"Stand up for Nuclear"
Author
G. Tracy Mehan III - American Water Works Association
American Water Works Association
Scalia Law School, George Mason University
Current Issue
November-December 2020
Issue
6

A recent front-page headline in the New York Times stated, “Disastrous Wave of Climate Events Slams California. Scientists Fear Fires Are Just the Start.” Journalists Thomas Fuller and Christopher Flavelle report that “multiple mega fires [are] burning more than three million acres.” They continue, “If climate change was a somewhat abstract notion a decade ago, it is all too real for Californians.”

These are certainly disastrous events; but Michael Shellenberger, author of Apocalypse Never: Why Environmental Alarmism Hurts Us All, demurs as to any linkage between the catastrophic fires in the Golden State and a changing climate. Actually, he rejects the notion entirely.

Shellenberger cites Jon Keeley, a U.S. Geological Survey scientist in California who has researched the topic for forty years: “We’ve looked at the history of climate and fire throughout the whole state, and through much of the state, particularly the western half of the state, we don’t see any relationship between past climates and the amount of the area burned in any given year.” Keeley and other colleagues modeled 37 different regions in the United States and found that “humans may not only influence fire regime but their presence can actually override, or swamp out, the effects of climate.” Indeed, the only statistically significant factors for the frequency and severity of fires, on an annual basis, were population and proximity to development.

Among the many interesting, controversial arguments Shellenberger makes are these: humans are not causing a “sixth mass extinction,” the Amazon is not “the lungs of the world,” the amount of land we use for meat — our biggest use of land — has declined by an area nearly as large as Alaska, carbon emissions are declining in most rich nations, food surpluses exist and will continue to rise as the world gets hotter, and habitat loss and the direct killing of animals are bigger threats to species than climate change.

A stunning data point, cited by Shellenberger, drawn from the International Disaster Database, Université Catholique de Louvain in Brussels, documents, at footnote 28 on p. 292, a 92 percent decline in the decadal death toll from natural disasters since its peak in the 1920s, a period when the global population nearly quadrupled!

Michael Shellenberger has been the enfant terrible of the environmental movement for nearly fifteen years. With Ted Nordhaus he famously declared “the death of environmentalism.” They co-founded the Breakthrough Institute, an “ecomodernist think tank” focusing on the limits of carbon taxes and regulation, arguing for major public and private investments in clean-energy R&D and infrastructure designed to foster economic opportunity. They severely criticized the failed Waxman-Markey cap-and-trade bill. “We have become convinced that modern environmentalism, with all of its unexamined assumptions, outdated concepts, and exhausted strategies, must die so that something new can live,” they declared.

According to Shellenberger and Nordhaus, environmental organizations spent 40-plus years defining themselves against “conservative values” such as cost-benefit accounting, smaller government, less regulation, and even free trade, then still a conservative if not populist position. Environmentalists tended to see these values as a distraction from their issues. The time had come to start framing policy proposals around core American values, they maintained.

A former vegetarian and a supporter of the Rainforest Action Network at 16, Shellenberger started his own operation, Environmental Progress, focused on promoting nuclear energy. He continues to provoke, recently writing articles for Forbes, including one apologizing for being part of the “climate scare” while still arguing for carbon reductions and economic development by means of nuclear power over renewables which he once promoted during the Obama years. “On behalf of environmentalists everywhere, I would like to formally apologize for the climate scare we created over the last 30 years,” wrote Shellenberger. “Climate change is happening. It’s just not the end of the world. It’s not even our most serious environmental problem.”

Provocateur though he be, Shellenberger has written an interesting book, thoroughly researched. In Apocalypse Never he offers a kind of “unified field theory” of international economic development and environmental amelioration grounded largely, but not solely, on the high energy density of nuclear power. True, he has entirely too much fun skewering some environmentalists and other sacred cows. He does so, however, from a consistent, foundational view as to the necessity of linking environmental protection and economic development, especially in places such as Congo, Indonesia, Brazil, and other parts of the world.

Shellenberger describes renewables, solar for instance, as “energy-dilute fuels.” Thus, solar farms require large amounts of land with resulting negative environmental impacts. For instance, California’s Ivanpah solar farm requires 450 times more land than its last operating nuclear plant, Diablo Canyon. The solar farm had to hire biologists to pull threatened desert tortoises from their burrows, put them in pickup trucks, and take them to pens, where many died.

“The maximum efficiency of wind turbines is 59.3 percent, something scientists have known for more than one hundred years,” argues Shellenberger. “The achievable power density of a solar farm is up to 50 watts of electricity per square meter. By contrast, the power density of natural gas and nuclear plants ranges from 2,000 to 6,000 watts per square meter.” Solar panels and wind turbines also require 16 times more materials, and generate 300 times more waste than nuclear plants, including toxic materials.

“Today, humankind relies upon fuels that are up to one thousand times more power-dense than the buildings, factories, and cities they power,” notes the author. “The low power densities of renewables are thus a problem not only for protecting the natural environment but also for maintaining human civilization.” Further, “Human civilization would have to occupy one hundred to one thousand times more space if it were to rely solely on renewables.”

France spends little more than half as much for electricity that produces one-tenth of the carbon emissions of German electricity since the latter’s phaseout of nuclear and embrace of renewables, claims the author.

“Had Germany invested $580 billion into new nuclear power plants instead of renewables like solar and wind farms, it would be generating 100 percent of its electricity from zero-emission sources and have sufficient zero-carbon electricity to power all of its cars and light trucks as well.” Instead, renewables contributed to a 50 percent increase in electricity prices since 2007. Says Shellenberger, “In 2019, German electricity prices were 45 percent higher than the European average.”

Vermont not only failed to reduce emissions by 25 percent by relying on renewables, but its emissions rose 16 percent between 1990 and 2015, “in part due to the closure of the state’s nuclear plant, and in part due to the inadequacy of renewables,” writes Shellenberger.

According to the Czech-Canadian academic Vaclav Smil, author of Power Density: A Key to Understanding Energy Sources and Uses (MIT Press, 2015), an author Shellenberger cites at length, “This power density gap between fossil and renewable energies leaves nuclear electricity generation as the only commercially proven non-fossil high-power-density alternative.”

Since the United States consumes almost 50 percent of its electricity during the cold months, storage of energy becomes a significant and costly challenge, as does the perennial problem of intermittency.

“Just as the far higher densities of coal made the industrial revolution possible, the far lower power densities of solar and wind would make today’s high-energy, urbanized, industrial civilization impossible,” claims Michael Shellenberger.

This energy intensity gap results in problems such as the loss of forests to produce wood-burning biomass. If just 10 percent of U.S. electricity were to come from this source, it would require an area of forest land the size of Texas. If the nation were to replace all of its gasoline with corn ethanol, it would need an area 50 percent larger than all of the current U.S. cropland.

“Power density determines environmental impacts. As such, coal is good when it replaces wood and bad when it replaces natural gas or nuclear. Natural gas is good when it replaces coal and bad when it replaces uranium,” observes Shellenberger. “Only nuclear energy can power our high-energy human civilization while reducing humankind’s environmental footprint.”

Starting from a commitment to humanism, he sees energy intensity as essential for economic development beyond affluent Europe and North America.“Environmental humanism will eventually triumph over apocalyptic environmentalism, I believe, because the vast majority of people in the world want both prosperity and nature, not nature without prosperity,” writes Shellenberger. Moreover, “The evidence shows that an organic, low-energy, and renewable-powered world would be worse, not better, for most people and for the natural environment.”

Shellenberger discounts a climate apocalypse, but supports nuclear as the primary solution for reconciling economic growth with environmental protection. Many environmentalists envision an apocalypse but discount nuclear energy. It is nothing if not an ironic turn of events.

Shellenberger and his colleagues started organizing pronuclear demonstrations in 30 cities around the world in 2019. Evidently, the cry of “Stand-Up for Nuclear” is resonating in Germany. He was even invited to testify before Congress. Maybe nuclear power is not a lost cause. It should get a second look from the body politic.

G. Tracy Mehan III is executive director for government affairs at the American Water Works Association and an adjunct professor at Scalia Law School, George Mason University. He may be contacted at tmehan@awwa.org.

"Stand up for Nuclear".

"No Ordinary Lawsuit"
Author
Barry E. Hill - Vermont Law School
Vermont Law School
Current Issue
November-December 2018
Issue
6
"No Ordinary Lawsuit"

Before rap, before hip-hop, there was the music of Gil Scott-Heron, the poet, singer, songwriter, musician, and author of the 1971 spoken-word anthem “The Revolution Will Not Be Televised.” Political consciousness was at the foundation of his work. According to Scott-Heron, “The revolution takes place in your mind. . . . When you want to make things better you’re a revolutionary.” Today, of course, the revolution is not only televised, it is Facebooked, Twittered, and Instagrammed. The kids who survived the horrible school shooting in Parkland, Florida, became successful young revolutionaries in the fight for stronger gun laws via social media and 24-hour news channels.

But in a quiet federal district courtroom in Oregon, another group of kids are becoming revolutionaries, too, but via legal briefs rather than tweets and mass rallies and talking heads on cable and YouTube. The Supreme Court itself, in denying the Trump administration’s application for a stay, unanimously said last summer it will not interfere with the progress of the youngsters’ lawsuit against the federal government for failing to protect them against a worsening environment caused by emissions of greenhouse gases. To be clear, this suit was not a reaction to the Trump administration; it was filed in August 2015, when Trump was still a long-shot candidate. But it has been injected with renewed fervor by the president’s withdrawal from the Paris climate agreement and his anti-climate regulatory rollbacks.

Millennials — the grandchildren of Baby Boomers like Scott-Heron — are speaking out and demanding comprehensive reform of government policy regarding climate change. They have more at stake than their aged progenitors in ensuring that the habitability of the planet doesn’t erode in their lifetimes. Their youthful energy and enthusiasm, and demand for change, is evident broadly in the environmental law and policy area, and specifically in litigation in federal and state courts.

These Generation Y activists believe in the pluralism of a diverse country and in environmental justice. They affirm the basic principle that all people, regardless of age, race, color, national origin, or socioeconomic status, are entitled to fair treatment and meaningful involvement with respect to the development, implementation, and enforcement of climate change policy. Finally, these revolutionary persons believe the federal government is required to protect the environment and the atmosphere in particular as part of its public trust responsibilities. Otherwise, in denying them life, liberty, and the pursuit of happiness, the federal government is violating these due process rights under the Constitution.

Sadly, EPA’s new policy is to deny that greenhouse gas emissions are driving climate change. This abegnation, however, is entirely inconsistent with the law. Notably, the agency’s current position is contrary to that established by then Administrator Lisa Jackson in response to Massachusetts v. EPA, in which the Supreme Court ruled in 2007 that the agency must regulate pollutants that cause climate change. Consequently, in the 2009 Final Endangerment Finding under Section 202(a) of the Clean Air Act, Jackson determined that greenhouse gases released into the atmosphere threaten public health and the welfare of future generations. The Trump administration’s change in policy and pullout from the Paris Agreement is contrary to the dictates of the Massachusetts decision and to the findings of the U.S. Global Change Research Program, the National Academy of Sciences, and the Intergovernmental Panel on Climate Change that the warming of the climate system in recent decades is unequivocal.

Fortunately, a diverse group of 21 young people, between the ages of 8 and 19, from across the country are challenging in federal district court in Oregon the Trump administration’s strained views on climate change and climate science in a landmark lawsuit, Juliana v. United States. The youngsters complain that the federal government, in causing climate change, has violated the newest generation’s constitutional rights to life, liberty, and property in violation of the Due Process Clause of the Fifth Amendment. The complaint alleges that the federal government promotes the development and use of heat-trapping fossil fuels. The climate youth plaintiffs argue that the government has known for decades that fossil-fuel emissions are destroying the climate system and not only failed to restrict those emissions but also continued to authorize fossil-fuel-development projects that amplify the danger and foreclose the opportunity to stabilize the atmosphere. The climate youth plaintiffs seek a court order requiring the president to implement immediately a national plan to decrease atmospheric concentrations of carbon dioxide to a safe level, 350 parts per million by the year 2100, which is based upon sound climate science.

In denying them their constitutional rights, the youths argue that the federal government has failed to protect and conserve the nation’s public trust resources, including the atmosphere. This argument originates from the Atmospheric Trust Litigation Approach developed by Professor Mary Christina Wood of the University of Oregon’s Environmental and Natural Resources Law Center. According to Wood, “It’s kind of a straightforward exercise to apply the public trust to the atmosphere. The government is a trustee and has to protect it for the benefit of present and future generations.”

In Massachusetts v. EPA, the Supreme Court recognized the federal government’s public trust responsibility regarding the atmosphere. “When a state enters the union,” the Court wrote, “it surrenders certain sovereign prerogatives. Massachusetts cannot invade Rhode Island to force reductions in greenhouse gas emissions, it cannot negotiate an emissions treaty with China or India, and in some circumstances the exercise of its police power to reduce in-state motor vehicle emissions might well be preempted. . . . These sovereign powers are now lodged in the federal government.”

Understanding the climate youth plaintiffs’ arguments in this case requires a brief primer on the ancient public trust doctrine, which has been in existence since the time of the Romans. In the Institutes of Justinian, the Emperor Justinian articulated the idea of the public trust when he stated, “By the law of nature these things are common to mankind — the air, running water, the sea, and consequently the shores of the sea.” In its early form, the public trust doctrine sought to protect the public’s right to access certain resources, particularly navigable bodies of water. The English later incorporated the doctrine into their legal system, and, in 1215, the public trust emerged as part of the Magna Carta, which, among other things, specifically condemned interference with citizens’ access to navigable waters, and prevented the king from giving favored noblemen exclusive rights to hunt or fish in certain areas. Although the monarch was understood to own the land, he had an obligation to protect it for use by the public. Still later, the public trust doctrine became a part of American common law, particularly in state courts. And in 1983, in the seminal case National Audubon Society v. Department of Water and Power of the City of Los Angeles, the California Supreme Court ruled, “The public trust is an affirmation of the duty of the state to protect the people’s common heritage of streams, lakes, marshlands and tidelands.” Other state courts have made similar findings.

The American Petroleum Institute, the National Association of Manufacturers, the American Fuel & Petrochemical Association, and other organizations immediately intervened in the Juliana case as defendants, joining the U.S. government in trying to have the case dismissed. (They later filed motions to withdraw, which were granted by the court last year.)

