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The role of the business sector in climate negotiations.

Interview with Nils Moussu

Photo of the Interviewee
Nils Moussu
DG Research and Innovation: Reflective Societies has asked social science and humanities researchers to answer a series of questions on climate change leading up to COP21 in Paris beginning the 30th of November, 2015. COP21 will, for the first time in over 20 years of UN negotiations, aim to achieve a legally binding and universal agreement with 196 states with the aim of keeping global warming below 2°C.

Nils Moussu is from the Institute of Political, Historical and International Studies (IEPHI) of the University of Lausanne and member of the Climacop project. His main research interests include climate and carbon market governance, transnational coalitions of firms and business discourses on the environment.

 

COP 21 is going to take off by the end of this month but the negotiations have been running in several locations, including, recently in Germany. How is the business world represented in these types of international negotiations?

The inclusion of non-state organisations within the UN system has a long history. This openness to non-state actors has led to various types of partnerships – from informal multi-stakeholder policy dialogue to institutionalised mechanisms of participation – a notable example of which is the UN Global Compact that gathers more than 8000 corporations around ten principles covering various issues (such as human rights, labour, environment and anti-corruption).

Within the climate regime, the inclusion of non-state organisations is based on Art.7§6 of the United Nations Framework Convention on Climate Change (UNFCCC) that allows non-governmental bodies to be admitted as observers. Since this does not prevent the participation of business corporations as it emphasises mainly the non-governmental dimension (i.e. that the organisations shall not be funded by states) the UNFCCC admission process requires applicants to provide a certificate of non-profit and/or tax exempt status, de facto excluding individual companies to be involved in the process. Consequently, companies, from small and medium-sized enterprises to large transnational corporations, are represented through their respective business associations under the broad category of civil society and non-governmental organisations (NGOs). Almost 1600 NGOs are currently admitted as observers by the UNFCCC and grouped into nine categories called constituencies or Major Groups. Business associations are gathered into the business and industry NGOs (BINGOs) constituency, whereas other constituencies gather environmental NGOs, trade union NGOs, local government and municipal authorities, and others. Of course, business influence on climate change policies is not limited to its access to multilateral forums such as the UNFCCC and takes place at various national and regional levels of authority through traditional lobbying activities well before the international negotiation itself.

Does the COP21 in Paris represent a new step towards the inclusion of the business sector in climate politics?

Beyond the narrow institutional admission process as observer as I have just outlined, the business sector has many participatory channels during a COP. As representatives of civil society, business associations can organise on-site side-events and press conferences to raise and discuss specific issues. Moreover, during the COP21, a specific area in Le Bourget where the COP will take place – La Galerie – is dedicated to the private sector. Often criticised by social movements, financial or in-kind contributions are also made by individual companies to support the organisation of the COPs. The COP21, for instance, has receives such in-kind or financial support by corporations like EDF, Engi, Renault-Nissan, Suez Environnement, Ikea, Air France, etc. They also organise several off-site events, for instance business summits planned during COP21 such as Sustainable Innovation Forum 2015, Caring for Climate Business Forum, World Climate Summit 2015, to name but a few.

Altogether, private-sector involvement during the COP21 is expected to be high. From an historical perspective, this has always been the case when a protocol or a legal instrument was supposed to be agreed upon. The high mobilisation witnessed before the COP21 - displayed by many business summits such as the Business & Climate Summit in May 2015 or the recent New York Climate Week in September - clearly shows that the business world closely follows the climate change negotiations.

You have mentioned "the business world". To what extent can we talk about one "business sector" in climate negotiations?

“Business” as a single entity is often used as an abstract category to discriminate non-state private/corporate actors from others non-state actors. However, since the nineties, a growing variety of business actors have been represented during the climate negotiations and, more broadly, in the transnational environmental governance. Several criteria can be used to distinguish between all the business associations. The most obvious of these is their geographic scope, since national associations (e.g. Business Council of Australia) are represented alongside regional associations (e.g. European Chemical Industry Council) and global associations (e.g. World Coal Association). Also relevant is their membership structure, as some associations gather corporations from a single economic activity (e.g. International Air Transport Association) whereas other associations are broader and represent multiple economic and industrial sectors (e.g. World Business Council for Sustainable Development). The thematic scope covered by an association is also crucial to characterise issue-specific groups (e.g. Carbon Capture and Storage Association) compared with more generalist ones (e.g. International Chamber of Commerce).

