Editor’s note: This commentary is by Laurie Ristino, an associate professor at Vermont Law School and the director of its Center for Agriculture and Food Systems.
Major corporations get it: Climate change is a business liability. The most recent evidence? After drought and crop failure disrupted its ability to produce beverages and other products, the Coca-Cola Co. conceded that climate change threatens its bottom line, according to a story published in The New York Times (Jan. 23, 2014).
Coke’s willingness to acknowledge the growing economic threat of climate change , however, is not unique among American companies. For example, General Motors, Disney and Microsoft purchase millions of tons worth of voluntary carbon offsets (which, in theory, mitigate and avoid greenhouse-gas emissions). In fact, in 2012, American companies led the world in the purchase of voluntary carbon offsets. These investments were made in advance of any federal regulatory requirement to reduce emissions. In other words, some corporations are proactively addressing climate change impacts as part of their business planning.
As a matter of fiscal survival, the business sector needs to follow the lead of Coke and other corporations in acknowledging the reality of climate change.
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One could chalk up offset purchase as green-washing. But when companies like GM and Coke acknowledge the effects on their bottom lines, it’s clear that corporate America is turning a corner on climate change. This is a significant departure from the traditional stance of industries like coal and industrial agriculture as well as the U.S. Chamber of Commerce, with its dogged determination to hamper any governmental attempt to address climate change. Their argument that government regulation of greenhouse gases will increase the cost of business seems increasingly untenable as businesses acknowledge that climate change itself negatively impacts profit.
Climate change’s catastrophic impacts and the centuries-long process it will take to mitigate its effects require response from all sectors of society, including business. Even if we had effective governance, Congress alone can’t solve this problem. And so, business’ engagement in addressing climate change is not just a welcome development, it is critically necessary. Business has the capacity to invest in mitigation and adaptation, innovate solutions, and provide leadership. This leadership is not just a matter of protecting profits. In fact, an increasing number of businesses recognize that the value of incorporating social good into their missions. In Vermont, where I work and teach, the business community has long incorporated social good into their pursuit of the bottom line.
It’s easy to forget that the American corporation, now beast of burden to the singularity of shareholder value as measured by profit, is a modern development. At our nation’s founding, the chartering of corporations was a limited affair to enable activities that benefitted the public such as the building of infrastructure. Colonists were wary of the power of English corporations with their expansive and sweeping power, and sought to limit their influence in governance and other aspects of society. Fast forward to present-day when corporations, in a sort of historical irony, have now been granted a degree of personhood by the Supreme Court. Yet, if corporations are to have the privilege of personhood, then certainly they should have the duties associated with membership.
Just a heartbeat ago, it seems climate change was a distant meteorological curiosity. But our radical reordering of weather is now visible: extreme weather its calling card. As a matter of fiscal survival, the business sector needs to follow the lead of Coke and other corporations in acknowledging the reality of climate change. And, as a matter of duty, corporations must embrace their role in addressing it.