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Critical  Analysis  &  Discussion:  Climate  Change  is  a  problem  of  Ethics      

By,  Lauren  Zahringer      

It  may  be  that  the  future  will  be  shaped  not  only  by  competitive  economic  growth,  but  also  by  potentially  disruptive  scarcities  and  the  consequences  of  human  induced  climate   change   (Atkinson,   2010).   The   fact   that   the   earth   is   heating   up,   or   that  resource   consumption   is   unsustainable   is   not   news.   Climate   scientists   have   noted  concerns   about   the   buildup   of   carbon   dioxide   in   the   atmosphere   and   the  consequences   of   this,   along   with   many   other   aspects   such   as   deforestation,  pollution,   etc.,   for   at   least   three   decades.   (Hulme,   2009).   What   is   news   is   how  devastating  and  rapid  these  changes  may  be.    David  Orr  (2009)  believes  we  are  looking  at  nothing  less  than  the  collapse  of  human  civilization.  As  Orr  sees  it,   the  cause  of  this  potential  calamity  is  our  refusal  to   live  with-­‐in   natural   limits,   our   political   negligence   in   the   development   of   and  dependency   on   an   economy   rooted   in   consumption,   and   our   gross   negligence   in  considering   the  well   being   of   future   generations.   The   conclusion   then,   is   that   we  must  act.    But  how  do  we  even  begin  to  think  about  this  situation?  The  ways  we  do  so  vary  greatly  and  they  shape  the  solutions  we  believe  are  possible.    There  are  many  proposed  scripts  outlining  solutions   to  climate  change.  This  essay  considers  one  proposal,  which,  although  not  formally  labeled,  will  be  referred  to  as  the  Benefit  Corporation  solution.  This   two-­‐stage  solution  argues   that  we  must  use  for-­‐profit  business  to  solve  social  and  environmental  problems  that  both  cause  and  are   caused   by   climate   change   and   conditions   stemming   from   climate   change.   The  first  stage  requires  creating  a  new  type  of  business,  one  that  is  legally  incorporated  to  maximizing  a  triple  bottom  line.  The  second  stage  is  the  increase  in  numbers  and  influence  of   this  new   type  of  business,  ultimately  producing  a   fourth   sector  of   the  economy  and  enabling  the  power  of  business  to  be  unleashed  for  the  betterment  of  society.    This   essay   evaluates   the   strengths   and   weaknesses   of   the   Benefit   Corporation  solution  in  the  context  of  the  United  States.  The  first  section  presents  a  discussion  of  the   theories   that   frame   the   problem   of   climate   change.   Building   upon   this  theoretical   foundation,   the   second   section   outlines   the   specific   components   and  assumptions   of   the   Benefit   Corporation   solution.   Section   three   identifies   and  evaluates   the   strengths   and   weaknesses   of   the   Benefit   Corporation   for   “solving”  climate  change.          

