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.

5 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.


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