Storms, Global Warming, and Corporate Citizenship

Humans are (very likely) changing the earth’s climate. And changes in climate are (very likely) making storms worse. And worse storms are (definitely) a bad thing. Granted, it’s hard — in fact, foolish — to try to draw a straight line between any individual’s or even any corporation’s behaviour and the Frankenstorm that just slammed New York and surrounding areas, but the fact remains that the devastation that storm wrought was not the effect of a mere freak of nature. As Businessweek bluntly put it, “it’s global warming, stupid.”

But what matters more than the cause of global warming is what we can do about it. In particular, what can business do about it?

Large-scale problems tend to require large-scale solutions, and so there’s a natural tendency to leave such issues to government. This is so for two reasons. First is simple scope: you driving a hybrid car or switching to CFL bulbs just isn’t going to accomplish much. Second is the nature of collective action problems: each of us benefits from a wasteful, energy-intensive lifestyle, and it seems narrowly rational to let other people (or other companies) bear the costs of doing things differently. But the fact that it’s tempting, or even narrowly rational, to let others bear the burden, or to wait for government to act, doesn’t make it the right thing, or even the minimally decent thing, to do.

So what can businesses do — what is it possible for them to do — in response to a trend in global warming that is clearly posing increased risks?

To begin, of course, they can work to avoid making things worse, by avoiding burning carbon and adding to the load of carbon dioxide in the atmosphere. This means looking at relatively small, obvious stuff like seeking energy efficiencies in their operations, promoting telecommuting, reduce air travel, and so on. Luckily, most such efforts are relatively painless, since they tend to reduce costs at the same time. Sometimes mere laziness or a focus on “how we’ve always don’t things” gets in the way of making such win-win changes. Don’t be lazy. Innovate. Share best practices with your suppliers, with other companies in your sector, and if you’re a B2B company, with your customers.

The second thing that businesses can do is to work with, rather than against, government efforts at making things better. In particular, it is a fundamental obligation of corporate citizenship not to block government action aimed at effective action at slowing climate change, and in particular action aimed at dealing effectively with the effects of climate change. If, for example, a government wants to pass rules forcing businesses to pay the full cost of their energy usage, or rules that impose industry-wide energy efficiency rules, business should welcome rather than oppose such changes. Energy inefficiencies impose costs on other people, and hence count as the kind of externalities that go against the fundamental principles of a market economy.

It’s also worth noting that asking what business can do is not quite the same as asking what your business, or any particular business, can do. Business organizations and trade associations abound, and there’s plenty they can do to a) help members share best practices and b) foster industry-wide standards that can help businesses live up to their social obligations while at the same time maintaining a level playing field.

Finally, business can do the things that business is supposed to be good at: efficient management, synergistic use of a range of kinds of human capital, and innovation. That stuff isn’t just a good recipe for commercial success. It’s an absolute obligation. And innovation is clearly the key among those three aptitudes. Efficiency — tightening our belts — will only get us so far. We desperately need a whole slew of truly brilliant new ideas for products, services, and productive processes over the next decade if we are to meet the collective challenge posed by changes in our environment. And it’s foolish to expect government to provide those ideas. It’s time for business to step up to the plate. There can be no better way to manifest a commitment to corporate citizenship than to be the kind of corporate citizen that sees a business model in trying to help us all cope with global warming.

6 comments so far

  1. Constant Geographer on

    I agree completely. I have some questions, hypothetical queries, really. What happens when widespread suspicion of science is prevalent among voters? What happens when a major political party denounces science as simply liberals being liberals, or worse, straight from the “mouth of Satan?” Or, a political party who believes in the Separation of Government and Business more so than Church and State?

    I am willing to allow markets work freely to a point. But, is there not a point when governments must impose a will, a difficult and unpopular choice, in order to correct consumer behavior which is ultimately destructive? Or, perhaps said differently, encourage the adoption of greater efficiencies?

  2. Chris MacDonald on

    Good questions. On the very first one, I think governments need to exercise leadership when there is good reason to think that the public is ill-informed. Democracy doesn’t *literally* mean giving the public everything they want.

    As for your last point: yes, for sure. There’s plenty of room for government action on things like climate. I just want to encourage the business community to do its part, too — especially since certain governments have difficulty taking action, due to ‘gridlock.’

  3. Pete Bresnahan on

    I find it somewhat humorous and ironic that a significant segment of the corporate sector–whose only purpose is to make money as Milton Friedman would argue–is not capitalizing on the notion that one of the nascent mega-growth sectors of the global economy will be dealing with climate change, pollution and water management. Those in the corporate world who prefer to deny climate change or claim no responsibility with regard to the well-being of the planet will become dinosaurs as the natural laws of economics guide innovation and capital to the economic sector that offers the greatest risk/reward investments.
    When the dust settles, corporate responsibility will trump greed out of pure necessity.

