Trusting Corporations by Weakening Antitrust?

Posted on October 3, 2017 by serena

This September, many socially conscious corporations have donated to climate change mitigation and sustainability. Ikea has devoted $44.6 million to the We Mean Business coalition, which began at a UNFCCC Business and Industry Day to provide a platform to “amplify the business voice and catalyze bold climate action.” Mars just pledged $1 billion in investments towards climate change, poverty and scarcity of resources by targeting renewable energy, food sourcing, industry coalitions, and support for farmers. Energy companies such as Pacific Gas and Electric have pledged their support for renewable energy. On a global scale, even supermarkets have collaborated to show their environmentally progressive intent for the future (although they were ultimately shut down because of antitrust and collusion issues). This current corporate support is a good sign for climate change as corporations prove their influence on climate policy.

Click on image to see full spectrum of corporate stances on environmental sustainability.

In light of all of this, legal scholar, Inara Scott, asks if U.S. antitrust law makes it “nearly impossible for corporations to collaborate on sustainability initiatives.” Scott asks whether the Sherman act (the original 1890 statute that broke up major U.S. monopolies) is actually a barrier for corporations to act sustainably because it outlaws collusion and collaboration amongst companies. Scott tells a story of Proctor & Gamble and Unilever. In the late 2000s the two companies planned to release a more efficient laundry detergent but were concerned about consumer reactions. So to avoid a price war they agreed to freeze their prices and market share. This violated antitrust laws so when regulators in Europe found out, they fined the companies more than 300 million Euro.

Two brand names tried to work together to fight climate change rather than each other.

Consumer protection was the ideal that spurred current U.S. antitrust law. Scott invokes consumer to protection to muse that companies should be able to argue that collusion and collaboration is best for long term consumer protection. Scott imagines that long term consumer protection would include sustainability goals that consider the scarcity of resources and is mindful of GHG emissions. Weakening antitrust policy would allow corporations to collaborate and respond to the problems of sustainability, resource depletion, and climate change in a market efficient manner. A particular issue with Scott’s antitrust theory is whether the American courts or legislators could trust corporations enough to allow them the power to collaborate.

Ikea displays their commitment to renewable energy in its stores.

Scott’s solution is to create a regulatory counsel to analyze cases of collusion for environmental protection. This will alleviate concerns about corporate greed and corruption. There is a lot of distrust amongst American consumers and American corporations. Capitalist ideals often push corporations to strive for the lowest cost with maximum benefit, often forsaking consumers or the environment. But “’sustainability issues are profitability issues so [Scott] think[s] the altruism is [of companies] tied up in the long-term health of these companies.” So between corporate environmental sustainability, corporate collaboration, and government regulation – climate change policy may look more and more like business.

Climate Policy For Sale?

Posted on April 11, 2016 by achristian

A newly released study from the UK-based, non-profit InfluenceMap reveals that just 5 oil industry entities collectively spend an estimated nearly $115 million every year through lobbying and influence to obstruct climate policy. And the report’s team considers this a conservative estimate. Topping the list are the American Petroleum Institute (API) ($65 mill), ExxonMobil ($27 mill) and Shell ($22 mill). The new assessment is built from InfluenceMap’s September 2015 release of a much larger assessment of 100 leading industrial corporations and 30 powerful trade associations.

This study, which also included the Western States Petroleum Association (WSPA) and the Australian Petroleum Production & Exploration Association (APPEA), is no stab in the dark exercise. InfluenceMap offers an open platform and transparent methodology, and utilizes well-established data sources of publicly available information, along with original research. A big reason InfluenceMap’s analysis is considered conservative is that it can’t count the monies these entities direct to anti-climate think tanks. Current disclosure requirements mean that information doesn’t have to be made public.

In addition to direct lobbying, the assessment covers the multiple ways corporations exert influence in today’s world – advertising, PR, social media, and access to certain circles. The application of these methods toward climate science and policy in the U.S. has been well documented.