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1.0:  Framing  Climate  Change    As  with  most  complex  problems  Climate  change  is  multi-­‐faceted  and  can  be  seen  as  problem   from   many   different   views   depending   on   the   frame   of   reference   from  which   it   is  being  viewed.   It   is  argued  here   that   the  Benefit  Corporation   is  a  social,  market  and  behavioral  solution  that  frames  climate  change  as  an  ethical  issue.    This  section   will   first   discuss   three   theoretical   framings,   ecological   agency,   the  stakeholder   theory   of   the   firm,   and   the   sustainable   economy   that   situate   climate  change   as   an   ethical   issue,   which   requires   both   a   social,   behavioral   and   market  response  and  elucidate  the  rationale  of  the  benefit  corporation  solution.  The   Benefit   Corporation   solution   calls   for   addressing   climate   change   through  rethinking   the   ideas,   values   and   actions   that   are   at   the  most   fundamental   level   of  modern   American   society:   capitalism,   and   for   profit   business.   Therefore,   it   is  proposed  that  climate  change  is  framed  as  an  ethical  issue.        The   dictionary   of   human   geography   defines   ethics   as     “that   part   of   philosophy  concerned  with  the  worthiness  of  human  actions  and  of  systems  of  belief  regarding  what   people   ought   to   do.   Questions   regarding   our   duties,   obligations   and  responsibilities  fall  within  the  purview  of  ethics.  Ethics  concern  not  only  the  actions  of  individual  people  but  social,  economic,  and  political  structures  and  arrangements  that   also   affect   human   and   non-­‐human   beings.”   The   framework   found   most  appropriate   in  understanding   the   grounds   for   the  Benefit   Corporation  proposal   is  normative   ethics,   and   specifically   utilitarianism.   It   is   through   this   lens   that   the  discussion  of  relevant  theories,  ecological  agency  and  the  stakeholder  theory  of  the  firm,   are   explained.   The   following   section   discusses   these   three   theories   to   show  how,  when   applied   to   the   larger   problem  of   climate   change,   the  particular   ethical  dilemmas  of  climate  change  can  be  engaged  through  businesses.      Ecological  Agency  Ecological  Agency   comes   from   the   field  of  Environmental   sociology  which   focuses  on   understanding   and   overcoming   the   separation   between   material   and   social  systems,   arguing   that   this   dividing   line   in   an   intellectual   construct   that   can   be  analytically   convenient   in   the   proper   circumstances.   However,   the   profuse  reification   of   this   illusory   divide   by   society   at   large   is   a   threat   to   the   planet's   life  support  systems  as   it  creates  a  division  of   false  perception  of   the  human  and  non-­‐  human  world’s  as   less  than  complementary.  The  pressing   importance  of  dispelling  this  illusion  is  that  the  maintenance  of  such  a  perspective  threatens  the  wellbeing  of  humans  and  the  environment.  (Redclift,  2010)    Presently,  human  beings  are  capable  of  altering  the  composition  of  the  atmosphere,  modifying  the  earth's  nutrient  cycles  and  causing  major  biodiversity  extinctions.  For  the  first  time  we  are  not  only  the  agents  of  social  change  and  ecosystem  change  at  the  local  level  but  also  the  main  agents  affecting  the  dynamic  evolution  of  the  global  environment.   In   the   International  Handbook   of   Environmental   Sociology,   Buzinde  

