“On the menu or at the table”: corporations and climate change

Issue: 116

Gareth Dale

“Another World Is Possible!” announces a placard held by a demonstrator on an unspecified global justice movement protest. The photograph is the background graphic of an advert. Above it the Shell logo. The advert is for a conference sponsored by the oil giant, entitled “Climate Change: Is Business Doing Enough?”

Not so long ago Shell denied climate change altogether. In 1989 it set up the Global Climate Coalition along with several dozen other fossil fuel, vehicle and chemical companies. The avowed aims were to sow doubt about scientific claims concerning global warming and to forestall political efforts to reduce greenhouse gas emissions. The coalition invested heavily in public relations campaigns warning that efforts to reduce emissions by restricting the burning of fossil fuels were misguided and would cause economic disaster. Its efforts helped to put policy making on climate change on hold for years.

At the turn of the century Shell shifted. Alongside BP, Dupont, Morgan Stanley and others, it defected from the coalition and established new organisations: the Partnership for Climate Action and the Business Environmental Leadership Council (BELC). In a sharp break from the old coalition line, BELC announced:

We accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address the consequences… Businesses should take concrete steps now to assess opportunities for emission reductions… and invest in new, more efficient products, practices, and technologies… More must be done to implement the market-based mechanisms that were adopted in principle in Kyoto.1

Another BELC member is the global energy giant General Electric. In 2005 its chief executive, Jeff Immelt, announced that the company was turning green. The new strategy, dubbed “Ecomagination”, aimed to cut emissions by 1 percent over seven years. The chief means to this end would be to invest in “clean coal” technology. Concurrently, General Electric invested in greening up its image, with a series of:

charming adverts—an elephant dancing in the jungle to “Singin’ in the Rain” with the words “Technology that’s right in Step with Nature”, and stunning models digging coal to the tagline “Harnessing the Power of Coal is Looking more Beautiful every Day”.2

These are snapshots, but they illustrate an unmistakeable trend: corporations now acknowledge climate change and are developing strategies in response. This much is plain to see. Also very visible, and advertised on company websites, are the strategies themselves. The knottier questions concern their effectiveness. Will they work or are they just dancing elephants? A related question is, “Why now?” What explains the timing of this corporate awakening?

Fig leaves and greenbacks

Search the websites of many blue chip corporations and you will find lists of measures designed to address the threat of climate change. The most important of these, found across a range of industries, can be grouped under seven headings:

(1) Investing in renewable energies.

(2) Improving energy efficiency.

(3) Encouraging emissions reductions by employees and consumers, eg through “carbon labelling”.

(4) Technologies to capture carbon dioxide.

(5) The use of biofuels.

(6) Carbon offsetting.

(7) Influencing national and international policy making.

Clearly many corporations feel the need to do something. Regrettably, close inspection of these methods reveals their colour, almost without exception, to be the green of the fig leaf or the dollar. In some cases a green tinge, once present, has since begun to fade.

Renewable energy is the least problematic of the seven methods listed for socialists and environmentalists. Additional investment in solar, wind, wave or tidal power can be applauded unreservedly. But the fig-leaf factor should not be overlooked. For instance, Tesco’s green strategy includes a promise to devote £100 million to supply energy for its stores using wind turbines, solar panels, geothermal power and gasification (power from waste food). If this investment is actually made it will be impressive, but a glance at the company’s balance sheet reveals that the figure—pledged over an unspecified number of years—is just 0.2 percent of its annual sales revenue, or 4.5 percent of its annual profits.

Of British based corporations the two big spenders are Shell, which invests an average of $200 million a year in renewables, and BP, which has created an alternative energy arm, chiefly through the purchase of the world’s largest manufacturer of solar panels, Solarex. Again the figures are significant, but should be placed in context. In 2005 Shell reported that its investment in renewables amounted to just 1 percent of total capital investment—in contrast to the 69 percent devoted to scouring the planet for new sources of fossil fuels. In BP’s case, the
$45 million it spent on Solarex is a quarter of the amount spent on revamping its image, complete with the distinctive green “exploding sunflower” motif.

In the renewables sector corporate behaviour is crucially determined by government carrots and sticks, and both of these, in most of the world, are diminutive. So Gordon Brown generated much publicity in 2006 when he set aside £12 million in subsidies for households to install solar panels and other “individual renewable energy solutions”. But his government is splurging £5.1 billion on widening the M1 motorway—£21 million per mile. Its subsidies for the fossil fuel and nuclear industries dwarf those for renewables.

Energy efficiency figures more prominently in the green strategies of most corporations. When, in 2007, Rupert Murdoch announced, “I’m proud to be green,” the key measures that gave substance to his conversion involved improving energy efficiency, for example installing low energy lightbulbs in the offices of his media empire. Is this evidence that corporations are seriously facing up to the challenge of climate change? Tesco’s chief executive, Terry Leahy, gave the game away in a widely cited article in which he set out to refute the claim that the company was simply involved in “greenwash”:

The truth is that Tesco has been getting greener for years… There are sound commercial reasons for cutting energy consumption in stores, reducing fuel consumption in distribution and getting rid of excess packaging, and we’d be doing many of these things even if we had no concern for the environment at all.3

To business executives this is obvious and it has long been a commonplace in business studies journals. For example, in 1996 an article in Managing Service Quality entitled “How to Turn Pollution into Profits” advised that schemes designed to reduce waste and pollution promised two rewards: not only could they be dressed in green garb, but they would also “cut costs and thus increase revenue”.4 In the capitalist market competition obliges firms to continually improve energy efficiency, especially when energy prices are high, and to cut waste. It seems remarkable that one of Britain’s best paid managers should take the trouble to explain to Telegraph readers that his firm’s green turn is genuine and yet still reveal that most of its emissions reduction measures would have been adopted anyway—even on a carbon dioxide free planet—in order to reduce costs.

