Can Business Do the Job All by Itself?
When the United Nations’ climate chief, Yvo de Boer, announced last month his intention to relinquish his post in July, he seemed to underscore a point that was becoming increasingly clear to everyone in the aftermath of the fizzled climate talks in Copenhagen
By TOM ZELLER Jr. | The New York Times | March 28, 2010
Yvo de Boer at the United Nations Climate Change Conference in Copenhagen last December. Christian Charisius/Reuters
“I have always maintained that while governments provide the necessary policy framework, the real solutions must come from business,” said Mr. de Boer, who will be taking a post as a global adviser on climate and sustainability with the Swiss consulting firm KPMG. “Copenhagen did not provide us with a clear agreement in legal terms, but the political commitment and sense of direction toward a low-emissions world are overwhelming. This calls for new partnerships with the business sector and I now have the chance to help make this happen.”
Mr. de Boer’s frustration at the world’s inability to come to an agreement on reducing greenhouse gas emissions is no secret.
Indeed, at a gathering of investors, business representatives and sustainability professionals in New York last week, Ed Crooks, energy editor for The Financial Times, the host newspaper, suggested that Mr. de Boer had simply grown tired of “banging his head against that particular brick wall.”
But Mr. de Boer’s words also suggest that the problem of industrial emissions and the risks posed by a warming planet have hardly gone away and that the hot, bright spotlight is now focused not just on parliaments and presidents, but on boardrooms and executive suites.
That is to say, while the globe’s biggest industrial emitters, led by the fossil fuel industries, may have successfully helped to stymie the development of a binding treaty at Copenhagen — and, as my colleague John Broder reported late last week, to defang cap-and-trade legislation now pending in the American Congress — there is more pressure than ever on big business to come up with solutions.
The question is, can businesses ever be relied upon to address climate change — or really, any social issue, from pollution to poverty — entirely on their own?
To be sure, for all the doubt and political mistrust that has been deliberately sown by big business organizations, from the U.S. Chamber of Commerce to fossil fuel lobbies the world over, the obligations facing industry — on the climate issue and on environmental impacts generally — continue to mount.
Lloyds of London, the global insurance giant, issued something of a warning to businesses on its Web site just last Friday. “Pressure is building on businesses to address the environmental impact of their operations,” the firm wrote. “Moves by intergovernmental bodies and investors suggest that they could soon be made more financially accountable for the pollution they cause.”
That call for accountability is coming from a variety of directions — and not just from legislatures, although the continued promise of new regulations loom large. Lloyds, for example, noted that “some experts are even predicting that many of the world’s biggest companies could see their profits cut by one third as a result of more stringent regulation, the abolition of subsidies and increased taxes.”
But investors and shareholders are playing an increasing role in demanding change as well.
Just last month, Lloyd’s noted, a coalition of investors from 13 countries representing about $2.1 trillion in assets decided to call out 86 “laggard” companies that had failed to deliver on their commitments as signatories of the United Nations Global Compact — a policy initiative initiated 10 years ago that seeks to bring global business in line with “universally accepted principles in the areas of human rights, labor, environment and anti-corruption.”
And the Financial Times conference last week in New York, after all, called “Investing in a Sustainable Future,” was animated by the notion that “C.S.R.” (one of those dreadful suit-and-tie glyphs standing in this case for Corporate Social Responsibility), is now an inextricable part of doing business.
“We believe that C.S.R. is entering its second stage of evolution, whereby it is being integrated into corporate strategy and is becoming part of good corporate governance,” wrote Jayne Van Hoen, the global director for conferences and events at The Financial Times, in the program for the event.
The menu of speakers — a medley of sustainability and investor relations directors from companies like Ford, Dell and ExxonMobil; corporate environmental consultants; and socially conscious fund managers — formed the basis, Ms. Van Hoen said, “of a single program at companies that believe a strategy of ‘doing good’ will not only be its own reward, it will also enhance shareholder value.”
Sure, it is easy to dismiss some of this as so much Pollyannaism. The whole notion, of Corporate Social Responsibility, after all, is seen by some as, at best, an opportunistic smokescreen — and at worst a fundamental contradiction in terms.
The Nobel Prize-winning economist Milton Friedman wrote 40 years ago in his book “Capitalism and Freedom,” that “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”
Of course, businesses also spend much time and treasure attempting to influence the rules of the game — and ensuring that any changes to the rules, however broad or obvious their potential social benefits, do not affect their bottom lines.
Which is probably why, when he was asked during a panel session at the conference, whether Mr. de Boer’s sentiment — that “real solutions must come from business” — was accurate, Fred Krupp, the president of the Environmental Defense Fund, said that while businesses had an important role to play in curbing emissions, governments still needed to provide a policy framework to make it happen.
“The most important thing government can do is pass national policy,“ Mr. Krupp said, adding: “We’ve never solved any pollution problem without policy limits.”
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