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and   Navarrete   (2009)   conclude   that   this   unprecedented   power   suggests   a   new  agency   that   goes   far   beyond   the   discussion   of   how   individuals   affect   social  structures;  this  task  of  transcending  the  human-­‐nature  divide  set  by  environmental  sociology   requires   thinking   in   terms   of   a   novel   form  of   human   agency   -­‐ecological  agency.  (Buzinde,  Manuel-­‐Navarrete,  2009,  Pg.  306-­‐336)      Stakeholder  Theory  of  the  firm  What   is   the   purpose   of   the   modern   corporation   and   to   whom,   or   what   should  business   be   responsible?   (Lawrence   and   Weber,   2010)   There   are   many   possible  answers,  but  whatever  the  answer  to  this  question  is  at  the  heart  of  the  relationship  between  business  and  society.   In   the  Unites  States   corporate   law  dictates   that   the  answer  is  profit  maximization,  as  explained  by  the  ownership  theory  of  the  firm.  In  the  ownership  theory  of  the  firm,  the  firm  is  seen  as  the  property  of  its  owners  and  thus   the   purpose   of   the   firm   is   to   make   the   most   amount   of   money   it   can   for  shareholders.   Under   the   ownership   theory   of   the   firm,   managers   and   boards   of  directors  are  agents  of  shareholders  and  have  no  obligations   to  others,  other   than  those  directly   specified  by   law.   (Lawrence  and  Weber,  2010)   In   this  view  owners’  interests  are  paramount  and  take  precedence  over  the  interests  of  others.    Yet  corporate   law  requiring  firms  to  maximize  financial  profits  has  been  a  catalyst  for   human   and   environmental   exploitation   by   business,   owing   to   the   fact   that  externalizing  as  many  costs  as  possible   is  a   time   tested  method   for   increasing   the  bottom   line.   (Chouinard   et   al.,   2011)   But   over   the   past   few   decades,   a   new   view  towards   the   relationship   between   business   and   society   has   emerged   called   the  Stakeholder   Theory   of   the   firm.   Under   the   stakeholder   theory   the   purpose   of  corporations   is   to   serve   a   broad   public   purpose:   to   create   value   for   society.  (Donaldson  &  Preston,  1995)  Still   firms  are   for-­‐profit,   and  must  make  a  profit   for  their  owners;  indeed,  if  they  did  not,  they  would  not  long  survive.      However,   corporations   create  many   other   kinds   of   value   as   well,   and   need   to   be  accountable  for  creating  value  for  people  and  the  planet  too,  a  perspective  known  as  a  triple  bottom  line.    This    theory    is    implemented    in    the    solution    of    presented    by    Benefit    Corporations.    The  stakeholder  theory  proposes  that  it  is  in  the  best  interest  of   business   also   to   consider   all   stakeholders   and   implement   self-­‐enlightened  management  perspective  to  protect  and  renew  the  global  commons.      Stakeholder  Capitalism  &  the  Sustainable  Economy    The  idea  of  stakeholder  capitalism  is  that  upon  reflection  of  the  nature  and  impact  of  shareholder  capitalism,   it   is  concluded  that  this  capitalist  system  does  not  seek,  or  oblige   itself   in   anyway   to   benefit   society,   it’s   only   loyalty   is   to   shareholders,   as  clearly  known  in  the  shareholder  theory  of  the  firm.  Stakeholder  capitalism  is  built  upon   the   idea   that   shareholder   capitalism,   in   light   of   growing   environmental  concern   and   social   inequality,   is   obsolete.   This   proposition   complements   Hulme’s  

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proposal   that   a   solution   to   solve   climate   change   should   include   an   alternative   to  global   capitalism   (Hulme,   2009).   Stakeholder   capitalism,   and   its   sustainable  economy,  is  an  example  of  one  such  alternative.    The  feature  article  of  the  October  2011  edition  of  the  Harvard  Business  Review  took  to  task  describing  its  Big  Idea:  Sustainable  Economy.  “Collectively  we  have  not  been  making   progress   on   reducing   the   damage   business   does   to   the   world.   Admirable  companies  have  launched  inspiring  initiatives,  but  the  negative  impacts  of  business  activity  continue  to  grow.  The  problem  is  simple.   It’s  generally  cheaper   to  buy  the  product   that   has   a  worse   impact   on   its   environment   than   the   equivalent   product  that   does   less   harm.     Higher   cost   to   planet   does   not   translate   to   higher   price   to  customer.”   (Chouinard   et   al,   pg.1,   2011)   The   sustainable   economy   3.0   as   it   is  termed,  would  be  one  where  prices  of  products  and  services  increased  as  the  price  of   negative   impact   to   the   environment   increased,   and   vice   versa.   The   Sustainable  Economy  system  would  self  regulate  by  market  demand.  The  sustainable  economy  would   be   the   economic   model   at   the   core   of   a   stakeholder   capitalism   system.  (Chouinard  et  al.,  2011)    The   Benefit   Corporation   solution   proposes   the   new   type   of   corporation   to   be   the  vehicle   for   developing   and   the   institution   compromising   a   new   sector   of   the  economy   that   is   built   upon   the   framework   of   Stakeholder   capitalism   and   the  sustainable  economy  model.     In   a  TEDx   talk  on  December  1,  2010   Jay  Gilbert,   the  brainchild   of   the   Benefit   Corporation  movement,   and   founder   of   the   nonprofit   B-­‐Lab,   explained   to   the   audience,   “The   new   sector   of   the   economy   exists   in   B  Corporations,   the   manifestation   of   stakeholder   capitalism   in   a   new   type   of  corporation   that  we  can  build,   invest   in  and  work   for.    Whether   its  micro   finance,  organics,  sustainable,  clean  techs,  to  buy  local...it  is  all  the  same  idea,  how  do  we  use  business  as  a  tool  for  social  change?”      2.0:  Benefit  Corporation  Solution    This  details   the  structure  and  components  of   the  how  the  Benefit  Corporation  can  solve  climate  change.  The  solution  presented  rests  upon  specific  assumptions  on  the  nature   of   business   and   the   environment,   and   the   relationship   between   the   two.  Therefore   it   is   necessary   to   first   identify   the   assumptions   inherent   in   the  proposition.      Assumptions:  Responsibility  of  Business    The   Benefit   Corporation   solution   proposes   specific   accountability   of   business  defined   in   the   words   of   David   Korten,   “Business   has   become   the   most   powerful  institution   on   the   planet.   The   dominant   institution   in   any   society   needs   to   take  

