Business Won’t Operate Sustainably but We Can’t Regulate Them or Else? I Don’t Accept That.

The idea that you can’t push too hard or else companies will leave is a convenient position for profit obsessed corporations.
Oct 1, 2019 10:15 AM ET
Blog

By Brad Zarnett

Last week I was engaged in a conversation with a highly respected sustainability colleague. We both have a similar vision for a better planet but we have a fundamental difference of opinion on how to get there.

I believe that business, via corporate sustainability, has failed to disrupt or reverse the climate destroying and inequality expanding economic model; social and environmental harm is expanding, not shrinking. Despite pledges, promises, commitments and declarations, every major ecosystem on the planet is in a state of decline; real average wages have been stagnant for decades and CO2 emissions continue to rise. My colleague concedes that business hasn’t done enough and that now is the time when they can step up and do more.

I agree, they can do more, anyone can step up to do more…the question is will they? Corporations have never been more profitable — it’s not like they’re clamoring for change. Saying that they can do more is like saying that climate change is complicated — yes, we agree that it is, but how do we address it?

So we’re back to square one — both government and business have failed to address our biggest challenges and we have a looming climate crisis unfolding. The question is: “Who should play the main leadership role in addressing the social and environmental impacts of how we live our lives and more importantly, how we conduct business?”

The Role of Business

This is where it gets tricky. My colleague and I see the roles of government and business differently when it comes to addressing climate change. Neither of us think that the other is completely wrong — we don’t see the issue in terms of black and white. Each of us believes that the other’s ideas have merit and it comes down to percentages and shades of grey.

I believe that business has shown its hand. Despite the recent non-binding pledge by the business roundtable, (which sounds a lot like previous unfulfilled pledges), on the whole, corporations have proven themselves to be incapable (or unwilling) of making choices on behalf of a wide variety of stakeholders rather than just shareholders. Too often when companies can easily find solutions for their impacts but it’s not a “money maker” or worse, it disrupts a proven cash flow, the idea is dropped, regardless of the benefits that would have flowed to a variety of stakeholders. Ask yourself, “within big cities in the developed world, why do we continue to allow the sale of water in single use plastic containers when there are equally convenient alternatives to the distribution of filtered water in reusable containers? Why does the single use plastic container business model persist?

 

Too often when companies can easily find solutions for their impacts but it’s not a “money maker” or worse, it disrupts a proven cash flow, the idea is dropped, regardless of the benefits that would have flowed to a variety of stakeholders.

 

Now it wouldn’t be fair to ignore the efforts of some companies. Driven by a clear or a calculated expectation of an acceptable return, some leaders will go to great lengths to address local or even regional issues. Both Patagonia and Nike reuse discarded fishing nets as part of the inputs to their manufacturing process. These efforts are admirable and deserve praise but ocean pollution is a global problem and these efforts are small in scale. Despite the claim by corporations that they are experts at scaling solutions across the planet, their track record at scaling initiatives that have a weak ROI, like reducing plastic pollution, protecting ecosystems and limiting carbon emissions has proven to be a failure.

Government Has A Vital Role

Do you know what is very good at scaling solutions? You guessed it, the government. But my colleague doesn’t agree. He argues that business is the best way to drive the necessary changes. Business is innovative, agile and resilient and able to find ways to make things happen. But they haven’t delivered when it comes to solving our planet’s biggest global issues that do not have a “shareholder first” business case. If we were talking about the next great innovation in vacuum cleaners, he may be right, but we’re not.

 

Business hasn’t delivered when it comes to solving our planet’s biggest global issues that do not have a “shareholder first” business case.

 

Only when business is regulated with monitoring and penalties have meaningful changes occurred — consider the good work of the EPA and the variety of regulators in the EU. In my country, Canada, government carbon regulations have pushed business and while it’s still not enough to force the necessary science-based changes to protect our climate (IPCC report), it has mobilized companies in a positive direction. This has not been the case in unregulated jurisdictions.

