Business and the Environment, 50 Years After the First Earth Day: What’s Changed, What Hasn’t, and What Needs to Happen Now
A Q-and-A with Michigan Ross Professor Tom Lyon.
Tom Lyon is a professor at both the University of Michigan Ross School of Business and the School for Environment and Sustainability. As U-M celebrates the 50th anniversary of the first Earth Day, Lyon answered questions on the changing relationship between business and the environment.
What was the relationship like between the business community and the environmental community in 1970?
Lyon: They were not communicating at all. It's hard to even characterize the nature of the relationship, because there wasn't one. The social movement for the environment that emerged in the '60s was totally unexpected on the part of business. We needed it at the time, because the United States at that point had very polluted air, very polluted water, with all kinds of well-known disasters happening.
What has happened in the decades since then?
Lyon: There were a large number of new environmental laws passed in the early to mid 1970s, including the Clean Air Act, the Clean Water Act, the National Environmental Protection Act, the Toxic Substances Control Act, and so on. All of this happened quite rapidly, and just caught business unaware.
Since then, business has developed much stronger Washington, D.C. offices, and put a lot more emphasis on the management of political issues, through lobbying and corporate campaign contributions. Business now is in a position to block almost all further legislative progress on the environment, and we've seen almost no new environmental legislation for the last 20 years.
So is all environmental progress stalled at this point?
Lyon: What has evolved is what a lot of people refer to as private politics, or activism, that doesn't try to use the political process, but instead goes directly at companies and tries to change their behavior.
That process takes two different forms. One is confrontation, where organizations like Greenpeace or Rainforest Action Network publicly attack a company and try to call attention to the bad things the company has done, and they demand changes in behavior. The alternative is cooperation, which is represented by other environmental groups like Environmental Defense Fund, World Wildlife Fund, and others.
These two types of environmental activism actually work very well together. The confrontation strategy does work, but often it needs some mechanism for companies to find a path forward and figure out how to comply with the requests, and the cooperative organizations help them do that. Behind the scenes, both types of activists understand that they're working toward similar outcomes.
What can the business community or individual businesses do to improve the environment?
Lyon: First, on public policy: We need to turn around the role of business with regard to climate policy. The oil and gas industry in particular has set back climate policy by decades by sowing doubt about the impact of climate change. They have done us all a real disservice.
I think it's really important for businesses to speak up on behalf of sensible climate policy. And there are environmental non-governmental organizations that focus on trying to do this. For example, Ceres has a network of businesses that they call BICEP that encourages businesses to speak out for sensible climate policy. The World Wildlife Fund has also been working with companies to encourage them to speak out. We need a lot more of that.
At the same time, we need a lot more transparency around the political activity of companies on climate change, but also much more broadly. We need a social movement demanding that companies be transparent about their political spending.
We also need to support the businesses that are stepping up and calling for sensible policy. There's a growing number that are doing so. I think that's really valuable.
What can be done within individual organizations?
Lyon: People often think about carbon emissions in terms of scope 1, scope 2, and scope 3 emissions. Scope 1 emissions are those that come directly from combustion of fossil fuels in your own facilities; scope 2 are fossil fuel emissions from purchased electricity; and scope 3 are emissions that are embedded in your supply chain, somewhere further upstream.
Companies are working on reducing the scope 1 emissions, and there is a lot of progress being made on that. A lot of them are also making progress on scope 2 emissions, demanding greener electricity from their utilities, or going around the utilities and just building enormous solar fields or wind farms to support their own enterprises. A lot of companies are making commitments to be 100 percent renewable in the relatively near future, over the next 10 years or so. That's putting a lot of pressure on the electric grid to green itself.
What’s an example or two of a company that’s a leader on environmental issues?
Lyon: Patagonia is probably the big leader in this regard. They advocate for climate policy and for people recycling or reusing their clothing products instead of buying new ones. Very few companies will take that sort of step. Now, Patagonia is a little bit special because they're privately held and relatively small.
The other corporate example people always point to is Unilever, which has a sustainable living plan that they've laid out in great detail. And they've made significant progress on it. I don't think Unilever is perfect, but as far as big consumer goods companies go, they have taken a lot of positive steps.
Tom Lyon is the Dow Professor of Sustainable Science, Technology, and Commerce; professor of business economics and public policy; and professor of environment and sustainability.
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