In April 2016, U.S. Magistrate Judge Thomas Coffin decided in favor of the 21 climate youth plaintiffs. Coffin characterized the case as an “unprecedented lawsuit” addressing “government action and inaction” resulting “in carbon pollution of the atmosphere, climate destabilization, and ocean acidification.” In ruling that the case should proceed, Coffin wrote: “The debate about climate change and its impact has been before various political bodies for some time now. Plaintiffs give this debate justiciability by asserting harms that befall or will befall them personally and to a greater extent than older segments of society. It may be that eventually the alleged harms, assuming the correctness of plaintiffs’ analysis of the impacts of global climate change, will befall all of us. But the intractability of the debates before Congress and state legislatures and the alleged valuing of short term economic interest despite the cost to human life, necessitates a need for the courts to evaluate the constitutional parameters of the action or inaction taken by the government. This is especially true when such harms have an alleged disparate impact on a discrete class of society.”

In November 2016, U.S. District Court Judge Ann Aiken upheld Coffin’s recommendation with the issuance of a historic opinion and order denying the motions to dismiss. “This is no ordinary lawsuit,” Aiken wrote. “This lawsuit is not about proving that climate change is happening or that human activity is driving it. For the purposes of this motion, those facts are undisputed. The questions before the court are whether defendants are responsible for some of the harm caused by climate change, whether plaintiffs may challenge defendants’ climate change policy in court, and whether this court can direct defendants to change their policy without running afoul of the separation of powers doctrine.”

With respect to the climate youth plaintiffs’ public trust argument, Aiken determined that the atmosphere is in fact a public trust asset, that the federal government has a public trust obligation, that the federal government’s public trust obligation is not displaced by federal environmental statutes, and that the youth plaintiffs have a private right-of-action to enforce the federal government’s public trust obligation.

In February 2017, President Trump was named a defendant and the new administration immediately took aggressive action in the litigation. The administration filed a motion seeking expedited appeal of Aiken’s opinion and order to the Ninth Circuit. And in June 2017, the administration filed a writ of mandamus petition with the Ninth Circuit seeking an extraordinarily rare review of Aiken’s opinion and order.

Ten months later, a unanimous three-judge panel of the Ninth Circuit rejected the Trump administration’s “drastic and extraordinary” petition for a writ of mandamus. The appellate court ruled that the case could proceed toward trial, and that the administration had not satisfied the factors necessary for an extraordinary writ of mandamus. Chief Judge Sidney R. Thomas wrote that the federal government’s request to halt the litigation was “entirely premature,” and that “the government’s concerns would be better addressed through the ordinary course of litigation.”

The Trump administration, surprisingly, filed a second petition for a writ of mandamus to dismiss the case altogether, or, in the alternative, to stay all discovery and trial. Last year, in a per curiam decision, Thomas wrote: “No new circumstances justify the second petition to grant mandamus relief,” and that “the merits of the case can be resolved by the district court or in a future appeal.” The request for a dismissal was denied, and that action was affirmed by the Supreme Court last summer.

In short, the administration cannot evade a constitutional climate change trial, which is scheduled to be underway at the time you read this. In order to prevail, the youth plaintiffs will need to show that the federal government’s actions created the danger to the plaintiffs; that the federal government knew its actions caused the danger; and that the federal government, with deliberate indifference, failed to act to prevent the alleged harm.

In the course of this litigation, the following questions arise: Do the actions of President Trump in withdrawing the United States from the Paris climate agreement, and in related policy actions such as reversing Obama’s regulations addressing carbon pollution from automobiles and power plants, make the plaintiffs’ case stronger? Are President Trump’s past statements that climate change is a “Chinese hoax” a boost to the plaintiffs? Will this case determine whether there is an enforceable human right to a clean and healthy environment for young people based upon the adverse effects of climate change? Will this case determine whether the Constitution guarantees a livable planet for young people? A jury of ordinary Oregon citizens will decide, among other things, the purpose of the public trust; the scope of the doctrine, particularly as it applies to the atmosphere; and the powers and duties of the federal government as trustee of the environment.

The climate youth plaintiffs are represented by the non-profit organization Our Children’s Trust, whose “mission is to protect the Earth’s atmosphere and natural systems for present and future generations.” This Oregon-based nonprofit has brought similar climate youth litigation in state court in Colorado, Maine, Massachusetts, New Mexico, North Carolina, Washington, Florida, and Alaska.

Our Children’s Trust spearheaded the climate youth litigation Reynolds v. Florida earlier this year. In that lawsuit, a diverse group of eight Floridians, ages 19 and younger, filed suit against the state and Governor Rick Scott for the “Defendants’ deliberate indifference to the fundamental rights to a stable climate system” in violation of Florida common law and Article I, Sections 1, 2 and 9; Article II, Sections 5, 7(a), and 8; and Article X, Sections 11 and 16, of the Florida Constitution. The youths argued: “All of Florida’s public trust resources, including without limitation, the atmosphere (air), submerged state sovereignty lands, lakes, rivers, beaches, water (both surface and subsurface), forests, and wild flora and fauna (individually, a “Public Trust Resource,” and collectively, “Public Trust Resources”), are essential for life, liberty, pursuit of happiness, and property, including human habitation and personal and economic health, safety, and wellbeing.”

Scott, who is now running for the U.S. Senate, is a noted climate denier. For example, in a 2010 interview aboard his campaign bus, when asked if he believes in climate change, he said, “I have not been convinced.” When asked what he needs to convince him, he stated, “Something more convincing than what I’ve read.” A few years later, he dodged the same question, saying only that he is “not a scientist.”

In Alaska, last October some 16 plaintiffs, many of whom were minors, filed a lawsuit in state court against the state, its governor, and its agencies alleging that the defendants had violated “their inalienable and fundamental rights to life, liberty, property, equal protection, public trust resources, and a stable climate system that sustains human life and liberty.” In Sinnok v. State of Alaska, the youth plaintiffs, represented by Our Children’s Trust, argue that in implementing its “Climate and Energy Policy,” which authorizes and facilitates activities producing greenhouse gas emissions and which does not implement needed climate mitigation standards, the defendants failed “to enforce Sections 1, 7, and 21 of Article I of the Alaska Constitution and Article VIII of the Alaska Constitution.”

Moreover, the youth plaintiffs argue, “All of Alaska’s Public Trust resources, including, without limitation, waters (surface, subsurface, and atmospheric), fish, and wildlife, air (atmospheric), the climate system, the sea and the shores of the sea, submerged and submersible lands, beaches, forests, and tundra (each individually a “Public Trust Resource,” and collectively “Public Trust Resources”), and correlative public uses to such resources, including, without limitation, public access, fishing, and navigation, are essential for Youth Plaintiffs’ rights to life, liberty, and property.”

This lawsuit is interesting in that oil and gas have represented the lifeblood of Alaska’s economy. Beginning in 1982, a family of four would have received a total dividend payment of $133,461 from oil and gas accounts. So this suit is hitting where it hurts in terms of the state’s traditional economy, which the plaintiffs view as neglectful of their public trust rights.

These revolutionary persons’ lawsuits in Florida and Alaska (and other states) mirror, in many respects, the legal arguments in the Oregon federal district court climate youth case. In the three suits, the climate youth plaintiffs argue that a government, whether federal or state, elected by and for the people has a duty to protect the public trust, which includes the atmosphere, for present and future generations. And if the executive and legislative branches of government fail to exercise that public trust duty, the judicial branch must intervene to reduce and mitigate any adverse effects.

Our Children’s Trust is part of a coordinated effort “to support youth and attorneys around the world who are developing and advancing legal actions to compel science-based government action on climate change in their own countries.” Our Children’s Trust’s U.S. and global lawsuits seek “climate justice,” which is the term used for framing global warming as an ethical and political issue, rather than one that is purely environmental in nature. This is done by relating the effects of climate change to modern concepts of justice, particularly environmental justice and social justice. The fundamental principle of climate justice is that those who are least responsible for climate change suffer the gravest consequences. Citizens, therefore, around the world are suing their own governments for failing to protect them. According to a May 2017 report issued by UN Environment and Columbia University’s Sabin Center for Climate Change Law, there were more than 900 such cases in 24 countries seeking climate justice, with more than 654 in the United States alone.

Climate justice litigation has shown a considerable amount of success, beginning with the precedent-setting 2015 lawsuit Urgenda Foundation v. Kingdom of the Netherlands, brought by 900 citizens against the government. The plaintiffs were represented by the Dutch environmental group Urgenda Foundation. The citizens won, which resulted in the court ordering the government to cut greenhouse gas emissions nationwide by at least 25 percent by the year 2020 (compared to 1990s levels). The case was upheld on appeal on October 9.

This case laid the foundation for similar lawsuits around the world, all relating to the governments’ obligations to mitigate climate change and grounded in part on rights-based theories rather than through reference to environmental statutory requirements. The Hague District Court in Urgenda said, “The state must do more to avert the imminent danger caused by climate change, also in view of its duty of care to protect and improve the living environment.” Our Children’s Trust continues to improve upon this rights-based litigation strategy with its climate youth lawsuits.

The Trump administration and the administrations of several state governments should heed the warning of one of the world’s most noted social justice icons. The Reverend Dr. Martin Luther King Jr. once said that it is imperative before it’s too late for humanity to “join with the Earth and each other, to bring new life to the land, to restore the waters, to refresh the air, to renew the forests, to care for the plants, to protect the creatures, to celebrate the seas, to rejoice in the sunlight, to sing the song of the stars, to recall our destiny, to renew our spirts, to reinvigorate our bodies, to recreate the human community, to promote justice and peace, to love our children and love one another, to join together as many and diverse expressions of one loving mystery, for the healing of the Earth and the renewal of all life.”

Consistent with the thrust of Dr. King’s words, young people in Utah, for example, were recently successful in getting the state legislature and the governor to issue the “Concurrent Resolution on Environmental and Economic Stewardship.” In March, Governor Gary Herbert signed H.C.R.7, the concurrent resolution, that, among other things, acknowledges the state’s tradition of stewardship of the natural resources and the environment; recognizes the need for responsible stewardship to mitigate the risks of, prepare for, and address the changing climate and its effects; encourages the use and analysis of sound science to understand the causes and impacts of local and regional climates; and expresses a commitment to create and support economically viable and broadly supported solutions, including solutions in rural communities.

Still further, a tight-knit group of technologically savvy youngsters created a nationwide coalition called Zero Hour, an environmentally focused movement led by climate justice advocates. This youth movement is committed to pressuring governments to move faster on climate change policy and action. Last July — a day after the appellate court’s decision in the Juliana case – Zero Hour members marched in Washington, D.C., Los Angeles, Seattle, and London, and met with various legislators to share their concerns about the lack of action on climate change by their governments. These kids will not stay silent on this issue. They are revolutionary persons.

In issuing a five-year strategic plan, EPA stated in 2010: “Environmental justice and children’s health protection will be achieved when all Americans, regardless of age, race, economic status, or ethnicity, have access to clean water, clean air, and healthy communities.” Or as Judge Aiken recognized more broadly in the suit before her in federal district court in Oregon, as described in the American University Law Review, “the right to a stable climate system, implicit in due process, is a constitutionally protected right, a consequence of the government’s dominion over trust resources like submerged lands and oceans.” Convincing a jury in her federal courtroom that that right has been abrogated by the government as trustee in ignoring greenhouse gas emissions and changing atmospheric conditions while supporting the fossil-fuel industry will be the job of the plaintiffs.

Watch the coverage of the lawsuit, which starts October 29. Outside the courtroom itself, this time the revolution is being televised, 24/7, and its precepts disseminated via Google, Facebook, and Twitter. The songwriter-poet Gil Scott-Heron would be proud of the grandchildren of the Baby Boomers who fought for the first racial justice and environmental laws. The kids support developing climate policy based on sound science, consistent with the principles of environmental justice and the federal and state constitutions. And as the 1950s chant regarding international coverage of civil rights events reminds us today, “The whole world is watching.” TEF

LEAD FEATURE ❧ Youth plaintiffs in Oregon are suing the federal government for climate inaction — one of many similar suits around the country and the world. Litigation based on the public trust doctrine can be difficult to win, but Millennials are speaking out about an issue that profoundly affects them.

Climate Justice
Author
Josephine Balzac - Rollins College
Rollins College
Current Issue
July-August 2018
Issue
4
Climate Justice

People of conscience need to break their ties . . . it makes no sense to invest in companies that undermine our future.

—Desmond Tutu

The perpetuation of business as usual in the climate change era endangers the future of human existence and, consequently, imperils the realization of human rights.1 The recent signing and adoption of the Paris Agreement signifies a global consensus that climate change is an urgent threat and common concern of humankind that needs ambitious mitigation and adaptation efforts to solve the problem.2 The Agreement requires holding the increase in global temperature to well below 2°C while pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.3 The Paris Agreement is undergirded by principles of equity, common but differentiated responsibilities, sustainable development, and poverty eradication.4

Protecting the environment and eradicating poverty are an “indispensable requirement and integral part of achieving sustainable development.”5 Sustainable development incorporates three components: environmental protection, social development, and economic development. On January 1, 2016, the 17 Sustainable Development Goals of the 2030 Agenda for Sustainable Development officially became effective.6 The goals include women’s rights, eradicating poverty, climate action, food security, environmental protection, health, education, equality, and job opportunities.7 The Sustainable Development Goals promote equitable economic growth, equitable social development, and integrated and sustainable management of natural resources and ecosystems.8

Sustainable development is rooted in equitably meeting the developmental and environmental needs of present and future generations.9 This concept of intergenerational equity was first emphasized in the Stockholm Declaration preamble, stating that “[t]o defend and improve the human environment for present and future generations has become an imperative goal of humankind.”10 Furthermore, the United Nations Framework Convention on Climate Change (UNFCCC) requires countries to protect the climate system for the benefit of present and future generations of humankind on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities.11

Viewing the scientific evidence and impacts of climate change through a human rights lens, climate change impacts endanger the effective enjoyment of a range of human rights. The connection between human rights and climate change has been recognized by the United Nations in a variety of documents by the Human Rights Council and the Office of the High Commissioner for Human Rights.12 In 2000, at the UNFCCC Sixth Conference of the Parties (COP6), the summit’s mission stated: “We affirm that climate change is a rights issue. It affects our livelihoods, our health, our children and our natural resources.”

