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18/04/2018

Business and Government in the Global Context BUSM3886

Topic Nine: Business, Government and Sustainable Development

Associate Professor Darryn Snell

Issues to Discuss:

• Sustainable development

• Climate Change

– The Scientific Evidence

–The Political Response

• ‘Carbon Lock-In’ and Decarbonising the economy: The

Case of Victoria, Australia

• Discussion questions

• Readings for this topic

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Objectives:

• To understand the significance of sustainable

development

• To recognise the impact of climate change and why

addressing global warming might be difficult.

• To consider the complexity inherent in apparent

disagreements across multiple levels of governments,

businesses and civil societies

What is Sustainable Development?

"Sustainable development is development

that meets the needs of the present without

compromising the ability of future

generations to meet their own needs”.

- Our Common Future,

also known as the Brundtland Report, 1987

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Three major components of

sustainable development

Climate Change: The scientific evidence

The intergovernmental Panel on Climate(IPCC) has concluded in its Fourth

Assessment Report (2007) that:

• Warming of the planet is unequivocal, as evidenced by increases in global average air

and ocean temperatures, the melting of snow and ice caps and rising sea levels.

• Global warming since the mid-20th century is ‘very likely’ due to human activities.

• Climate change will have different impacts on different regions and localities.

• Evidence indicates the negative costs of climate change are likely to be significant and

will increase over time.

• With the increase in global temperatures, many ecosystems are likely to struggle

resulting in major social, economic and ecological impacts (drought and bushfires,

flooding of coastlines and small island states, ocean acidifications, extinction of flora

and fauna, spread of insects and tropical diseases).

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Climate Change: reconsidering politics

Global warming is a political issue/situation

– Conflict – many agents pursuing their own interests

– Power – used by those who possess it to gain advantage

– Uncertainty – difficult to predict the outcome

Climate Change: The political response

• “climate change is the greatest moral, economic and social challenge

of our time” (former Prime Minister Kevin Rudd).

• “The argument [on climate change] is absolute crap.” (Opposition Leader Tony Abbott 12 December 2009).

• “I don’t think we can say that the science is settled here…whether carbon dioxide is quite the environmental villain that some people make it out to be is not yet proven” (Opposition Leader Tony Abbott 14 March, 2011).

• "We do need to do something about emissions and the Coalition's position is that climate change is real. Humanity is making a contribution. It's important to have a strong and effective policy to try to bring emissions down and that's what we're doing” (Opposition Leader Tony Abbott 15 March, 2011).

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Malcolm Turnbull’s (Australia’s current PM) statements

while in Opposition

“We are as humans conducting a massive science experiment

with this planet. It’s the only planet we’ve got…. We know that

the consequences of unchecked global warming would be

catastrophic. We know that extreme weather events are

occurring with greater and greater frequency and while it is

never possible to point to one drought or one storm or one

flood and say that particular incident is caused by global

warming, we know that these trends are entirely consistent with

the climate change forecasts with the climate models that the

scientists are relying on…. We as a human species have a

deep and abiding obligation to this planet and to the

generations that will come after us” (2010).

Malcolm Turnbull’s (Australia’s current PM) statements

while in Opposition

“Politicians and shock jocks, scientists and coal barons, all of

them can argue for as long as they like, but they cannot

change the physical reality. I won't linger on climate change –

the hopeless, confused, hyper-partisan nature of the debate is

too well known to rehearse” (Malcolm Turnbull’s Speech,

Republican virtues: Truth, leadership and responsibility, 2012

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PM Malcolm Turnbull in response to the Opposition

Australian Labor Party’s commitment to introduce 50%

Renewables

‘Is new Australian prime minister Malcolm Turnbull already

a climate change turncoat?’ The Guardian

“Opposition leader Bill Shorten] is highlighting one of the most

reckless proposals the Labor party has made. Fancy

proposing, without any idea of the cost of the abatement, the

cost of proposing that 50% of energy had to come from

renewables! What if that reduction in emissions you needed

could come more cost-effectively from carbon storage, by

planting trees, by soil carbon, by using gas, by using clean

coal, by energy efficiency?” (September 2015).

Turnbull Government’s National Energy Guarantee Policy

National Energy Guarantee Policy aims to address trilemma:

1. energy security

2. affordability

3. emissions reduction

Political divisions have emerged:

• ‘States threaten to call off energy deal if renewables undermined’

(The Guardian 12 April).

• ‘National energy guarantee will 'lock in' poor climate outcomes, ACT

says’ (The Guardian, 17 April 2018).

• ‘Manufacturing bosses call on states for speedy national energy

guarantee take-up’ (Australian Financial Review, 15 April).

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Political Players (Stakeholders/Vested Interest)

• Businesses– local state and global (MNCs and TNCs)

• Governments – local state and global

• Civil Societies – local state and global

• Collectively their interest derive from a number of sources: social (implications of global warming, political (to be active in pressuring governments – involved in decision making) and economic (who stands to win or lose)

Climate Change as a Global Issue

It conflicts with state sovereignty

– Requires a global solution that may be at odds with state sovereignty (national mandate)

– The solution requires deference to formal global institutions – UN, World Bank, WTO, etc

– Global pressure groups like Greenpeace act as spokespersons for civil society and seek to influence governments at all levels

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Climate Change as a State Issue

• Challenge from global institutions – help to form and

implement a global solution

• Challenge from local and international business –

generally concerned with costs to those generating green

house gasses

• Challenge from civil society – mixed – some concerned

with the impact on the household budget – others with

climate change

Climate Change as a Business Issue

• The future of all those industries/businesses relying on

fossil fuels are directly affected

• Despite “creative destruction” (Schumpeter) being a key

feature of the capitalist system – those industries

rendered redundant resist

• Despite the claim that capitalism is based on

entrepreneurship and risk taking threatened industries

believe they have a right to corporate welfare

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Climate Change as Business Opportunity

• On the creative side of the business equation renewable

energy provides an opportunity for both old and new

businesses – old in moving to the new technology and

new in terms of establishing businesses in solar, wind,

tides and geothermal

• Once again cannot talk of a unified business position

Civil Society Activism

• Increased severe weather events impact directly on

people – indirectly on the economy

• Concern over the inheritance we will pass on to future

generations

• Increased electricity costs

• Loss of jobs

• Lower standard of living

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‘Carbon Lock-In’ and Decarbonising the Economy

‘Carbon lock-in refers to the systemic bias against carbon- saving technologies despite their obvious economic and

environmental advantages. It results because of inertia at

the corporate, government and system-wide levels and

these inertia are themselves the result of the historical

development of the technological system at hand’ (Perry,

2012).

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