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Faced with government inaction, private firms emerge as major players in climate change mitigation

Beyond Politics: The Private Governance Response to Climate Change

Michael P. Vandenbergh and Jonathan M. Gilligan
Cambridge University Press
2017
493 pp.
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For decades, most scholars and policy-makers have assumed that serious solutions to the problem of global climate change will require highly effective government. According to this perspective, only government can represent the broadest public interest. Only government can mandate deep cuts in emissions and work with other governments around the world to achieve international coordination of national policies.

Private firms, according to this view, focus narrowly on their own interests. Where they are relevant at all, it is usually in blocking what governments seek to achieve.

In a thoughtful and far-ranging new book, Michael P. Vandenbergh and Jonathan M. Gilligan turn that view upside down. Both from Vanderbilt University—Vandenbergh a lawyer and Gilligan a professor of civil and environmental engineering—the authors help explain why firms from Coca-Cola to UPS are motivated to be leaders in cutting emissions. That leadership helped pave the road to the Paris Agreement and has been a growing source of political support for the accord even as the Trump Administration has announced that the United States will pull out.

The case for looking beyond government—and thus beyond conventional politics—is attractive these days. For nearly three decades, governments have been talking about action on climate change. Despite all the chatter, emissions have gone up. Governments adopted the Paris Agreement, a fresh effort to get serious, but a slew of studies is showing that the pledges made do not add up to effective solutions. Trumpian antics have further eroded the credibility of government as a steward of the public purpose.

The idea that there are private solutions to public problems is hardly new. The motivations for private action, such as self-interest, consumer pressure, or feared loss of reputation, are all familiar. Also familiar is the feeling that there are many different forces affecting firm and household behavior, and it is hard to pin down which ones really matter most.

Vandenbergh and Gilligan know there has been a lot of fuzzy thinking about private governance, and what they offer that is new is a three-part approach to evaluating when and how private governance actually matters. They point to the technical potential for reducing emissions, along with two other factors. One factor is what they call “behavioral plasticity”—the extent to which firms and households can actually change their behavior. The other is “initiative feasibility”—defined as whether firms and householders are “able to develop and implement the initiatives quickly and easily without confronting barriers that will slow down or reduce emissions reductions.”

With a large number of diverse vignettes and case studies, the authors show that the success of private governance hinges, in particular, on what the behavioral sciences have learned about how firms and households internalize change. The authors point to factors such as labeling, flexible organizational structures, and new types of markets as contributors to this new interdisciplinary science of private governance.

Particularly important is the book’s attention to firms that have become adept at realigning incentives across the whole supply chain. Walmart is a standout, having achieved 28 million tons of emissions reductions from 2010 to 2015, mainly through making their supply chains and operations smarter and getting their suppliers to line up.

One of the strengths of this book is that the authors don’t just make the case for their view of a privately governed world. They also grapple with the weaknesses of that approach. A chief concern is whether private governance, for all its potential, might actually make a difference to the climate problem.

The authors seek to quantify the level of emissions reductions that private governance could achieve in the real world—that is, not just the technical potential of such an approach but what actual implementation might look like in real organizations. They estimate, for example, that almost 500 million metric tons per year of CO2-equivalent emissions might be cut by households—a big number in absolute terms, although small when one considers that total global emissions are 100 times that level.

One area for future work is to quantify these impacts dynamically. Where successful private solutions emerge, it is reasonable to presume that others will follow; good deeds will beget more success, and a virtuous (and profitable) cycle of emissions cuts might follow.

Private governance could change the nature of government itself, suggest Vandenbergh and Gilligan. It could also change how society achieves justice and its lines of accountability. Work like this helps reveal what is possible, even without formal governments doing much or all the work.

My guess is that the pendulum will need to swing back a bit toward a view of governance that brings the state back in. But Vandenbergh and Gilligan offer a sober and well-grounded reminder that real change depends on much more than formal government.

About the author

The reviewer is at the School of Global Policy and Strategy, University of California–San Diego, La Jolla, CA 92093, USA, and is a fellow at the Brookings Institution, Washington, DC 20036, USA.