Excerpt from Beyond Politics: The Private Governance Response to Climate Change
Who recently announced a goal of reducing 20 million metric tons of greenhouse gas emissions? We have posed that question to dozens of audiences at public events and in university classrooms, and the answers we get invariably assume that government is the actor.
In some cases, the answers are cities like Seattle and New York. In other cases, the answers point to states and provinces like Rhode Island and British Columbia, or countries ranging from China to small island states.
The correct answer? Walmart. Working with the Environmental Defense Fund, in 2010 Walmart announced the 20 million-ton goal, and the effort ultimately yielded more than 28 million tons of emissions reductions between 2010 and 2015 from Walmart’s suppliers in China and around the world. Moreover, on the heels of this achievement, Walmart announced the even more ambitious goal of reducing its greenhouse gas emissions between 2015 and 2030 by 1 billion tons, which would be roughly the same reduction that would be achieved by a government regulation that required the U.S. iron and steel industry to cut its emissions to zero.
Whatever your views are about Walmart, we suspect that taking a leading role in greenhouse gas (GHG) emissions reductions is not the role you envisioned for the company. We examine why climate debates so often default to an assumption that government must be the actor that responds to climate change and that the action must be some form of international agreement, or domestic law, policy or program.
Private climate governance is not a sideshow but one way to bypass government gridlock and achieve major emissions reductions over the next decade.
Although the climate problem will not be solved without government responses, we demonstrate that private actors — including corporations, advocacy groups, individuals and households, civic, cultural, philanthropic and religious organizations, universities and hospitals — are achieving major emissions reductions in the United States and around the globe. We explain why they are acting, and we identify additional opportunities that could add up to a billion tons per year of additional emissions reductions over the next decade.
A focus on actions by the private sector is particularly important because climate policy is deeply polarized along liberal and conservative lines, but private sector responses, which we call private climate governance, can bypass “solution aversion” — the resistance to climate change that arises from concerns about a big government response. A billion tons of emissions reductions per year over the next decade will not solve the climate problem, but these reductions will buy additional time for public opinion and public support to catch up with the climate science.
Corporate climate initiatives such as the Walmart example are the most visible example of private governance, and these initiatives have proliferated in the U.S. and around the world in the last decade.
Walkers Crisps, the largest potato chip producer in the United Kingdom, feeling pressure to examine its carbon footprint, has learned that because it was buying potatoes by the pound, farmers were responding by picking the potatoes when they were wet and storing them in humidified warehouses, only to have the company dry them before it turned them into potato chips. This process boosted energy costs and carbon emissions, and wasted money.
Apple has pushed for lower carbon emissions from its suppliers in China, and to address concerns that the suppliers could not reduce their carbon footprint because they could only buy coal-fired electricity, in 2015 Apple partnered with its suppliers to provide two gigawatts of renewable energy (the equivalent of roughly two to four major electric power plants) to these suppliers. In 2016, Apple took a similar step in Arizona, committing to build a major new solar power plant to offset the emissions from a new manufacturing facility.
In the United States, Microsoft, Google and dozens of other major companies have publicly committed to become carbon-neutral. Hundreds of others have committed to less ambitious but still important emissions reduction goals. For instance, Dell Computer has committed to 30 percent carbon emissions reductions. Some of these actions may have been taken in anticipation of near-term government regulations that look increasingly unlikely, at least in the United States, but many clearly are not the product of near-term government pressure.
The business world can buy time for a more comprehensive government response, reduce the risk of catastrophic climate change, and cut the cost of climate mitigation.
Recent developments in our area, the U.S. Southeast, provide an example. The southeastern states would be the sixth largest emitter if they were a country, and these states are not known as leaders in climate policy. Most have not only rejected state climate regulations, but also have litigated vigorously to prevent the federal government from enforcing national regulations that would reduce emissions from coal-fired power plants. Although these states are not pursuing carbon emissions reductions, Google, Facebook, and other companies are pushing utilities in the region to provide renewable energy for new facilities such as data centers and are extending their influence by encouraging other electricity buyers to do the same.