  4. Joe Citizen on

    The thrust of your comments stem from the notion that businesses or corporations have a social obligation to the society they serve. This is a nice idea but it’s not the reality that I see today. Innovative ideas that reduce emissions or do not contribute to climate change have been around for decades. For example, the use of solar energy could make dramatic changes to the demand for fossil fuelled power. Yet solar energy remains poorly used, poorly promoted and frighteningly expensive to install.

    What compounds the issue is a media hysteria around what is or what is not climate change. Until there is a recognised consensus that is irrefutable about what is or what is not happening caused by whom and their actions, what corporation is not going to continue to deliver what consumers demand, and continue to provide “efficient management, synergistic use of a range of kinds of human capital, and innovation” all for the quest of maximising profits?

    According to Friedman (2005) “it would be both undemocratic and a waste of resource for managers to do anything other than seek to maximise profit while remaining within the law and engaging in open and free competition without deception or fraud.” What incentive is there for corporations to adopt change if the change costs more?

    Why do we expect corporations in our society to be any better than our governments? If our governments cannot lead why would we expect corporations to be any different? Governments answer to the people. Is this therefore an indication the populace does not require or demand change? Perhaps, as you hint, it is a failing of government?

    I believe the social responsibility for real and influential changes lies with the population. The population has the power and they need to exercise that power by electing governments or representatives that will take action. Additionally, they can boycott the products or services of those corporations that do not fit with the changes they believe are required and perhaps, force businesses into adopting a stakeholder approach (Freeman, 2044). Corporations will respond. And they will do so quickly; they cannot afford to ignore the expectations of their consumers. Friedman’s thrust remains though: it’s the responsibly of the citizens of the country to get the government to make the environmental laws more stringent, if the citizens want to. It is after all governments that make law, take businesses to account when there is a breach and can provide a favourable economic environment to work within.

    Currently, while your suggestions may be valid, they are not without significant expense, can be less effective or increase loss of control to the corporation and it is for this reason I believe they are not being employed. For example, remote working can only work with a few trusted employees and within certain industries. Also I cannot expect corporations to share their best practices with other companies in their sector. Where would their competitive advantage go?

    Perhaps then the best answer is a shared approach? Governments and consumers groups should empower other consumers through communication, education and legislation. Consumers and governments will then be emboldened to influence businesses to adopt eco friendly alternatives. Perhaps the UN could play a role in establishing a global consensus about what is climate change? This may help to communicate the message across borders and cultures. I do wonder though if it will take a truly cataclysmic event before the world wakes up and takes action. For example, if smog pollution that is literally “off the charts” (http://www.3news.co.nz/Beijing-pollution-literally-off-the-chart/tabid/1160/articleID/282915/Default.aspx)
    in one of the worlds largest cities is not enough to stimulate rapid change, what will it take?

    Finally, I agree with you that innovation is necessary and is an obligation. I would argue however, that many innovative ideas are already about. They simply need to be encouraged into use, either by government enforcement or consumer demand. Both would be valid and just as empowering. And, I believe, they are the only potent mechanisms required to seek the changes we idealistically want from our corporations.

    References

    Freeman, R. (2004). A stakeholder theory of the modern corporation. In T. L. Beauchamp & N. E. Bowie (Eds.), Ethical theory and business (7th ed., pp. 55-64). Upper Saddle River, NJ: Pearson Education.

    Friedman, M. (2005). The social responsibility of business is to increase its profits. In G. D. Chryssides & J. H. Kaler (Eds.), An introduction to business ethics. (pp. 249-254). London: Thomson Learning.

    Beijing pollution literally off the chart (n.d.). Retrieved January 17, 2013 from http://www.3news.co.nz/Beijing-pollution-literally-off-the-chart/tabid/1160/articleID/282915/Default.aspx

    • Chris MacDonald on

      Thanks for your thoughtful comment. I can’t respond point-by-point, but I’ll say this: the idea that people have the power is a nice idea, but it’s worth remembering that individuals face many of the same problems that corporations do when it comes to taking action on climate change. Namely: 1) self-interest, and 2) the fact that unilateral action can accomplish little. In other words, individuals find it hard (or against their interests) to take action, just like (as you point out) corporations do.