Encouraging emissions reductions by employees and consumers is the third strategy. For example, BT claims that it has been taking climate change seriously since the early 1990s, and part of its programme involves encouraging its “104,000 strong workforce to reduce their personal carbon footprints”.5

Such measures are, again, laudable if taken at face value. But are they effective? Are they taken seriously? If BT is a representative case, the answer is, “Not very.” To give an example that stands for many, in the early 2000s BT consolidated its south east England operations in four large offices adjacent to the M25 motorway. In the narrowest business arithmetic the relocation made sense. But it entailed closing BT’s central London offices, forcing any employee who previously commuted by public transport to travel by private means. Each of the new offices boasts a giant parking lot. In my mind’s eye I see them adorned, Soviet style, with banners sporting BT’s slogan, “To Engage with our Workforce to Reduce their Personal Carbon Footprints”.

Informing and “empowering” customers is a particular preoccupation of retailers. Tesco, among others, has committed to publishing a “carbon count” on its packaging. In explaining the initiative senior executive David North pointed out that customers can only act on climate change if they have appropriate information. Surveys, he said, “reveal a discrepancy between what people say and how they act on climate change”, the reason being that “customers think they’ll have to pay more, they fear their actions will make no difference, and they lack information to act”. With labelling, informed customers can act appropriately. But how effective will carbon labelling be? At the margins it will affect behaviour. When, for instance, consumers discover that the carbon footprint of a bunch of flowers sourced in Africa is, against expectations, lower than that of a bunch sourced in Europe some will compare labels and buy the African product. But the most important of the three reasons for customer inaction is not lack of information, but individuals’ assumption that their shopping choices will make no difference. The super-rich excepted, individual consumers have negligible market power and influence, and are aware of it. As individual consumers ordinary people are not “empowered”, and no acreage of labelling will alter that.

Carbon labelling can actually exacerbate this problem, for it represents an attempt by corporations, in tandem with governments, the media and many environmentalists, to delegate responsibility for combating climate change to individual consumers. Heather Rogers has traced the history of earlier business-led campaigns that deliberately set out to create the idea that individuals are the primary source of pollution:

In the 1950s the group Keep America Beautiful was formed by industry to pre-empt legal restrictions on disposable goods, namely packaging. Through an elaborate public relations campaign the organisation generated a popular narrative about garbage that shifted responsibility from industry to the individual… Its goal was to distract people from questioning the viability of an increasingly trash-reliant marketplace.6

Then, in the 1980s, manufacturers learnt to exploit the rise of recycling “as a bulwark against the adoption of more rigorous measures mandating reduction and re-use”. Recycling also worked to

further ingrain a sense of personal culpability for increasing levels of trash… The rhetoric of recycling targeting individual behaviour as the key to the garbage problem, steering public debate away from the regulation of production.7

The current focus upon individual “carbon footprints” is a continuation and amplification of this trend. It is flourishing now because heightened environmental concerns have arrived in a neoliberal age, with its ideology that corporate behaviour is driven by consumer choice. By way of illustration, at a recent Climate Change Summit (organised by the Guardian and sponsored by Shell) “the resounding message” was, “It’s the customer, stupid”.8

Developing technologies to capture carbon dioxide (CO2) is the fourth strategy. It takes two forms. The first is to extract CO2 from emissions at power stations and inject it into underground geological reservoirs. Projects of this type are already under way, although BP’s much publicised venture in Scotland was recently abandoned after Whitehall indicated a reluctance to subsidise it.9 Assuming that the potential for leaks can be restricted, this could become a technology that contributes to climate change mitigation. As things stand, however, it is perceived as economic only because CO2 is injected into depleted oil fields in order to extract previously inaccessible oil—for burning.

The second approach is to absorb CO2 from the air using sodium hydroxide (caustic soda), or from the oceans by seeding them with iron filings to stimulate the growth of phytoplankton (plankton that absorbs CO2 during photosynthesis). These technologies are far from proven. Absorption from the air requires colossal energy inputs to produce the caustic soda, distribute it, and collect and dispose of the waste products. As for ocean seeding, the small-scale trials that have been conducted so far have not demonstrated sequestration (permanent capture) of CO2 in the deep ocean. Rather they found that zooplankton (plankton that cannot absorb CO2) multiplied as quickly as phytoplankton, consuming them before emitting almost all of the carbon as CO2 into ocean and air.

Although it would, of course, be marvellous if a technological solution could be found, there is little sign that any miracle is in the offing. In general technological fixes create an edifice of wishful thinking, a costly smokescreen for continued reliance on fossil fuels, diverting attention and funds from proven technologies such as renewables, building insulation, and rail and bus as replacements for private transport.