The Mary Robinson Foundation is a leading climate justice organization that seeks to put justice and equity at the heart of climate change responses and identifies the strong connection between human rights and climate change.13 In its Principles of Climate Justice, the Foundation observed that “[c]limate justice links human rights and development to achieve a human-centered approach safeguarding the rights of the most vulnerable and sharing the burdens and benefits of climate change and its resolution equitably and fairly.”14 The climate “injustice” is that the people most vulnerable and marginalized are the ones that have had little to do with generating the greenhouse gas (GHG) emissions that cause climate change. Climate justice affirms the need to significantly reduce the emission of GHGs and associated local pollutants.15 The Bali Principles identified the 27 principles of climate justice.16

The business community is now recognizing this connection between human rights and climate change.17 Businesses play a role in addressing climate change impacts on human rights.18 Until recently, businesses addressed these two subjects independently of the other. Due to the growing awareness and recognition of the nexus between the two, however, businesses are now addressing climate change and human rights concerns holistically.19 Recent actions in the business and investment sectors reflect a new focus on protecting human rights in the face of climate change impacts.

This heightened awareness of climate change has inspired various institutional investors to divest from fossil fuels.20 Investors have embraced the same thinking by pushing for a new sustainable energy economy with socially and environmentally responsible investments.21 This fossil fuel divestment and investment in sustainable and socially responsible businesses will become a powerful driver of change.22 This transition will promote climate justice by taking a human-centered approach to climate change and safeguarding the rights of present and future generations in the investment decisionmaking process.

This chapter examines the ethical motivations behind the movement to divest from dirty energy in order to protect our planet and present and future generations. Part I of this chapter discusses the moral origins of the fossil fuel divestment movement, the litigation that has ensued, and the movement’s reach beyond its college campus origins. Part II identifies the sustainable business model through a corporate social responsibility (CSR) framework and discusses how CSR voluntary initiatives undertaken by companies can help promote climate justice. It addresses how climate change impacts are driving responsible investments and prompting investors to consider environmental, social, and governance criteria in the investment decisionmaking process.

The Fossil Fuel Divestment Movement

Movements seeking ecological equity for future generations and rights of nature have been gaining momentum in the 21st century.23 Divestment is a social responsibility campaign in which owners can decide to withhold their capital by selling investments in reprehensible activity.24 It is the process of removing investments that are unethical or morally ambiguous.25 Divesting is a form of social investing, defined as “the systematic incorporation of ethical values and objectives in the investment decision-making process.”26 The objective of divestment is to promote a certain behavior or policy.27

In the 20th century, reprehensible activity subject to divestment campaigns included tobacco, munitions, corporations in apartheid South Africa, adult services, and gaming.28 These divestment campaigns have been successful, but the largest and most impactful was the South African apartheid context.29 Divesting in multinationals doing business in South Africa helped break the back of the apartheid government and usher in a new era of democracy and equality.30 The success of this campaign is the inspiration for the current fossil fuel divestment movement.31

The fossil fuel divestment movement has quickly become the fastest growing divestment corporate campaign in history, surpassing the South Africa apartheid divestment movement.32 The spark began in August 2012 when Rolling Stone Magazine published an article by Bill McKibben, founder of the organization 350.org, which detailed the risk of increasing the global temperatures above 2°C.33 A tour called Do the Math was launched by 350.org explaining the need to limit the release of fossil fuels and keep the fossil fuels in the ground.34 The tour led to the 350.org Fossil Free Divesture Movement, “a network of independent campaigns petitioning institutions and investors to divest from fossil fuels.”35

The first major victory was in May 2014 when Stanford University agreed to divest its $18.7 billion endowment from coal companies.36 By December 2015, 500 institutions representing $3.4 trillion in assets committed to divesting.37

Moral Dimensions of the Fossil Fuel Divestment Movement

The fossil fuel divestment campaign focuses on the moral dimensions of climate change by spotlighting the immoral actions and impacts of the polluting fossil fuel industry.38 It is a climate justice initiative that seeks to stand in solidarity with vulnerable frontline communities and those already experiencing the impacts of climate change.39 The students of the campaign make a further plea that their futures are at stake because they are inheriting the consequences of global warming beyond 2°C.40 They emphasize the injustice in this reality because they did not create the crisis but have a responsibility to fix it.41 This intergenerational equity focus of the campaign seeks to ensure that future generations are not worse off by our choices.42 It requires utilizing resources sustainably to avoid irreversible damage to the environment.43

The movement focuses on “living up to our values, changing the business as usual mentality, and redefining our future.”44 Our values as humans are what determine how we will behave in certain situations.45 In order to have integrity, there must be consistency in what we say we value and what our actions say we value.46 Ethical decisions involve self-restraint: (1) not doing what you have the power to do and (2) not doing what you have the right to do.47

The goal of divesting from fossil fuels is to “diminish the influence and power of the fossil fuel industry in the market, our political system, and in the social conscience overall.”48 Fossil fuel divestment has three aims:

(i) “force the hand” of the fossil fuel companies and pressure government to leave the fossil fuels “down there”; (ii) pressure fossil fuel companies to undergo “transformative change” that can cause a drastic reduction in carbon emissions; [and] (iii) pressure governments to enact legislation such as a ban on further drilling or a carbon tax.49

It demands institutions and investors to eradicate the environmental and social injustices created by “dirty energy” by adopting sustainable investment policies.50

The Bali Principles on Climate Justice intended to shift “the discursive framework of climate change from a scientific-technical debate to one about ethics focused on human rights and justice.”51 “Divesting is a form of social investing . . . incorporating ethical values and objectives in the investment decision making process.”52 The campaign is not just to fight climate change “but to fight the racism, classism, and imperialism that the fossil fuel industries perpetuate.”53 This future generation is shifting the way of thinking “business as usual” and propelling change. This shift is necessary to change these social and political realities and have a meaningful response to climate change impacts on the environment and human rights.54

College Campus Future Generations Lead Divestment Campaigns

The Fossil Free Divestment Movement mobilized and trained thousands of students and young people to organize against the threats of climate change.55 Social movements use confrontational strategies, including media protests, to emphasize the negative social and environmental practices of highly visible corporations.56 With social media commanding the public’s attention, these corporations realize they are not immune to “naming and shaming” strategies when their valuable brands and reputation are linked to objectionable and social practices.57 Social movements have emerged as key forces in mobilizing political consumers to address their concerns through the market.58

The students are demanding full divestment of fossil fuels and are doing it in the name of “climate justice.” Students and graduates are making campaign pledges such as: “[M]illennials, we must rise to our historic moment and lead the call for climate justice. This is truly the fight of our lives.”; “[W]e will not stop until we confront, dismantle and ultimately transform oppressive structures that perpetuate climate injustice, gender violence, and economic equality”; and “[B]ecause I want a more just and sustainable world that protects humanity over profits, environment over exploitation.”59 The “fossil fuel divestment [movement] is a moral campaign at its core.”60 In an open publication, Divest Harvard students criticized the Harvard Management Company (HMC) for betraying its moral obligations to its students by investing new capital in oil and gas exploration and refusing to divest.61

Most of the divestments to which colleges, universities, or schools have committed are only partial, such as only divesting in coal or tar sands, and are mostly from smaller private colleges.62 Students are being advocates by writing and signing petitions, scheduling meetings, and conducting protests, week-long blockades, and sit-ins.63

Recently, this type of social activism generated real change on a university campus. On May 25, 2016, the University of Massachusetts became the first major public university to fully divest its endowment from fossil fuels.64 Divestment of coal at UMass first began last year in response to a petition from the Student Fossil Fuel Divestment Campaign at UMass.65 In April 2016, in efforts to call for full divestment of fossil fuels, the Campaign staged a series of protests that led to student arrests at UMass Amherst.66 This student activism resulted in a unanimous decision by the board of directors of the UMass Foundation to fully divest from fossil fuels.67 The board of trustees chairman stated that he will endorse the Foundation’s decision, “because members of the UMass community have urged us to consider divestment in moral terms . . . and we acknowledge the moral imperative.”68 The UMass Amherst chancellor stated in regards to the decision to divest, “[T]he Foundation’s action today . . . speaks volumes about our students’ passionate commitment to social justice and the environment. It is largely due to their advocacy that this important issue has received the attention that it deserves.”69

Although the divestment movement started on university campuses, it has spread beyond campuses and reached diverse institutions and cities throughout the world.70 Of the more than 500 institutions divesting, only 13% are universities, colleges, and schools.71 Other institutions divesting include faith-based organizations (26%), foundations (24%), governmental agencies (14%), pension funds (13%), nongovernmental organizations (6%), and for-profit corporations (3%).72

More than 70 cities worldwide have divested from fossil fuels, including Oslo, Norway; Paris, France; Newcastle, Australia; Muenster, Germany; Copenhagen, Denmark; San Francisco, California; Boulder, Colorado; and Minneapolis, Minnesota.73 In addition, Stockholm, Sweden, and Berlin, Germany, are reviewing their fossil fuel investments.74 Copenhagen’s mayor stated in his proposal to divest that it would be wrong to continue investing in fossil fuels when Copenhagen is leading the world in the transition to a green economy.75 Similarly, in deciding to divest from fossil fuels, the UMass board of trustees chairman shared a similar vision in stating, “[D]ivestment from fossil fuel companies is in keeping with our status as a national leader in environmental sustainability with cutting-edge programs in alternative energy research, sustainable agriculture, and sustainable built environment.”76 The decisionmakers deciding to divest are recognizing that their investments must align with their values to convey the proper message and uphold integrity in promoting their goals.

Fossil Fuel Divestment Litigation

Social activism in the fossil fuel divestment movement has been taken to the courts, as students demand climate justice.77 The litigation arose out of Harvard students’ frustration with the university’s refusal to divest from fossil fuels after demanding divestment from the university endowment through their campaigns and petitions.78 The students decided to take their advocacy to another level.

On November 19, 2014, the Harvard Climate Justice Coalition filed a complaint against the Harvard president and fellows of Harvard College, the HMC, and the attorney general of Massachusetts.79 The plaintiffs are a group of seven students, consisting of law, graduate, and undergraduate students.80 The students are bringing this suit seeking climate justice on behalf of future generations.81 The complaint names “individuals not yet born or too young to assert their rights but whose future health, safety, and welfare depend on slowing the pace of climate change.”82

The innovative causes of action listed in the complaint are twofold: (1) mismanagement of charitable funds and (2) intentional investment in abnormally dangerous activity.83 The statement of facts describes the vesting of responsibility in the “President and Fellows” by the charter of the Harvard Corporation to further the goals of “the advancement and education of youth.”84 They are suing the attorney general of Massachusetts by citing the duty of Massachusetts “‘legislatures and magistrates’ to ensure the charitable operation of schools . . . [by] acting in the public interest, furthering the education and welfare of the students, and refraining from actions known to cause harm to the public and students.”85

The lawsuit identified $79 million in direct holdings in publicly traded fossil fuel companies in Harvard’s endowment.86 The endowment also contains additional indirect holdings in fossil fuels, but the amount is not listed.87 The plaintiffs connect investing in fossil fuels with creating environmental and social harms because the universities are helping finance the fossil fuel industry’s business activities.88 The complaint identifies the catastrophic consequences that endanger the health, safety, and welfare of present and future generations if businesses continue to burn fossil fuels and emit GHGs.89The complaint is supported by significant evidence labeled as exhibits, including reports from scientists (James Hansen) and international organizations (the Intergovernmental Panel on Climate Change), federal agencies (U.S. Environmental Protection Agency), Harvard’s U.S. Securities and Exchange Commission (SEC) filing, Harvard’s charter, the Massachusetts Constitution, news articles, and academic studies.90

The mismanagement of charitable funds cause of action stems from Harvard Corporation’s breach of fiduciary and charitable duties as a public charity and nonprofit.91 The complaint asserts that investing in fossil fuels damages Harvard’s reputation, and the students’ and graduates’ reputations.92 The students are unable to be free of the threats of climate change, and the future damage to the university’s physical campus as a result of sea-level rise.93 The second count—intentional investment in abnormally dangerous activities—identifies the fossil fuel industries’ business activities as abnormally dangerous “because they inevitably contribute to climate change, causing serious harm to Plaintiff’s Future Generations’ persons and property.”94 The argument continues that there is no amount of reasonable care that can be taken by a fossil fuel company to substantially reduce the risk of harm.95 The complaint alleges that Harvard has knowledge or should have known that fossil fuel companies contribute to climate change and cause harm, and that these harms are well understood among institutions of higher education.96

The Harvard Climate Justice Coalition complaint requests “an injunction ordering Defendants to immediately withdraw Defendant Harvard Corporation’s direct holdings in fossil fuel companies and an injunction for Defendants to take immediate steps to begin withdrawing indirect holdings and to complete withdrawal within a reasonable period of time.”97 The plaintiffs also request a declaration that Harvard breached its obligations contained in its charter.98

The plaintiffs acknowledged the difficulty of meeting the “special interest” requirement to have standing to sue.99 The lawsuit was ultimately dismissed on the ground that the plaintiffs lacked standing because they claimed the threat was to “future generations.”100 The court reasoned that the plaintiffs’ status as Harvard students did not give them personal rights enough to have standing to charge Harvard with the mismanagement of its charitable assets.101

The Harvard students appealed the dismissal of the divestment lawsuit.102 The appellate brief was supported by amicus curiae briefs by Dr. James E. Hansen and the Animal Legal Defense Fund.103 The brief from the Animal Legal Defense Fund supported the moral obligation for the protection of future generations, as a recognized principle in international and domestic law.104 The city of Cambridge, Massachusetts, also supported the lawsuit.105 Dr. Hansen’s amicus brief also cites the moral obligation to protect future generations by phasing out fossil fuels.106 The appeal focuses on the same arguments that Harvard mismanaged its endowment by investing in “abnormally dangerous activities.”107 On June 7, 2016, the Harvard Climate Justice Coalition appeared for oral arguments in the Massachusetts Appeals Court and the appeal is pending as of this writing.108

Even in the face of this social activism and litigation, the HMC still decided not to divest but instead became the first university endowment in the United States to join the Principles for Responsible Investment (PRI) and the Carbon Disclosure Project (CDP).109 The HMC has dedicated a web page to their sustainable investments, reporting their focus on investments based on environmental, social, and governance (ESG) factors.110 The HMC assesses and manages ESG risks, and documents and considers risk before making a decision on the investment.111 The faculty members in support of divestment responded by saying that the PRI and CDP are “utterly ineffective.”112 These voluntary measures are not as effective in mitigating climate change as mandatory legal standards or full divestment; however, in lieu of full divestment, these initiatives can be seen as steps in the right direction toward a more sustainable future within businesses. If the intent behind the initiative is purely for public relations reasons, however, it would be deemed to be merely “greenwashing.”113 A sustainable business model “should not be a discretionary preference, to follow only if corporate leaders perceive an economic benefit.”114 What is necessary is the acceptance of an ethical responsibility to do what is right and act for environmental and social well-being, regardless of financial gain.115

Corporate Social Responsibility and Responsible Investment

Divestment of fossil fuels is promoting climate justice by bringing awareness to the moral obligation of corporations, wealth owners, and investors, and to the duty to protect the interest of society, future generations, and the environment. The campaign creates stigma and advocates for more socially responsible investment practices. Divestment of fossil fuels is the “people demanding institutions and corporations to adopt comprehensive sustainable investment policies that eliminate the environmental and social injustices that the fossil fuel industry is creating.”116 Climate justice will be achieved not just by divesting from fossil fuels, but also by businesses incorporating sustainable policies, practices, and standards into everyday business activities. Since divestment is the opposite of investment, sustainable and socially responsible investments are also needed to promote climate justice.

