Private Sector Initiatives to Address Climate Change

Over the past decade or more, there has been increasing attention to private-sector initiatives to address climate change, with scholarly research and considerable action being centered in business schools, particularly in the United States.  This is the focus in the latest episode of my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”

I engage in conversation with Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration at Harvard Business School (HBS).  We discuss the many ways in which business schools are giving much greater attention to climate change and other environmental issues, as well as how businesses and governments can and are working together to address climate change.  The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

Toffel, who is a Faculty Fellow of the Harvard Environmental Economics Program and hosts the Climate Rising podcast at HBS, cites several examples of climate initiatives that are bubbling up organically throughout the private sector.

“What’s very interesting are …. the movement on the finance side, where you’ve got a lot deeper pockets of capital, pools of capital that are seeking out climate solutions,” he says. “You’ve got this whole ESG [Environmental, Social, and Governance] area that’s evolved … [which is] putting new screens on the types of investments that they want to include in their portfolio. You’ve got companies making these net zero commitments, which include a combination of decarbonizing their operations and their supply chains, and then using carbon credits to offset the residual. And a bunch of commitments in that regard remains to be seen.”

Michael emphasizes that it is uncertain how much this climate talk will translate into action.

“That’s long been an interest of mine – are companies following up with action? Who is? Who isn’t? And so that continues to be an interest of mine. We will see. A lot of my research in this area has taken the form of case writing, because so much of this is so new, and we don’t have years and years of data sets to do the type of empirical work that my scholarly work tends to gravitate toward.  We’re learning in real time through cases, and then doing some empirical scholarship as well.”

Toffel cites two recent projects he’s been involved with that he is especially proud of.

“On the scholarly research side, [there] is a study that’s just coming out in AEJ Applied Micro, a leading journal or field journal … that looks at the effectiveness of U.S. OSHA, the Occupational Safety and Health Administration’s efforts to target companies for inspection. OSHA is dramatically underfunded in the sense that they can maybe inspect every establishment that they regulate [once] every 100 years, and so they really need to make some tough decisions about where to go,” he says.

“Traditionally, they’ve been making these decisions for a lot of their inspections, based on where the problems have arisen in the past … and we conjecture and find some evidence that if they change that [strategy by] using more modern techniques and machine learning to figure out and predict where are problems more likely to be in the future, or where might their inspections do the most good … they can really reduce injuries by the thousands, with millions of dollars of consequences of reduced injury, pain, and suffering.”

The other research he cites is a Case Study, co-written with his HBS colleagues Shirley Lu and George Serafeim, on BMW’s approach to decarbonization.

“It’s a very engineering focused company, so they have a very engineering orientation to carbon accounting, to carbon management, to reduction, and to even their publicity around all of this. And their CEO has taken a perspective that whereas other companies are having these phase out dates for the internal combustion engine … they’ve said, ‘We’re not going to make that claim because we don’t know if we can keep that promise, in part because we don’t know if the infrastructure is going to be there to power electric vehicles, and will it be electric or will it be hydrogen powered fuel cells? We’re not really sure where the technology will shake out.’ So, they’ve been reluctant … to make such promises, because they have a culture … where they [don’t] want to … make promises until they know they can keep them.”

Reflecting on his almost two decades at Harvard Business School, Toffel remarks on how far the field of environmental management has come in recent years.

“When I applied to Ph.D. programs, this topic was very fringe,” he says. “This whole thing has completely changed, where most business schools now are leaning into the idea of environment and climate in particular … and scholarship is really exploding on these topics. So, that’s been really heartening to see. In addition, students’ interest in this has really risen incredibly in the 17 years that I’ve been here. Originally, no one talked about environment. Now … students are bringing these [issues] up. They’re demanding more content.”

For this and much, much more, I encourage you to listen to this 52nd episode of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.


History May Convey Some Hope for Biden’s Climate Agenda

Before launching into unbridled enthusiasm about the implications for environmental policies of the change from Trump to Biden, it can be helpful to place this change into some historical context.  Someone who is exceptionally well qualified to do this is my guest in the latest episode of my podcast, released today – Daniel Esty, who held a variety of senior roles in the George H.W. Bush (Bush 41) administration, and has been a close observer – and sometime consultant – on environmental policies of the four subsequent Presidential administrations.  You can hear our complete conversation in the Podcast here.

In these podcasts – “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program – I talk with well-informed people from academia, government, industry, and NGOs.  Dan Esty certainly belongs in this group, as he has occupied positions in two of these sectors, and has worked with all four!  Currently, he is the Hillhouse Professor at Yale University, with primary appointments at the Environment School and the Law School.  I’m pleased to say that he and I are both proud, long-time members of the Board of Directors of Resources for the Future, the Washington-based think tank.  Dan is the co-author with Todd Cort of a new book, Values at Work: Sustainable Investing and ESG Reporting.

Early in our conversation, Dan Esty reflects on his time in government, and recalls the high degree of bipartisanship that characterized voting in the U.S. Congress 30 years ago on the path-breaking Clean Air Act Amendments of 1990, when 96% of Democrats and 87% of Republicans in the House of Representatives voted in support (in the Senate, 91% of Ds and 87% of Rs voted in the affirmative).  This stands in sharp contrast with voting in 2009 on the Waxman-Markey climate legislation, which had support from 83% of Democrats and 4% of Republicans!

In regard to the recent presidential transition, Dan comments that he was disturbed by the ease with which the Trump Administration rolled back environmental policies, but is heartened by the change of leadership in Washington and the course that the new administration is charting.

“I’m excited about having a commitment across the administration to good science, good data, and good analysis. And, frankly, the elevation of the White House Science Advisor to Cabinet-level status is a signal of that, and an important one, that…science is back, and we’re going to build on the best evidence we can establish, and drive policy from there,” he says.

Esty commends President Biden for many of his high-level appointments, including John Kerry as climate envoy, Gina McCarthy as domestic climate change czar, Jennifer Granholm as Secretary of Energy, Pete Buttigieg as Secretary of Transportation, and Michael Regan as Administrator of the Environmental Protection Agency. Kerry in particular, Esty notes, can play a critical role in helping rally international support for climate policy as the U.N. Conference of the Parties prepares to hold its next annual meeting, this November in Glasgow, Scotland.

“There’ll be a big push as we approach that November gathering in Scotland to really have countries demonstrate renewed commitment and increased ambition to speed up the pace at which de-carbonization takes place,” Esty says. “We’re not going to renegotiate the Paris agreement, but I think John Kerry is the one who could say, the U.S. is back in this agreement, serious of purpose in terms of its own strategy for emissions reduction, and he will be able to tell that story with conviction to the leaders across the world.”

Dan is cautiously hopeful that the new administration will deploy a bipartisan approach to domestic climate policy as it lays the foundation for the transition to a clean energy economy in the United States.

“There is a hope, but I know that it’s a tough moment, that we might get back to a time, perhaps not this year or next, but at some point soon, when more of the agenda does move on a bipartisan basis.  I think we’re going to need to see a new tool box, a new set of approaches to the strategy of moving to clean energy, and I’m excited about that because I think it offers the promise, not the certainty, but the possibility of bringing together a broader coalition across party lines.”

Dan’s hope is commendable, and given the current state of political polarization in the U.S. Congress, he recognizes that it will require some truly inspired and highly creative proposals from the new administration to bridge the divide that exists.

All of this and much more is found in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  I hope you will listen to this latest discussion here.  You can find a complete transcript of our conversation at the website of the Harvard Environmental Economics Program.

My conversation with Professor Esty is the 20th episode in the Environmental Insights series, with future episodes scheduled to drop each month.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.