Blogs & Comment

Storms, global warming, and corporate citizenship

What can business do to help fight the effects of global warming?

Humans are (very likely) changing the earth’s climate. And changes in climate are (very likely) making storms worse. And worse storms are definitely a bad thing. Granted, it’s hard—in fact, foolish—to try to draw a straight line between any individual’s or even any corporation’s behaviour and the Frankenstorm that just slammed New York and surrounding areas, but the fact remains that the devastation that storm wrought was not the effect of a mere freak of nature. As Businessweek bluntly put it, “it’s global warming, stupid.”

But what matters more than the cause of global warming is what we can do about it. In particular, what can business do about it?

Large-scale problems tend to require large-scale solutions, and so there’s a natural tendency to leave such issues to government. This is so for two reasons. First is simple scope: you driving a hybrid car or switching to CFL bulbs just isn’t going to accomplish much. Second is the problem of collective action: each of us benefits from a wasteful, energy-intensive lifestyle, and it seems narrowly rational to let other people (or other companies) bear the costs of doing things differently. But the fact that it’s tempting, or even narrowly rational, to let others bear the burden, or to wait for government to act, doesn’t make it the right thing, or even the minimally decent thing, to do.

To begin, what business can do is work to avoid making things worse, by avoiding burning carbon, which adds to the carbon dioxide in the atmosphere. This means looking at relatively small, obvious stuff like seeking energy efficiencies in their operations, promoting telecommuting, reduce air travel, and so on. Luckily, most such efforts are relatively painless, since they tend to reduce costs at the same time. Sometimes mere laziness or a focus on “how we’ve always done things” gets in the way of making such win-win changes. Don’t be lazy. Innovate. Share best practices with your suppliers, with other companies in your sector and, if you’re a B2B company, with your customers.

The second thing businesses can do is to work with, rather than against, government efforts to make things better. In particular, it is a fundamental obligation of corporate citizenship not to block government action aimed at slowing climate change, and in particular action aimed at dealing effectively with the effects of climate change. If, for example, a government wants to pass rules forcing businesses to pay the full cost of their energy usage, or rules that impose industry-wide energy efficiency rules, business should welcome rather than oppose such changes. Energy inefficiencies impose costs on other people, and hence count as the kind of externalities that go against the fundamental principles of a market economy.

It’s also worth noting that asking what business can do is not quite the same as asking what your business, or any particular business, can do. Business organizations and trade associations abound, and there’s plenty they can do to a) help members share best practices and b) foster industry-wide standards that can help businesses live up to their social obligations while at the same time maintaining a level playing field.

Finally, business can do the things it’s supposed to be good at: efficient management, synergistic use of human capital, and innovation. That stuff isn’t just a good recipe for commercial success. It’s an absolute obligation. And innovation is clearly the key among those three aptitudes. Efficiency—tightening our belts—will only get us so far. We desperately need a whole slew of truly brilliant new ideas for products, services, and productive processes over the next decade if we are to meet the collective challenge posed by changes in our environment. And it’s foolish to expect government alone to provide those ideas. It’s time for business to step up to the plate. There can be no better way to manifest a commitment to corporate citizenship than to be the kind of corporate citizen that sees a business model in trying to help us all cope with global warming.

Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.