Achieving a sustainable future does not occur in a vacuum, however. Although often the primary source of environmental pollution, business must be part of the long-term solution.117 Compared to government, business has greater capital, research, development capacity, and influence in the market to push towards sustainable development and climate justice.118 The United Nations acknowledged the significant role of business in mitigating and adapting to climate change.119 Caring for Climate is a joint initiative convened by the United Nations Global Compact, the United Nations Environment Programme (UNEP), and UNFCCC and recognizes that “only through a critical mass of engaged companies can the private sector be an effective part of the climate solution.”120 The initiative calls on all companies to commit to corporate responsibility policies on climate action.121

Since the Earth Summit in 1992, the field of CSR has evolved to become part of mainstream thinking in corporate compliance with environmental and human rights principles.122 CSR is premised on the idea that businesses have a responsibility to society and all its stakeholders, not just to their shareholders or their bottom line profits.123 The World Business Council for Sustainable Development defines CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”124 CSR encompasses the sustainability agenda by thinking in terms of the “triple bottom line,” focusing on economic prosperity, environmental quality, and social justice.125 John Elkington wrote, “[t]o refuse the challenge implied by the triple bottom line is to risk extinction.”126 This shift in thinking for business priorities stems from a reshaping of society’s expectations.127

The severe financial crisis and climate change risks have underscored the need for businesses to incorporate ESG factors into their financial statements, policies, and disclosures.128 Businesses feel pressure from all stakeholders, customers, investors, financial institutions, and shareholders.129 Lenders and investors, of course, want the best return on their investments with the least amount of risks.130 Moreover, investors today understand that financial success and good corporate citizenship are connected.131

Therefore, investing in fossil fuels is a risky business not only because of the financial risks, but also because of the environmental and social risks. Al Gore made a comparison of the risks of investing in fossil fuels to the meltdown in the market for subprime mortgages: “The assumption that you can safely invest in assets that come from business models that assume carbon is free is an assumption that is about to go splat. Many companies have lots of assets in your portfolios that are chock full of ‘subprime’ carbon assets.”132

ESG issues have a material impact on those risks and fulfill fiduciary duties.133 These ESG practices and considerations are evident across the spectrum of business entities including financial institutions, institutional investors, individual investors, corporations engaging in CSR practices, and consumers. CSR and ESG performance, monitoring, and improvement provide the greater transparency that all sectors are demanding.134 After the financial crisis and the looming threat of climate change, consumers, investors, stakeholders, and suppliers are demanding greater transparency.135 This pressure caused an increase in CSR reporting to publicize companies’ ESG data.136

Corporate Social Responsibility Reporting and Disclosures

It is becoming the norm in corporate practice to submit sustainability reports or CSR reports using at least one voluntary initiative.137 CSR disclosure focuses on the paradigm of sustainability reporting, with the information reported being relative to the triple bottom line of social, environmental, and economic impacts of a corporation’s activities.138 Executives are now considering the environmental issues, such as climate change, to be among the most important issues affecting business.139 The Governance and Accountability Institute reported that in 2015, 75% of the Standard & Poor’s 500 Index produced sustainability reports, an increase from 20% in 2011.140

There are many voluntary initiatives and providers of CSR reporting, but the major providers offering sustainability reporting include: the Global Reporting Initiative (GRI) (GRI’s Sustainability Reporting Standards), the Organisation for Economic Co-operation and Development (OECD) (OECD Guidelines for Multinational Enterprises), the United Nations Global Compact (the Communication on Progress), the International Organization for Standardization (ISO) (ISO 26000, International Standard for social responsibility), and the Carbon Disclosure Project.141 The GRI is the best example of the CSR reporting trends.142 It was launched in 1997 by the Coalition for Environmentally Responsible Economies (CERES)143 and it included the participation of organizations such as CEP, UNEP, and the World Business Council for Sustainable Development.144 The GRI’s mission is “to elevate the comparability and credibility of sustainability reporting practices worldwide.”145 Currently, 92% of the 250 largest corporations in the world report on their sustainability performance utilizing the GRI.146 The GRI’s goal is to make sustainability reporting as commonplace as financial reporting.147

True sustainability reporting allows for greater transparency into corporate practices that either achieve CSR or impede its achievement. Sustainability reporting is valuable because it ensures that the organizations reporting consider their impacts on environmental and social issues and allows them to be transparent about the risks and opportunities that they encounter.148 A trusting relationship amongst stakeholders is necessary to receive good support.149 Transparency builds and maintains trust and credibility150 in businesses because it shows honesty, openness, and self-criticism.151 CSR reporting on ESG issues promotes better decisionmaking because it informs the decisions of investors, consumers, local communities, and civil society.152 Reporting in a transparent manner is an essential part of committing to sustainability.153

Businesses need to make sure that they report the good, the bad, and the ugly of their companies. Voluntary self-reporting can tempt companies to only reveal the greatest achievements and omit negative information.154 This type of reporting is seen as greenwashing and is only concerned with image and not with accurate reporting.155 This practice causes distrust in stakeholders because they fear a cover up and, therefore, are unable to be fully informed of the risks and benefits of the company.156 To avoid creating suspicion, companies should report achievements and weaknesses and identify the steps to fix the problems.157

International Voluntary ESG and CSR Initiatives

The growing public awareness of environmental performance is driving companies to adopt voluntary or self-imposed standards, guidelines, and codes.158Those supporting ESG and CSR considerations in any sector must rely on international voluntary corporate standards because transnational corporate activities are minimally governed by international law.159 These voluntary standards or initiatives usually do not have any verification methods or enforcement measures.160 The only enforcement mechanism available is to “name and shame” the companies that fail to meet these standards.161 These standards also lack explicit performance benchmarks.162 Some companies become signatories to these third-party initiatives committing to standards and codes of conducts to improve their public image.163 Others view these initiatives as attempts to prevent more stringent regulations through preemptive measures by the market.164 Others do it out of a commitment to true sustainability. Although there is no substitute for legally binding standards, these voluntary initiatives signify a change of consciousness, a change in values, a change in priorities, and a commitment across the globe to create a more sustainable and just future for our present and future generations in the face of climate change. The “business as usual” model is no longer mainstream, it is no longer popular, and the market has responded.

CSR voluntary corporate codes of conduct are becoming the norm as companies want to convey their core values and ethical business practices to all stakeholders. This shift in thinking to employ CSR has caused an increase in the majority of corporations dedicated to addressing larger social problems.165 The United Nations Global Compact is the world’s largest voluntary corporate sustainability initiative.166 More than 8,000 companies and 4,000 non-businesses have become signatories to the compact.167 The mission of the compact is for businesses to be responsible by aligning their strategies and operations with principles on human rights, labor, environment, and anti-corruption.168 The United Nations Global Compact’s General Assembly mandate is to “promote responsible business practices and UN values among the global business community and the UN System.”169

The 10 principles of the United Nations Global Compact are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.170 The Compact principles have been endorsed by the Human Rights Council, which has confirmed the interconnectedness between climate change and human rights.171 The Global Compact institutes these principles as the core values to be shared among businesses, trade unions, and civil society.172 The United Nations Guiding Principles on Human Rights have been incorporated into the Compact commitments for the past four years.173 The Compact requires businesses to make a policy commitment to respect human rights and take proactive steps to prevent violations and remediate any adverse human rights impacts.174

Commitments to the Compact also include taking action to advance societal goals, such as the United Nations Sustainable Development Goals 2030.175 Through the Global Compact, businesses have played an important role in the process of shaping the Sustainable Development Goals and helping companies implement them.176 The efforts through partnerships created by the Compact include the Post-2015 Business Engagement Architecture, Rio+20 Corporate Sustainability Forum, Global Compact Local Networks, SDG Industry Matrix, Caring for Climate, and Global Compact LEAD.177

Opportunities for Responsible Investment

While CSR reporting has been on the rise within corporations, investors have been able to use this information to determine in which sectors of the stock market they want to invest. Socially responsible investing (SRI) is “an investment discipline that considers environmental, social, and governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.”178 The motivations for SRI investing include personal goals, institutional missions, and the demands of clients and stakeholders.179 Investors also are seeking strong financial performance in their investments to contribute to advancement in ESG practices.180 SRI allows investors to match financial investments with ethical and moral values.181 These SRI investments focus on considering ESG criteria.182 SRI investments were more than $6.57 trillion in 2014, a 76% increase compared to 2012 figures.183

The SRI practice used to focus on weeding out companies from specific industries that investors did not want to support, such as natural resource extraction and nuclear energy.184 This approach is a negative screen; positive screens focus on promoting positive change and rewarding good behavior by investing in companies that promote positive social and environmental impacts.185 This section discusses three important SRI opportunities to promote climate justice.

United Nations Principles for Responsible Investment: The United Nations Principles for Responsible Investment (PRI) is a voluntary set of guidelines for investors that seek to combine financial return with a moral and ethical obligation by giving consideration to the ESG issues of companies in which parties choose to invest.186 Ethical values are the essence of climate justice and instilling these principles into investment decisions allows for greater protection of the rights of vulnerable communities. The goal was to incorporate “ESG issues into mainstream investment decision-making and ownership practices.”187 This momentum is driven by recognizing that ESG factors play a material role in determining risk and return within the financial community.188 Investors understand that part of their fiduciary duty is incorporating ESG factors and that beneficiaries are demanding more transparency.189 Responsible investment is also grounded in the fact that companies could face serious reputational risk by destroying value on environmental (climate change and pollution), social (employee diversity and working conditions), and economic issues (aggressive tax strategies).190 The PRI has nearly 1,500 signatories that represent $60 trillion from more than 50 countries.191

Shareholder Resolutions; An important aspect of SRI is shareholder advocacy. Through shareholder resolutions, investors are given the opportunity to file resolutions to raise ESG issues.192 These resolutions involve human rights, working conditions, and climate change issues.193 In 2007, only 43 climate shareholder resolutions were filed with U.S. companies.194 That number increased in 2009, with 68 shareholder proposals on climate change.195 In the 2015 proxy season, a record-breaking 433 social and environmental shareholder resolutions were filed with climate change as one of the leading drivers of the uptick in activity.196 By filing shareholder resolutions, active shareholders are able to bring important issues to the attention of company management.197 Filing these resolutions gains media attention and educates the public.198 The mere process of filing resolutions prompts productive discussions and agreements, and the receipt of the shareholders’ majority vote further pressures action by the corporation’s management.199

Recently, an Exxon climate justice shareholder resolution, “Acknowledge Moral Imperative to Limit Global Warming to 2° Celsius,” was filed.200 It stated that the poor and most vulnerable are the first to suffer, while future generations, holding no responsibility, will live with greater impacts of global warming.201 Shareholders called on the board of directors to act by adopting a policy acknowledging the imperative to limit global average temperature increases to 2°C above pre-industrial levels.202 Exxon challenged the proposal as “vague” to exclude the climate justice proposal from this year’s proxy ballot so that the shareholders would not be allowed to vote, fearing a majority in favor of the resolution.203 The SEC reviewed the resolution and denied Exxon’s challenge.204 This outcome is a significant victory, as shareholders will have the opportunity to vote on Exxon’s moral responsibilities regarding climate change.205 These moral and ESG considerations are continuing to take center stage in the investment decisionmaking process in seeking to promote climate justice.

Equator Principles ESG Guidelines for Financial Institutions: This framework sets out minimum standards for institutions to implement to ensure due diligence in determining, assessing, and managing environmental and social risks when determining whether to finance projects.206 Financing of the project is conditioned on complying with the Equator Principles (EP). If companies will not or are unable to comply with the EP, then no project finance or project-related corporate loans will be provided.207 Borrowers must categorize and fully disclose environmental and social risks and provide a mitigation plan to manage the risks to obtain loans from these Equator Principles Financial Institutions (EPFIs).208

Currently, 83 EPFIs209 in 36 countries have adopted the EP.210 This number of institutions covers more than 70% of international project finance debt in emerging markets.211 The EPs incorporate principles of climate justice by including comprehensive standards for indigenous peoples and consultation with locally affected communities within the project.212 Borrowers must also disclose to affected communities “a mechanism for addressing grievances, and third-party verified review, monitoring, and annual public reporting.”213 Studies show that after the financial crisis of 2008, only four of the largest financial institutions—Bank of America, Wells Fargo, JP Morgan Chase, and Citibank—survived and they were all signatories to the EPs.214 This outcome is further proof that incorporating ESG principles into lending practices helps manage and identify risks and opportunities.

Conclusion

The impacts of climate change are the biggest threat of our time, imperiling both natural resources and human rights. This connection between climate change and human rights has significantly impacted decisionmaking in financial markets from divesting to investing. Companies, consumers, and investors are prioritizing ESG considerations and responsible business practices. The detrimental impacts of climate change have prompted the recognition that there is an ethical and moral obligation to invest responsibly by choosing to divest from morally reprehensible activities such as fossil fuel extraction.

