[R-G] Corporations and climate change

[Anthony Fenton]

Corporations and climate change
Renfrey Clarke
29 March 2008
http://www.greenleft.org.au/2008/745/38559

Global warming, General Motors’ vice-chairperson of global product  
development Robert A. Lutz told reporters in a closed-door meeting in  
January, is “a total crock of shit”. Within hours the remark was  
reported on the internet, and spread, as Lutz subsequently lamented,  
“like ragweed”.

Lutz’s declaration was no isolated outburst. A March 4 Inter Press  
Service article reported that a blog entry by the GM executive had  
earlier derided efforts to force car companies to build smaller, more  
fuel-efficient vehicles. Such attempts, he wrote, were “like trying  
to address the obesity problem … by forcing clothing manufacturers to  
sell smaller, tighter sizes”.

According to the March 5 Wall Street Journal, Lutz is “sometimes  
referred to in Detroit as Mr Horsepower for his love of big, powerful  
cars”. His firm’s latest creations include the Sportwagon, 40,000  
of which are to be built in South Australia by GM’s Holden  
subsidiary, mostly for export to the US. Top-of-the-range models of  
the Sportwagon feature a monstrous six-litre V8 motor.

The US Environmental Protection Agency has noted that 2006 car models  
in the US were the fastest and heaviest in 31 years. Their average  
fuel economy was about 5% below the peak reached in 1987-88.

Lutz, it appears, does not see such facts as cause for self-criticism,  
either personal or corporate. “My beliefs are mine and I have a right  
to them”, he wrote in a blog entry during February, “but among my  
strongest beliefs is that my job is to do what makes the most business  
sense for GM”.

Lutz the klutz

The reason why this executive dinosaur has aroused such consternation  
is because it is now almost unheard of for senior corporate executives  
to express themselves so crudely on climate change issues — whatever  
their private views might be. Since about the turn of the century, the  
orthodoxy has changed.

The new line is trumpeted by the London-based oil major BP. Years ago,  
the initials stood for “British Petroleum”; in 2000, the  
corporation adopted the slogan “beyond petroleum”.

BP was not always so virtuous. In 1989, soon after the United Nations  
began addressing the question of global warming in a concerted way,  
the firm joined several dozen other resource, vehicle and chemical  
corporations to form the Global Climate Coalition (GCC). Other members  
included ExxonMobil, Ford, GM, BHP Minerals and the United States  
Chamber of Commerce.

The GCC directed its blows not against climate change, but against  
moves to regulate greenhouse gas emissions. For its lobbying and  
advertising campaigns it relied largely on public relations and  
advertising firms that had earlier served the tobacco industry.

But by 1997, BP had undergone an epiphany. It left the GCC and began  
“greening” its image, acquiring a distinctive new “exploding  
sunflower” logo. Chiefly through purchasing Solarex, the world’s  
largest manufacturer of solar panels, it set up a renewable energy arm.

“Beyond petroleum is a summation of our brand promise and values”,  
a BP website declares. “It is both our philosophical ideal and a  
practical description of our work.”

However early in December last year, the company announced that it  
would invest nearly £1.5 billion in a joint venture with a Calgary  
firm to produce oil from the Athabasca tar sands in northern Canada.  
Occurring in the form of bitumen mixed with sand and clay, the tar  
sands are extracted using high-temperature steam. While producing a  
barrel of oil conventionally involves releasing about 29 kilograms of  
CO2, the figure for tar sands oil can be as much as 125kg.

“By jumping into tar sands extraction”, Greenpeace Canada  
campaigner Mike Hudema told the December 10 British Independent,  
“[BP] is taking part in the biggest global warming crime ever seen  
…”

Science prevails

GM and BP are conspicuous for their brazenness, but even the most  
discreet and image-savvy corporations are not fundamentally different.  
Ultimately, their actions are determined not by ethics, or even a  
desire to appear consistent, but by the need to maximise profits and  
“shareholder value”.

With their resource or energy-use focus, the corporations that set up  
the GCC recognised that efforts to limit greenhouse emissions would  
cost them money. Their period of belligerent denial, during which  
scores of millions of dollars were spent on deriding climate change as  
“unproven science” lasted in some cases well past the turn of the  
century.

