Essay Emissions Trading and Climate Change

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The Business and Politics of Environmental
Regulation and Activism
3028IBA – Energy and Environmental Security

Dr Tapan Sarker
Department of International Business and Asian
3028IBA - 2013

Topics Covered in this Lecture
• The business/corporate sector and the environment (essentially business and the climate change issue); and
• Emissions trading schemes (the key strategy, considered the most cost-effective strategy, by which economic activity is to be guided towards meeting certain GHG emission reduction targets) 3028IBA - 2013

The Business/Corporate
Sector and the Environment

3028IBA - 2013

Some of the questions today’s lecture and tutorial topic considers

In the context of governments attempting to achieve climate security, what have been the key concerns of the business sector? •

How has the business sector attempted to influence decision making on climate change policies?

How have businesses responded to the greenhouse gas reduction challenge and policies, and what has motivated their responses? 3028IBA - 2013

The Traditional Behaviour of the Business
Sector in Relation to the Environment

Opposition to national and international policies that they believe would impose significant new costs on them or otherwise reduce expected profits

When faced with existing strong domestic regulations on an activity with a global environmental dimension, corporations are likely to support international agreements that would impose similar standards on competitors abroad

3028IBA - 2013

The Three Attitudes of Business Towards
Environmental Concerns
1. The rejectionist position
- sections of business who comprehensively reject the case for environmental concern
2. The accommodationist position
- largely skeptical, but have sought accommodation by making limited changes 3. The environmental business position
- have embraced the themes raised in environmental critiques and have redesigned their processes to minimise damage to the environment
(Source: Timothy Doyle and Doug McEachern 2001, Environment and Politics, London and New
York, Routloudge, pp. 135-136.)
3028IBA - 2013

Corporate Influence Over Global
Environmental Issues

Their ability to influence global environmental regimes, by:
- shaping the definition of the issue under negotiation in a way that is favourable to their interests;
- persuading an individual government to adopt a particular position on a regime being negotiated by lobbying it in its capital
(i.e. the location of the central government); or
- lobbying delegations to the negotiating conference on the regime. (Source: Pamela S. Chasek, David L. Downie, and Janet Welsh Brown 2006, Global
Environmental Politics, Boulder, Colorado, Westview Press, p. 88.)

3028IBA - 2013

The Emergence of Corporate

Two trends since the early 1990s:
1. Environmental activist groups started to work with corporations 2. Corporations started to see ‘being green’ as easy (or possibly profitable) •

But corporations can simultaneously promote and oppose proenvironment policies (especially climate change policies)
- also merely engage in “greenwashing”

Some say recent corporate greening is part of a more profound, permanent trend (driven by the end of cheap oil and the way in which the climate change issue is so intertwined with the economy)
3028IBA - 2013

An Example of Green Promotion

Westpac Bank and the Equator Principles

“We were the first Australian bank, and one of ten founding signatories globally to adopt the Equator Principles. Today, there are over 60 signatories, covering more than 80% of the global project-financing market.
In adopting the Principles, we agreed to provide loans only for projects whose sponsors can demonstrate their ability and willingness to comply with processes that ensure they are developed in a socially