These actions promote climate justice via the financial investment markets. Investors are recognizing not only the financial incentives of considering ESG factors, but most importantly the ethical need to invest in sustainable and socially responsible companies to protect the needs of present and future generations. Investors now understand and recognize climate change risks and social injustices and do not want to invest in or support companies that are not concerned with their moral duty to be good citizens of the world. The businesses that survive are the ones that have a genuine interest in caring about the people and the planet while also making a profit.

Divesting from fossil fuels and SRI reduces GHG emissions, helps eradicate poverty, promotes sustainability, and protects future generations. Although the actions undertaken are voluntary in nature, they represent an important shift in thinking necessary for a sustainable future. Therefore, these actions promote the goal of climate justice for the most vulnerable communities of the world. TEF

1. Webinar: Business and Climate Justice: What Role Can Business Play in Tackling the Human Rights of Impacts of Climate Change? (U.N. Global Compact and Mary Robinson Foundation 2015), https://www.unglobalcompact.org/library/1231.

2. Adoption of the Paris Agreement, UNFCCC Conference of the Parties, 21st Sess., U.N. Doc. FCCC/CP/2015/10/Add.1 (Dec. 12, 2015), http://unfccc.int/files/home/application/pdf/paris_agreement.pdf.

3. Id.

4. Id.

5. Rio Declaration on Environment and Development, U.N. Conference on Environment and Development, Rio de Janeiro, Brazil, June 3–14, 1992, Annex 1, U.N. Doc. A/CONF.151/26 (Vol. I) (1992), http://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm [hereinafter Rio Declaration].

6. United Nations, The Sustainable Development Agenda, http://www.un.org/sustainabledevelopment/development-agenda/ (last visited Aug. 21, 2016).

7. Id.

8. Id.

9. Rio Declaration, supra note 5, at Annex I, Princ. 3 (noting that the “right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations”).

10. Declaration of the United Nations Conference on the Human Environment, U.N. Conference on the Human Environment, Stockholm, Sweden, June 5–16, 1972, U.N. Doc. A/CONF.48/14 (1972), revised by U.N. Doc. A/CONF.48/14/Corr.1 (1972), reprinted in 11 I.L.M. 1416 (1972); see also David Hunter et al., International Environmental Law and Policy 492 (3d ed. 2007).

11. United Nations Framework Convention on Climate Change, May 9, 1992, 1771 U.N.T.S. 107 (entered into force Mar. 21, 1994).

12. Webinar, supra note 1; see also John H. Knox, U.N. Special Rapporteur, Mapping Report on Climate Change and Human Rights (2014), http://srenvironment.org/wp-content/uploads/2014/08/Climate-Change-mapping-report-15-August-final.docx; United Nations Human Rights Office of the High Commissioner, Key Messages on Human Rights and Climate Change 2 (2015), http://www.ohchr.org/Documents/Issues/ClimateChange/KeyMessages_on_HR_CC.pdf.

13. Mary Robinson Foundation-Climate Justice, Mission and Vision, http://www.mrfcj.org/about/mission-and-vision/ (last visited Aug. 21, 2016).

14. Mary Robinson Foundation-Climate Justice, Principles of Climate Justice (n.d.), http://www.mrfcj.org/pdf/Principles-of-Climate-Justice.pdf.

15. Bali Principles of Climate Justice (2002), http://www.ejnet.org/ej/bali.pdf.

16. Id.

17. Webinar, supra note 1.

18. Id.

19. Id.

20. Divestor.org, Reinvest: Your Home, https://divestor.org/YHreinvesting.html (last visited Aug. 21, 2016).

21. Id.

22. Id.

23. Judith E. Koons, At the Tipping Point: Defining an Earth Jurisprudence for Social and Ecological Justice, 58 Loy. L. Rev. 349, 349 (2012).

24. Atif Ansar et al., Stranded Assets and the Fossil Fuel Divestment Campaign: What Does Divestment Mean for the Valuation of Fossil Fuel Assets? (Smith School of Enterprise and the Environment 2013), http://www.smithschool.ox.ac.uk/research-programmes/stranded-assets/SAP-divestment-report-final.pdf.

25. Fossil Free, What Is Fossil Fuel Divestment?, http://gofossilfree.org/what-is-fossil-fuel-divestment/ (last visited Aug. 21, 2016).

26. Surbhi Sarang, Note, Combating Climate Change Through a Duty to Divest, 49 Colum. J.L. & Soc. Probs. 295, 300 (2016).

27. What Is Fossil Fuel Divestment?, supra note 25.

28. Ansar et al., supra note 24, at 9 (noting that the private wealth owners making the decision to divest typically are university endowments, public pension funds, or their appointed asset managers).

29. What Is Fossil Fuel Divestment?, supra note 25.

30. Id.

31. Ansar et al., supra note 24.

32. Marc Gunther, Why the Fossil Fuel Divestment Movement May Ultimately Win, Yale Env’t 360, July 26, 2015, http://e360.yale.edu/feature/why_the_fossil_fuel_divestment_movement_may_ultimately_win/2898; Desmond Tutu, We Need an Apartheid-Style Boycott to Save the Planet, The Guardian, Apr. 10, 2014, http://www.theguardian.com/commentisfree/2014/apr/10/divest-fossil-fuels-climate-change-keystone-xl.

33. Sarang, supra note 26, at 298.

34. Id.

35. Id. at 299.

36. Id.

37. Fossil Free, Divestment Commitments, http://gofossilfree.org/commitments/ (last visited Aug. 21, 2016).

38. Brett Fleishman, The Decarbonizer and the Moral Case for Divestment, 350, Feb. 5, 2016, https://350.org/the-decarbonizer-and-the-moral-case-for-divestment/.

39. We Are Power Shift, Fossil Fuel Divestment, http://www.wearepowershift.org/campaigns/divest (last visited Aug. 21, 2016).

40. Id.

41. Id.

42. Hunter et al., supra note 10, at 491.

43. Id.

44. Fleishman, supra note 38.

45. Michael Josephson, Making Ethical Decisions 5–6 (Josephson Inst. of Ethics n.d.), http://www.sfjohnson.com/acad/ethics/making_ethical_decisions.pdf.

46. Id.

47. Id. (explaining that an act is not proper simply because it is permissible or you can get away with it. There is a big difference between what you have the right to do and what is right to do.).

48. Fossil Fuel Divestment, supra note 39.

49. Ansar et al., supra note 24.

50. What Is Fossil Fuel Divestment?, supra note 25.

51. Bali Principles of Climate Justice, supra note 15; Robert Cox, Environmental Communication and the Public Sphere 121 (3d. ed. 2013) (citing J. Agyeman et al., The Climate-Justice Link: Communicating Risk With Low-Income and Minority Audiences, in Communicating a Climate for Change: Communicating Climate Change and Facilitating Social Change (S.C. Moser & L. Dillings eds., 2007).

52. Sarang, supra note 26, at 300–01.

53. Fossil Fuel Divestment, supra note 39.

54. Koons, supra note 23, at 351.

55. Fossil Fuel Divestment Student Network, Organizing Pledge Project, http://www.studentsdivest.org/organizing_pledge (last visited Aug. 21, 2016).

56. Carmen Bain & Tamera Dandachi, Governing GMOs: The (Counter) Movement for Mandatory and Voluntary Non-GMO Labels, 6 Sustainability 9456, 9459 (2014).

57. Id.

58. Id.

59. Organizing Pledge Project, supra note 55.

60. 350, In the Space of Just 10 Weeks . . . , https://350.org/in-the-space-of-just-10-weeks/ (last visited Aug. 21, 2016).

61. Open Publication: Divest Harvard Requests Meeting With Stephen Blyth, Divest Harv., Mar. 9, 2016 (stating that “[a]bsent strong action, those of us who are young will likely see some of the world’s great cities begin to be submerged underwater and millions of people displaced or killed by droughts, floods and famines. In our view, this crisis calls for new intergenerational accountability entailing drastic reductions in fossil fuel investment, production, and use.” In order to reach the goal of 2°C, Divest Harvard states that “at least half of current reserves must remain in the ground, and investments in fossil fuel production must decrease considerably”), http://divestharvard.com/updates/.

62. Divestment Commitments, supra note 37.

63. Mariel A. Klein, Student Protesters Appeal Dismissal of Divestment Lawsuit, Harv. Crimson, Oct. 13, 2015, http://www.thecrimson.com/article/2015/10/13/divestment-appeal-lawsuit-dismiss/.

64. Robert P. Connolly, UMass Becomes First Major Public University to Divest From Direct Fossil Fuel Holdings, UMass Amherst, May 25, 2016, http://www.umass.edu/newsoffice/article/umass-becomes-first-major-public.

65. Id.

66. Id.

67. Id.

68. Id.

69. Id.

70. Fossil Fuel Divestment, supra note 39.

71. Divestment Commitments, supra note 37.

72. Id.

73. Fossil Fuel Divestment, supra note 39.

74. Melanie Mattauch, Mayor Wants to Rid Copenhagen of “Totally Wrong” Investments in Coal, Oil, and Gas, Fossil Free, Feb. 3, 2016, http://gofossilfree.org/mayor-wants-to-rid-copenhagen-of-totally-wrong-investments-in-coal-oil-and-gas/; In the Space of Just 10 Weeks, supra note 60.

75. Mattauch, supra note 74.

76. Connolly, supra note 64 (quoting Kumble Subbaswamy, UMass Amherst chancellor).

77. John Schwartz, Harvard Students Move Fossil Fuel Stock Fight to Court, N.Y. Times, Nov. 19, 2014, http://www.nytimes.com/2014/11/20/us/harvard-students-move-fossil-fuel-divestment-fight-to-court.html?ref=us&_r=1.

78. Id.

79. Harvard Complaint (Nov. 19, 2014), http://www.divestproject.org/wp-content/uploads/2014/10/Read-the-Complaint.pdf.

80. Harvard Climate Justice Coalition v. President and Fellows of Harvard College, About The Plaintiffs, http://www.divestproject.org/about-the-plaintiffs/ (last visited Aug. 21, 2016).

81. See Harvard Complaint, supra note 79.

82. Id. para. 2.

83. See id. paras. 41, 63.

84. Id. para. 29.

85. Id. paras. 29–31.

86. Id. para. 32.

87. Id.

88. Id. para. 33.

89. Id. paras. 21–28.

90. Harvard Climate Justice Coalition v. President and Fellows of Harvard College, The Evidence, http://www.divestproject.org/the-evidence/ (last visited Aug. 21 2016).

91. Harvard Complaint, supra note 79, para. 47.

92. Id.

93. Id.

94. Id. para. 66.

95. Id.

96. Id. para. 67.

97. Id.

98. Id.

99. Schwartz, supra note 77.

100. Theodore R. Delwiche & Mariel A Klein, Judge Dismisses Divestment Lawsuit, Harv. Crimson, Mar. 24, 2015, http://www.thecrimson.com/article/2015/3/24/judge-dismisses-divestment-lawsuit/.

101. Id.

102. Klein, supra note 63; Brief for Petitioner-Appellant Harvard Climate Justice Coalition v. President & Fellows of Harvard Coll., No. 2015-P-0905 (Nov. 19 2014), http://www.divestproject.org/wp-content/uploads/2015/10/HCJC-Appellants-Brief.pdf.

103. Klein, supra note 63; Harvard Climate Justice Coalition v. President and Fellows of Harvard College, Court Documents, http://www.divestproject.org/documents-2/ (last visited Aug. 21, 2016).

104. Animal Legal Defense Fund Amicus Brief, 36-9, http://www.divestproject.org/wp-content/uploads/2015/10/ALDF-Amicus.pdf.

105. Klein, supra note 63.

106. Dr. James Hansen Amicus Brief, 2015-P-0905 (Oct. 23, 2015), http://www.divestproject.org/wp-content/uploads/2015/10/Hansen-Amicus.pdf.

107. Klein, supra note 63.

108. Appellant Harvard Climate Justice Coalition v. President & Fellows of Harvard Coll., No. 2015-p-0905, Appeals Court, Full Case Panel Court Docket http://www.ma-appellatecourts.org/search_number.php?dno=2015-P-0905&get=Search (last visited Sept. 20, 2016).

109. Press Release, Harvard, Harvard to Sign on to United Nations-Supported Principles for Responsible Investment (Apr. 7, 2014), http://news.harvard.edu/gazette/story/2014/04/harvard-to-sign-
on-to-united-nations-supported-principles-for-responsible-investment/.

110. Harvard Management Co., Investing for the Long-Term: Integrating ESG Factors, http://www.hmc.harvard.edu/investment-management/sustainable_investment.html (last visited Aug. 21, 2016).

111. Id.

112. The Divestment Debate, Harv. Mag., July–Aug. 2014, http://harvardmagazine.com/2014/07/the-divestment-debate.

113. Thomas P. Lyon & John W. Maxwell, Greenwash: Corporate Environmental Disclosure Under Threat of Audit, 20 J. Econ. Mgmt. Strategy 3, 4 (2011) (defining greenwashing as “the selective disclosure of positive information about a company’s environmental or social performance, while withholding negative information on these dimensions”).

114. Beate Sjafjell & Benjamin J. Richardson, Company Law and Sustainability: Legal Barriers and Sustainability 2 (2015).

115. Id. at 2.

116. What Is Fossil Fuel Divestment?, supra note 25; Fleishman, supra note 38.

117. Sjafjell & Richardson, supra note 114, at 35–36.

118. Id.

119. Caring for Climate, Homepage, http://caringforclimate.org/ (last visited Aug. 21, 2016).

120. Id.

121. Caring for Climate, Responsible Corporate Engagement in Climate Policy, http://caringforclimate.org/workstreams/climate-policy-engagement/ (last visited Aug. 21, 2016).

122. Hunter et al., supra note 10, at 1489.

123. Donal Crilly et al., The Grammar of Decoupling: A Cognitive-linguistic Perspective on Firms’ Sustainability Claims and Stakeholders’ Interpretation, 59 Acad. Mgmt. J. 705 (2016).

124. Sjafjell & Richardson, supra note 114, at 3.

125. John Elkington, Cannibals With Forks: The Triple Bottom Line of 21st Century Business 22 (1998).

126. Id.

127. Id.

128. Kevin Wilhelm, Return on Sustainability: How Business Can Increase Profitability and Address Climate Change in an Uncertain Economy 105 (2013).

129. Id.

130. Id.

131. Id.

132. Id.

133. US SIF: The Forum for Sustainable and Responsible Investment, SRI Basics, http://www.ussif.org/sribasics (last visited Aug. 21, 2016).

