Instead of government setting goals and rules for emissions reduction, the private sector — including multinational oil giants — is increasingly dictating to governments how companies can be “supported” to make changes.
WASHINGTON — As global leaders came together this week in New York to unveil commitments on cutting carbon emissions and to try to inject fresh energy into climate discussions, focus on the private sector took on a prominent new role – both inside the United Nations headquarters and outside, among protesters.
At the U.N. Climate Summit on Tuesday and in the days leading up to the event, multinational corporations and major institutional investors took an unprecedented number of voluntary steps, from making unilateral pledges of sustainability to placing new priority on funding alternative energy technologies to collectively urging global policymakers to take substantive action on emissions reduction.
“These are vast and marked changes, and very different from any other time I can remember. The level of interest on the part of the private sector is radically different than it was even five years ago,” Mindy Lubber, the president of Ceres, a U.S. coalition of investors and others focused on sustainability, told MintPress News.
“It goes without saying that financial and corporate leaders calling for action does change the debate. It moves the discussion from one of the environment versus the economy to one about both.”
More than 100 corporate CEOs showed up to take part in the summit, according to a count by the World Resources Institute. A major new umbrella group, the We Mean Business coalition, made up of thousands of companies, investors and some of the world’s most powerful businesspeople, came together to work to speed up the transition to a low-carbon economy and to “ask policymakers to help the private sector go further.”
Other pledges could have more immediate impact. Dozens of multinational companies took part in a historic declaration to halve all deforestation by the end of this decade, and to end the practice outright by 2030. Likewise, several of the world’s largest producers and users of palm oil – one of the most significant current drivers of deforestation, which in turn has a direct impact on rising carbon emissions – pledged to redouble their efforts and to strengthen policies against deforestation.
The World Bank, meanwhile, unveiled a new coalition of more than a thousand businesses (and 73 countries) urging the creation of a global price on carbon emissions. Indeed, in the days just prior to the summit, a widely discussed study found that many of the world’s largest companies, including the oil giant Exxon Mobil and financial services firm Goldman Sachs, are already incorporating internal carbon prices into their financial planning and risk management.
“[M]ajor corporations not only recognize climate-related regulatory risks and opportunities, but also are proactively planning for them,” the report found, suggesting that companies are now “outpacing their governments in thinking ahead.”
Opportunity versus obstructionism
Prominent voices within the environmental community are making similar observations, clearly hoping to use the new private sector momentum to motivate broader action from governments and their representatives.
After all, the aim of the New York summit, called personally by U.N. Secretary General Ban Ki-moon, is to galvanize new energy in the run-up to final negotiations toward a new global framework on combating climate change, slated to take place at the end of next year in Paris. The last such negotiations, held five years ago in Copenhagen, resulted in a widespread sense of frustration and missed opportunity.
“In Copenhagen, businesses were left waiting at the altar for governments to solve the climate change problem. Companies then moved on with their own climate action plans – and you’re seeing some first results of those efforts today,” Samantha Smith, the head of the World Wildlife Fund’s Global Climate & Energy Initiative, said Tuesday in a statement.
“We agree with the business leaders at the Summit today – they are moving and it’s now governments’ turn to raise ambition and lead.”
While Smith noted that strong action from corporations is “critical,” she cautioned that “some powerful parts of the private sector are still actively standing in the way of policy decisions that could lead to more renewable investments and a clean energy future. That kind of backward-thinking and obstructionism must stop.”
Such dual concerns have characterized much of the civil society response to the new corporate interest in responding to climate change. After record-breaking crowds gathered in New York and in other cities around the world on Sunday to demand emissions-related action from policymakers, demonstrators continued their actions on Wall Street the following day. While those protests carried multiple messages, demonstrators particularly vented anger over what they see as corporate obstructionism around climate action.
Here in Washington, climate protesters have likewise focused their frustrations on business entities, marching on Tuesday in front of industry trade associations and deriding “corporate sponsors of climate change.” Many say that the underlying profit motive inherent to any corporate structure makes it hard to put much faith in company-led sustainability initiatives.
“I think it’s wise to be very skeptical about these new corporate plans around climate change. And anyway, most of these proposals are pretty minor in terms of actually slowing down the production of greenhouse gases,” Bill Ragen, an organizer of the Washington protest, told MintPress.
“People are frustrated that we’ve now had 20 years of U.N. summits on climate change and things keep getting worse. People realize that there’s so much money in digging up and burning fossil fuels that unless we address the corporate incentive we’re not going to get a solution – there’s just too much money to be made in the short run by people who don’t mind destroying the planet in the process.”
For others, engagement with the private sector remains important, on the understanding that action by business will ultimately play a central role in the global response to climate change. Yet concerns continue to revolve around the exact role that the private sector is playing in determining that approach. The recent summit, some suggest, underscored these apprehensions.
“The problem isn’t the corporate involvement at the summit, but rather that the event put heads of state on equal footing with corporations. That distorts who’s making decisions about addressing climate change,” Janet Redman, the director of the Climate Policy Program at the Institute for Policy Studies, a Washington think tank, told MintPress.
“Climate issues are central to the broad public interest but corporations are specifically set up to maximize profits, so we have a fundamental incongruity here. And when those interests don’t line up, it usually means that people and the planet lose out.”
The fossil fuel industry, of course, is a key indicator of this tension. On the one hand, the oil and gas industry is overwhelmingly the biggest driver of global climate change, contributing some 80 percent of global greenhouse gas emissions, according to the head of Statoil, the Norwegian oil and gas company. Thus, changes within the sector will inevitably offer the most significant levers for effecting broad emissions-related change.
On the other hand, the industry has been almost completely unwilling to support any substantive reform or to begin diversifying into forms of energy that are less carbon intensive. At Tuesday’s summit, six global oil companies — a mix of private and state-owned entities from the United Kingdom, Mexico, Thailand, Norway, Italy and the U.S. — did agree to reduce their methane emissions, though these did not include any large U.S. companies and no targets were set.
“It’s really problematic that we’re seeing the fossil fuel industry saying it will come forward with new ways to fight pollution,” Redman said.
“That’s very different than saying that we need to move away from fossil fuels and, in my opinion, is simple green-wash. The private sector is panicking at this new focus on environmental impact, but no one is actually suggesting a fundamentally changed business model.”
Redman said Tuesday’s climate summit highlighted a strengthening inversion of the proper roles for government and state regulation. Instead of government setting goals and rules for emissions reduction, the private sector is increasingly dictating to governments how companies can be “supported” to make changes.
“That’s a perversion, with public sector energy going into supporting the private sector,” she said. “Instead, the public sector has to set a framework for how we all need to act, both individuals and the private sector.”