InfluenceMap’s performance rankings are reported in grades A+ through F. Each entity’s grade is based on both its direct influencing efforts as well as its strength of relationships with policy influencers (e.g., trade associations, chambers of commerce, and advocacy groups) and the importance of those influencers. The results? API, WSPA, and APPEA all got Fs, ExxonMobil got an E-, and Shell received a D-.

This report is designed to help investors assess and manage climate risk. It also assists shareholders seeking corporate change, and climate-progressive corporations seeking competitive advantage. For advocates of climate-smart policy, it may advance the effort to quench fossil fuel’s already smoldering fire.

Take note, Big Oil. You are selling out of good will.

Financial services promote a greener world

Posted on December 5, 2015 by madhavi

According to Michel Sapin, the French Minster of Finance, the financial sector is in the midst of a transition. Investors, insurers, and banks are at the center of the climate change activity. In a recent presentation at COP21 Sapin noted, “Climate change has immense opportunities. The future is low emissions.”

Principles for Responsible Investment, an investor initiative in partnership with UNEP and the UN Global Compact, corroborates Sapin and notes that investors must address the climate issue in their investment strategy.The organization promotes investor focus in sustainability as a fiduciary duty to shareholders.

In looking at investment data, it appears that many investors have embraced and take the duty seriously. From the organization’s report on trends in the private sector:

Private sector commitment to green investing is growing.
New green bond market exists and it is valued from 50 to 70 billion dollars.
Carbon price is a reality; presently more that 450 companies have set internal carbon prices.
Investor behavior is changing; portfolio decarbonization strategy is an accessible example.
Insurance scaling up both through both issuance and through investment portfolios. Insurers are shifting to low carbon investments

Looking ahead, to promote investor enthusiasm and enable stronger growth, regulatory authorities need to provide clear guidelines and frameworks. Prices need to be established for carbon and we need to stop subsidizing fossil fuels. Presently several carbon prices exist on global level but trading activity could be more efficient if there was an established market and a transparent carbon price. With carbon and greenhouse gas prices topics of discussion at COP 21, perhaps the UN agreement will assist in establishing a global market.

What a concept! The fossil fuel industry pay for loss and damage?

Posted on December 12, 2014 by achristian

The COP is an exciting experience, rich with smart, creative and passionate individuals. Among them is a still relatively small network of thought leaders – researchers, attorneys, and others – advocating a new direction for mitigating GHGs and advancing accountability for atmospheric carbon contributions. In a side event yesterday panelists from the Climate Accountability Institute (CAI), Union of Concerned Scientists (UCS), The Center for International Environmental Law (CIEL) and the Climate Justice Programme explored multiple dimensions of climate responsibility and ways to change fossil fuel industry behavior using research from the Carbon Majors Project of the CAI. A particularly intriguing concept offered was a fossil fuel extraction levy to help pay for loss and damage from climate change.

Focusing on the largest emitters in the world, the Carbon Majors Project research has revealed that, as of 2013, as few as 90 entities were actually responsible for 65% of the now 1.4 trillion tons of cumulative CO₂ in our atmosphere. These fossil fuel extractors, refiners and sellers include investor-owned companies, state-owned companies, and national government-run industries. The power of this research is that it comes from companies’ own production statements themselves, and it accounts for mergers and acquisitions over time.

The Carbon Majors Project’s primary objective is “to quantify and trace historical and cumulative emissions of carbon dioxide and methane to the largest extant fossil fuel and cement producers.” Instead of the primarily fuel consumption-based and aggregated approach used to estimate national GHG inventories of the 6 GHGs covered by the Kyoto Protocol, this work traces emission back to those corporate producers responsible for the majority of our fossil fuels and cement. Carbon Majors’ top-20 list includes some you’d expect: Chevron, ExxonMobil, and BP – all investor-owned companies.

The trajectory of the research is to link from emissions to concentrations to temperature increase to impacts and ultimately to damages. As UCS’s Peter Frumhoff put it, this work will increasingly “inform the policy, legal and social discussion about responsibility.”