134. Wilhelm, supra note 128, at 166.

135. Id.

136. Hunter et al., supra note 10, at 1490.

137. David W. Case, Corporate Environmental Reporting as Informational Regulation: A Law and Economics Perspective, 76 U. Colo. L. Rev. 379, 389 (2005).

138. Id.

139. Wilhelm, supra note 128, at 166.

140. Emily Chasan, Investors Want More From Sustainability Reporting, Says Former SEC Head, Wall St. J., Nov. 12, 2015 (citing Governance & Accountability Institute, Flash Report—Seventy-Five Percent (75%) of the S&P 500 Index Published Corporate Sustainability Reports in 2014, http://www.ga-institute.com/nc/issue-master-system/news-details/article/flash-report-seventy-five-percent-75-of-the-sp-index-published-corporate-sustainability-rep.html), http://blogs.wsj.com/cfo/2015/11/12/investors-want-more-from-sustainability-reporting-says-former-sec-head/.

141. Wilhelm, supra note 128, at 161; Carbon Disclosure Project, Homepage, https://www.cdp.net/en-US/Pages/HomePage.aspx (last visited Aug. 21, 2016).

142. Case, supra note 137, at 389; see also GRI, Homepage, https://www.globalreporting.org/Pages/default.aspx (last visited Aug. 21, 2016).

143. The organization describes itself as follows: “CERES is a non-profit organization advocating for sustainability leadership. We mobilize a powerful network of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy.” http://www.ceres.org/ (last visited Aug. 31, 2016). CERES established a 10-point code of conduct that companies voluntarily commit to reporting on corporate environmental activities. Id.

144. Case, supra note 137, at 389; see also GRI, supra note 142.

145. Hunter et al., supra note 10, at 1491; see also GRI, Homepage, https://www.globalreporting.org/Pages/default.aspx (last visited Aug. 21, 2016).

146. GRI, Homepage, supra note 145.

147. Hunter et al., supra note 10, at 1491.

148. GRI, About Sustainability Reporting, https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx (last visited Aug. 21, 2016).

149. William R. Blackburn, The Sustainability Handbook: The Complete Management Guide to Achieving Social, Economic, and Environmental Responsibility 285 (2d ed. 2015).

150. Id.

151. Id.; About Sustainability Reporting, supra note 148.

152. United Nations Global Impact, Participation, https://www.unglobalcompact.org/participation/report (last visited Aug. 21, 2016).

153. Id.

154. Case, supra note 137, at 389.

155. Id.

156. Blackburn, supra note 149, at 285.

157. Id. at 285–86.

158. Hunter et al., supra note 10, at 1488.

159. Id. at 1493.

160. Id. at 1501.

161. Id. at 1488.

162. Sjafjell & Richardson, supra note 114, at 4.

163. Hunter et al., supra note 10, at 1501.

164. Sjafjell & Richardson, supra note 114, at 18.

165. Crilly et al., supra note 123.

166. United Nations Global Impact, What Is U.N. Global Impact?, https://www.unglobalcompact.org/what-is-gc (last visited Aug. 21, 2016).

167. Id.

168. United Nations Global Impact, Our Mission, https://www.unglobalcompact.org/what-is-gc/mission (last visited Aug. 21, 2016).

169. United Nations Global Impact, Our Governance, https://www.unglobalcompact.org/about/governance (last visited Aug. 21, 2016); G.A. Res. 70/224, U.N. GAOR, 70th Sess., at 2, U.N. Doc. A/RES/70/224 (2016).

170. United Nations Global Impact, The Ten Principles of the UN Global Compact, https://www.unglobalcompact.org/what-is-gc/mission/principles (last visited Aug. 21, 2016).

171. See E. Cameron et al., Business in a Climate-Constrained World: Catalyzing a Climate-Resilient Future Through the Power of the Private Sector 6 (2014), http://www.bsr.org/reports/BSR_Business_in_a_Climate_Constrained_World_Report.pdf.

172. United Nations Global Impact, Global Compact +15: General Assembly Session, https://www.unglobalcompact.org/library/3861 (last visited Aug. 21, 2016); Video: GC + 15: General Assembly Session (U.N. Global Compact 2016), https://www.youtube.com/watch?v=DFMaTKadtfs.

173. Id.

174. Id.

175. United Nations Global Impact, Our Mission, supra note 168.

176. United Nations Global Impact, UN Global Compact and the Sustainable Development Goals, https://www.unglobalcompact.org/what-is-gc/our-work/sustainable-development/background (last visited Aug. 21, 2016).

177. Id.

178. US SIF, supra note 133.

179. Id.

180. Id.

181. Wilhelm, supra note 128, at 166.

182. US SIF, supra note 133.

183. Id.

184. Id.

185. Wilhelm, supra note 128, at 115.

186. Principles for Responsible Investment, About the PRI, https://www.unpri.org/about (last visited Aug. 21, 2016); Wilhelm, supra note 128, at 161 (The six principles are: (1) Incorporate ESG issues into investment analysis and decisionmaking process;
(2) Incorporate ESG issues into ownership policies and practices;
(3) Seek appropriate disclosure on ESG issues by the entities invested; (4) Promote acceptance and implementation of the Principles within the investment industry; (5) Work together to enhance effectiveness in implementing the Principles; and (6) Report on activities and progress toward implementing the Principles).

187. Wilhelm, supra note 128, at 107.

188. Principles for Responsible Investment, What Is Responsible Investment?, https://www.unpri.org/about/what-is-responsible-investment (last visited Aug. 21, 2016).

189. Id.

190. Id.

191. Principles for Responsible Investment, About the PRI, supra note 186.

192. US SIF, supra note 133.

193. Id.

194. Wilhelm, supra note 128, at 116.

195. Lawrence P. Schanpf, Environmental Issues in Business Transactions 461 (2014).

196. Caitlin Kauffman, Proxy Preview 2015 Examines Record-Breaking Number of Sustainability-Related Shareholder Resolutions, Sustainable Brands, Mar. 11, 2015, http://www.sustainablebrands.com/news_and_views/marketing_comms/caitlin_kauffman/proxy_preview_2015_examines_record-breaking_
number_s.

197. US SIF: The Forum for Sustainable and Responsible Investment, SRI Basics, http://www.ussif.org/sribasics (last visited Aug. 21, 2016).

198. Id.

199. Id.

200. Acknowledge Moral Imperative to Limit Global Warming to 2°C, 2016—Exxon Mobil Corporation (Feb. 1, 2016), http://www.iccr.org/sites/default/files/resources_attachments/exxonreso.pdf.

201. Id.

202. Id.

203. Id.

204. Press Release, Interfaith Center on Corporate Responsibility, ExxonMobil Seeks to Deny Shareholders a Vote on Climate Justice Proposal (Feb. 1, 2015), http://www.iccr.org/sites/default/files/blog_attachments/pr_exxon_-_moral_reso_1-31-15_final_3.pdf.

205. See Press Release, Interfaith Center on Corporate Responsibility, ExxonMobil Fails to Block Climate Justice Proposal at the SEC (Mar. 24, 2016), http://www.iccr.org/sites/default/files/blog_attachments/exxon_pr_sec-moral_reso_3-24-16final.pdf.

206. Wilhelm, supra note 128, at 106.

207. The Equator Principles Association, About the Equator Principles, http://www.equator-principles.com/index.php/about-ep (last visited Aug. 21, 2016).

208. Wilhelm, supra note 128, at 106.

209. The Equator Principles Association, Equator Principles Association Members & Reporting, http://www.equator-principles.com/index.php/members-reporting (last visited Aug. 21, 2016).

210. The Equator Principles Association, Homepage, http://www.equator-principles.com/ (last visited Aug. 21, 2016).

211. Id.

212. The Equator Principles Association, About the Equator Principles, supra note 207.

213. Wilhelm, supra 128, at 106.

214. Id.

This chapter appears in Climate Justice: Case Studies in Global and Regional Governance Challenges, Randal S. Abate, editor. 700 pages. $79.95. The collection is published by ELI Press, the book publishing arm of the Environmental Law Institute.

Josephine Balzac is an assistant professor in the Department of Social Entrepreneurship at Rollins College.

ELI PRESS ❧ Promoting corporate responsibility through the divestment of fossil fuels and socially conscious investment.

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Mixing Private Action and Climate Policy
Author
G. Tracy Mehan III - Antonin Scalia Law School, George Mason University
Antonin Scalia Law School, George Mason University
Current Issue
May-June 2018
Issue
3

Distinguishing government from governance, identifying the separate yet complementary roles of the private and public spheres, say, in the realm of environmental management, and thinking seriously about the opportunities and barriers of an integrated or collaborative approach to confronting the challenges of the day — none of this would have made any sense to a citizen of the Roman Empire in the time of Augustus.

The classical view did not recognize anything like civil society beyond the Empire itself encompassing both political, social and religious aspects. It was only after centuries of struggle between Church and Empire, state and society, and the emergence of varying degrees of individualism, did the concept of a civil order and institutions (church, family, community, labor unions, corporations), antecedent to and independent of the state, come to pass.

Without civil society, government and governance are essentially the same. With civil society government is simply part of the complex web of governance by which a society orders itself as well as the state. Thus, no longer is governance viewed as a synonym for government.

The late Elinor Ostrom of Indiana University, the first woman to receive the Nobel Prize in economics, did pioneering research on a plethora of collaborative approaches to resource management — governance if you will — around the world in ways that mitigate the Tragedy of the Commons not imagined by Garrett Hardin, who reduced everything to either regulation or privatization. She demonstrated that user-managed fish stocks, pastures, woods, lakes, and groundwater basins, in many countries and cultures, are able to establish norms of behavior, sophisticated rules for decisionmaking, and even enforcement mechanisms. Her classic book on the subject is Governing the Commons: The Evolution of Institutions for Collective Actions (1990).

Given the state of environmental protection today, with many problems dispersed throughout society, the landscape, the air- and watershed, involving numerous small sources or causes of harm, all within the control of private parties, households, farms and institutions, the old top-down, hierarchical model, driven by a federal government much less revered now than in the 1970s, seems inadequate.

Writing in 1997, Daniel Esty and Marian R. Chertow of Yale called for the “next generation” of environmental policies “that are not confrontational but cooperative, less fragmented and more comprehensive, not inflexible but rather capable of being tailored to fit varying circumstances.” See introduction to Thinking Ecologically: The Next Generation of Environmental Policy (1997). They noted the value of keeping pace with the important elements of “institutional realignment that are occurring in society. Notably, the role of government is narrowing, the private sector’s responsibilities are broadening, and nongovernmental organizations, from think tanks to activist groups, are increasingly important policy actors.”

Michael P. Vandenbergh and Jonathan M. Gilligan, respectively, professors of law and engineering at Vanderbilt University, argue strenuously for private action and governance specifically, in the context of climate change and the flagging efforts of governments, especially the United States, to take meaningful action. They are not anti-governmental action. But they believe that time is flying and private action provides a realistic, interim strategy until an effective political consensus develops before catastrophe befalls the world. Their Beyond Politics: The Private Governance Response to Climate Change is an imposing work of academic scholarship (e.g., over 200 footnotes in one chapter alone). But their engaging, accessible writing style makes the slog a pleasant one for the diligent reader. It might have been subtitled Making a Virtue of Necessity given the realities of climate politics, global aspirations for economic growth, and the complexity of the science.

In the very first line of their preface, Vandenbergh and Gilligan cite Gallup for the proposition that two thirds of Americans believe that big government is the greatest threat facing the United States. So any systematic regulation to mitigate climate change faces predictable resistance. The authors seem to believe that the Trump administration’s rollback on carbon regulation is a temporary phenomenon, but they astutely observe that the 2009 Waxman-Markey cap-and-trade bill failed “even though the party that espouses support for climate mitigation controlled the White House and both bodies of Congress — a failure that seems remarkable until it is viewed against the backdrop of two decades with only one major new pollution control statute.”

“Only in the past several years have scholars begun to recognize that a fundamental shift has occurred away from federal legislation as a social response to environmental threats, a shift that became much more apparent with the 2016 elections,” write the authors. They might also have noted the 1997 vote of 95-0 in favor of the Byrd-Hagel Resolution in the U.S. Senate against signing onto the Kyoto Protocol.

Vandenbergh and Gilligan make a sincere, passionate, even eloquent case to both conservative and liberal skeptics, the former skeptical as to climate policy in general and big government in particular, the latter concerned about undermining the case of strong governmental action on climate.

Essentially, these authors see zero chance of the community of nations meeting the goal of stabilizing global temperature at 2 degrees Celsius as called for in the Paris Agreement. “In fact, the Paris Agreement, even if all commitments are fulfilled, will allow an increase in global emissions of roughly 34 to 46 percent in 2025 over 1990 levels.” Even with full implementation of all Paris commitments, the globe is likely to see temperatures of more than 3 degrees Celsius above pre-industrial ones.

The Vanderbilt professors look to private action to achieve “a significant fraction of the necessary reductions — carbon dioxide emissions equivalent to roughly 1 billion tons out of the 5.5 billion tons per year of reductions necessary over the next decade to close the Paris Gap.” They view this strategy as “buying time for a more comprehensive government response” at some indeterminate point in the future, presumably post-Trump. They do not posit “an all-or-nothing argument that the world must choose between public and private governance. In our view, they are complementary, and we should pursue both.”

The authors cite many instances of effective private action, notably major institutions and corporations such as Walmart, Microsoft, Google, and the like, corporate giants which can lean on their suppliers for emission reductions, practices that could be scaled up nationally and internationally. They take heart in Elinor Ostrom’s concept of “polycentric governance to reduce GHG emissions” which she first applied to the management of water resources and the provision of municipal services. This refers to the use of multiple scales of government and nongovernmental organizations to address collective action problems, such as managing common pool resources.

(Readers of The Environmental Forum may recall Professor Vandenbergh’s article, “The Drivers of Corporate Climate Mitigation,” in the January/February issue, providing a succinct statement of the case for private action in that realm.)

Big fans of Pope Francis and his 2016 encyclical addressing the moral dimension of climate change, the authors view the Catholic Church as not just an influencer on government, but also “a private regulator of its energy suppliers and emissions in and of itself.” Based on their back-of-the-envelope calculations, Catholicism, with its many churches, schools, hospitals, orphanages, and missions, would be among the top 50 largest emitters in the world if it were a country. Whether or not such a vast collection of bishoprics, dioceses, religious orders, lay institutions, and the like could ever be subject to such centralized management, notwithstanding its unity of doctrine and practice, it is an interesting thought experiment, as the Germans say.