The use of biofuels to replace fossil fuels seems neatly persuasive in theory. The CO2 emitted by burning biofuels is not “new” but had been absorbed by the crops from the atmosphere as they grew. However, biofuels must be grown on an immense scale to make an impact. The grain required to feed a person for a year will power a “sports utility vehicle” for less than a day. Even at this early stage biofuels are edging aside agricultural crops and pushing food prices up. The medium term consequences could be disastrous for hundreds of millions of people. The “buffer” stocks of food stored by governments are already diminishing—and these are the only reserves available if harvests in wide regions of the globe are afflicted by droughts, storms or floods (all made more likely by climate change).

Biofuel crops are hastening the concentration of land ownership in many countries as poorer farmers are driven off their land. Working conditions are often appalling. In Brazil plantation workers cutting sugar cane to make ethanol (alcohol) are forced to work 14-hour days in horrendous conditions. A form of debt slavery is widespread: workers are lured to remote areas where plantation owners charge exorbitant prices for everything from food to transport, and then force them to work to pay off their debts. (Despite this, President Lula acclaims Brazil’s ethanol business executives as “national and world heroes”.)

The evidence that biofuels reduce climate change is far from convincing. One study revealed that cars using a biofuel mix increased nitrous oxide emissions by 17 percent.10 Nitrous oxide—no laughing matter, despite its familiar name—is a greenhouse gas 300 times more powerful than CO2. And matters are far worse when it comes to the production of biofuels. Synthetic fertilisers are invariably used in growing biofuel crops, and this is the main source of nitrous oxide emissions. Producing fertilisers requires large amounts of energy, producing yet more greenhouse gases. Biofuel plantations growing soya in Brazil, sugar cane in Africa and palm oil in South East Asia are major causes of peat burning and tropical deforestation. The UN predicts that at current rates 98 percent of tropical rainforest in Malaysia and Indonesia, which together produce 84 percent of the palm oil used in biodiesel, will be destroyed by 2022. According to an official EU Commission impact assessment:

increased use of biofuels in the EU…is likely to have various effects…[including] substantial CO2 losses if grassland is ploughed up or forest cleared. These losses can be expected to outweigh CO2 gains from biofuels for many years.11

Concerns at these problems have led some biofuel boosters to change tack. They now advocate a certification scheme to ensure that only “sustainable” feedstocks are used. They also place their hopes in a wonder crop, jatropha, and in “second generation” biofuels such as cellulosic ethanol. None of these are solutions at present. Certification cannot address the fact that increased demand for “sustainable” feedstocks raises prices, encouraging increased sales of “unsustainable” feedstocks to less scrupulous bidders. Jatropha can be grown on marginal land, but its yields are far higher when grown on prime land, meaning it does compete with food crops. It is, moreover, toxic and rapidly becomes an invasive weed. Cellulosic ethanol is sourced from woodchips. If produced on a mass scale monoculture tree plantations would compete with food crops, deplete the soil and reduce ecological diversity. But its more significant drawback is that cellulosic ethanol has not yet demonstrated carbon saving potential; for it to become viable, breakthroughs in plant physiology are required.12

Carbon offsetting can be unilateral and voluntary. Corporations invest in emissions reduction projects, usually in the developing world or in forestry (since young trees absorb CO2). Marks & Spencer, for instance, announces that “using a system known as carbon offsets, M&S has funded the planting of new forestry in the UK which over its lifetime will take out more pollution from the atmosphere than the 2,600 tonnes of carbon dioxide that our home deliveries will produce over the next 12 months”.13 (For the benefit of sceptics, the website displays photographs of the seedlings.) But offsetting plays its most important role within international carbon trading schemes such as the European Trading Scheme and the Kyoto agreement. Corporations earn government-distributed “carbon credits” by sponsoring projects that supposedly reduce greenhouse gas emissions. The corporations can use these credits to increase their emissions without facing penalties.

Offsetting has so many flaws that space permits mention of only the major ones. The effect of planting trees is negligible if fossil fuel extraction continues. Over four trillion tonnes of carbon exist underground in the form of fossil fuels, whereas all biomass, living and dead, amounts to only half that figure.14 Trees only absorb and hold carbon for a short time. Mature trees cease to absorb much carbon; they then rot and release it. A functioning forestry offset scheme requires that the trees grow, do not burn and do not rot when they die. Some media interest in this particular logjam was sparked when most of the trees perished on a mango plantation supported by rock group Coldplay.

In addition, the CO2 “offset” is emitted today, while offset schemes may not “save” carbon until years into the future. Take the M&S scheme mentioned above. The firm planted new forestry which in its lifetime could absorb more CO2 than emitted by a year’s home deliveries. Hopefully, M&S will be able to ensure that the trees are protected from fire and bugs and, once mature, are used for house building or to make furniture. Moreover, in many schemes the offset entails not new tree planting but simply buying the “rights” to the carbon bound up in those new trees. One offset company charged customers £8.50 per tree, but paid only £0.43, for the “rights” to the carbon that each was predicted to absorb.15 All in all, it is scarcely an exaggeration to say, with Cambridge University botanist Oliver Rackham, that planting trees to mitigate climate change is like “drinking more water to keep down rising sea levels”.16

The drawbacks are no less serious when offsetting takes the form of investment in emissions reduction projects, while the absurdities are greater still. The credits that a project is awarded “are calculated by subtracting the emissions of the world that has the project in it from the emissions of an otherwise identical possible world that doesn’t”.17 That “other possible world” is the assumption of “business as usual”; its fictional vital statistics are calculated by the project proponents’ private consultants.

