There are corporations that just want to be loved. Philanthropy used to be the preferred vehicle, now it's corporate social responsibility. The danger of corporations involving themselves in social responsibility is that they may begin to play the role of government, either in service provision or deciding public priorities. At the very least, they are distracted from their core responsibility by messing around with "community stakeholders" and lose value for their real stakeholders, owners, workers and customers.
Take for example the decision by Insurance Australia Group, Australia's largest insurance company, to employ Lynette Thorstensen. She is head of community and environment for IAG and a former chief executive of Greenpeace Australia and director of the Greenpeace International climate-change campaign based in Amsterdam.
Promotional material for a corporate social responsibility conference to be held in Sydney reads, "Lynette draws on her depth of experience to share how to build a business case and get support and buy-in from the board and other key stakeholders". Well, IAG certainly bought into a debate when it bought Thorstensen.
A number of companies have been applauded for entering the public debate over climate change; it was their "buy-in" to corporate social responsibility. The impact of man-made greenhouse gas on the climate is, however, not certain. Even less so is the correct response to the phenomenon. Undaunted, last year's winner of the Ethical Investor sustainable company of the year award, IAG, argues that there is a strong relationship between rising global sea temperatures and the ferocity and frequency of storm events. It has said that "the link between insurance and environmental risk is even clearer when considering that 19 out of 20 of Australia's major insurance payouts have been related to weather events".
But no empirical relationship has yet been observed between modest temperature changes of a degree or so and the frequency or intensity of such events. The evidence that increases in atmospheric greenhouse gases have warmed the seas or caused wild weather is tenuous.
It may also be true that the traditional source of damage to property, from fire and chemical spills and the like, has become much better managed in recent years. In other words, the sources of destruction that are possibly not man-made are more in evidence because of the excellent management of risk by governments and insurance holders of those that are.
By contrast, an insurance company cannot change the climate, especially using a poor policy instrument such as the Kyoto Protocol, but it can change the climate for customers. IAG is using the data to scare people to take out insurance. In other words, it is doing what it normally does, drum up business but in this instance it is using the cover of the greenhouse issue. IAG is indulging in public policy debate in order to win customers. The Kyoto policy is being used as a "dog-whistle" on climate change to have people take out insurance on weather damage to their properties. Good for business, bad for public policy.
On that basis, what is IAG to make of the Asia-Pacific Partnership on Clean Development and Climate, which Australia has announced in conjunction with the United States, China, India, Japan and South Korea?
The statement released by the partners makes it perfectly clear that Kyoto means sacrifice, and sacrifice will be felt not only by wealthy resource-rich countries such as Australia, but also by poor countries. Development and poverty eradication are urgent and overriding goals internationally as well.
The World Summit on Sustainable Development made clear "the need for increased access to affordable, reliable and cleaner energy". The international community agreed in the Delhi Declaration on Climate Change and Sustainable Development on the importance of the development agenda in considering any climate change approach. Greenpeace, of course has no time for the Partnership on Clean Development.
Should IAG sack its climate-change campaigner and substitute her with a development campaigner from Oxfam or World Vision? Or should it go about its business, providing insurance for those who want it, and assessing risks accurately in order to set the best premiums? Dabbling in public policy can be an awful messy business.
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