Business adaptation to climate change as economic opportunity

International Relations: Article Summaries and Analyses

Article Summary #1: Climate for business: from threat to opportunity
It has only been a few years since business leaders adamantly denied the science behind climate change and this strategy worked for a long time, but things are changing today. Despite aggressive lobbying and efforts on the part of the fossil fuel industry and its interests to discount climate change, the growing body of scientific and empirical evidence compelled policymakers and business leaders alike to face the reality of a changing climate and the corresponding implications for humanity. Nevertheless, throughout the 1990s, the fossil fuel industry was relentless in its attempts to persuade lawmakers and the American public that either climate change was not real, or that if it was real, it was not as bad as scientists argued, and finally that making the changes that were needed to reduce carbon emissions would drive modern national economies into bankruptcy.
By the late 1990s, however, the calculus concerning the costs that were associated with responding to climate change began to shift in favor of identifying opportunities to leverage investments in cleaner business practices into profitable enterprises. These responses assumed a number of different forms, all of which sought to capitalize on the increasing evidence in support of the reality of climate change. Perhaps more importantly, business leaders and lawmakers began to realize that their efforts to minimize the realities of climate change were not only counterproductive in actually reducing greenhouse gas emissions in meaningful ways, they were adversely affecting the credibility of their efforts to characterize themselves as being environmentally responsible.
Against this backdrop, it is not surprising that modest progress was made, albeit grudgingly, by the public and private sectors in reducing greenhouse emissions by the fin de siècle, multinational corporations were recognizing the handwriting on the wall that the extent to which companies adapted to the reality of climate change would be the extent to which they would be able to survive and prosper in the 21st century. Indeed, companies have already started including the need to relocate as the world heats up, but far too many continue to ignore climate change in their future business plans.
Given the overwhelming scientific evidence, I certainly agree that climate change represents an existential threat to humanity and by extension multinational corporations. One of the major strengths of this article was the use of real-world companies and the descriptions about their increasingly aggressive responses to climate change as the scientific evidence mounted. Conversely, a major weakness of this article, which may be attributable in part to the fact scenario, was the lack of any mention of purely altruistic motivations for implementing cleaner business practices and virtually all of the responses to climate change discussed in this article were based on the money that could be made, yet another reality that is challenging the international community’s response to global warming.
Reflective Open-Ended Question for Discussion
Do national laissez-faire economic policies encourage or discourage the private sector to exploit workers in developing nations?

Article Summary #2: “Poverty chains and global capitalism” by Benjamin Selwyn (2018)
The author emphasizes that capitalism is not all that it is cracked up to be, at least for many developing nations. Rather than promoting economic development in emerging nations such as Cambodia, the internationalization of trade has further exacerbated the exploitation of vulnerable populations by multinational corporations and state-sponsored investments. In an effort to assess claims that the global value chain has actually benefited or harmed the global south (an umbrella term used to refer to subjugated populations), the author provides an analysis of primary and secondary resources regarding the garment and electronics chains in Asian countries (i.e., Cambodia and China), including studies about the global value chain policies in the private and public sectors to support his conclusion that instead of creating new economic development opportunities as claimed by proponents, global value chains in the global north operate to the detriment of the global south irrespective of claims to the contrary and amplify existing income disparities.
Drawing on these findings, the author provides an innovative strategy he terms the “Global Poverty Chain” that not only challenges the positive claims about the effects of global value chains on developing nations but provides some solutions that can mitigate these adverse effects in the future. In fact, some of the more noteworthy findings that emerged from this analysis included the fact that despite assumptions to the contrary, worker productivity in the global south is on par with or exceeds that of the global north, and low wages are therefore a function of the gender-related exploitation of female workers that are paid wages in the garment and electronics industries that are insufficient even for basic living needs
In sum, the author concludes that the global north continues to exploit the global south in ways that resemble the colonialist practices of the past, and rather than providing emerging nations with value-added opportunities for economic development, multinational corporations – with the active cooperation of national governments – are continuing a harvest economy mindset in new ways that make the rich richer and the poor poorer. This finding is the major strength of this study since it provides rich food for thought concerning the flip-side of the trumpeted benefits of capitalism in improving the living standards of all people around the world today. A corresponding weakness of this study, though, is a lack of definitional clarity with respect to poverty in the context of the national economies he evaluates, making across-the-board comparisons of his findings problematic. Despite this weakness, I agree with the finding that greenwashing can make even the most despicable business practices sound just fine, and it is therefore important to look beyond annual reports to evaluate the actual effects of globalization on developing nations.
Reflective Open-Ended Question for Discussion
How can national policymakers reduce income disparities without disrupting economic development and what measures of income inequality better reflect the quality of life and standard of living “on the ground” in different countries?