Vandenbergh and Gilligan aim to ground their optimism on sound reasoning, to wit: “Our view that many households and corporations will respond to private initiatives by reducing emissions does not require unrealistic assumptions about altruism. Instead, the opportunity arises because private initiatives can stimulate efficiency improvements that have not yet been exploited because of market and behavioral failures. Private initiatives also can draw on existing levels of support for climate mitigation in ways that governments cannot. These initiatives also can address solution aversion among moderates and conservatives, bypassing resistance to government climate efforts that arises from concerns about big government. At the international level, private governance initiatives can supplement the slow and cumbersome international negotiations process. Private initiatives also can harness supply chains to transfer pressure for lower-carbon goods and services across international boundaries, circumventing sovereignty and free-trade concerns and increasing support for mitigation in developed and developing countries.”

The “principal barrier” is “conceptual,” i.e., “the need for opinion leaders, corporate and NGO leaders, and philanthropists to grasp the magnitude of the opportunities available to them.”

Beyond Politics is provocative and challenging, well-sourced and full of insights as to motivational approaches to household and institutional behavior. Yet, nowhere in the dozen or so pages of the book’s index will the reader find any references to either adaptation or resilience in the face of climate change. The authors chose to focus exclusively on mitigation. Society, however, may be forced to consider other options given the stark political and economic realities of climate policy.

On private action and climate policy.

Some Historical Context to Today’s Debates on the Climate Agreement
Author
Robert N. Stavins - Harvard Kennedy School
Harvard Kennedy School
Current Issue
May-June 2018
Issue
3
Robert N. Stavins

The European Union, China, India, Brazil, South Korea, Canada, and other countries are negotiating the details for implementation of the Paris Agreement, and are developing domestic policies to achieve their respective Nationally Determined Contributions under the accord. At the same time, the United States — under the leadership of President Donald Trump — has announced its intention to withdraw from the Paris Agreement as soon as permitted (November 2020), and has taken significant steps to roll back domestic climate change policies. This may be a good time to place this U.S. government behavior into historical context.

Of course, the history of climate change science goes back at least to Svante Arrhenius in the 19th century, but my focus is not on the history of the science, but on the policy history, in particular, the history of discussions within the U.S. government regarding climate change and potential policy responses.

Some might think that the starting point would be the 1988 Congressional hearings — led by Senators Timothy Wirth and Albert Gore — which the New York Times covered in a long article. That was during the last year of the Reagan administration, but the story really begins more than two decades earlier.

On November 5, 1965, President Lyndon Johnson released a report authored by the Environmental Pollution Panel of the President’s Science Advisory Committee. The report included a 23-page discussion of the climatic effects of increased concentrations of atmospheric carbon dioxide, due to the combustion of fossil fuels, and — interestingly enough — concluded with a proposal for research on a specific approach to responding, namely with what is now called geoengineering.

In his introduction to the report, Johnson emphasized that “we will need increased basic research in a variety of specific areas,” and then went on to state: “We must give highest priority of all to increasing the numbers and quality of the scientists and engineers working on problems related to the control and management of pollution.”

Four years later, Daniel Patrick Moynihan — one of the leading public intellectuals of the 20th century — was working in the Nixon White House, and sent a memorandum to John Ehrlichman, then a key presidential assistant (who subsequently served 18 months in federal prison for his role in the Watergate conspiracy). In the memo, Moynihan referenced the Johnson administration’s report, focused on “the carbon dioxide problem,” described the basic science of the greenhouse effect, highlighted anticipated impacts including sea-level rise, proposed potential policy responses including “stop burning fossil fuels,” and concluded that “this is a subject that the administration ought to get involved with.” We do not know whether Ehrlichman responded.

From today’s perspective in the second year of the Trump administration, it may — or may not — be comforting to recognize that scientific and even policy attention by the White House to climate change goes back more than five decades. Since the Johnson administration, there have surely been ups and downs — through the administrations of Presidents Nixon, Ford, Carter, Reagan, Bush I, Clinton, Bush II, Obama, and Trump.

This list of presidential administrations illustrates that the White House swings between parties. It should also remind us that whether a single four-year term or even the maximum of eight years, administrations are relatively short-lived when judged in historical context.

All of which reminds me of a personal story. In November 2016, just days after the U.S. election, I was in Marrakech, Morocco, for the annual U.N. climate negotiations. I was speaking on a panel assembled by the government of China in their pavilion. Those who preceded me voiced their dismay about the election and their very low expectations for the climate change policy that would likely be forthcoming from Donald Trump and his administration-to-be.

Our moderator from the Chinese government then introduced me to speak, and as I listened with headphones to the simultaneous translation, I heard him say, “And now Harvard’s Professor Stavins will bring us some good news from the United States.” I was dumbfounded. What could I possibly say? I walked to the lectern, sipped some water, took a deep breath, and said to the audience, “When you get to be my age, you recognize that four years is not a long time!”

That will have to suffice as an optimistic conclusion to this column.

Some historical context to today’s debates on the climate agreement.

Delivering Climate Change Progress
Author
Dan Esty - Yale University
Yale University
Current Issue
March-April 2018
Issue
2
Delivering Climate Change Progress

With all the challenges that humanity faces, there are huge opportunities as well.

Which is not to say that the environmental news isn’t bleak. When the world community met in Bonn last November to advance the Paris Agreement on climate change, Washington signaled it would be leaving the 2015 accord and abandoning the key domestic program for achieving America’s commitment to reduce its greenhouse gas emissions by 26-28 percent over the next dozen years, the Clean Power Plan to cut power plant emissions. But despite the new administration’s actions, the momentum behind America’s Paris pledge remains strong — and emissions reductions in general continue across the world, as 190-plus other nations move to implement the agreement.

On the downside, we face profound challenges not only at the national level with the new administration, where the pullback from environmental regulation has been well documented, but also at the state level, where budget crises are taking a toll. For example, the Connecticut Department of Energy and Environmental Protection (which I led from 2011 to 2014) faces dramatic budget cuts and staff reductions. And the CT Green Bank, which I helped to launch — bringing Republicans and Democrats together to use limited clean energy resources to leverage private capital — faces budget challenges too.

These pressures require us to pursue our environmental agenda in new and better ways. For instance, one of the most profound points of learning from ecological science over the last fifty years is that we must take a systems approach to environmental problems. Air, water, waste, and land use are all connected. Issues at the global, national, state, and local levels are all connected. Thus, we need to use the current crisis to shape a 21st century policy strategy that is more integrated and better captures the opportunities from systems thinking. 

The logic of connectedness extends to the political domain. Yet, our elected officials appear more deeply divided than ever. Clean energy can move on a bipartisan basis, but it takes hard work, it takes compromise, and it takes doing things in better ways, not simply reiterating the same old arguments that have kept people apart for so very long.

While a systems approach can and should be deployed across the environmental agenda, climate change looms as the central — even existential — challenge of our times, demanding worldwide collaboration and, at the same time, transformative change toward a clean energy future at the local, state, and national levels. As a young EPA official, I helped to negotiate the 1992 Framework Convention on Climate Change. Maurice Strong, the Canadian diplomat and businessman who chaired the 1992 Rio Earth Summit at which the convention was launched, took me aside and said, “Dan, you’ve got to remember, that when we gather all these presidents and prime ministers, only two outcomes are possible: Success and real success.” Sadly, we have not delivered real success over the ensuing 25 years. Emissions have continued to rise, and we have not transformed the energy foundation for our planet.

The 1992 climate treaty was top-down, reflecting the prevailing wisdom that national governments were the way to deliver transformative change and broad-based outcomes. In contrast, the Paris Agreement shifts toward bottom-up strategies that recognize the reality that presidents and prime ministers don’t actually control most of the decisions that determine the carbon footprints of their societies. Those decisions — about urban development, transportation, housing, and economic activity — fall more directly to mayors, governors, CEOs, university presidents, and the leaders of community organizations. The Paris accord, with its more decentralized structure, reflects the fact that they are the ones who make the actual decisions that will determine whether our society decarbonizes.

The importance of this shift in focus cannot be over-stated. Since the 1648 Treaty of Westphalia, national governments have been in charge. But what was the right structure to solve the religious wars of Europe in the 17th century might not be right for solving 21st century environmental problems. We are not one nation with one leader in one place. We have a much richer tapestry of political and societal leadership. California Governor Jerry Brown, for instance, leads a sovereign state with great potential to deliver greenhouse gas emissions reductions. Likewise dozens of other governors, mayors, and corporate leaders have committed their states, cities, and companies to climate action — thus keeping momentum behind the Paris Agreement.

I argue that this new broader leadership framework should be formally acknowledged and celebrated. In this regard, I would like to see the Paris Agreement opened to signature by mayors, governors, CEOs, and others who are steering society toward a transformed energy future. This same logic would apply, I might add, to all future global agreements where national governments alone cannot deliver successful outcomes.

More generally the game plan of the 1992 framework convention, reflecting 20th century thinking, centered on targets and timetables for emissions reductions. I call this “the lawyer’s mistake,” since those with legal training often think that if you pass a law, write regulations, sign a treaty, or issue rules, people will follow them. No one in business would have made that mistake. They would regard the treaty as a mission statement or maybe a business plan, but lacking a serious implementation strategy. The Paris Agreement gets beyond this error, shifting people’s focus from mere goals to incentives to deliver solutions — particularly new strategies for financing investments in energy efficiency and renewable power infrastructure. And it moves away from a command-and-control model that demands conformity to a single path forward to an approach that asks each country to say what it can do and how it will do it.

To that end, there is no better incentive to reduce emissions and expand the deployment of wind, solar, and other renewable power sources than to make people pay for the harm they cause — thus steering them toward clean energy options. In this spirit, many countries (and companies — and even universities) have begun to put carbon charges in place. Using price signals stands in contrast with the 20th century strategy of regulatory mandates, which require the government to figure out all the answers — and then tell business what to do. But in the 21st century we face a broad-based problem where everyone’s behavior has to change, not just large businesses but the myriad of small businesses and individuals too.

Another contrast with the 20th century is that we now live in the Information Age and have a variety of Big Data and communications tools that did not exist in the past. We can track harms with much greater precision and simultaneously gauge whether our policy interventions are working. Thus, we have the capacity today to measure performance at the national, state, local, and company scales — and to identify leaders, laggards, and best practices. The Paris Agreement reflects this new data opportunity and calls for a “stocktake”every five years to see if the actions being undertaken are delivering at the pace and scale required to mitigate climate change. 

With the Paris Agreement, I believe we have turned a corner — and the move toward a decarbonized future is now inevitable. But let me tell you the bad news. The pace of change can be affected by political leadership. President Trump’s push to withdraw the Clean Power Plan will have an impact. Likewise, the administration’s budget cuts and other regulatory changes (including the plan to pull back from using a $40-per-ton “social cost of carbon” in regulatory analyses) will slow the shift toward a clean energy future. 

But it will not stop it. Coal is not coming back. Market forces ensure that fact regardless of regulatory changes. And innovation in support of a transformed energy future continues around the world — with or without the United States. While I disagree with much of what the administration is doing, it must be said that the Clean Air Act isn’t the best vehicle for addressing climate change. Simply put, it doesn’t provide a ready way to put a price on emissions. In this regard, I would prefer a carbon charge that begins at $5 per ton of carbon dioxide or equivalent and escalates by $5 every year until the carbon charge reaches $100 a ton at year 20. We know that carbon pricing works. In the Northeast, we already pay a $5-per-ton charge through the Regional Greenhouse Gas Initiative — and top-tier clean energy results. 

The Clean Power Plan, by contrast, emerged under the old 20th century regulatory model because there was no other possibility available. Congress had signaled that it would not pass comprehensive climate change legislation. So, we ended up with a primitive tool. Within the constraints of the Clean Air Act, the CPP offers considerable flexibility. Each state has been given a target for reducing emissions. Not each power plant, each state. And which states got the hardest assignments? Those who had already done the most. As the commissioner of Connecticut’s Department of Energy and Environmental Protection at the time, I was furious about this structure that assigned the states that had dragged their feet on climate change more lax targets. I then realized the separate standards were politically shrewd. When the challengers from the foot-dragging states go to court, the judges are going to look at them and say, “Really? When other states are already 90 percent decarbonized, why can’t you take the first easy steps?”

While some might see the current political challenges as dire, I think action on climate change will continue apace — even in the United States. For one thing, President Trump is finding out that he cannot erase the CPP with the stroke of a pen. Our law says that once a regulation has been finalized, you have to take it down by the same notice-and-comment process. American administrative law requires that an agency act furthermore in a manner that is neither arbitrary nor capricious. In re-examining the Clean Power Plan, EPA must make a decision based on science and facts. There have to be hearings, citations of relevant studies, and careful review of the administrative record before a judgment can be made that a different policy would better achieve the statutory goals of avoiding emissions that endanger public health and welfare. In addition, Congress and the courts have roles to play. As the administration has already seen, these co-equal branches will not hesitate to act.

Just as governors and mayors are stepping up to the issue of climate change, so too are corporate leaders. In the wake of Trump’s pullback on climate change, the business community has not, by and large, walked back from its commitments to reduce emissions. To the contrary, nearly 2,000 companies have joined the We Are Still In climate coalition. Citizens will also be critical in delivering a sustainable future. People are putting their environmental values into action as consumers — signaling their interest in sustainability by buying green products, such as electric vehicles. Likewise, an ever-wider swath of investors are saying, “I want the companies in my portfolio to align with my values” and therefore are asking for more information on the environmental, social, and governance performance of companies, including details on corporate climate change action plans. I see this trend as continuing, with more and more of us factoring carbon footprints into all kinds of decisions, including how we do our business, how we lead our lives, how we raise our children, and how we engage with our communities.

We have entered an era of sustainability. Not everyone yet recognizes it, but a growing number of people and institutions and businesses have come to accept that we face a sustainability imperative. In this regard, we have to gauge progress not just in terms of economic results but also environmental and social outcomes. Multiple goals that entail inevitable tradeoffs makes policymaking more difficult. With this broader perspective in mind, we can achieve real success on climate change and other challenges, but it will require transformation of our environmental policies — and our politics. TEF

TESTIMONY ❧ No baseball team picks players in 2018 the way it did in 1978. Nor does any business do marketing today the same way it did in decades past. Environmental protection, however, remains stuck in a top-down 20th century regulatory model. But new tools and strategies, including carbon pricing, could unleash a sustainability revolution that drives innovation — and delivers a transformed energy future.

