Why business is greener than Trump
- Supreme Court to refer to constitutional bench pleas against allowing Jallikattu
- Godrej Industries board to meet on 14 December over Vora Soaps merger
- Death of a hedge fund: Why the original model is fading so fast
- IndiGo owners InterGlobe Aviation to sell 2.91% stake for $197 million
- Imax, AMC size up Saudi Arabian market as kingdom opens up to theatres
The relationship between business, politics and the environment is about to become more complicated. As US President Donald Trump’s administration threatens to dismantle vital environmental protections, some of which have existed for decades, business leaders are increasingly recognizing—and acting upon—the need for environmentally sustainable policies.
Trump, who once called climate change a Chinese hoax intended to weaken the US economy, has repealed the Stream Protection Rule which bars coal producers from dumping waste into waterways. Next on the chopping block may be the Clean Power Plan, which limits greenhouse-gas emissions from generating plants—by far the country’s largest source of carbon dioxide emissions—with the goal of cutting carbon pollution from the power sector to 32% below 2005 levels by 2030. The Trump administration has even threatened to back out of the Paris agreement.
A decade ago, business leaders would have largely welcomed such regressive environmental policies, which can lower costs and expand opportunities. But today, even as markets respond bullishly to Trump’s “business-friendly” pledges— not just deregulation and tax cuts, but also a trillion-dollar infrastructure plan that would include reviving coal—business leaders have remained cautious.
In particular, they have strong reservations about a potential withdrawal from the Paris agreement. Whatever benefits could be derived from a low-regulation economy would not offset the harm of reneging on environmental commitments that are viewed as vital to American business success.
Some are already making their voices heard on the matter. Since Trump’s election, nearly 900 companies and investors, many of them American, have signed an open letter, “Business Backs Low Carbon”, calling on the administration not to withdraw the US from the Paris agreement. These companies, which include large multinationals, believe that failure to build a low-carbon economy would jeopardize America’s prosperity.
There is compelling recent research to support this view. Last January, the Business & Sustainable Development Commission, which I chair, estimated that companies could unlock $12 trillion globally in revenue and savings by pursuing sustainable business models. Such models can also create up to 380 million jobs by 2030 in key economic sectors, including food and agriculture, energy, transport, health, and municipal government. In the energy sector alone, the opportunities are valued at $4.3 trillion.
Corporate strategies are increasingly falling into line with these findings. In 2005, on the heels of Hurricane Katrina, which devastated the US Gulf Coast and affected a significant regional consumer base for Walmart, the company’s then chief executive officer (CEO), Lee Scott, delivered a telling speech, titled “Twenty-First Century Leadership”, to all company employees. Scott set significant environmental goals, as part of a broader vision for Walmart to become a more responsible corporate citizen.
Today, Walmart is a leading commercial solar and on-site renewable-energy user, deriving about 25% of its global energy consumption from renewable sources. By increasing the efficiency of its US fleet of trucks, Walmart avoided the emission of nearly 650,000 metric tonnes of carbon dioxide from 2005 to 2015, and saved nearly $1 billion in 2016 alone.
Another US company, Mars, Inc., is on a similar path. A signatory of the Business Backs Low Carbon letter, Mars is working to eliminate its greenhouse-gas emissions entirely by 2040, through greater efficiency and investment in renewable energy projects like wind turbines. The company’s CEO, Grant Reid, is also a member of the Business & Sustainable Development Commission.
But while business leadership and collective action are needed to create a sustainable and inclusive economy, the private sector cannot do it alone. Government must be an active partner, helping to scale sustainable activities by creating market conditions that spur a “race to the top” and unlock the finance needed to keep America competitive and innovative.
So it is not enough simply to oppose Trump’s environmentally damaging policies; businesses need to get his administration on their side, so that the US authorities create an environment that encourages sustainable practices and green innovation. Such an environment could include carbon pricing, which a growing number of businesses are pursuing internally, and tax credits for carbon efficiency.
Trump’s own businesses have benefited from such government interventions. As The New York Times revealed, in 2012, Trump secured nearly $1 million in energy-efficiency incentives and low-interest loans from New York State.
A groundswell of support from CEOs, on a non-partisan basis, could be the key to spurring the needed action. Before the Paris climate conference, politicians knew that environmental activists wanted a deal to limit climate change; arguably, what ultimately drove them to act, however, was finding out that CEOs and boards felt the same way.
Business leaders need to show Trump that they are not cheerleaders for coal, pollution, and global warming. They are determined champions of an enlightened environmentalism that is in the interest of all their stakeholders—customers, shareholders, employees, and the communities in which they operate.
Mark Malloch Brown is chair of the Business and Sustainable Development Commission and a former UN deputy secretary general and UK Foreign Office minister of state for Africa.