Article #3: “Income Inequality: Should We Worry About Global Trends?” by Robert H. Wade
Although there has been a growing body of scholarship devoted to economic growth and poverty in recent years, there has been a corresponding dearth of timely and relevant research concerning income inequalities and their antecedents. While the corresponding paucity of research into income inequalities may appear insignificant on its face, the author emphasizes that the lack of interest in this element of economic development has focused attention on issues that fail to assist the marginalized members of modern societies. Following the global economic downturn that occurred in 2008, however, income inequalities became the focus of a growing amount of interest on the part of consumers that occupied the lower rungs of the economic ladder, including most especially members of the lower and middle-class. This interest was fueled by high-profile media reports of the obscene wages and compensation packages that were being paid to top executives of multinational corporations which further underscored the growing disparities in income distribution.
One of the more interesting and noteworthy assertions made by the author was that the cumulative effects of longstanding income inequalities came together to actually precipitate the 2008 global economic downturn. This causation operated in ways that still remain unclear but which have become the focus of investigations into what global trends and national policies can do to reverse the increasing income disparity gaps around the world. Yet another interesting assertion made by the author concerned the nature of the income inequalities that have persisted for the past 2 centuries. For example, the author posits that the primary antecedents of the income inequalities that existed prior to the Industrial Revolution in the United Kingdom were based on social class divisions while they were based primarily on geographic comparative advantages or disadvantages that were the main drivers of wage levels during the latter half of the 19th century.
The grim realities of income inequalities can be more readily discerned from a breakdown of the nations that have actually enjoyed reductions in income gaps over the past 20 years or so. These nations include those in the UK and Western Europe as well as their previous colonial possessions (i.e., North America and Oceania). Although income disparity rates persist in India and China, the author posits that the progress made in these countries to date representing the very low income levels at which they began the benchmark comparisons with other countries. In addition, the author also discusses the causes of income inequalities within nations, including the fact that wealth and power tend to accumulate at the top where they are leveraged to ensure that even greater revenues flow their way in a process that further exacerbates any existing disparities (e.g., the rich get richer and the poor get poorer in these situations).
Although the point can be made that a rising tide raises all boats, the author concludes by stressing the fact that suboptimal national fiscal policies combined with the relentless greed of certain quarters of society create fragility and instability in national economies that can further reinforce income inequalities. In other words, addressing the complex global problem of income inequalities demands a complex solution that has largely eluded policymakers, and this failure will likely translate into future multi-country economic crashes at the alarming rate of one every 5 years. Clearly, this eventuality is unsustainable and it is incumbent upon business leaders and policymakers to identify opportunities to reduce the disparities in income distribution in their countries.
In sum, the world of the 21st century is a troubled place that is faced with an existential threat caused by unmitigated climate change where companies are still consumed with making a profit rather than saving the planet, a global economic system that exploits the already marginalized elements of national societies through a harvest-type mindset that have driven increasing income inequalities in developed and developing nations alike.
Reflective Open-Ended Question for Discussion
Do developed nations have a moral obligation to assist with the economic development of emerging nations?