Last week, the Business Roundtable released “Principles & Policies Addressing Climate Change” — a 16-page statement that declares the U.S. should adopt a “market-based approach” to reduce emissions in line with the Paris Agreement. The BRT is careful to note that carbon should be priced only where it is environmentally and economically effective and administratively feasible, and in a way that continues to foster innovation and competitiveness. A Politico article summarizes the BRT’s positions. Here’s an excerpt:
A “market-based mechanism” is a broad term, and the Business Roundtable did not recommend any one particular design. It called for putting a price on carbon as a means to reduce emissions since “a clear price signal is the most important consideration for encouraging innovation, driving efficiency, and ensuring sustained environmental and economic effectiveness.”
Examples include direct taxation of carbon dioxide emissions as well as cap-and-trade schemes, such as legislation that passed the House in 2009 but fizzled in the Senate.
Any revenues that come from any market-based system should be used to support economic growth, reduce societal impact, and aid people and companies that are the most negatively affected, the groups said. And it should be linked with “at least a doubling of federal funding for research, development and demonstration of (greenhouse gas) reduction technologies.”
As a WaPo article notes, it’s looking like corporate interests may be more likely to claim a seat at the table the next time climate change legislation is considered, versus trying to kill those efforts outright, and that might help us all. However, the BRT’s principles envision reducing emissions by at least 80% from 2005 levels by 2050 and come at a time when the BRT is still drawing scrutiny of last year’s “stakeholder capitalism” pledge — the latest shot being a letter last week from Senator Elizabeth Warren (D-Mass.).
I suspect that a 30-year goal for reducing emissions is not what investors have in mind when they refer to “long-termism” — so if companies are hanging their hats on the BRT timeline, they probably also need to have some convincing talking points for engagements. As illustrated by an “open letter” issued last week by PRI, investors also continue to want companies to reflect climate-related risks in financial reporting.
-Liz Dunshee, TheCorporateCounsel.net September 25, 2020