A majority of carbon credits come from just six projects, in India, China and South Korea, which manufacture refrigerant (the fluid used in refrigerators and air conditioners). The process produces HFC-23, a greenhouse gas 11,700 times more potent than CO2. Refrigerant companies burn the HFC-23 and, for each tonne saved, receive 11,700 carbon credits, which they then sell on through emissions trading schemes. The potential profits “are so great that companies are being encouraged to expand production of refrigerants so they can produce more HFC-23 to incinerate, thus increasing the net amount of pollution”.18

Other offset projects involve investment in efficiency improvements that would have been implemented anyway. One scheme gives credits to a company for burning gas instead of coal; in another a company is paid to burn woodchips, releasing CO2, rather than landfill them, which would release methane.19 Only a minority of projects involve renewables. One instance of this, flagged up in the EU brochure EU Action Against Climate Change, is a project constructing wind turbines in New Zealand.20 The carbon credits this project “earns” are calculated on the basis that if the wind farm were not built the same electricity would be supplied by a coal-fired power station (without carbon extraction technology). This is fiction posing as economics; it is spun from the hypothesis that the New Zealanders would not themselves build a wind farm.

It is little wonder that offsetting has attracted the attention of satirists. Its fundamental premise—that emissions can be made good by bank transfer—has been expertly caricatured by cheatneutral.com which offers disloyal partners the prospect of offsetting their infidelities by paying money to couples who pledge to stay faithful:

When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere. Cheatneutral offsets your cheating by funding someone else to be faithful and NOT cheat. This neutralises the pain and unhappy emotion and leaves you with a clear conscience… When you use Cheatneutral, we’ll email you a Cheatneutral Offset Certificate, so you can prove to your loved one that your playing away has been successfully offset. Then, you and your partner are both happy, a broken heart is mended, and you can feel good about yourself again, all thanks to Cheatneutral.

Another widely aired satirical comparison is with medieval Christian indulgences—the pardoning of sins in return for payment. Given that protest against indulgences, Protestantism, contributed to the dissolution of an unjust and wasteful social order, socialists may read this analogy with optimism.

Influencing national and international policy is the final corporate climate change mitigation strategy. Few corporations trumpet their activities in this area, but there are exceptions. “We will focus our efforts on influencing policy [and] regulation,” declares BP. “We can do this by working to develop inclusive, informed dialogue, supporting the creation of a ‘level playing field’ for low-carbon energy [and] encouraging market mechanisms.” In line with this approach, BP joined the World Bank’s “Prototype Carbon Fund”, the mission of which “is to pioneer the market for project-based greenhouse gas emission reductions”.21 In lobbying for “regulation lite”, organised through markets, BP is representative of the corporate sector.

The corporate climate change campaign

Why are such large swathes of the ruling class “going green”? The mainstream explanation is that consumers, increasingly environmentally conscious, shop with “green” companies. “Going green” is now seen as a brand asset because marginal differences in brand image translate into large differences in turnover. Climate change activist Mark Lynas argued recently in the Guardian:

The obsession of some campaigners in exposing “greenwash” may be misplaced. Yes, companies will seek to improve their image, but in doing so they have to achieve a real transformation, and also make themselves ever more open to consumer pressure. Moreover, corporations are extremely powerful customers in their own right: when Wal-Mart in the US decided to switch to green electricity, it sent a strong signal to energy generators that investment in renewables should be ramped up.22

Like it or not, “you have to recognise that this is where power resides in our society—and in some ways corporations are much more accountable than governments. What customers have to do is ensure that big companies are global leaders in climate change”.23 If each of us changes our lifestyle and consumes in an eco-conscious way, companies will turn ever greener.

This argument takes for granted the free market assumption of a neoliberal age. It is nonsense. Opinion polls show that large majorities of respondents are more likely to buy a product from a company that is known to have environmentally friendly practices, yet most consumers will in reality use cost as the chief guide and the vast majority will not research a company’s environmental record. One recent report suggests that although 80 percent of consumers believe it is important that companies act in an ecologically sustainable way, their understanding of what this means is “shallow, confused and easily swayed by company messages”.24 The same survey found that the top 20 “green brands” included Smart, Tesco, Marks & Spencer, BP, Asda, Toyota, Virgin Atlantic and Shell. Shell is the biggest emitter of CO2 listed on the FTSE index and its operations have in recent years become markedly more carbon intensive. Smart is included even though DaimlerChrysler also manufactures gas guzzling Mercedes and sports utility vehicles (as does Toyota). Simply including the colour green in a company’s logo can make a difference to consumers’ perceptions—-presumably this explains the presence of Asda and BP.