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responsibility  for  the  whole.  Every  decision  that  is  made,  every  action  that  is  taken,  must  be  viewed  in  light  of  that  kind  of  responsibility”  (Korten,  1996).      Surveying  recent  history,  the  oil   industry’s  environmental  disasters  from  Alaska  to  the   Gulf   of  Mexico,   the   pulp   and   paper   industry’s   deforestation,   or   agro-­‐business’  degradation   of   arable   land,   it   is   clear   that   business   has   long   been   part   of   the  problem  in  the  relationship  between  society  and  environment.  Benefit  Corporations  are  turning  this  image  on  its  head  and  are  proposing  now,  that  business  be  a  leader  for   the   solution   of   environmental   and   social   problems   on   the   assumption   that  governments   and   nonprofits   are   necessary   agents   for   change   but   are   insufficient  and   thus   the   power   of   business   must   be   used   to   address   society's   greatest  challenges.  (Lawrence  &  Weber,  2010)        

(Accessed  from  www.Benefitcorp.net)      The  about  section  of  the  Benefit  Corporation  website  outlines  the  specific  meaning  of  and  goals  of  benefit  corporations.  There  are  two  specific  and  different  ways  that  Benefit  Corporations  engage  with  business.  Each  will  be  outlined.    The  first  strategy  is  introducing  Benefit  Corp  legislation  that  creates  the  option  for  legally   incorporated   Benefit   Corporation.   As   specified   in   the   publically   accessible  White   Papers,   “the   Benefit   corporation   has   three   important   features:   1)   creates   a  material  positive  impact  on  society  and  the  environment;  2)  expands  fiduciary  duty  