You Can’t Push Too Hard

My colleague argues that if you push companies too hard — and “over regulate” they’ll leave and with that, our conversation abruptly ended. This was new territory and it would have forced us to leave a somewhat fact based discussion for one that was ideologically driven with incomplete examples that are often used as conservative talking points. I suppose that subconsciously the mutual respect that we have for each other was in part why the conversation drew to a close. But it certainly got me thinking.

To respectfully continue the conversation, first, we have to define what is meant by “over regulation” and we have to find some agreement as to the level of urgency for regulations in the first place. Once those questions are answered, we can study and learn from examples where over regulation may have caused companies to leave a particular jurisdiction or country, while simultaneously acknowledging that every situation is different. And one final area where we need to reach a consensus is that half measures are unacceptable — the implications of failure are unthinkable.

Ideology

People can get very defensive of their views on how the world should operate. It’s not easy to accept that after years of a particular belief, maybe you don’t have it right and that your core beliefs may be flawed. So naturally people don’t give up their worldviews easily and with that being said, perhaps our conversation did touch upon ideological thinking. I think it’s fair to say that my colleague would agree that government is incapable of addressing our global problems and that “Government doesn’t lead, it’s wasteful and ineffective at driving change.”

This is not an isolated opinion, many people on the centre-right side of the political spectrum believe this to be true. After all, the campaign against government that has been in place for the last 40 years has largely been effective. Neoliberal, market driven, win-win solutions have been inserted into our business and political narrative and it’s regularly praised by the corporate owned media, despite the fact that it has failed to deliver to the bottom 99% and has our climate on the proverbial ropes. It’s well documented that in the last 30 years, the top 1 percent increased its total net worth by $21 trillion while the bottom 50 percent actually saw its net worth decrease by $900 billion. And yet despite this failure, the narrative persists.

No Room To Maneuver

The idea that you can’t push too hard or else companies will leave is a convenient position for profit obsessed corporations. Essentially it leaves the choice of how to combat climate change in the hands of a pathological entity that is single minded in its drive to continuously grow shareholder profits. Of course this is fervently defended with the flawed logic of Adam Smith’s invisible hand theory that tries to convince us that the quest for one’s personal goals will make society as a whole better off. Massive wealth inequality not seen in nearly a century coupled with devastating environmental degradation is more than enough proof to put this idea to rest.

 

…it leaves the choice of how to combat climate change in the hands of a pathological entity that is single minded in its drive to continuously grow shareholder profits.

 

And yet despite a decades long track record of failure we’re not allowed to regulate business using science based targets for fear that companies will pick up and leave. Instead, our best option is to gently suggest ideas that don’t interfere too much with their profits while accepting actions that are essentially ineffective and hope that somehow our climate doesn’t completely breakdown. I don’t accept that this is the best we can do.

Holistic Solutions

We need to address climate change holistically and business doesn’t have the necessary reach. Business is driven by profits which is why change has eluded us thus far. Not everything has a business case. Some things are simply not suited for business to address, especially when scaling our solutions is so important. When dealing with challenges that do not have a clear business case, centralized regulation, as disturbing as this idea is to right of centre ideologues, is the best option that we have since business has shown that it cannot get the job done.

Our climate crisis requires a coordinated approach. Since every major country is failing to meet its non binding Paris commitments, the next best approach is country by country regulations and even tariffs if that’s what get’s corporations to change.

The idea that we can’t regulate companies because they will just pick up and leave is unacceptable to me — it’s a death sentence. The citizens of each country deserve better. It’s time to shake the corporate hold over our governments and if our Democratic systems can’t do it then people will look for other ways to get their governments to listen to them. There’s a reason why so many countries are exploring authoritarian leaders. Mother nature is knocking at the door — we can’t ignore her any longer.

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Brad Zarnett is a Canadian sustainability strategist, speaker and blogger. He is the Founder of the Toronto Sustainability Speaker Series (TSSS). You can follow Brad on twitter: @bradzarnettLinkedIn, and now on Medium Brad on Medium