In the end, the science prevailed. Particularly after the 2001  
presentation of the United Nations Intergovernmental Panel on Climate  
Change’s Third Assessment Report, most of the corporate leaders  
involved in the GCC began to accept that global warming was genuine  
and that efforts to deny and conceal it would be counter-productive.

Accordingly, corporate funding to “denialist” think-tanks was cut  
back. The GCC closed down in 2002. Money began instead to flow to  
consultants who promised a “greening” of corporate images. Firms  
were established that offered to render corporate clients “carbon  
neutral”. A small but rapidly expanding cohort of renewable energy  
companies began attracting attention from investors.

Meanwhile, executives across the broad spread of corporations showed  
only limited interest in global warming — reflecting, no doubt, the  
skeptical and sometimes derisive coverage given to the issue by the  
conservative press. As late as May 2007, British writer George Monbiot  
noted: “A YouGov survey revealed that climate change is pretty much  
at the bottom of the ’priority list’ for the FTSE 350 companies in  
the UK. Only 14 percent of the 73 companies interviewed had any kind  
of serious strategy for tackling climate change.”

By the beginning of 2008, this broader mood was changing. Soon after  
the new year a McKinsey Quarterly survey of 2687 global senior  
executives recorded 87% as saying they were “personally somewhat or  
very worried about global warming”.

Respondents expected that the environment would attract more public  
and political attention and affect shareholder value far more than any  
other societal issue. Sixty per cent viewed climate change as an  
important consideration in determining overall strategy, and nearly  
70% thought it important for managing corporate reputation and brands.

Some of this shift in corporate thinking is probably due to reports of  
the December 2007 United Nations Climate Conference in Bali. But more  
crucial, one suspects, have been survey results showing that consumers  
are now widely concerned about climate change — and that many say  
they will vote with their wallets to have it stopped.

Greenwash

In October 2007, Accenture surveyed more than 7500 consumers in 17  
countries in North America, Europe and Asia. Eighty-five per cent of  
respondents said they were either “extremely” or “somewhat”  
concerned about climate change, and 81% said they believed it would  
directly affect their lives. Eighty-nine per cent indicated they would  
switch to energy providers offering products that emitted less carbon.  
Sixty-four per cent said they would be willing to pay a higher price  
— 11% higher, on average — for products and services with lower  
greenhouse impacts.

For corporations, the benefits of acquiring at least a green sheen are  
now beyond question. But while PR messages have mostly been revamped,  
this does not mean that company practices have changed.

On the whole, the record of corporations in taking practical steps to  
address global warming remains lacklustre. A Clifford Chance survey of  
major world firms in January 2008 records that all but 26% had  
considered launching a product related to climate change. But the  
survey recorded climate change as being “emphasised” at only 29% of  
firms. Some 44% of the McKinsey respondents said that climate change  
was not a significant item on their agendas.

More than 60% of respondents working for companies that considered  
environmental management at least somewhat important said that their  
firms had not set greenhouse gas emissions targets. In time,  
environmentally conscious customers are bound to recognise corporate  
“greenwash” for what it is.

Taking more than token action against global warming costs real money,  
often enough to threaten the competitiveness of firms that venture it.  
As they contemplate a nuts-and-bolts “greening” of their  
operations, corporations are a little like penguins massing on the  
edge of an ice floe. Who will jump first, and risk being eaten?

The demand is thus going out for clear government regulations that  
apply to everyone. A survey of British-based firms reported by the  
Financial Times in July 2007 showed that a “large majority” thought  
the best way to reduce emissions would be through more state  
regulation. The Accenture survey found that four out of five companies  
wanted governments to take a central role in tackling climate change.

Reporting this finding, the Independent in January observed: “The  
[Accenture] survey demolishes George Bush’s insistence that global  
warming is best addressed through voluntary measures undertaken by  
business.”

When leading corporations accept state regulation of aspects of their  
activity, they do not surrender control altogether. In capitalist  
society, big business routinely exercises extraordinary influence over  
government decision-making. This has applied particularly to climate  
change policy in Australia and the US.