Al Gore enjoined those attending the July 2007 Live Earth concerts to swear that they would “buy from businesses who share my commitment to solving the climate crisis”.25 Given the scale of advertising, not to mention gauging the effectiveness of corporations’ climate change mitigation strategies, those who take the oath seriously might find their shopping trips taking a very long time with few purchases being made—even aside from the difficulty in ascertaining the ownership of many companies.

A very different explanation for the greening of business comes from some on the left. It is seen as a smokescreen designed to divert attention from other issues. Canadian historian David Noble argues that the corporate denial of climate change in the 1990s coincided with a “triumphalist ‘globalisation’ offensive”. But the Kyoto agreement, combined with the vibrant global movement born at the 1999 protest in Seattle, prompted some of the more prescient business and political leaders to seek “to get out ahead of the environmental issue by affirming it only to hijack it and turn it to corporate advantage”, thereby rendering it compatible with corporate interests.26

What Noble calls the “corporate climate change campaign” emphasises the primacy of “market based” solutions, while simultaneously hyping the climate issue into an obsession: “a totalistic preoccupation with which to divert attention from the radical challenges of the global justice movement”. He highlights the role of Al Gore who, in 2004, teamed up with Goldman Sachs executives to establish the London based environment investment firm Generation Investment Management, and who champions market mechanisms and individual behavioural change as the key tools with which to tackle climate change.

This corporate campaign, Noble argues, has generated “hysteria about global warming”, which is “safely channelled into corporate friendly agendas at the expense of any serious confrontations with corporate power”. It has also subdued the global justice movement and restored confidence in those very faiths and forces which that movement had worked so hard to expose and challenge:

globe-straddling profit-maximising corporations and their myriad agencies and agendas; the unquestioned authority of science and the corollary belief in deliverance through technology, and the beneficence of the self_regulating market with its panacea of prosperity through free trade… All the glaring truths revealed by that movement about the injustices, injuries, and inequalities sowed and sustained by these powers and beliefs have now been buried, brushed aside in the apocalyptic rush to fight global warming. Explicitly likened to a war, this epic challenge requires single minded attention and total commitment, without any such distractions. Now is not the time, nor is there any need, to question a deformed society or re-examine its underlying myths. The blame and the burden has been shifted back again to the individual, awash in primordial guilt, the familiar sinner facing punishment for his sins.27

Another response, similar in some ways to Noble’s, has been provided by Alexander Cockburn, editor of one of the US’s most important left webzines, Counterpunch. He sees the whole science of climate change as a “new dogma” backed “all the way from radical greens through Al Gore to George W Bush, who signed on at the end of May”. He argues:

The left has been swept along, entranced by the allure of weather as revolutionary agent, naively conceiving of global warming as a crisis that will force radical social changes on capitalism by the weight of the global emergency. Amid the collapse of genuinely radical politics, they have seen it as the alarm clock prompting a new Great New Spiritual Awakening.28

Hostility to Al Gore by the US left, reflected in Noble’s article, is justified, given he vice_presided over the Iraq sanctions regime, Plan Colombia and the bombing of former Yugoslavia. Some have been tempted, like Cockburn, to reject not only Gore’s corporate friendly solutions but his scientific case too. However, the issue of climate change was not first raised by such establishment figures. Rather it was put on the agenda by “decades of campaigning by the political left, public intellectuals and environmentalists”.29 It is doubtless true that in the aftermath of scandals such as the Enron case some corporations have striven harder than normal to clean up their image, but this does not make concern for the environment a distraction from campaigns for social justice. Indeed, fears that corporate and political elites are ill-equipped or unwilling to properly address climate change can bring fresh recruits to the global justice movement—as was evident among protesters at the June 2007 G8 summit at Heiligendamm, Germany. Climate change also encourages advocates of strong regulatory action or even full blown economic planning. Vaclav Klaus, the conservative Czech prime minister, recently sounded the alarm in a Financial Times op-ed column:

As someone who lived under Communism for most of his life, I feel obliged to say that I see the biggest threat to the market economy and prosperity now in ambitious environmentalism, not in Communism. This ideology wants to replace the free an spontaneous evolution of mankind by a sort of central (now global ) planning.30

What is more, far from contributing to “hysteria”, the “corporate campaigners” understate the dangers of climate change. It already appears that even the dramatic predictions of the 2007 Intergovernmental Report on Climate Change report were overly cautious, for example on the rate of increase of atmospheric greenhouse gas and the speed of collapse of Antarctic ice sheets. It has been scientists, scientific publications (such as New Scientist), and campaigning journalists (notably George Monbiot)—not the corporations—who have pointed to this downplaying of the scale of the problem. By contrast Al Gore’s film, An Inconvenient Truth, leans towards understatement.

The great danger posed by climate change is that a threshold may be crossed after which “positive feedback” mechanisms accelerate warming beyond any possible human control. An Inconvenient Truth mentions only one of the various important positive feedback mechanisms: the melting of the Arctic ice sheet. (Ice, at the poles, on mountains and as in glaciers, acts as a “solar mirror” without which the planet will absorb more solar heat.) Others include: the evaporation of some of the 280 billion tonnes of frozen methane currently locked in tundra permafrost, or of the 10,000 billion tonnes deposited under seabeds as methane hydrates; warming of the soil, which accelerates the decomposition of accumulated organic matter; the increased likelihood of forest fires; and warming of the seas, which turn from CO2 sinks to sources (as is already occurring in some oceans).

