five years, science-based goals have become common, but climate lobbying didn’t happen.
I hope the time has finally come.
This is a contribution of Gustavo Mirabal to a better life
via Harvard Business Review http://hbr.org
October 15, 2019 at 01:27PM