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The Business and Climate Summit took place in Paris, ahead of the UN negotiations in the same city later this year
The Business and Climate summit took place in Paris, ahead of the UN negotiations in the same city later this year Photograph: Chesnot/Getty Images
The Business and Climate summit took place in Paris, ahead of the UN negotiations in the same city later this year Photograph: Chesnot/Getty Images

We need honesty from business to tackle climate change

This article is more than 8 years old
Andrew Simms

Business leaders may be genuinely concerned about emission cuts and carbon pricing, but there is barely any conception that business itself might still be part of the problem

Will they, won’t they? Companies gathered for last week’s business and climate summit agonised over whether governments in Paris later this year will deliver the commitments to cut emissions to avoid 2C of warming, and whether the policies to pursue targets will be agreed jointly with business.

There was fretting too about carbon pricing and whether eagerly sought cash for new technology would materialise. Reactions in the business community varied from those who thought it a lost cause without a strong, guiding and investing government hand, those who said they would show climate leadership regardless, and those who might see inaction as a blessing, leaving them to get on with business as usual.

But is business over-thinking, even on its own terms? Confusion and obsession about the environment and about climate change … creates opportunity for the investor – this is hard-core capitalist advice from James Altucher and Douglas R. Sease, authors of the audaciously titled Guide to Investing in the Apocalypse published by the Wall Street Journal.

Money is going to be spent, they point out, and so, in their eyes, there is money to be made. In fact, across a range of scenarios which read almost like a field manual for the “shock doctrine” described by Naomi Klein, the message is that if you can’t make money by seeing opportunity where others see peril, you’re probably in the wrong game.

Is the concern genuine?

What does this tell us about how business sees itself in the struggle to tackle climate change? That maybe there’s a few diehard exceptions who will obstruct you, but at worst you’ll encounter amoral opportunists determined to make money whatever happens. Apart from that there are dynamic entrepreneurs out in front not waiting for government and frustrated business leaders, stuck and waiting for an official green flag.

Concerns about commitments, carbon pricing and adequate resources are genuine, though not the unique preserve of the business community, but in these versions there is barely any conception that business itself might still be part of the problem.

Business may want a clear signal from government, but the signal from bellwether businesses with a major climate impact is anything but clear.

The oil company Shell, for example, is becoming something of a test case. It now acknowledges the science of climate change and the impossibility of avoiding 2C warming if all fossil fuel reserves are burned. But in its next corporate breath, its chief executive, Ben van Beurden, says:, “All the oil that we have, we will use.”

Last year it produced a convoluted public statement to rationalise its position in response to the momentum of the argument that unburnable reserves should be labelled as “stranded assets”. Far from working alongside to achieve climate progress, we’ve learned too from former diplomats about the role played by some businesses, like Shell, in obstructing progress at climate negotiations.

In an odd inversion of the redemptive public narrative, Van Beurden almost seemed to be asking for sympathy when describing recently the personal journey he had to go on before continuing with Shell’s ambitions to drill in the Arctic. In terms of sowing confusion, the advertising standards authority ruled against Shell for misleading environmental claims in its advertising. There was a time when, judging from its adverts alone, you could be forgiven for thinking it wasn’t an oil company at all, but all about renewables and carbon capture.

Can business make things better?

At the business and climate summit, French oil company Total appeared to lament the likely lack of action in Paris later in the year, while seemingly taking a lead from the Shell’s advertising playbook. Total is using the hashtag #MakeThingsBetter in full page glossy magazine adverts for its climate campaign and boasts of its investments in the “cleanest fossil fuel”, natural gas.

Even ignoring the huge gap between rhetoric and reality about the bridge natural gas is supposed to provide to a post fossil fuel future (in reality it is merely adding to total carbon production) this focus conveniently distracts from the brutal reality that Total is planning to spend around $192bn on oil projects between 2014 and 2025. This will surely #MakeThingsWorse. Then there’s high profile business advocates of climate action like Richard Branson, who send an almost comically mixed message by simultaneously promoting airport expansion and space tourism.

Everyone wants to hear positive messages about win-wins for business and the environment, and undoubtedly there are many. Boardrooms would jump for joy if the EU’s recent commitment to quantitative easing were designed in such a way as to stimulate, directly, the low carbon economy.

But there’s also a need in the business community to face some tough reality where a company’s core activity is incompatible with preserving a stable climate.

Swiss billionaire Stephan Schmidheiny was an early corporate advocate of environmental action, setting up the World Business Council for Sustainable Development after the 1992 Earth summit. Among other things, his family wealth came from the very climate unfriendly manufacture of cement. I once asked him several years ago if, push come to shove, he would choose company or climate. Back then he chose survival of the company.

Can business change?

There are huge opportunities for business and climate, but there are also tough choices to be made. It’s a bit like at the end of the Cold War when many defence industries had to convert due to a changed situation. We need some honesty from the business community that to stay the right side of the climate change line, new business sectors need to grow, others may adapt and convert, but some will also have to consign themselves to history.

The other tough reality demanding more honest business reflection is the incompatibility of further, orthodox economic growth in the OECD with the 2C target. The structure of markets relying on the shareholder model also demands that companies must grow. But the best analysis available suggests that growth in OECD countries cannot be squared with halting warming at 2C, 3C or even 4C.

Where are the companies brave enough to even ask the question of what the optimal size of a company might be, after which it should grow no further, and how that company should be governed and function with regard to investors?

For all the decades of discussing triple bottom line accounting for social, economic and environmental performance, the single bottom line demanded by financial markets remains a trump card. Explaining why it wouldn’t invest in wind power in the UK, Shell said it “couldn’t make the numbers work”.

And the reason given more recently by Van Beurden for neither investing more in renewables or even in the carbon capture technology to clean up the mess from Shell’s own waste: “I have great difficulty to have shareholders focus on the quarter after next.”

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