Tuesday is Poznan Business Day at the ongoing COP14 Climate Talks. According to host organizations, the International Chamber of Commerce (ICC) and the World Business Council for Sustainable Development (WBCSD) the global economic crisis underscores the need for strong government leadership and the urgency of agreement on the road to Copenhagen.
Martin Wolf, Chief Economic Commentator for the Financial Times, suggests, “businesses will respond – or, in the technical jargon, “internalise” externalities [such as climate change] – only if it is in their interests to do so.”
The joint ICC and WBCSD presence in Poznan proves that’s not so, Bj√∂rn Stigson, President of the WBCSD, argues in a letter to the editor. Together the two organizations represent a diverse membership of thousands of companies worldwide. Clearly though, voluntary effort on the part of industry has proven an inadequate tool for fighting climate change. Effective regulation and incentives (read: subsidies) are imperative to systematize an impact on corporate culture.
Indeed, industry needs the government to set standards. In a recent lecture at the Woodrow Wilson School focusing on the legal response to climate change, Harvard Professor Jody Freeman asserts that there is only one thing industry hates more than regulation: uncertainty. Industry, she says, would often prefer a federal law to set a price signal with which to move forward.
The Senate hearings on the future of the auto industry substantiates this claim. The industry crisis has led to a lot of finger pointing. Economic pundits remind us it was not just hubris that brought the companies down. Recent investment in green technology weakens such a simplified stance. GM, the focus of attention with the Volt, spent over eight billion dollars on research and development last year.
Yet, the investment was clearly too little, too late. Dan Neil , automotive columnist for the Los Angeles Times, concedes that “Many of GM’s strategic missteps — such as betting large on trucks and SUVs and not investing early in hybrid technology — were the result of willful shortsightedness at the board level, responding to a financial market in which shareholders look for the quick return.” His point? Only government can tip the scale in cost-benefits analysis. As Neil maintains, “Putting Uncle Sam in charge would fundamentally enlarge the return-on-investment horizon.”
In the case of the auto industry, this means providing much-needed subsidies for plug-in hybrids and electrics. Perhaps more importantly, strong government leadership should ease the fight over clean-air regulations. Here Stigson can agree with Wolf, “Only if the right global policies are in place will business play its part in delivering the desired outcomes.”
The current economic crisis underscores that only through public-private partnership will a post-2012 global agreement on climate change succeed. Stigson ends his letter to the Financial Times by putting forth a clear agenda, “business needs: a transparent, predictable, long-term policy framework…”
In addition to Poznan Business Day, both the ICC and WBCSD are representing industry through a number of side events. Though focused on the need for policy, legal, and institutional frameworks to fight climate change, they are also there to represent emerging business solutions.
Is your business a member of the ICC or WBCSD? Are you following their representation in Poznan?