Gore and his allies are not representative of the capitalist class as a whole. A YouGov survey revealed that “climate change is pretty much at the bottom of the ‘priority list’ for the FTSE 350 companies in the UK. Only 14 percent of the 73 companies interviewed had any kind of serious strategy for tackling climate change”.31 Yet climate change is certainly rising in importance—at least relative to other “corporate social responsibility” issues. A 2007 survey of European companies found that, as a corporate social responsibility priority, it had soared from eighth to fourth within a year—still lagging behind “transparency” and tackling corruption, but ahead of labour conditions, income equality and fair trade, and far above ecological diversity and, in last place, poverty. Many corporate executives do regard global warming as a real problem. The evidence by now is so overwhelming that it would be surprising if they did not. Some businesses will be adversely affected by climate change, for example through higher insurance premiums, higher crop prices and the loss of fixed capital to floods or hurricanes. Corporate leaders such as Nicholas Stern, author of the government’s Stern Review on the Economics of Climate Change, are also concerned with the impact of climate change on long term capital accumulation, and with the social problems and political instability that it will catalyse or exacerbate, such as starvation, water shortages and resource wars.

The climate change strategies of corporations and states involve an attempt to square two conflicting imperatives. To avoid instability and maintain the conditions necessary to capitalism’s reproduction, climate chaos must be mitigated, but, for states and corporations alike, this must not affect the bottom line of maximising profitability and outcompeting rivals. Gore and Stern emphasise the former imperative, but all capitalist elites seek solutions within the framework of “business as usual”—modifying technologies and organisations, while shoring up hierarchical structures and extending commodification. The concern for climate change must not deflect from the need to perform for shareholders. Hence most corporations, politicians and civil servants adopt a complacently pragmatic stance: the threat should be addressed through a mix of carbon absorption measures, energy saving and improved technologies. (A representative example is the US department of energy official who reportedly stated that “tree planting will allow US energy policy to go on with business as usual out to 2015”.32) Climate chaos, attempts to mitigate it and the cultivation of a green image also provide business opportunities.

In addition, corporations have become alive to the benefits that can be gleaned from influencing the regulatory framework. In early 2007 two articles in the US business press drew attention to this phenomenon. The first, entitled “Why Key Executives Are Warming To Legislation on Climate Change”, appeared in the Wall Street Journal. “On the personal front,” it began:

three business leaders have played an extraordinary role in pushing [the issue of climate change regulation]: General Electric’s Jeffrey Immelt, DuPont’s Chad Holliday, and Duke Energy’s Jim Rogers. The three men were driving forces behind the group of ten CEOs who called on President Bush last month to cap greenhouse gas emissions… As a practical matter, Messrs Immelt, Holliday and Rogers argue that limits on carbon dioxide emissions are now inevitable… “The probability is almost 100 percent that the candidates for president from both parties will be calling for some sort of regulation of CO2 in the next election,” says Mr Rogers. Business leaders who sign on early will likely have more influence in crafting the all important details of any legislation, which could determine who wins and who loses. “A seat at the table would help,” says Caterpillar CEO Jim Owens.

The other, from Business Week, discussed the fear of environmentalists that companies:

are more interested in protecting themselves than in saving the planet, since those not willing to negotiate could face higher costs. As Charles Territo of the Alliance of Automobile Manufacturers says: “If you’re not at the table, you’re on the menu.”

That phrase has caught on more widely. Shell’s chairman James Smith repeated it verbatim at the “Climate Change—Challenging Business” conference sponsored by his company.33 What it signifies is that chief executives recognise the inevitability of regulation, and seek to push “pre-emptively” for a business friendly policy framework. Regulation, moreover, does not affect all equally. Far reaching changes to the global energy system are in the pipeline, and some sectors will be hit harder than others. “There’s not a win-win here,” says Ray Kopp, a senior fellow at a Washington based think-tank. “Somebody gets hammered and somebody doesn’t”.34 Jockeying over who gets “to the table” and over the regulatory framework itself is the result.

The relevant questions then are: “What sort of framework, nationally and internationally, will govern the climate change regime? Will it be regulation heavy? Will it be geared around taxation? Or will it be ‘regulation lite’, organised through markets?” It may not be surprising that businesses lobby for market mechanisms to tackle emissions, yet they are acting against better judgment. A survey of 151 large and medium British based companies, published in mid-2007, revealed that a “large majority” said the best way to reduce emissions would be through more state regulation. Somewhat fewer thought taxes and tax breaks were key. In bottom position came the market: “Fewer than half thought voluntary agreements and market trading schemes were effective environmental tools”.35 A managing partner of the professional services firm that commissioned the survey made this point: “Corporate leaders recognise that customer and investor pressure is not enough to change their behaviour fast enough given the urgency and scale of action required.”

Businesses, perhaps surprisingly, are less sanguine about the effectiveness of market schemes than many government representatives, liberal newspapers and even environmentalists. How can this be squared with the fact that the business sector has formed a powerful lobby for market based emissions reduction and against heavier regulation? Three possible explanations offer themselves. Could it be that the 151 companies surveyed are not a significant sample, and not representative of business opinion? Or, conceivably, the business managers interviewed have character flaws—they are inveterate liars or incapable of exercising rational judgment? The alternative is that the interests of businesses in protecting the environment and in protecting their profits tend to clash, with the latter consistently trumping the former.

