by Andy Hoffman
This essay appeared as “Consensus builds to create limits on carbon emissions. Urgency on climate change stirs firms to demand change,” in the The Detroit News, November 14: 11A.
Write this down: New federal regulations regarding carbon emissions will be on the books within the next five years, regardless of who occupies the White House in January 2009. This will happen not because the environmental movement is gaining strength, but because a sense of urgency about climate change has moved beyond the environmental community and into the minds of corporate leaders and geopolitical strategists. The politicians will follow. Climate change—and the vexing question about what to do about it—is provoking a paradigm shift in the political alignments that have historically defined the issue.
The conservative Republican coalition that has for decades sought to inhibit aggressive environmental regulation was built largely on three ideological pillars: a nationalism that emphasized national security and competitiveness; support for big business based on a laissez-faire argument about the wealth of nations; and a notion of morality rooted in American traditions of biblical interpretation. The ground is shifting beneath all three pillars. We may not be far from a time when nationalistic, pro-business, Christian conservatives make common political cause, albeit tactical, with those they used to call tree huggers around the regulatory issues raised by climate change.
Let’s start with nationalism. Ever since President Bush declared in his 2006 State of the Union that we are “addicted to oil,” the issue of energy consumption has stuck to all serious conversations about national security. In addition, a 2007 report commissioned by the Center for Naval Analyses, a non-profit research organization, called climate change a “serious threat to America’s national security.” Written by a group of retired generals and admirals called the Military Advisory Board, the report found that climate change acts as a “threat multiplier” that could lead to political instability caused by tides of refugees fleeing regions beset by pandemic and flooding. “The chaos that results can be an incubator of civil strife, genocide and the growth of terrorism.”
From the standpoint of national competitiveness, more and more companies are shifting their responses to climate change from a focus on risk management and bottom-line protection to an emphasis on new business opportunities and top-line enhancements. Smart businesses see the opportunity for growth strategies in low carbon technologies and markets. DuPont, for example, has identified the most promising growth markets in the use of biomass feedstocks that can be used to create new bio-based materials such as polymers, fuels and chemicals, new applied biosurfaces, and new biomedical materials. The company has set a goal to have 25% of its revenue come from such non-depletable resources and is two-thirds of the way toward meeting that goal.
One promising development is Sorona® polymer made from corn sugar.Alcoa is another company looking ahead. It sees opportunity in recycling because aluminum produced from recycled materials requires only five percent of the energy needed to make primary aluminum.
But large companies and industries can’t fully commit resources to growth strategies unless and until they know the rules of the regulatory game. That’s why, to a degree not seen since the late 1960s, business interests are calling for environmental regulation. In February 2007, the US Climate Action Partnership (USCAP), a consortium of ten blue-chip corporations (including DuPont, Alcoa, BP America, GE, Lehman Brothers, PG&E and others) called for federal standards on greenhouse gas emissions. Throughout 2007, 17 additional corporations joined the USCAP. In February 2007, a group of 85 multinational companies calling themselves the Global Roundtable on Climate Change called on the world’s governments to cut greenhouse gas emissions by “placing a market price on carbon emissions that is reasonably consistent worldwide.” Also in February 2007, the Edison Electric Institute, a group that represents 60% of U.S. electricity production and has long opposed action on climate change, changed its position and endorsed federal action in the US. In March 2007, a group of investors, which represent more than $4 trillion worth of investor capital, including funds managed by Merrill Lynch, the California Public Employees Retirement System, Allianz and Calvert, called on Washington to end investor uncertainty by establishing “sizeable, sensible long-term cuts to U.S. carbon emissions.”
Beyond geopolitical and corporate strategy, of course, there is a moral dimension to the issue of climate change. In many American churches, synagogues and mosques, green is emerging as a religious issue. For some, this is a matter of protecting God’s creation. For others, concern for the world’s poorest, who will be hit hardest by the physical impacts of climate change, The Vatican, in April 2007, hosted a conference on climate change and development which acknowledged the issue as a serious problem that is already causing suffering to the poor, and the Pope is planning to write an Ecumenical letter on the topic later in 2008. A new group of Christian evangelicals, preferring to call themselves “caring creationists” rather than “environmentalists” (which they see as synonymous with “liberal”), are calling for action on climate change. In 2006 more than 100 prominent pastors, theologians and college presidents signed an ”Evangelical Climate Initiative” calling for action on the issue. In May 2007, more than 20 religious groups signed an open letter urging U.S. leaders to limit greenhouse gas emissions and invest in renewable energy sources.
Add it all up, and you’ve got an issue that is not going away any time soon. What is particularly striking is that climate change was written off just two years ago. In an incendiary 2005 essay called The Death of Environmentalism, Micheal Shellenberger and Ted Nordhaus argued that the environmental movement had been spectacularly unsuccessful because it had framed climate change purely as an environmental issue driven by environmental special interests competing with other, more powerful, special interests. The essay caused widespread chest thumping and vitriolic reactions from the likes of Carl Pope of the Sierra Club and others. But environmentalism didn’t die. It grew up and left home. The issues associated with climate change are no longer the province of an environmental movement. They are everybody’s concern and everybody’s problem.
Even those traditionally most hostile to environmentalism or skeptical about the science of climate change now acknowledge the political realities of what is before them. One night driving in my truck, I heard a conservative talk-radio host announce, “Well, I’m not sure I believe in this climate change stuff, but we’ve got to get ourselves off foreign oil. That’s for certain. So I don’t care if they’re right or they’re wrong. We’ve got the same end game in mind.” Strange bedfellows, indeed.
Andrew Hoffman is the Holcim (US) Professor at the University of Michigan, holding joint appointments in the Ross School of Business and the School of Natural Resources & Environment. He is Associate Director of the Erb Institute for Global Sustainable Enterprise. His latest book “Climate Change: What’s Your Business Strategy” was released as part of the Memo to the CEO series by the Harvard Business School Press in May 2008.