When two billionaires and three former US treasury secretaries get together on something, it is a fair bet that corporate America will take notice.
At least that was the calculation when former New York City mayor Michael Bloomberg, the hedge fund manager turned environmental activist Tom Steyer and the former Goldman Sachs chief and Treasury secretary Henry Paulson got behind a report warning US business about the risks to their bottom line from climate change. George Shultz, Treasury secretary under former US president Richard Nixon, and Robert Rubin, who served under former US president Bill Clinton, also endorsed it.
The Risky Business report used risk modeling to reframe earlier warnings from scientists about sea-level rise, flooding and extreme heat in language familiar to corporate America. The findings — up to US$1 trillion in real estate under water by the end of the century because of sea-level rise and flooding — and the novelty of having lifelong liberal Steyer on the same page as Paulson, once an official in the administration of former US president George W. Bush, ensured the report got widespread coverage in US media.
The report produced two meetings at the White House, where members of US President Barack Obama’s administration and business executives agreed on “the importance of public and private-sector action to make carbon pollution reduction a priority.”
So it would be tempting to think that last week was the week when corporate America finally began to “get it” on climate change. Except that while much of the business world began to get serious about climate change years ago, other business leaders, especially those in the power and manufacturing industries, remain implacably opposed.
However, the real problem is in US Congress, where Republicans as a bloc deny that climate change is occurring and have cast Obama’s efforts to act on the issue as a “jobs killer.” Republicans in the US House of Representatives have cast 500 anti-climate votes just since 2011, according to a tally kept by the departing Democrat and climate champion Representative Henry Waxman.
That is what Bloomberg, Paulson and Steyer were really aiming for in their report — to build public support for Obama’s climate plan and new rules released this month to cut carbon dioxide emissions from power plants. The idea was to bring enough of corporate America onside so that blocking action on climate change is seen as anti-business.
European insurance companies such as Swiss Re and Munich Re have been talking about climate risk since the 1990s. The UN held a climate risk summit for investors in 2003, organized by Ceres, a nonprofit group that supports sustainable business practices. By last year, 700 leading companies signed a declaration calling for stronger US climate policy.
Some of those companies support specific policies on climate change, unlike the Risky Business report, which did not endorse a carbon tax.
When the US Environmental Protection Agency (EPA) came out this month with its new rules to cut carbon pollution from power plants, 170 companies, including brands such as Nike and Starbucks, sent out a letter of support to Obama.
“The fact that this group has come together to release such an important report is yet another indication that the financial community is taking climate change seriously,” said Mindy Lubber, who heads the Ceres green investment network. “There are two big elephants in the room: policymakers in the US and around the world who are lagging in enacting tougher policies to reduce greenhouse gases, and investors who remain fixated with short-term profits at the expense of sustainable, long-term business strategies that will protect the global environment and economy.”
The US Chamber of Commerce and other industry groups challenged the new EPA rules. Coal mining companies and manufacturers tilt heavily toward funding Republican candidates. Meanwhile, conservative billionaires, such as the Koch brothers, give millions to groups that deny climate change and have worked to overturn state policies expanding the use of renewable energy.
While the billionaires and the Treasury secretaries hope the report will capture attention, it is still not clear that the business community is ready to face up to what lies in store.
“As of 2013, over 40 percent of companies listed on the Standard & Poor’s 500 Index were still not voluntarily disclosing climate risks,” the report says.
The message on climate change is getting through to corporate America — but slowly.
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