It is easy to fall into the trap of assuming that the only important climate policy question, as one leading pundit suggested, is “What can government do?” Even our vocabulary, ranging from terms such as “policymaker” to “regulation” and “international,” can create a conceptual trap, implying that government is the actor that can respond to social problems. Instead of asking “What can government do?” in this book we ask, “What can any organization do?” To avoid the vocabulary trap, when talking about private governance we use broad terms such as “actor” and “initiative” in place of “policymaker” and “regulation.” These terms may seem too generic, but they can accommodate the large variety of private climate actors and actions, and most alternative terms tend to reinforce the government-as-actor framing.
Re-framing the question to leave room for private governance leads to several additional conceptual shifts. The actor that can drive emissions reductions shifts from government alone to any public or private organization. In turn, the actions that can be taken expand from government laws, policies and programs to include a number of private options as well, such as supply chain contracting requirements, private certification standards for forestry and other carbon-intensive sectors, commodity roundtables, lender standards, corporate and product carbon disclosure, green finance, private sector demand for renewable power, employee household efficiency campaigns, household energy disclosure, and a host of others. Even the conception of emissions sources shifts, since private actors and initiatives can reach many types of sources that are difficult for government to regulate, including households, small businesses, foreign businesses, religious organizations, universities, hospitals, and civic and cultural organizations.
We make the case that governments are not the only important actors for climate mitigation. Private actors, including corporations, advocacy groups, individuals and households, civic, cultural, philanthropic and religious organizations, universities and hospitals are not just advocates for or against government action, but they can make an important, and perhaps essential, contribution on their own. In other words, addressing climate change requires more than just government action; a concerted effort is needed to mobilize private actors to reduce their emissions and push other private organizations to do so as well.
Our analysis suggests that private climate initiatives in the corporate and household sectors alone can reduce carbon dioxide emissions by roughly a billion tons per year over the next decade, on top of the emissions reductions that could be achieved from government climate policies. These private sector-driven emissions reductions are not enough by themselves to limit global warming to 3 degrees Celsius, much less 2°C or 1.5°C, but they can be an important piece of a larger strategy to buy time, improve the odds of avoiding catastrophic climate change, and reduce the costs and intrusiveness of emissions reductions. Even after governments adopt additional policies, private governance can play a complementary role, providing additional information and motivation to achieve emissions reductions.
Corporations are regulators of their suppliers, of their borrowers, of their commercial tenants, and sometimes of their corporate customers.
Can private actions yield sufficiently large emissions reductions to be worth the effort? Our research suggests that private climate governance is not a sideshow but is one of the few ways to bypass government gridlock and achieve major emissions reductions over the next decade. International, national and sub-national actions are obviously important, but private initiatives already are reducing annual global emissions by millions of tons through the individual and collective actions of corporations, private certification and standards groups, advocacy groups, religious organizations, universities, households, and other actors typically viewed as lobbyists for or against government action, not as important players directly in climate mitigation.
The conceptual shift regarding climate actors, actions and sources makes it possible to appreciate the extent of the efforts that are under way and to envision a private climate governance strategy that can bypass government gridlock at the international, national and sub-national levels. In this new vision, the Catholic Church and other not-for-profit organizations are important sources and regulators of their contractors’ emissions, not just advocates for government action. Corporations are regulators of their suppliers, of their borrowers, of their commercial tenants, and sometimes of their corporate customers, not just regulatory targets or lobbyists.
The amount of private climate governance activity under way now is remarkable. But to see the significance of these initiatives, we need a conceptual framework that does not exclude private actions from our notions of governance.
We develop that conceptual framework in this book and outline a private climate governance strategy by defending three propositions. First, we demonstrate that large emissions reductions are needed in the near term. Second, we explain why it is unrealistic to assume that governments will be able to deliver the needed reductions. Third, we demonstrate how private climate governance can achieve a significant fraction of the necessary reductions — carbon dioxide emissions equivalent to roughly 1 billion tons.
Private governance is not enough to solve the climate problem, but it can contribute to buying time for a more comprehensive government response, reduce the risk of catastrophic climate change, and reduce the cost of climate mitigation. We do not pose an all-or-nothing argument that the world must choose between public and private governance. In our view, they are complementary, and we should pursue both.