If these criteria are important to locate a specific association and its strategic positioning, the link between these associations is also decisive in getting the broader picture, a link often made by cross-cutting membership or individual political entrepreneurs. These links also indicate the will of business associations to create a united “business voice” with clear, short, and strong messages in order to maximise their impact during negotiations. Created in September 2014, the coalition of business associations “We Mean Business” is representative of this strategy, as it gathers some of the major business associations historically involved in climate negotiations. Business associations are therefore subject to a dual and endless constraint: on the one hand they have to find their specific “advocacy niche” and demonstrate the uniqueness of their message and actions but on the other hand, alliances, coalitions, and collaborations between them are needed in order to build a common business voice.

What is the impact of this "business voice"? Is climate “regulation” trough market mechanisms, for instance, the result of business strategies?

Assessing the actual influence of business actors has always been a major challenge for social science researchers, especially in broad and complex transnational political processes such as climate change negotiations. Yet, a relatively consensual view is that business has been unable to prevent climate change to be on the international agenda during the nineties but has had a strong influence in shaping how climate change was to be dealt with.

Indeed, most individual corporations or business associations are now asking a carbon price, preferably through market mechanisms such as a cap-and-trade scheme (i.e. a market where emissions permits are traded), and their lobbying has undoubtedly been influential in reinforcing this kind of mechanism compared to more command-and-control policies (i.e. direct regulation through quality standards/targets setting for instance). Nonetheless, the wide adoption of market mechanisms around the world could reflect a much broader trend, given the large support for these “solutions” coming from states – the recent announcement of a new cap-and-trade scheme in China being a pre-eminent example – but also from some environmental NGOs and other sectors of civil society. In addition, market mechanisms are not limited to climate “regulation” but extend beyond the climate regime per se – through voluntary offsetting schemes for instance – and beyond the climate change issue in areas such as biodiversity. Carbon markets has therefore to be placed within a large historical, intellectual, and socio-economical evolution that took root in the 1960-70s and established a (neo)liberal and entrepreneurial vision on environmental issues as the mainstream perspective. Overall, it has to be noted that this (neo)liberal vision is consistent with most current business positioning, a result that can be attributed to lobbying strategies but also to more structural forms of business power in global and national politics.

Business claims to be a driving force in the fight against climate change: what do you think of this statement?

In strong contrast with the obstructive lobbying that took place in the nineties in relation to any climate change regulation, most business corporations and associations now have adopted a progressive stance toward climate negotiation. This stance can be illustrated by repeated support for a strong, universal, and ambitious agreement at COP21, in-line with the 2°C target and climate science. Moreover, many business representatives have recently presented themselves as leaders of the global mobilisation on climate change, ahead of many politicians. How to assess these claims depends heavily on the chosen theoretical perspective. Notwithstanding these differences, the research community shares some doubts about the credibility of such confident statement. Some preliminary points can be made here:

Any assessment of the claim of the business sector as leaders on the scene of climate change should take into account the specific case of individual corporations and/or industrial sectors. The situation of the oil and gas sector in particular, at the heart of what has been called “carboniferous capitalism” is critical for any credible assertion to limit global warming, whatever specific target is chosen.

When business corporations have demonstrated their willingness to joint or launch multi-stakeholder partnerships that, all together, form what has been described as transnational climate change governance, issues of legitimacy, transparency, and accountability related to these initiatives often remain blatant, not to mention the challenging task of assessing their accurate environmental impacts.

The division of tasks promoted by many business associations between states and the private sector is highly problematic. From this view, states should only provide a level playing field, set up the “right framework”, in short, create a sound “business climate” with the right incentives (i.e. a price on carbon) and policy signals (medium/long-term mitigation targets and low-carbon investments for instance). With such a stable and minimal regulatory environment, business corporations would allegedly be able to seize the new opportunities it provides, climate action would be good for business, and ultimately “doing well by doing good” would be the common sense and the new way of doing business. This narrative is questionable at least for two reasons. First, it completely neglects the deep social and political dimensions of the changes required in order to limit global warming. Second, it assigns the task of steering the transition to a low-carbon world to market forces only with no role for all the other actors included in the COP and climate change debate, including civil society. This de-politicisation tendency is often reinforced by discourses centred on ecological modernisation and strong beliefs in technological innovation.

To conclude, business corporations will be at the heart of the changes required to limit global warming for quite simple reasons: their responsibility in producing huge amounts of greenhouse gas emissions is indisputable, and changes in their operational activities could make a significant contribution to any global efforts. But the key to future climate governance does not only lie in the private sector’s willingness to lead and collaborate. It also or mainly depends on the capacity of states and state-led intergovernmental institutions to regulate business activities and sometimes restrict or forbid some of them.

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