Revenue Use Matters
Author
Donald Goldberg - Climate Law & Policy Project
Dave Grossman - Green Light Group Consulting
Climate Law & Policy Project
Green Light Group Consulting
Current Issue
March-April 2018
Issue
2
Revenue Use Matters

Pricing carbon and using some or all of the proceeds to provide strategic, cost-effective subsidies could achieve deeper, faster emissions cuts than a conventional price alone — without increasing costs to industry or consumers.

Donald Goldberg and Dave GrossmanDonald Goldberg is the executive director of Climate Law & Policy Project. Dave Grossman is principal at Green Light Group Consulting.

We are not reducing greenhouse gas emissions quickly enough. Sure, renewable energy is proliferating, electric vehicles are starting to gain market share, and countless numbers of innovations and policies are being pursued all over the world to reduce the amount of carbon released to the atmosphere. Yet we remain far from the needed decarbonization trajectory. After remaining flat for three straight years, worldwide emissions ticked up another 2 percent in 2017 and are predicted to continue rising in 2018, according to a report by the Global Carbon Project. The U.S. Energy Information Administration has projected that world energy-related CO2 emissions will rise 16 percent between 2015 and 2040. The UN Environment Program, in its latest “emissions gap” report, found that the existing national pledges under the Paris Agreement are only a third of what is needed by 2030 to meet internationally agreed temperature targets.

At the same time, climate science seems to paint a bleaker picture with every new study. In November, the U.S. Global Change Research Program released its part of the National Climate Assessment, finding that climate change, driven by human activities, is causing global and U.S. temperatures to rise, heat waves to become more frequent, the incidence of wildfires to increase, the frequency and intensity of heavy rainfall to grow, ocean temperatures to warm, and sea levels to rise. All of that is occurring with only about 1°C of warming. To have a two-thirds chance of limiting warming to 2°C at the end of the century, the Intergovernmental Panel on Climate Change has concluded that global greenhouse gas emissions must be net zero by the latter half of the century — and significant amounts of negative emissions will probably be needed thereafter. Humanity is not even close to being on pace to achieve that.

In the United States, the Trump administration has abdicated leadership on climate change and is attempting to roll back climate-related regulations. Many subnational actors — states, cities, businesses, universities — have stepped up to assert climate leadership, pledging to meet the commitments the United States made under the Paris Agreement. This leadership is most welcome, but achieving our Paris commitments, much less achieving true deep decarbonization, will be a heavy lift. There is a suite of existing policies in U.S. states (and around the world) to address climate change, but given the scale of reductions needed, we need to boost these policies significantly to increase their emission-reducing power.

There is a growing consensus that carbon pricing is one of the key policies needed to achieve meaningful emission reductions. Putting a price on carbon, whether via a tax or a cap-and-trade mechanism, sends an economic signal that the atmosphere is no longer a free dumping ground for greenhouse gas pollution, spurring emission reductions and clean energy deployment. Some of the states leading the way on climate change, such as California and the northeastern and mid-Atlantic states in the Regional Greenhouse Gas Initiative, already have carbon pricing policies in place.

Carbon pricing alone, however, is unlikely to get us to the levels of emission reductions needed. Analyses of carbon prices around the world have found that most are far below estimates of the social cost of carbon (a measure of the cost of the damages caused by emitting one ton of carbon dioxide). There is a way, though, to make carbon pricing policies much more powerful drivers of reductions. Here’s the key: how the revenues are used can matter just as much as the price itself.

The uses of carbon revenues are starting to get more attention. Disagreement over revenue use may have been the primary factor that torpedoed the Washington state carbon tax referendum in 2016. Generally speaking, there are three broad categories of revenue use that are being implemented or at least discussed. The first is to support activities that bear some relation to climate change, such as achieving additional emission reductions and adapting to climate impacts, or that mitigate negative effects of the climate policy, such as offsetting the regressive effects of a carbon price on the poor. Another approach is to promote economic efficiency through a revenue-neutral tax swap that would replace economically undesirable taxes, such as business or payroll taxes. The third route is to provide a “dividend” to all citizens, whether based on the premise that the atmosphere belongs equally to every individual or based on the political calculus of building public support.

While all of these uses of revenue could be socially beneficial, and each has its supporters, there is a strong argument to be made for pursuing the first approach and devoting some meaningful portion of revenues to achieving additional emission reductions. First, as just noted, most carbon pricing policies are not that robust; political constraints create a significant hurdle to implementing carbon pricing policies at levels sufficient to achieve the reductions required. Second, there are some needed reductions that a carbon price will be unable to reach (e.g., some energy efficiency measures), requiring other types of solutions that carbon revenues could help fund. Third, to achieve the global targets of keeping warming well below 2°C (and below 1.5°C if possible), the reduction trajectory has to be so steep that it seems imprudent to give away resources that could be used to help. Finally, even if a cap or tax could get enacted that could achieve some jurisdictions’ share of the 1.5°C or 2°C targets, the fact that we are already experiencing significant adverse impacts at about 1°C of warming suggests that those targets do not necessarily represent what is “safe” — just what would provide a reasonable chance of avoiding the worst impacts of climate change. In addition, emissions in other jurisdictions, especially in the developing world, will not be declining on a trajectory to meet global climate targets, so jurisdictions leading the way will have to go above and beyond.

Using carbon revenues to achieve additional reductions likely would have strong public support. Several polls over the past few years have shown that the preferred use of carbon revenues is to support the development of clean energy. For instance, a 2016 Yale poll found that 81 percent of registered voters support using carbon tax revenues to support the development of clean energy, more than for any other use; the least popular uses of tax revenues were reducing corporate taxes (26 percent), reducing payroll taxes (46 percent), and returning the money as dividends to households (48 percent). Similarly, a 2014 National Surveys on Energy and Environment poll found that a carbon tax with revenues used to fund research and development for renewable energy programs received 60 percent support, including support from majorities of Democrats, Republicans, and independents — and greater support than rebate checks or deficit reduction.

The RGGI states and California already direct most of the revenues from emission allowance auctions toward climate-related purposes, investing both in reducing emissions (through renewable energy and energy efficiency) and in moderating the economic effects of carbon prices on their citizens. At present, the RGGI states and California simply allocate the proceeds from emission allowance auctions into particular programs, many of which seem to be chosen in a rather piecemeal fashion. There does not seem to be a disciplined effort to tailor the spending of auction revenues in order to achieve both the biggest emission-reducing bang for the buck and reductions beyond what their caps alone would achieve. We need our leading states to do even better.

A price-and-subsidy system is one way to do better. This approach not only puts a price on CO2 and possibly other greenhouse gas emissions to create a financial disincentive to emit those gases, but also uses the revenues generated to provide targeted subsidies that cost-effectively encourage investment in additional reductions of emissions — reductions well beyond those that would have been achieved by the carbon tax or cap itself.

The basics of the price-and-subsidy approach are pretty straightforward. The first step, clearly, is having emitters pay for their emissions, whether via a carbon tax or allowance auctions in a cap-and-trade system. Some portion of the proceeds are then pooled in a fund and used to subsidize additional reductions. If revenues are to be directed toward achieving additional cuts, it makes sense to do so cost-effectively, which can be achieved by utilizing mechanisms, such as reverse auctions, that “buy” additional reductions, starting with the cheapest beyond what the price signal or cap alone would achieve. It also makes sense to limit subsidies to the difference between the carbon price and the abatement cost of the reduction, to avoid offering excessive subsidies that duplicate the incentive of the price. In addition, reductions should be paid for only as they occur, rather than offering up-front, multi-year payments to projects. Combined, these cost-effective features maximize the amount of additional reductions that can be achieved with the pooled revenues.

Let’s make this even clearer with a simple example. Imagine a jurisdiction enacts a tax of $20 per ton of CO2. Any entity that can reduce emissions for less than that cost will do so, to avoid having to pay the tax. That is the effect of the price signal. If a reduction costs $21 a ton, however, the emitter’s incentive is to pay the tax and save a dollar. If, instead, that emitter is given a subsidy of $1 per ton, and emitters with $22-per-ton reductions are given subsidies of $2 per ton, then those reductions also would get made. The cost to emitters would be the same — $20 per ton — but instead of paying it as a tax, they would spend it, in concert with the subsidy, to achieve reductions. (Giving these emitters subsidies of, say, $5 a ton would be wasteful.) Any emitter or project developer who wants to could submit a bid for a way of achieving reductions. The subsidies would go first to the cheapest reductions beyond the price signal, working up the reduction cost curve until all of the designated carbon revenues have been spent.

Over time, as the carbon tax rises, some activities that had received subsidies would no longer qualify. For instance, the emitters with the $22-per-ton reductions would no longer receive subsidies once the tax rises higher than that level, as the price signal alone should then drive those reductions. The risk of receiving smaller or no subsidies in later years as the tax level rises — and therefore having to bear more of the reduction costs themselves — should give emitters incentive to use the subsidies to make their reductions early. Activities performed earlier to achieve reductions mean less greenhouse gases added to the atmosphere.

None of these policy mechanisms are novel in and of themselves. Carbon prices are being implemented in many jurisdictions. Reverse auctions are already used to purchase renewable energy, energy efficiency, and emissions reductions. Subsidies to support clean energy, energy efficiency, and other ways of reducing greenhouse gas emissions are also common. What the price-and-subsidy approach does is to link up these elements into a single, systematic, turbocharged whole. Carbon prices send out the signal to reduce emissions, and reverse auctions for subsidies amplify that signal, increasing the incentive to abate and, therefore, the scale and rate of emission reductions.

Some simplified modeling — such as using a linear marginal abatement cost curve — can make clear the potential power of using carbon revenues to accelerate reductions under a price-and-subsidy approach. First, let’s assume that all such revenues are directed toward achieving additional reductions. Modeling suggests that a price-and-subsidy approach could boost a conventional carbon pricing policy that would achieve a 20 percent reduction to one that theoretically could achieve a 60 percent reduction — without increasing costs for emitters or consumers. Relatively stringent reduction targets could become even more ambitious: a 40 percent reduction could theoretically become an 80 percent reduction, a 60 percent reduction could become a 92 percent reduction, and so on. These numbers, of course, are purely theoretical. Reality is not a simplified model. Technology, reliability, or other constraints may limit the number of additional reductions that are achievable during a given period. Some projects take time to get up and running. Still, the potential of the approach is clear.

Few jurisdictions are likely to devote all the revenues generated by a carbon tax or cap-and-trade program to achieving additional reductions, as there are other political, social, and climate realities that could benefit from carbon revenues. Some percentage probably should go to offset the regressive effects of the carbon price on the poor. Some could go to help coal communities transition. Some may have to go to tax relief, dividends, or other areas needed to garner political support. Some revenues probably should be used to promote adaptation and resilience to climate impacts. The need for urgent climate action, however, suggests that a meaningful portion of the revenues should go toward cost-effectively achieving additional near-term reductions.

Using even a relatively small percentage of the revenues could give a significant boost to reductions. Again, simplified modeling shows the potential power of this approach. For example, given a price that would achieve a 20 percent reduction alone, it is theoretically possible to boost reductions to 27 percent using only a tenth of the revenues, to 35 percent using a quarter of the revenues, or to 45 percent using half of the revenues.

Jurisdictions implementing a price-and-subsidy approach will have to determine which types of additional reductions qualify for the reverse auction subsidies. The price-and-subsidy approach presented here works best when the additional reductions are ones already subject to the price, which enables the subsidy to provide emitters with enough of an incentive to take further action. (Carbon revenues could, of course, also be used to support reductions of emissions not covered by the price, but that is outside the scope of this proposal.)

Price-and-subsidy could be technology-neutral, designed to simply accelerate the next-cheapest reductions available beyond what the cap or tax would achieve. Constraints could also be implemented to support additional objectives. For instance, to address environmental justice concerns, priority could be given to bids to achieve additional reductions in low-income communities or to achieve reductions in local air pollution as well as in greenhouse gases. In addition, there should probably be a constraint to prevent using revenues in ways that achieve cheap, near-term reductions but that lock in technologies or infrastructure incompatible with deep decarbonization pathways.

While price-and-subsidy can work with either a carbon tax or a cap-and-trade system, there is an extra step required for the latter. To ensure the reductions subsidized by the reverse auction are additional to what the cap alone would achieve, an allowance must be retired or otherwise removed from the system for each subsidized ton of reduction. Otherwise, excess allowances could be banked, or other emitters could use them instead of making reductions (which means the subsidized reductions would end up displacing reductions required by the cap instead of being additional). Assuming the universe of bidders for allowances is the same as the universe of bidders for subsidies, a jurisdiction could even have the allowance auction and the reverse auction rely on the same bids and only sell the allowances that are actually needed. Alternatively, and more simply, it probably would be sufficient to reduce the number of allowances sold in subsequent auctions to reflect the number of reductions that, to date, have been achieved by means of subsidies. Reducing allowance sales to account for prior subsidized reductions would allow a jurisdiction to ratchet its cap down further — and then continue to use allowance revenues to drive even more reductions.

The core idea is to accelerate reductions and to do so cost-effectively. A price-and-subsidy approach would enable governments to use carbon revenues to achieve deeper, faster emission cuts without increasing costs to emitters or consumers. Looked at another way, governments could achieve higher levels of reductions far more cheaply with a price-and-subsidy approach than with a conventional price alone. Even if it utilizes only a portion of revenues, a price-and-subsidy system can help jurisdictions dramatically accelerate their drive toward a zero-carbon future.

Given that the U.S. government is likely to remain actively hostile to efforts to fight climate change for the foreseeable future, leading states trying to ensure the country meets its Paris commitments — and goes even further to achieve deep decarbonization — could use a price-and-subsidy approach to take climate leadership. They should combine carbon prices with cost-effective subsidies to spur much larger, much faster emission reductions. True climate leadership should include using the money collected from a tax or an allowance system to get onto an emissions-reduction trajectory that is more commensurate with the urgency of the climate challenge. Revenue use matters. TEF

CENTERPIECE ❧ Pricing carbon and using some or all of the proceeds to provide strategic, cost-effective subsidies could achieve deeper, faster emissions cuts than a conventional price alone — without increasing costs to industry or consumers.

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