The ethical dimension raised by yesterday’s panel centered on a couple of questions:

What might we have expected these companies to do in the face of the scientific data and information available as far back as 1988, when the IPCC was formed?
What level of responsibility do they have for committing us to a dangerously warming world?

According to work by the Union of Concerned Scientists, instead of taking the long view and beginning to shift to renewable fuel production, the fossil fuel industry “actively invested in sowing doubt, and solidifying its business model by intensifying exploration and extraction.”

On the legal dimension, Niranjali Amerasinghe of the Center for International Environmental Law shared the significant potential for this research to inform legal strategies. Establishing the causal chain creates opportunities for a number of legal theories, including: torts (going after past harm), nuisance, negligence (at what point was this known?), misinformation/deception, and even product liability (are these emissions inherently dangerous things?). Granted, there are huge jurisdictional challenges to putting these legal theories into practice. Nonetheless, the Carbon Majors research offers a powerful tool for holding these companies accountable. And there are side benefits to a legal angle, for instance the increase in financial risk of an asset that could become “stranded.”

Putting these pieces together, the Climate Justice Programme builds on the work of the Carbon Majors Project and CIEL in formulating the “bad faith” argument based on the violation of the principle of “no harm.” Its solution: The fossil fuel industry should pay for the damages their products have created and are creating through a levy to Warsaw International Mechanism for Loss and Damage (WIM).

With climate finance still currently woefully inadequate for adaptation alone, much less for means of implementation, a new source of finance is critical for ensuring that the poor and vulnerable impacted populations are not the ones who pay for the climate change loss and damage they suffer. The idea is that through the WIM, such funds could go directly to affected communities or to pay insurance costs.

Resting on key precedents such as the Oil Spill Compensation Fund (a regime to provide funding for oil spills), this levy could be based on the historical emissions of the Carbon Majors and the future extraction of fossil fuels. Taking this route could be attractive to governments and increase risk assessment capacities of companies.

Yes, the panelists and the audience acknowledged many questions and challenges, but the energy in the room was palpable. These weary champions seemed genuinely excited that they might just have something here that’s been needed for decades.

Another ‘tion pushing national climate change action: the corporation

Posted on March 10, 2014 by tbach

Greenwire reports that activist investors will propose 142 shareholder resolutions asking corporations to strengthen their climate change commitments. This list of resolutions covers greenhouse gas reductions, energy efficiency, deforestation, and water use. The resolution campaign is led by 35 institutional investors, including public pension funds in New York, California, and Connecticut; labor groups like the AFL-CIO, the Teamsters, and the International Labor Union of North America; investment firms like Amalgamated Bank LongView Funds, Walden Asset Management, and Calvert Asset Management Company; and religious groups like the Presbyterian Church (USA), Mercy Investment Services, and Unitarian Universalist Congregrations.

According to Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk, “Investors are not standing still as the climate crisis worsens. These wide-ranging resolutions reflect a deepening concern that stronger actions from companies are needed.” Ceres reports that investor groups filed 23 resolutions this year asking companies to set greenhouse gas reduction targets and increase transparency on how they are managing climate risks. Climate change resolutions are targeted at oil and gas companies like Exxon Mobil and ConocoPhillips, electric utilities like Ameren and Dominion Resources, and retailers and manufaturers like Lowe’s, Advance Auto Parts, and Polaris Industries.

Petitioning shareholders argue that ignoring the risks of climate change now will place companies at risk of future operational and financial hardship. They also point to recent studies showing that many U.S. businesses have reported a higher rate of return on investments in carbon-reduction technologies than on overall corporate capital investments. For example, the World Wildlife Fund and the British nonprofit Carbon Disclosure Project found that companies that commit to cutting carbon emissions by 3% annually over the next six years could save as much as $190 billion through lower energy bills. More than 700 firms have signed onto Ceres’ Climate Declaration avowing that “tackling climate change is one of America’s greatest economic opportunities of the 21st century.” Some of the largest corporations are already planning for the U.S. government to put a price on carbon emissions.

UPDATE: Read this RTCC post on point concerning Shell’s annual report.