Greenhouse mafia

Citing doctoral thesis research by Guy Pearse, formerly an adviser to  
Liberal Environment Minister Robert Hill, Clive Hamilton in his book  
Scorcher explains how a cabal of fossil fuel, electricity, mining and  
refining industry association chiefs — the self-described  
“greenhouse mafia” — largely monopolised policy-making in the  
climate change area in Australia under the former Howard government.  
In the US, the oil industry links of President George Bush, Vice- 
President Cheney and Secretary of State Condoleezza Rice are notorious.

John Howard, of course, is now out of office, and Bush is soon to  
follow. The climate policies of Howard and Bush in their classic form  
— a mix of outright denialism, tokenism and obstruction — are now  
mostly viewed as electorally unsalable. In Australia, the Rudd Labor  
government acknowledges the dangers of climate change, and has called  
in economist Professor Ross Garnaut to help set emissions reduction  
targets.

Strong corporate input into the policy-making process, however, will  
continue both in Australia and the US. Garnaut himself is a director  
of two mining companies. The Australian “greenhouse mafia” will  
continue to function. Almost all of its members were formerly senior  
federal bureaucrats, and Labor government ministries are familiar  
territory for them. One prominent “mafia” figure, the Australian  
Coal Association’s Mark O’Neill, was earlier a senior adviser to  
Labor PM Paul Keating.

Under Prime Minister Kevin Rudd, and whoever succeeds Bush, the  
obstruction of environmental initiatives will remain; the continuing  
domination of the ministries by pro-business bureaucrats will  
guarantee that. The denialism and tokenism will endure too, though in  
modified form. Under the new conditions, the corporations will not  
dispute the reality of climate change. But the scope of the dangers,  
and the extent and timing of the measures needed to deal with them,  
will be fiercely contested.

A pointer to the new corporate strategies is provided by the World  
Business Council for Sustainable Development, which groups some 200  
multinational companies. This body calls on governments to agree on  
global targets, and urges cuts in emissions of 60-80% from current  
levels by 2050.

This ambitious-sounding target, however, is less demanding even than  
Australian Labor’s “60 by 2050" goal. The latter proposes its cuts  
not in relation to current emissions levels, but to the markedly lower  
levels of 1990.

Meanwhile, Labor’s target is itself gravely inadequate. It  
corresponds to global warming of about 3̊C, far into the zone where  
further, runaway warming would be almost certain.

Hamilton, like Pearse before him, stresses the quasi-religious  
zealotry with which the members of the “greenhouse mafia” combat  
the environmentalist cause. By contrast, it could be argued, most  
corporate executives simply want to do business and make money in a  
straightforward regulatory setting.

The future, however, is most unlikely to allow such relatively easy,  
painless solutions. Among climate scientists, the emerging consensus  
now holds that there is no level of net carbon emissions that can be  
considered “safe”. With vital years lost to corporate recklessness,  
the only way to be reasonably hopeful of avoiding climate disaster is  
to move swiftly to a zero-emissions world economy. In rich countries  
like Australia, this future economy will actually have to be emissions  
negative.

None of this will come cheaply, and the profit rates of most companies  
will suffer. With worldwide economic conditions unpromising in any  
case, the additional burden of stringent anti-greenhouse action will  
put the survival of many enterprises in peril. Rather than accept the  
loss of their wealth, many of the corporate rich who until now have  
been relatively indifferent to climate change will join with the  
zealots of the energy and resources industries.

As Hamilton explains, the triad of anti-environmentalist industry  
leaders, pro-business bureaucrats and denialist politicians has until  
now had striking success in beating off environmentalist lobbying.  
Mere cajolery, and even tightly reasoned scientific argument, simply  
will not work against people who are superbly connected and who take  
pride in their closed-minded ruthlessness.

Faced with this wall of greed and prejudice, the only hope for  
environmentalists is to take their message to the majority of  
Australians who want more for their grandchildren than a primitive,  
insecure life in the southernmost corners of the continent.

Instead of an environmental movement that focuses on submissions to  
government departments, what is needed is a movement that works to  
involve the broadest possible layers of the population in active  
campaigning.

It must also be a movement that is not scared of the implications of  
what it demands. If the only way to force major corporations to halt  
their emissions is to take them into public ownership, that is what  
the movement must deliberately pursue.

From: Comment & Analysis, Green Left Weekly issue #745 2 April 2008.