Menu Close

Can business save us from climate change?

While green business is commendable, canola-fuelled elevators will not save us from climate change. monique/Flickr, CC BY-ND

Without a functional international climate policy, and a set of Australian policies that look set to be repealed, it might seem that business offers the greatest hope for mitigating climate change. Business is beginning to see climate change as a strategic risk, and is reducing consumption to avoid the worst climate impacts.

But there are a three key reasons not to rely on business to save us from climate change. Ultimately we’ll need a global response to keep carbon emissions below a safe threshold.

Business as usual?

An increasingly common response to government climate inaction has been to focus on business, and specifically large multinational companies, to “save us” from the worst effects of climate change.

For instance, a recent New York Times story highlighted how global companies like Coca-Cola and Nike were increasingly seeing climate change as a strategic risk. According to the report, these companies were reducing their use of natural resources and analysing supply chains to avoid the impacts of increasingly extreme weather events.

“Green business” has been a familiar refrain for some time. Many large businesses have introduced elements of corporate environmentalism which includes focusing not only on the physical risks of climate change for business operations, but also market, reputation and regulatory risks.

When I began researching business responses to climate change some years ago, the idea of market capitalism reinventing itself around new technologies that would wean us off our fossil fuel addiction was seductive.

But there are a number of problems in placing our hopes on business as our best hope in avoiding the worst of climate change.

Business: 1; environment: 0

First, businesses really only engage in environmental activities when there is a “business case” to justify such action, that is, to increase shareholder value.

Sustainability proponents argue that there doesn’t have to be a trade-off between market and environment, and that “shared value” can often be created.

But what happens when the interests of the environment conflict with those of the market? Based on our research of large Australian companies, these conflicts almost inevitably mean that the interests of the market will prevail.

Indeed, as Peter Dauvergne at the University of British Columbia has cogently demonstrated in his book Eco-Business, much of the recent focus of corporate environmentalism has been aimed primarily at improving productivity and supply chain efficiencies, to expand production and markets, and ultimately be less environmentally sustainable.

“Less unsustainable”

Second, relying on business as a strategy is simply incapable of providing the sort of systemic and fundamental changes that are required to mitigate climate change. For all the potentially worthy efforts of individual companies in reducing their carbon emissions, retired sustainability academic John Ehrenfeld notes this simply equates to being a “little less unsustainable.”

This is very different from sustainability as a way of maintaining economic and social activities over time in harmony with the environment.

Professor Dirk Matten, visiting at University of Sydney from University of York, recently argued that relying on corporate social responsibility simply results in “islands of pet projects in a sea of corporate irresponsibility.”

Distracting from the real issue

Third, placing our faith in business further distracts us from advocating for what is actually required: meaningful government regulation of greenhouse gas emissions.

The only way we as a species can deal with climate change is to dramatically reduce our use of fossil fuels and this will require regulation, technological innovation and, most likely, mandatory restrictions on fossil fuel use.

For many on the political right, the idea of increased government regulation and restrictions on the use of fossil fuels is heresy. But government regulation has always been central to the efficient functioning of capitalist economies, particularly in times of crisis.

Witness for instance the role of governments in liberal democracies during the Second World War, where most economic activities came under government control as part of war-time mobilisation. Interestingly, some have sought to explore such a “mobilisation” on climate change. It isn’t pretty but then the alternative of muddling along as we have looks much worse.

Wishful thinking

In 2014 such political scenarios seem outlandish. In the absence of strong government action we are left with the hope that somehow business corporations and the market will save us.

This is beyond wishful thinking. In fact Daniel Nyberg from the University of Nottingham and I recently argued that this belief in corporate environmentalism forms one of three political myths that reinforce our suicidal trajectory as a species in the face of climate change.

I strongly support companies that take meaningful action to reduce their carbon footprint, cut their waste and use of natural resources, and even give back to the environment and society. However, this win-win outcome is far from common. Indeed, as one senior sustainability adviser confessed in one of our research interviews “the best thing a business could do for the environment would be to shut down, but that’s clearly not a viable option.”

Interesting work is being conducted around the type of response needed to avoid catastrophic climate change. It is vastly different from the “business as usual” mantra of the mainstream media and the soothing discourse of the “green business” industry.

To get some idea of the difficult task at hand, Professor Kevin Anderson’s recent presentation at the Tyndall Centre’s Radical Emissions Reduction Conference gives us some idea of what we might need to limit global warming to 2C.

Businesses will clearly be key actors in this social and economic change, but the scale of change also demands government regulation. We cannot afford to simply leave it to business to “save us” from climate change.

Christopher Wright is a member of the Academy of Management

The academy is a funding partner of The Conversation US.

Want to write?

Write an article and join a growing community of more than 148,500 academics and researchers from 4,412 institutions.

Register now