Businesses Take On Climate Change

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Beyond Petroleum? [Penumbra / Flickr]

Post-Katrina seems like the right moment to resume our intermittent climate change miniseries. This time, we’re looking at the Bottom Line. Figuring out how and why some businesses are tackling their greenhouse-gas emissions is a helpful angle into global warming because it gets right to a central issue: motivation. What is it really going to take to motivate companies (…and individuals and towns and countries…) to become more energy efficient? Money certainly plays a central role here, and a number of forward-thinking companies across lots of industries (e.g., BP, GE, Swiss Re, HSBC) have figured out that reducing their greenhouse gas emissions is good not only for their image but also for their wallets. Many of them are finding that by eliminating certain inefficiencies in their energy use they can actually save money — lots of it — while going green. In other words, it’s simple business common sense.

These are companies that anticipate an end to our carbon-based economy and want to be on the leading edge of whatever comes next. They see business opportunities in innovative energy-efficient products. They want to be involved in upcoming policy debates on greenhouse-gas regulation.

So among the questions for this hour: why aren’t more businesses jumping on the bandwagon? And why do some oil & gas giants — like BP — see $$$ in being progressive on global warming while others — like ExxonMobile — see $$$ in continuing to deny that climate change is even an issue?

Other things we’d like to ask: Are the BPs of the world just talking the talk or actually walking the walk? And are they doing anywhere near enough to effect real change?

A Few Interesting Links

The Business Environmental Leadership Council at the Pew Center on Global Climate Change

BP on global warming

A clickable list of companies working on global warming with The Climate Group.

A new report from Ceres on how global warming threatens insurers.

Sadly, despite repeated inquiries, BP, GE, and Chevron didn’t make anyone available to join us on the show. We still have calls out to quite a few other companies. Here’s our evolving roster of guests:

Mindy Lubber

President of Ceres. Director of the Investor Network on Climate Risk. Former Regional Administrator for the EPA.

Steve Howard

CEO of The Climate Group.

John Stowell

Vice president for environmental strategy and sustainability at Cinergy, a large energy company (electricity and gas) based in Ohio that is about to merge with Duke Energy.

Francis Sullivan

HSBC’s Advisor on the Environment. Here’s a relevant interview with him.


Comments

8 thoughts on “Businesses Take On Climate Change

  1. There are two factors that combine to slow greenhouse gas reductions:

    1) The vast majority of companies aren’t major visible players in the greenhouse gas or energy fields. (Think Wal-Mart, Dell, Proctor and Gamble, e.g., not Exxon and GM).

    2) The true societal costs of greenhouse gas production are not imposed on companies (or people) generating them.

    So, combining these two points, it is easy to see that it is cheaper for almost everyone to be a free-rider than to take steps to reduce greenhouse gases. The companies that will move first will be those that are most exposed to public pressure on the issue (BP, Ford, etc.). And it is hard to generate public pressure prior to a crisis becoming obvious.

    To get ahead of the crisis curve, we have to identify and address greenhouse gas emission at the choke points. This means transportation vehicle makers, heating system makers, electricity generation equipment makers, appliance makers, etc. If we tax or reward those companies based on energy efficiency, the change will be propagated efficiently to the consuming companies and people without having to make the majority of people change their behavior or even be aware of the issue. And we are addressing the behavior of a limited set of companies, so the political effort to make the changes should be reasonable.

    Another method is to tax energy consumption in all forms. This would have a large impact quickly, but this approach would face huge political obstacles since it would affect almost everyone.

  2. agreed with avecfrites here– also I fear that exercises like this show this evening will be derivations of “How do we solve a problem other than employing the blindlingly obvious solution, which is apparently political suicide here in the U.S., but policy in the rest of the industrialized world?” Oh, wait, maybe that’s universal health care.

    Also, not like it’s come up, but the whole idea of demonizing people for driving SUV’s is silly. When energy gets to be more expensive, you can laugh at those people.