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to   require   consideration  of   non-­‐financial   interests  when  making  decisions;   and  3)  reports  on  its  overall  social  and  environmental  performance  using  recognized  third  party   standards.”   Through   this   strategy   Benefit   Corporations   aim   to   redefine  corporate  accountability.    The   second   strategy   is   the   B   Corporation   certification   scheme.   A   “certified”   B  Corporation   is   in   a   sense   synonymous   to   a   certified   LEED   building,   the   process,  qualifications,  and  terms  of  certification  are  detailed  but  overall  the  features  of  the  Certified   B   Corp   are:   1)   Certified   B   Corporation   must   meet   transparent   and  comprehensive   standards   of   social   and   environmental   performance;   2)   be  committed   to   amplifying   the   voice   of   sustainable   business   and   for-­‐profit   social  enterprise   through   the   power   of   the   unifying   B   Corporation   brand.   Through   the  second  strategy  the  benefit  corporation  movement  is  influencing  society  by  building  support   for   businesses   to   be   better,   and   consumers   to   be   able   to   distinguish  between  green  washing  and  marketing,  and  actual  truth  in  business  claims.      Each   of   these   strategies   is   autonomous,   yet   in   union.   Taken   together,   these  initiatives   define   the   overarching   mechanisms   and   proposals   of   the   Benefit  Corporation   solution.   The   Benefit   Corporation   movement   is   just   two   years   old,  making  it  quite  new,  and  aside  from  blog  and  mainstream  news  coverage,  there  has  been   no   rigorous   academic   research   on   the  meaning,   impact,   or   feasibility   of   any  aspect  of  its  operations,  evaluations,  or  analysis.  However,  the  system  works,  so  to  say.   To   date   there   are   over   500   companies   that   are   either   certified   Benefit  Corporation,   or   incorporated   as   a   Benefit   Corporation.   Twelve   U.S.   states   have  passed   legislation,   and  many   are   in   the   process,   (Benefit   Corp.  Website).   But   the  question  remains,  how  does  the  Benefit  Corporation  stand  as  a  solution  to  climate  change?      3.0:  Strengths  and  Weaknesses    Strengths    Overall   the   strength   of   the   Benefit   Corporation   as   a   solution   for   solving   climate  change  is  that  it  is  in  that  it  goes  ‘beyond  climate  change’  (Hulme,  2009,  pg.  361).  In  the  concluding  thoughts  of  ‘Why  We  Disagree  About  Climate  Change’  Hulme  (2009,  pg.   361-­‐362)   writes,   “The   idea   of   climate   change   should   be   used   to   rethink   and  renegotiate   our  wider   social   goals   about  how  and  why  we   live   on   this  planet.  We  need   to  harness  climate  change   to  give  new  expression   to  some  of   the   irreducible  and  intrinsic  human  values  that  are  too  easily  crowded  out…We  need  to  use  climate  change  to  rethink  how  we  take  forward  our  political,  social  and  economic  systems.”  Climate  change  is  dynamic  and  complex,  and  if  nothing  else  represents  in  the  most  simple  terms  an  imbalance.    

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The  strength,   then,  of   the  Benefit  Corporation  solution   is   that   it   calls   for  a   further  evolution   of   systems,   and   an   inclusion   of   new   ways   of   thinking   and   acting,   and  organizes   a   road  map   for   change   that   is   reasonable,   accessible,   and   feasible.   It   is  logical  and  proposes  rewarding  practices   that  are,  well,  worthy  of  reward,  such  as  creating   measurable   benefits   for   people   and   the   planet.   It   creates   a   standard   of  practice  that  can  catalyze  investment  and  support  for  better  ways  of  doing  business  across   industries:   manufacturing,   production,   retail   and   services,   for   example.  However,   whether   it   can   “solve”   climate   change,   or   whether   it   will   gain   enough  support  to  be  of  significance  is  another  question  all  together.      Weaknesses    The  weaknesses  of  the  Benefit  Corporation  solution  for  solving  climate  change  are  that   it   is   highly   unlikely   that   the   most   concentrated   and   influential   power   of  business,  which  is  held  by  multi-­‐national  corporations  and  oil  companies,  will  be  a  force  for  good,  or  would  take  the  task  of  reincorporating  to  a  triple  bottom  line.  In  addition,   the   lower   returns   will   most   likely   stall   or   cripple   true   large-­‐scale  investments   because   the   financial   industry   and   financial   reporting   is   in   its   own  nature  short  term  oriented.      Summary    Introducing   new   legislation   and   expanding   the   legal   protection   of   business   that  choose  to  commit  to  a  triple  bottom  line  may  very  well  be  what  makes  the  Benefit  Corporation  proposal  a  viable  solution  for  climate  change.  All   in  all,   the  breadth  of  meaning  developed  and  effect   in   action   from   the  people  behind   the   conception  of  the   Benefit   corporation   movement   is   admirable   in   the   least.   It   is   suggested   that  further   research   is   needed,   even   if   only   to  bring   the   subject   and   ideas   the  benefit  corporation   proposes   into   current   discussions.   All   in   all   in   content   the   solution  proposed  by  the  benefit  corporation  is  a  strong  one  for  solving  climate  change,  if  it  is  to  be  ‘solved.’  However,  in  practice,  it  is  unsure  whether  the  ideals  and  motives  will  survive  the  test  of  time.                          

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