Is Big Business the Solution?

In reporting yesterday on the flurry of diplomatic activity in advance of the COP21 climate conference I perhaps should have noted another international gathering: the Business and Climate Summit taking place today and tomorrow at UNESCO headquarters in Paris. Big business leaders from all over will converge to share a "Vision of a Low-Carbon Society"--but what will they do to help bring it about?

In an op-ed in yesterday's Guardian French foreign minister Laurent Fabius and UNFCCC executive Christiana Figueres attempted to answer that question, but I'm not sure their answers were perfectly convincing. Yes, corporations can and will have already developed plans to reduce their energy consumption--within the limits of what production requires. And they have declared their interest in using renewable energy and "supporting sustainable development"--but surely their shareholders will insist that these feel-good objectives will only happen in the context of a maximized bottom line.

What is perhaps truer is that corporations are more alert now to investment opportunities in alternative energy and related technologies--but only if public initiatives establish markets for them by increasing the cost of fossil fuels (through carbon taxes and exchanges). Likewise corporations can, as Fabius and Figueres note, factor in the costs of climate risk and adaptation--but only if those costs are made real, either by public mandate or by actual disasters. Concretely, why should Royal Shell or Gazprom write down the cost of their fossil reserves unless some public entity makes those reserves unburnable? What interest would they have to initiate the accounting for such enormous losses on their own?

Symptomatic of this impasse is the op-ed in yesterday's Monde (here, in French) by two well-meaning executives, Jean-Pascal Tricoire of Schneider-Electrique and Pierre-André Chalendar of Saint-Gobain, the former a global electricity company, the latter a giant construction supply firm. Both are involved in climate-related trade associations, both declare their interest in decarbonizing the global economy. How? By declaring that energy efficiency is compatible with growth. By encouraging limits on energy consumption (but is that compatible with growth?). And by calling for higher prices on carbon-based energy, which they claim is the policy of their trade associations. Really?

Finally Tricoire and Chalendar acknowledge that only government can reform the energy markets that will allow profit-seeking corporations such as theirs to implement the policies they call for. Unilateral moves to pay more for energy are not to be expected. They, like the rest of us, look to the UNFCCC process in Paris to establish those regulatory parameters within which they can seek to decarbonize their enterprises. Can business play some role? Yes, by supporting the government initiatives that will made sustainable energy more competitive, and allow private markets to adjust. Is it a good sign that conglomerate corporate executives are standing up to support those goals? Of course. Will the Business and Climate Summit alter the energy landscape? Not by itself--but it may, as it intends,  add to the momentum for the real action in Paris, 200 days from now.