The Copenhagen Conference is not just crunch time for efforts to combat destructive climate change. It also questions what are the limits of voluntary corporate responsibility.
Three months to go and already my desk groans under reports and analyses about the Copenhagen Conference. If there were a Society for the Prevention of Cruelty to Desks it would be seeking to prosecute me.
Quantity is not always matched by quality, however gems can be found in the dross. Let’s consider just three.
Carbon Emissions- Measuring the Risks analyses the greenhouse gas (GHG) emissions of 230 of the S&P 500. Structured by industry sector, the report covers direct and indirect emissions, benchmarks companies within their industry sector, examines the relative financial risk posed by the increased cost of carbon and weighs carbon against other environmental impacts. The report is clear, succinct and professional. One fact stands out: “For all 230 companies analysed, over 80% of emissions are indirect from suppliers…” So curtailing climate change relies more on the ability to influence suppliers than on direct action where the companies have control, hardly an optimism-inducing fact.
The Carbon Disclosure Project’s The Carbon Chasm is depressing. To achieve the required 80% cut on 1990 GHG levels by 2050 requires a 3.9% per annum reduction. The FT Global 100 firms surveyed are achieving only a 1.9% reduction. “Feeble!” as my English teacher used to say.
Buildings account for 40% of global energy consumption. The WBCSD’s Energy Efficiency in Buildings: Transforming the Market does a little to lift the gloom. It lays out a costed pathway for transformational savings but the pathway: “cannot and will not come through market forces alone”. So what voluntary corporate action can deliver, while good, is limited. It is so limited it cannot do the job in hand.
We must now use what for some is an offensive word, rarely mentioned in discourse on corporate citizenship. It is not the F word but the G word: Government.
Climate change cannot be beaten without concerted government action. This means agreements between governments on an international regime for carbon reduction. It means regulation by individual governments and public spending.
Some surprising companies recognise this. Step forward ExxonMobil. Rex Tillerson, Chairman and CEO of the corporation the green lobby loves-to-hate has spoken out boldly: in favour of a carbon tax. I repeat: in favour of a carbon tax. The argument is cogently made on page 31 of the 2008 Corporate Citizenship Report. One of the themes of the argument is that taxing carbon is a simple, clear, unbureaucratic mechanism.
ExxonMobil is not alone. Other companies too have spoken out about what should be on governments’ climate change agenda. See for instance Shell’s ‘Calling for change’ (Shell Sustainability Report page 18) or ‘E.ON’s Expectations for a Copenhagen climate agreement 2009’ (E.ON CR Magazine 2008 page 24).
Companies remain under a moral obligation to slash their emissions to avoid damaging, irreversible climate change. Yet surely there is an equal obligation to recognise and welcome the necessity of government leadership on climate change. Some clearly have recognised this but overall the literature generated on Copenhagen leaves one with a feeling that the penny has not quite dropped.
If though it is admitted that the limits of what can be achieved through voluntary corporate action have been reached on climate change, might it not be time to review whether the part government can play is being underestimated in some other areas, most notably labour conditions and responsibilities towards consumers?