There’s method in the market

The policy regime on emissions reduction, as it has emerged in parts of the US, the EU and at global level, has centred on creating markets in emissions. As these markets become actual, more and more corporations recognise their inevitability and consider how best to play them, and how best to lobby for favourable terms.

Emissions trading works like this: a state or group of states caps emissions at a certain level—ideally less than that which, they reckon, would have been emitted otherwise—then issue emissions permits to corporations. These then buy and sell the permits; organisations exceeding their allocated emissions can buy quotas from those with a surplus. In effect, the permits are temporary property rights in pollution. Proponents of carbon trading justify it in terms of efficiency. Trading, they say, allows the cheapest cost of reducing carbon emissions to be found. If the market price for emissions is set high enough, companies will respond accordingly.

In reality, the record of carbon trading has been abject. For one thing, it opens the door “to meddling by, and fierce infighting among, industries jockeying for the best deal on their allowable emissions”.36 For another, the marketisation of emissions encourages information distortion and cheating because the figures are supplied by the companies themselves. Above all, trading is simply ineffective. It enables well funded, high emissions businesses to buy the “right to pollute” on the permits market. It is a licence for the industries most dependent on hydrocarbons to carry on business as usual, encouraging tardiness in shifting away from fossil fuels. Consider the EU’s Emissions Trading Scheme. Its scope is restricted: it only applies to CO2 and to certain plants in certain sectors, accounting for less than 30 percent of the EU’s greenhouse gas emissions. It rewards the biggest emitters, and if a company closes a highly polluting plant, its permits are withdrawn.37

It was apparent from the EU scheme’s earliest stages that permits were being over-allocated. The price of the right to emit one tonne of CO2 slumped: from €30 in April 2006 to under €10 a month later. In 2007 the market collapsed: the price crashed to €1.2 in March 2007, then €0.13 in June. The collapse was not without a golden lining. The emissions trading company Climate Exchange, for example, saw its share price quadruple even as the market collapsed. The biggest winners, however, have been the biggest polluters, for they were granted the biggest quotas (ie permits to pollute).

Some of them deliberately inflated their initial emissions estimates and possessed huge quantities of surplus permits, which they sold at a profit. Although the permits are distributed free, many big energy firms factor their market value into the price of the power they sell. In Germany RWE is said to have made €1.8 billion in windfall profits by this method. In the Czech Republic the electricity giant CEZ sold enormous quantities of permits when prices were high, and then bought them back when they had fallen, enabling it to expand coal production.38 In Britain, while universities and NHS hospitals have had to pay tens of thousands of pounds to buy extra permits, companies such as Esso, BP and Shell netted £10 million to £21 million each.39 Behind this profiteering, Guardian journalist Nick Davies argues, the “reality was that these major producers of carbon emissions were under no pressure from the scheme to cut emissions”.40 Carbon trading has not reduced the EU’s CO2 emissions.


Capitalism is addicted to fossil fuels. It is easy to see why. “In comparison with other energy sources,” Elmar Altvater argues, “fossil energy fulfils almost perfectly the requirements of the capitalist process of accumulation”.41 It is transportable, enables flexibility in the spatial organisation of production, and can be used 24/7, enabling production to be run on a profit optimising timetable. Over time, processes based upon fossil energy have become entrenched in the economic, physical, cultural and political dimensions of our world. As a result, fossil energies benefit from “economies of scale, synergies with other industries, access to policymakers, accumulated specialist expertise, and subsidies of various kinds”.42 The resulting inertia is greatly enhanced by capitalism’s competitive dynamics. The logic of capitalist competition ensures that profits are paramount, with the environment treated as an “externality”.

Global warming enters the equation only after the fact, and too late, in the form of rising costs and pressure on profitability. Firms must compete to survive, while capitalist states compete in military, economic and political arenas. If abandoning fossil fuels requires investments that undermine a company or state’s competitive position, the pressure to resist change is immense. Inertia is further strengthened by the lobbying and market power of fossil fuel dependent corporations, above all in the energy and vehicles sectors.

Accordingly, many measures taken by states and corporations ostensibly to mitigate climate change are cosmetic—they are designed to placate public opinion. Others are assumed to mitigate climate change but in reality serve other interests. For example, the expansion of biofuels in the US serves the interests of agribusiness and farmers. It also involves an alliance with Brazil that is explicitly designed to counter the moves towards regional integration based on oil and gas that for several years has been loosely constructed between Venezuela, Argentina, Bolivia and Ecuador. Still other measures acknowledge the threat, while trying to reformulate it in ways that either benefit businesses—such as commodifying the right to pollute via emissions trading—and/or involve toothless regulation. As Larry Lohmann puts it, emissions trading encourages businesses:

to treat global warming not as a social and environmental problem to be solved but as a business and public relations problem to be kept out of ordinary people’s hands and to be managed at the least possible relative financial and market loss to themselves… Far sighted companies treat carbon trading as an opportunity to gain new property rights, assets and openings for capital accumulation, even if climate change is accelerated in the process.43

