Interaction with public policy

A company's impact upon sustainability, however, goes far beyond its role merely as a trading body.

As previously noted, the sustainability challenge requires nothing short of a transformational change to the way in which we manage our economy. Incremental change (i.e. that which can be delivered by companies acting alone) will fail to address the scale and urgency of problems such as climate change, breakdown of ecosystem services, water scarcity and growing inequality.

Transformational change will only be possible through government interventions that are guided by a clear, consistent and strategic approach to policy-making - and where long-term regulatory frameworks are put in place to correct market failure and to change the terms of trade for resource consumption. Governments will only be able to introduce such bold and long-term policy measures if they are given support and political space by the business community to do so, and so the role that companies can play as progressive 'corporate citizens' - urging governments to introduce transformational policies - becomes critical.

The corporate sector's history in public policy has not been good. The public image of a 'corporate lobbyist' is of someone working to protect a narrow vested interest, often against the interests of society as a whole. There are plenty of famous examples of companies, or groups of companies spending millions of dollars in opposition to progressive public policy, whether it is tobacco companies in the 1960s and 1970s questioning the link between smoking and cancer, aerosol companies lobbying against the banning of chlorofluorocarbons (CFCs) in the 1980s, or oil companies clubbing together as the Global Climate Coalition to question the science of climate change in the 1990s.

The widespread perception of 'corporate influence' as a malign force (as described in Monbiot, 2000, and Korten, 1996) is not, however, just derived from these famous examples. The way in which mainstream business associations are structured has historically resulted in them often adopting 'lowest common denominator' positions - where a large group of companies ends up adopting the position of the least progressive member as a lazy way of securing consensus. A business association might then assert the agreed position as if it was held passionately by its members as a whole, even though it might more accurately reflect the position of just a handful of the least progressive members.

For many years, this discrepancy was not of material concern to companies, especially on issues to do with environmental policy.

This was clearly illustrated by a conversation I had, in 2003, with a very senior executive at one of the UK's largest companies. The company had a fairly progressive position on climate change and I asked him what he was doing to challenge the position of the Confederation of British Industry (CBI) -which remained sceptical of the need for action on climate change. He laughed about the CBI's position, told me 'not to worry' and explained that they only bothered to send junior staff to the CBI policy meetings.

His company was one of the CBI's biggest contributors and he had completely missed the point of my question. I had hoped to ascertain what his enlightened company might have been able to do to influence the CBI's position on climate change, not to hear that it was going to sit back and let it say whatever it wanted while his company filled its coffers.

This sort of lazy indifference mattered. By 2004, under the charismatic leadership of Sir Digby Jones, the CBI was becoming increasingly hostile to environmental regulations and was repeatedly warning that they would cause UK-based companies to relocate (see, for example, CBI, 2004). The CBI had little evidence to substantiate this assertion. When, in January 2005, the House of Commons Environmental Audit Committee asked Sir Digby for an example of a company that had moved overseas as a result of environmental pressures, he said there were 'nil' (House of Commons Environmental Audit Committee, 2005).

Just a couple of months later, however, the CBI published its business agenda to coincide with the 2005 UK general election and called on the future government to 'set emissions reduction targets ... that are sensitive to the need not to simply drive business overseas' (CBI, 2005).

The CBI's behaviour infuriated non-governmental organization (NGOs) and even led Friends of the Earth-UK to launch a campaign report on the CBI (see McRae et al, 2005). But the business association's tactics were also causing disquiet amongst some of its largest members who were starting to feel uncomfortable at how business was repeatedly being portrayed as sceptical of the need for action on climate change. Their concern was not so much about how they might be perceived by members of the public, but more about how UK plc might miss out on the opportunities to develop new low-carbon technologies if the government failed to introduce relevant policies because it was running scared of a hostile business lobby.

As a result, in June 2005, the UK Corporate Leaders Group on Climate Change (CLG) was convened, initially by just 13 companies, including Johnson Matthey, F&C Asset Management, BAA, Standard Chartered Bank, John Lewis Partnership, Shell and Sun Microsystems. Its aim was to bring together business leaders to advocate the development of new and longer-term policies for tackling climate change. Its first output was an open letter to Prime Minister Tony Blair in May 2005, published immediately in advance of the G8 Gleneagles Summit. It noted that enabling a low-carbon future should be 'a strategic business objective for the UK' and stated:

At present, we believe that the private sector and governments are caught in a 'Catch 22' situation with regard to tackling climate change. Governments tend to feel limited in their ability to introduce new policies for reducing emissions because they fear business resistance, while companies are unable to take their investments in low carbon solutions to scale because of lack of long-term policies. (Corporate Leaders Group, 2005)

In order to help break this impasse, the CLG offered to work in partnership with the UK government in order to:

• support the development of a world-leading climate change policy framework capable of enabling a step change in private-sector investment in low-carbon technology in the UK;

• significantly increase support for action on climate change from UK businesses, the public and other governments and businesses internationally;

• dramatically scale up investment in low-carbon technologies and processes by our companies and others in response to new policy (Corporate Leaders Group, 2005).

The letter was followed by a meeting between the CEOs of UK CLG member companies and Prime Minister Tony Blair and the modus operandi of the CLG was born.

In 2006, the group sent a second letter to the prime minister in which they called on the UK government to set tougher targets on carbon emissions under the European Union Emissions Trading Scheme (ETS). Towards the end of the year, a different group of pan-European companies came together to form the EU Corporate Leaders Group on Climate Change (CLG). They sent an open letter to President Barroso in which they called on him to introduce the long-term policy frameworks that were needed at the EU level to tackle climate change. They welcomed the development of the ETS, but noted that it would not be enough and that other policy interventions would be required. Crucially, they argued that the EU's overall competitiveness need not be harmed by tackling climate change and, on the contrary, there was a competitive advantage to be gained in growing a global market for low-carbon technologies.

Since then, the UK and EU corporate leaders groups have made a number of very significant interventions in the UK, EU and international policy debates on climate change. In 2007, they came together to publish a communiqué to governments gathering at the UN Climate Change Conference in Bali. The Bali Communiqué was endorsed by over 170 companies from around the world. It called for:

• a comprehensive, legally binding United Nations framework to tackle climate change;

• emission reduction targets to be guided primarily by science;

• those countries that have already industrialized to make the greatest effort;

• world leaders to seize the window of opportunity and agree a work plan of negotiations to ensure an agreement can come into force post-2012.

The communiqué appeared in a full-colour, centre-spread advert in the global edition of the Financial Times on Friday, 30 November 2007, just before the Bali conference and has been credited by some climate negotiators as having played a crucial role in persuading the US to change its position at the conference.

Just a decade ago, it would have seemed inconceivable to many that business groupings would be formed to advocate bold regulatory interventions from governments in support of sustainability.

And yet, this seventh area of how companies should be engaging with sustainability issues could prove to be the most important since it only through progressive interactions in the public policy debate that companies can help to drive the transformational change that is necessary to make all companies truly sustainable.

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