    Meanwhile we T-riding, apartment dwellers in the Hub are facing an energy “tax” increase of sorts– NStar has asked the state to raise electric rates by 25% for the coming year.

  3. Great show! Well-rounded discussion from diverse stakeholders, basically demonstrates that all the players — concerned citizens, NGO’s, corporations — have showed up except for the federal government. Too bad no representation from state governments — a lot of ‘em are stepping around the obstacles put in place by Bush and his ilk and really pushing for positive change.

    May I now be a broken record (from posts I made a while ago) and urge you to focus on green building? I think it’s misunderstood as more of a sideline issue, but the fact is that buildings account for more energy use than any other, and also for a large chunk of greenhouse gas emissions. And if we’re talking corporate behavior, the real estate industry is one of the biggest (*the* biggest?) in the country and has a huge impact not only economically but obviously on the environmental side.

    Anyway, thanks for tonight’s show.

  4. BB — We hope to take on town & state initiatives in another show. And we haven’t forgotten green building, either. It seems like global warming touches on everything we do, so we’ve got a long way to go yet in this series. Keep watching the blog!

  5. I caught the second half of the show; interesting. One thing that struck me was as you the guests were going through the list of “good corporate citizens,” I started wondering about the apparent liberal dogma that big business are all Republicans, and ergo, bad citizens.

    True, it is public companies that engage in mergers which end up rewarding the fat cats profusely while shedding thousands of jobs. But big public companies are could be found to be quite liberal. It’s corporate America that has ushered in domestic partner benefits. My guess is that they are more diverse overall in hiring than small businesses (which tend to be family-run). Pension funds? The big industries are just about ready to have the feds bail them out. And about that big government: bring it on. Big companies feed of the trough of big government, though some of their showboating captains forget that when they run for office (H. Ross Perot, anyone?) With regards to regulation, sure, public companies fight it, but they’re used it by now, and if regulation ties up the little guys, they’re all for it.

    On the other hand, it’s the small businessman who seems himself as the very model of the self-made Republican, and the little guy who personally feels the pinch at every tax and every regulations.

    So I’d be very curious to read opinion polls comparing the worldviews of small vs. big businessman. If the big businessmen are actually favoring liberal-leaning, precautionary environmental policies (and, all apologies, this shouldn’t be a liberal vs. conservative issue), and those policies are getting no traction in Washington, it would be a bit of a shocker that big business doesn’t have the power that people think it does.

  6. (It’s not exactly big versus small companies — it’s more public versus private companies, which admittedly correlates highly with big/small)…

    Waiting and hoping that public companies take action is problematic, not because they are evil or Republican, but because of the nature of the constraints on public companies. Public companies, by law, exist only to maximize return to shareholders. Any action taken by a public company that doesn’t maximize profit opens the management of the company up to the charge of breach of fiduciary duty. The only way to get public companies to do things that don’t directly result in profits is to convince them (by public pressure, e.g.) that the actions will eventually indirectly affect profitability.

    So the most reliable ways to get public companies to act are:

    1) write laws that take the choice out of their hands

    2) write laws that provide incentives and/or penalties that get factored into the profit-maximizing equations.

    A useful way to think of public companies is as robots, but this time following laws different from Asimov’s progressively personal laws:

    1) maximize profit

    2) don’t break the law (a cynic could say “don’t get caught breaking major laws”)

    So it’s not surprising that corporations lobby to change laws that affect their ability to maximize profits, and that corporations are not proactive or charitable except where it gets them good PR.

  7. I caught this show, but am late with comment. So glad you are spending some time on key issues like this. I hate to say “environmental” issues because so many people tune out and think we’re all a bunch of stereotypical tree hugers. What makes it tangible for folks is when you connect the dots with aspects and issues from everyday life (e.g., big business). Agree with BB on the state/local angle. Just wanted to say thanks and encourage more green issues in the future. Love the show.

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