This is not to say that effective regulation of emissions is impossible under capitalism. In 1956 the British government passed the Clean Air Act, which succeeded in its goals. “We didn’t mess about with soot trading or breathing credits,” Labour MP Alan Simpson recalls. “We just told industry it had to change to smokeless fuel”.44 But the situation today is less tractable than in 1956, for three reasons. First, and most obviously, the problem is on a vastly greater scale. Second, neoliberal ideology places the greatest emphasis upon the least effective, even counterproductive, measures: carbon markets and individual lifestyle change. Third, whereas the British state could impose a law upon corporations in 1956, tackling global warming requires transnational regulation. Common agreement is thwarted as nation states press for regulation advantageous to their particular interests. Thus Japan and Russia demanded extra carbon credits to represent their existing forests before agreeing to sign the Kyoto Protocol, while the US defected from Kyoto altogether. The EU, meanwhile, pushes for limited controls managed via trading schemes: its economies are less dependent on carbon energy than their US and Chinese rivals and its carbon traders would gain first-mover advantages if such schemes proliferate.

This is not a hopeful scenario. But, as the effects of climate change make themselves felt, the contradictions discussed above, between and within national ruling classes, will build. Global warming will exacerbate economic crisis, social breakdown, mass migration and political divisions, and will generate political and moral questioning. Fissures will grow, opening space for struggles from below. “There is unlikely to be one great movement,” Chris Harman writes in Socialist Review:

but there will be 1,001 struggles as different classes respond to the impact… Capitalists and states will react to the need to do something about greenhouse gases by price and tax measures that inevitably hit the living standards of the poor. The underlying motivation could be a sense of class grievance, yet these movements can also be manipulated by sections of the ruling class to advance capitalists’ interests in producing greater emissions… Faced with these struggles, there will be a particular onus on those who see climate change as resulting from the blind advance of capitalist accumulation to understand their class dynamic. That means trying to give struggles a direction that protects [workers’] living standards and conditions while at the same time presenting real alternatives to pouring greenhouse gases into the atmosphere.45

In their essentials those alternatives are simple. They include massive investment in renewable energy, public transport and energy efficiency measures such as housing insulation. Tree planting, and some form of carbon sequestration and biofuel use may well be indispensable too. Corporations and governments claim to be enacting some of these measures but, this article has shown, they are invariably too little, too unjust or even destructive of the environment when enacted by neoliberal institutions. While applauding neoliberals such as Al Gore for their indispensable work in publicising the science of climate change, progress on the issue requires a radical break from neoliberal solutions.


1: “Business Environmental Leadership Council”, from the Pew Centre on Global Climate Change website, www.pewclimate.org/companies_leading_the_way_belc

2: “Green is Green”, Strategic Direction, volume 22, number 9 (2006).

3: “You don’t need to be an Eco-warrior to Realise Green is the new Black in the City”, the Telegraph, web edition, 19 April 2007, www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/04/18/ccleahy18.xml

4: Denton, 1996.

5: “Reduce your Carbon Footprint with Help from BT”, from www.btplc.com/News/Articles/

6: Rogers, 2007.

7: Rogers, 2007

8: “Customers want us to Tackle this”, Climate Change: Challenging Business (sponsored by Shell), the Guardian, www.guardian.co.uk/climatechange2007/story/0,,2112002,00.html

9: The Independent, 24 May 2007.

10: Mojica, 2007.

11: Corporate Europe Observatory, 2007.

12: Institute of Science in Society, 2006.

13: www.marksandspencer.com/gp

14: Lohmann, 2006, p7.

15: Smith, 2007.

16: The Guardian, 28 March 2006.

17: Lohmann, 2006, p144.

18: The Guardian, 2 June 2007.

19: Lohmann, 2006, p171.

20: http://ec.europa.eu/environment/climat/pdf/emission_trading3_en.pdf

21: http://carbonfinance.org/

22: Lynas, 2007.

23: Oliver Tickell, quoted in Lynas, 2007.

24: The Guardian, 4 May 2007.

25: From www.liveearth.org

26: Noble, 2007.

27: Nobel, 2007.

28: Cockburn, 2007. See also the reply by George Monbiot to early articles by Cockburn (Monbiot, 2007).

29: As Derrick O’Keefe, 2007, observes in a reply to Noble.

30: Financial Times, 13 June 2007.

31: “The World in our Hands”, Climate Change: Challenging Business (sponsored by Shell), the Guardian, www.guardian.co.uk/climatechange2007/story/0,,2111975,00.html

32: Cited in Lohmann, 2006.

33: The Guardian, 27 June 2007.

34: The Wall Street Journal, 5 May 2007.

35: The Financial Times, 5 July 2007.

36: Business Week, 23 April 2007.

37: Except in the Netherlands. Lohmann, 2006, p93.

38: Lohmann, 2006, p91.

39: Smith, 2007, p20; Open Europe, 2006; The High Price of Hot Air: Why the EU Emissions Trading Scheme is an environmental and economic failure’, July 2006; Lohmann, 2006, p91.

40: The Guardian, 2 June 2007.

41: Altvater, 2007, p41.

42: Lohmann, 2006, p110.

43: Lohmann, 2006, p89.

44: The Independent, 14 March 2007.

45: Harman, 2007.


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