Why Business Needs Government Action on Climate Change

 By James Gustave Speth

When Ronald Reagan famously said that "Government isn't the solution to our problems; government is the problem," many in business cheered. But what if Reagan had it wrong? What if business is shackled by forces far more powerful than government and, in fact, needs government to free it to do the job it increasingly knows must be done?

Business leaders know better than anyone that they are trapped in a system, constantly hemmed in by imperatives shaped by market competition, consumer preferences, investor behavior, and other factors. These imperatives often preclude attractive options. When the gap between the required answer and the right answer gets too wide, government action to provide new norms and rules of the road becomes imperative.

Why Business Needs Government

If business and governments don't get their act together soon on global warming, the extraordinary economic machine we have created is going to wreak such havoc on the Earth's systems, both natural and social, that today's disruptions by terrorists will look like child's play. The result will not be good for business, or the rest of us. In short, business needs government action on climate, now.

Our world is now a "full world." Whatever slack nature cut us is gone, and we are affecting natural systems and cycles on a scale rivaling nature's. We have increased the carbon dioxide concentration of Earth's atmosphere by a third and begun the process of warming the planet; we depleted the Earth's ozone shield without knowing it; we fix nitrogen at a rate equal to nature's; we consume or destroy 40 percent of nature's net photosynthetic output annually, leaving too little for other species. We have spread persistent toxins to the far corners of the globe and into each and every one of us. Whether we like it or not, we are at the planetary controls.

The principal actors on the world stage are business units. Negatively, corporations are responsible for a huge share of the appalling environmental deterioration now under way. Positively, corporations have the technology, access to capital, and managerial discipline essential to the transition to sustainability. The corporate sector thus has both a profound interest in promoting the transition to sustainability and a responsibility to do so. How then should it respond? The historical transformation now needed is one in which corporations rise to their new responsibility and accept the need for positive collaboration with government and citizens in adopting the far-reaching climate measures that are now essential.

Rising to this occasion requires, first of all, some hard rethinking about friends and enemies. More than Greenpeace and the anti-globalization activists, business should worry about two true impediments. One is what I would call, not originally, market fundamentalism. As political analyst Benjamin Barber has noted, this strange religion, which worships the unfettered market and seeks to "starve the beast" of government, in the end "robs us of the civic freedom by which we control the social consequences of our private choices." It leaves business ensnared in the clutches of the old imperatives, with no possibility of transcending them to reach a higher level of corporate citizenship, which can only be achieved in partnership with government and civil society.

The other impediment facing business is more subtle but more prevalent in enlightened corporate circles. Progressive corporate leaders often say they do not want government actions "at this time" because they want their companies to be first to stake out a claim on the future-to get there first and thus establish competitive advantage in the world that is coming. Such thinking would not be dangerous if we still had the luxury of time, but we do not. There is only so far companies can go on their own, and it is not far enough.

Three Paths Into the Future

The World Business Council for Sustainable Development (WBCSD), a leading international group of major corporations, has sketched three illustrative scenarios depicting different approaches to environmental governance. One they playfully call FROG: First Raise Our Growth. The FROG philosophy is to meet economic challenges first and worry about the environment later. FROG is thus a business-as-usual scenario leading to huge environmental costs. FROG leads not just to a wrecked global ecosystem but to a wrecked global society as well. It is a path to failure even in the eyes of the business-orientated WBCSD.

In the WBCSD's other two scenarios, environmental sustainability is successfully pursued but the approaches are very different. Under GEOpolity, people turn to government to focus the market on environmental and social ends, and they rely heavily on intergovernmental institutions and treaties. GEOpolity is the world of international environmental law and other global agreements. Under Jazz, the third scenario, people and business create a world full of unscripted, voluntary initiatives that are decentralized and improvisational, like jazz itself. In the Jazz world, information about business behavior is abundant, and good conduct is enforced by public opinion and consumer decisions. Governments facilitate more than regulate, environmental and consumer groups are very active, and businesses see strategic advantage in doing the right thing.

Employing this useful framework, we can say that the initial international response to global challenges-our first attempt at global environmental governance-has tried to move the world from FROG to GEOpolity. It has not worked well, yet. Nations have not yet genuinely embraced GEOpolity, and where GEOpolity approaches have been used, they have been too weak to be successful. This problem is not weak compliance with international agreements; the problem is weak agreements.

Getting serious about global environmental governance requires new action on two mutually supportive fronts: pursuing a very different approach to GEOpolity, and taking Jazz to scale, enlarging it until it is a major part of the solution.

What does it mean to pursue GEOpolity differently? Basically, we need very different international institutions, procedures, and core understandings. We need a World Environment Organization as much as we need a World Trade Organization. Business should put its weight behind making GEOpolity succeed rather than lobbying against it, as is most often the case today.

What about taking Jazz to scale? For my money, green Jazz is the most exciting arena of ongoing action today. Private businesses, environmental groups, consumer groups, state and local governments, foundations, religious organizations, investors, and other are behind a remarkable outpouring of initiatives that are the most hopeful things happening. Scores of major international corporations, for example, are voluntarily reducing their greenhouse gas emissions and taking other climate friendly initiatives. They are doing it because they anticipate they will be regulated one day, because of shareholder pressure, because of public image campaigns and consumer pressure, because of lawsuits or the threat of liability for damages, because of pressure from insurers and lenders, and in many cases because they know it is the responsible thing to do.

Is there a link between GEOpolity and Jazz? One reason we are hearing so much Jazz, especially from the business community, is because of all the classical music being played over in GEOpolity Hall. And what do you get when jazz and classical music are brought together? It's called Fusion, of course, and we are beginning to see it as well. Jazz and GEOpolity are not mutually exclusive; they can reinforce each other. GEOpolity actions, proposed or actual, can stimulate Jazz, and successful Jazz can pave the way for further GEOpolity initiatives that create a framework where individual initiatives can flourish.

The high point of the 2002 World Summit on Sustainable Development in Johannesburg was a joint press conference convened by WBCSD and, yes, Greenpeace. They came together to call upon governments to provide the framework-the goals and the means to measure progress towards them-within which the creativity and drive of both the corporate and the NGO sectors could be unleashed to get the job done. It was a remarkable moment. And a brave one, too.

To transcend the confines of the old imperatives, we need not only to strengthen the treaty world of GEOpolity and multiply Jazz initiatives manyfold, we need also to bring Jazz and GEOpolity together. And that is what WBCSD and Greenpeace were seeking at Johannesburg.


James Gustave Speth is Dean of the Yale University School of Forestry and Environmental Studies, and author of Red Sky at Morning: America and the Crisis of the Global Environment.