  5. sutharnaveen on

    I do agree with the notion that to face the collective challenges in environment we desperately need new ideas for products, services, and productive processes over the next decade and it’s foolish to expect all those new ideas from the government only. For centuries business institutions were able to ignore their impact on the environment. Today there are several issues of concern in business like release of carbon dioxide, carbon monoxide, Water-Air-Sound pollution etc. because all these are affecting the business phenomenon and quality & quantity of the products too.
    In the race of development graph of carbon dioxide in atmosphere is increasing day by day. It is a race of becoming biggest economies in the world between developed and developing countries themselves. Fossil fuels are being used by the industries which result in limitation of resources, environment pollution, global warming and many other imbalances like-rise in Sea level, floods, droughts, wildfire, and extreme storms.
    All basic elements of business viz Society, Technology, Economy, Regulations, Politics in one way or another affects environment and also get affected by environment. Today relationship of business and environment gets poorly integrated and required to be cured. No society or business in the world can afford worse environment conditions. As Velasquez says, “for centuries business institutions were able to ignore their impact on the natural environment. Businesses treat things such as air and water as free goods—that is, as goods that no one owns and that each firm can therefore use without reimbursing anyone for their use and they have seen the environment as an unlimited good. That is, the “carrying capacity” of air and water is relatively large, and each firm’s contribution of pollution to these resources is relatively small and insignificant” (Velasquez, 2004). It shows that businesses use water, air and other resources in unethical manner. As stated by Velasquez, “For several years, for example, a DuPont plant in West Virginia had been dumping 10,000 tons of chemical wastes each month into the Gulf of Mexico, until it was forced to stop” (Velasquez, 2004). It shows that businesses keep on using the natural resources in unethical manner till they are forced to stop doing so. Government and businesses should take corrective steps and frame laws and regulations for the conduct of businesses and their operations.
    According to the Kyoto Protocol agreement, “Recognizing that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity, the Protocol places a heavier burden on developed nations under the principle of “common but differentiated responsibilities.” (Kyoto Protocol, 2015). It’s a fact that Kyoto Protocol itself was adopted in 1997 and came into force after more than 6 years in 2005 (Kyoto Protocol, 2015). Isn’t it suffice to show that how much serious are we?
    As a Nation, Business, Society or an Individual we should ask ourselves that what is our relation with the natural world? and what kind of decisions we have to take to save our planet?
    • Should we continue to throw liquid wastes in rivers and oceans?
    • Should we continue to cut down the forests?
    • Shouldn’t we use source of energy having no or less harm to environment?
    • Shouldn’t we have any environmental obligations to coming generations?
    Reason behind asking these questions, is the inclining graph of threats because of the pollution. I’m of the view that as a remedial step proper policy of pollution control within the business viz. Source reduction, Recycling, Treatment, Disposal must be followed by all companies. Prime consideration should be given to “Big Fishes” which are the top toxic pollutant industries. Few examples are: Battery Recycling, Lead Smelting, Mining and Ore Processing, Tanneries, Industrial/Municipal Dumpsites etc. (The World’s Worst Pollution Problems, 2012). This problem needs urgent attention because “more than 200 million people are at risk of exposure to toxic pollution globally” (Top Ten Toxic Threats, 2013). Apart from this William T. Blackstone argued that “the possession of a livable environment is not merely a desirable state of affairs, but something to which each human being has a right” (Velasquez M., 2004). I’m of the view that no industry in the world is working without the rules and regulations with regard to environment. So, the need is to implement the same rules and regulations genuinely with combine efforts of businesses, its employees, government and society otherwise we all will have to suffer because of the disturbance of ecological system. “Now business firms (and all other social institutions) are parts of a larger ecological system, “spaceship earth.” Business firms depend upon the natural environment for their energy, material resources, and waste disposal and that environment in turn is affected by the commercial activities of business firms” (Velasquez M., 2004).

    Nature of the value of environment is considered on:
    Extrinsic
    Environment has its value because it is valuable for us. If we pollute the environment than our basic structure also get disturbed and we will not be able to inhale pure air, consume pure water. So, if we take this view as an individual everyone should protect the environment by doing whatever he/she can do.
    Intrinsic
    Environment has its own value. What will we feel when our rights are violated by some other person? Feel it! Like same feeling intrinsic approach tells us that environment has the right to be kept clean and we are not supposed to pollute or use it in un-humanistic manner for our benefits.
    As an ethical duty all businesses should drop dirty technologies. Use of fossil fuel should be minimized. Every business should switch itself to the steps towards the environment like treatment of water, treatment of dirty land. Satellite observation technology should be used for analysis of environment for help in decision making and reduction of losses by identifying pre Incidents. For all these suggested steps joint efforts by businesses, its employees, government and society are required to be taken.

    Reference:

    Kyoto Protocol (2015). Retrieved from http://unfccc.int/kyoto_protocol/items/2830.php

    Velasquez, M. (2004. Ethics and the environment. In T.L. Beauchamp & N.E. Bowie (Eds.), Ethical theory and business (7th ed., pp.227-228). Upper Saddle River, NJ: Pearson Education.

    The World’s Worst Pollution Problems (2012). Retrieved from http://www.worstpolluted.org/

    Top Ten Toxic Threats (2013). Retrieved from http://www.worstpolluted.org/

    Velasquez, M. (2004). Ethics and the environment. In T. L. Beauchamp & N. E. Bowie (Eds.), Ethical theory and business (7th ed., pp. 227–237). Upper Saddle River, NJ: Pearson Education.


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