Spatial and Industry Association Effects on Climate Change Action and Denial

Friday, June 24, 2016: 10:45 AM-12:15 PM
420 Barrows (Barrows Hall)
David Peetz, Griffith University, Brisbane, Australia
Georgina Murray, Griffith University, Brisbane, Australia
The future of global wellbeing will be most influenced by developments in climate.  This paper investigates corporate behaviour on climate change, using various regional and industrial aggregations, and raises serious questions about the capacity for voluntary industry-level or corporate-level regulation to deal with the climate crisis.

The climate crisis can be seen in the context of conflicting capitalist visions between short-term profit and long-term considerations.  There may be different degrees of attention to short or long term considerations between industries, between regions (that is, groups of countries) and also within parts of capital.  For example, in earlier, quantitative research we established that climate-interested investors (CIIs), who had signed up to various instruments and institutions actively engaged in addressing climate change, accounted for well over a third of the ownership of the world’s very large corporations.

We develop a model of capitalism and the carbon economy that distinguishes between corporations engaged in ‘green’ capitalist accumulation (which in the foreseeable long run is worsened by rising carbon emissions) and in ‘brown’ capitalist accumulation (which in the foreseeable long run is assisted by rising carbon emissions), and locate divisions within capital within this framework.

We use a series of data sources to examine the role of national, industry and institutional effects on climate change action and denial, on organisations at various stages in the global capital chain.  Global 'capital chains' are analogous to supply chains, but on the capital side rather than the labour side; they involve asset owners, fund managers (who invest capital on behalf of asset owners); what we call ‘target’ corporations – non-financial corporations that generate profit for the benefit of shareholders which, our earlier research shows, are predominantly fund managers and asset owners; and collective entities of corporate capital, typically referred to as ‘industry associations’.

Our data sources include:

  • a database of the Carbon Disclosure Project (CDP), with around 1500 observations, detailing responses to a questionnaire distributed by CDP to some of the world’s largest corporations, being participants in CDP activities (the CDP database);
  • a linked database, joining corporate data from the Bureau van Dyk global business database and the CDP database, enabling us to identify which target corporations are involved with the CDP (the Finance and Climate Database or FCD);
  • a dataset created by publicly available responses to a survey by the Asset Owners Disclosure Project (AODP) of the world’s largest 1000 asset owners, of which approximately half replied (the AODP dataset);
  • a database created by publicly available assessments by the Influence Map (a UK-based non-profit organisation) of the extent to which, and direction in which, large non-financial corporations are influencing climate change policy.  It has around 100 observations of the world’s largest non-financial corporations, and also 33 observations on the position and influence of industry associations.

These sources do not all use a consistent method of coding for national aggregations into region.  They inherently differ in their methods for assessing the climate performance of organisations.  Still, some findings can be ascertained.

Our analysis finds a pattern of national or regional effects that appears to persist across different parts of the capital chain.  In particular:

  • target corporations from European countries may have slightly higher participation in CDP than North American (mostly US) corporations, but both have substantially higher participation than Asian corporations;
  • within the CDP database, countries domiciled in tax havens appeared to give less attention internally to climate issue than those from any other regions while on some issues of internal governance, Australian firms appeared to also give less attention to climate issues;
  • within the financial sector, insurance firms seem to be more active than others, especially diversified financials, in integrating processes for assessing and managing risk and opportunities from climate change;
  • when assessed by AODP, European asset owners, especially from parts of the north, appeared to be more activist on climate issues than North American asset owners, especially those from the USA;
  • Australian asset owners appeared to perform better, and asset owners from Asia and the Middle East appeared to perform worse, than those from North America or Europe as assessed by AODP;
  • when assessed by Influence Map, target corporations from Europe appeared to perform better than North American target corporations (especially those from the USA), while target corporations from Asia appeared to perform worse;
  • there were important differences between industries in target corporation performance (seemingly more important than regional differences, but they did not explain the regional differences), with consumer staples, IT and (European) utilities performing well, and materials (mining), chemical and energy (oil) companies performing worst;
  • importantly, there were major discrepancies between the positions of target corporations, and of industry or trade associations representing them.  This is also evident within specific industries, such as oil.

Possible explanations for the discrepancy between industry/trade associations and individual corporations include that the latter’s behaviour become responsive to and dominated by the target corporations with the most to lose from responding to the climate crisis; that they take on an ideological role within capital; or (in contrast) that the behaviour of the industry/trade associations is a better reflection of the genuine interests and preferences of target corporations (whose public statements might not be taken at face value).  There are interesting comparisons to be drawn with employer associations in industrial relations.

We conclude that:

  • divisions within capital may open up opportunities for alliances to take action against climate change;
  • however, collective action by parts of capital (in particular parts of finance capital) that would benefit from ‘green’ growth are unlikely to materialise in forms familiar to labour activists, and new forms of action would be necessary;
  • voluntary action by individual target corporations, asset owners or fund managers are unlikely to make a major difference, absent a pricing intervention by the state;
  • voluntary behaviour by industry associations (especially those with any ‘brown’ component) is more likely to be mobilised to oppose effective action against climate change, often against the interests of at least some of the target corporations they represent.