Does Business Have an Ethical Responsibility to Help Save the Planet?

Xiye Bastida, the 20-year-old University of Pennsylvania student and high-profile climate-justice activist who in 2019 led 600 students from her high school to participate in the first Fridays for Future New York City, continues her youth leadership to address climate change.

In November 2022, she attended the UN Climate Change Conference in Egypt, known as COP27. While there, she said, “The New York Times said that by 2070, 16% of the world might be uninhabitable due to how hot it can get. I don’t know what an uninhabitable world looks like. We don’t know what no coral reefs look like. I can cry thinking about my hometown being flooded and that’s what we need to bring back into these rooms. The emotion of what it feels to see your home being stripped away from you.”

Xiye is one voice of a generation, advocating for climate policy and holding businesses – especially fossil fuel companies – accountable for their contributions to the warming of the planet caused by excessive greenhouse gas emissions.

Profits with a ‘Climate Constraint’

While it may sometimes feel like an “us vs. them” fight – climate activists against a carbon-spewing corporate sector – business is not always the enemy. Segments of the business world have supported the growth of the global climate movement, inspired by the science behind climate change. And they are sending a strong message to the collective business community for a radical shift in mindset and mission.

Some of that momentum is coming from business academia, which generates research that often drives policy and change at the corporate level. Eric Orts, a Wharton professor of legal studies, business ethics and management, has been interested in climate policy and law since he first attended the “Earth Summit” in Rio de Janeiro, Brazil, in 1992.

Fast forward 40 years to this time of climate crisis and Orts has drawn on his decades of scholarly research to urge his business colleagues in industry to look at the issue through an ethical lens. He and Brian Berkey, a Wharton professor of legal studies and business ethics, recently co-authored The Climate Imperative for Business, an article published in the California Management Review that considers: What do we have to do to change the world toward a sustainable path on the climate?

Their main conclusion: Business as usual is no longer an option. While maximizing profits might still be a fundamental business goal, it should happen within a ‘climate constraint.’

“Businesses can’t just say, ‘Hey, we’re going to follow the same path we’ve been following,’” notes Orts. “Business has an ethical responsibility just like consumers, citizens, governments and everyone else in society to help contribute to solving the climate problem.”

This climate imperative, the co-authors suggest, is something that all businesses should add to their priorities — because it’s the right thing to do for the planet. “There are limits on what you can do ethically as a business,” says Orts. “If you are in a business that is essentially destroying the world by producing fossil fuels, then you have an ethical responsibility to start to make a radical transition. You have to get serious about what you’re going to do. If you’re an oil company, you should have a plan by 2050 that you’re not an oil company anymore. You should make a transition into being an energy company. That doesn’t just mean selling off your assets to somebody else who is going to continue being an oil company. There has to be some sort of way that you encourage everyone to stop using oil.”

Companies that are part of the solution, like a solar-panel manufacturer that is trying to change the fossil-fuel electricity grid to solar power, aligns with the climate imperative: “Maximizing your profits if you sell more solar power is also advancing climate objectives. The two go together.”

“Find where you want to play a role…if you like politics or policy, one of the solutions is to change the incentives for companies. We still give huge tax subsidies to oil companies to drill for oil.” – Wharton Professor Eric Orts

The co-authors contend that while business activity has contributed significantly to the climate threat facing our planet, there’s no reason in principle why most businesses can’t operate in ways that are sufficiently climate-friendly, including the major carbon emitters like large fossil fuel, cement and agriculture companies.

Orts and Berkey recommend four climate actions; specific strategies that businesses can take to advance the climate imperative. They are: measure and reduce your carbon footprint; join with other firms to advance international objectives; invent products and innovative services for climate preservation; and get political and lobby governments for pro-climate legislation.

‘Quite a Long Way to Go’

Are businesses making this kind of progress toward slowing climate change? “There’s a lot of variation when it comes to how much firms have done to adjust their business models to be more climate-friendly,” says co-author Berkey, who is also a philosopher by training. “Some firms have made significant strides and taken real steps to change the way that they operate, while others have done little or nothing. And some have engaged in quite a bit of greenwashing – claiming to have become more environmentally friendly while doing little to actually improve their environmental practices. So, while some progress has been made, it’s been uneven and much too slow overall, and so there’s quite a long way to go.”

But don’t despair, says Orts. Students who care about the environment are in a unique position to become valuable problem-solvers. “Be active and find where you want to play a role,” he suggests. “We need inventions. How do we make electricity more efficient? There are lots of technical solutions that make the world more efficient using less energy and also allow us to use new types of transportation. If a student likes politics or policy, one of the solutions is to change the incentives for companies. We still give huge tax subsidies to oil companies to drill for oil. As long as the businesses are able to make money, then they will try to do so without following the ethical imperatives.”

For students who want to explore what success in climate action might look like, Orts suggests reading The Ministry of the Future by Kim Stanley Robinson. “It imagines how you actually get to 2050 and the emissions curve is going down,” he notes.

Orts and Berkey are hopeful that more companies will embrace the climate imperative for business – because they believe the alternative looks bleak. We can no longer say we’re going to win-win our way out of this without giving something up, concludes Orts. “We have to stop using coal first, then we have to stop using oil, and eventually we stop using natural gas. If we don’t, then the planet literally burns up to an extent that humanity might not be wiped out, but life is going to be solitary, poor, nasty, brutish and short (borrowed from author Thomas Hobbes). Tens of millions of people are going to die from heat waves and drought and starvation…if we don’t do something about it.”

Conversation Starters

If you’re a climate activist, how do you feel about the role of business in climate change? Knowing that there are at least two sides to every story, do you see them as the evil-doer, solely responsible for the degradation of the planet? Do you believe that companies might agree with the climate imperative for business and radically change their business model? Why or why not?

Dr. Eric Orts says, “We can no longer say we’re going to win-win our way out of this.” What does he mean by this?

How do you want to play a role in helping to solve the climate crisis, especially at the corporate level? What is your vision for a totally eco-friendly business world? Share your story in the comment section of this article.