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By Carol Pierson Holding

A classmate from business school emailed me last week to set me straight on climate change. His argument was “extreme opinions about things that naturally vary are probably wrong” and supported his stance with three arguments:

1) Malthus predicted the end of the world’s ability to feed itself in 1798.

2) In the 70’s, oil was projected to cost (in constant dollars) $200/bbl, whereas the current price is about $80, or after inflation, less than in 1980.

3) California was going to run out of salmon – it’s having abundant seasons.

My classmate’s opinions were formed watching severe weather growing up in Florida, working in the oil industry, and, for the last 27 years, as a venture capitalist in Silicon Valley. He’s smart and thoughtful. He understands risk. How could our opinions on climate change be so opposed?

Once again, the battle turns out to be filled with irony. What saved us from each of the predicted disasters was not that the predictions were wrong, but that we changed the set course through innovation, a skill through which my classmate makes his living. Had we stayed on the trajectory we were on without innovation, the alarmists would actually have been correct.

Malthus raised the specter of mass starvation but failed to account for the response to his predictions — innovations in machinery and fertilizers — as well as the growth in the workforce. Recent scholars such as Ester Boserup augmented Malthus’ theory, adding that whenever the population threatens to exceed the food supply, people find ways to increase the production of food. The predictions were followed by visible evidence of food shortages, which drove innovation and altered Malthus’ trajectory.

Oil companies were predicted to run out of oil based on trends evident in the 1950s. Shell Engineer M. King Hubbert introduced the peak oil curve, causing great consternation among fellow geologists and oil companies and eventually the public as well. But technological advances made drilling in secondary sites economical. Since then, public pressure has energized political will to open areas previously not available for oil exploration. US oil production in 2012 was the highest in our history. (Paradoxically, that success energized the renewable energy movement, which could make oil as an energy source obsolete.)

My classmate’s third example, salmon in California, experienced this same process. Environmentalists warned of impending doom; experience on the ground amid fishermen supported dire predictions. Salmon stock began dwindling in the 1950s then crashed in 2008. By 2011, only 1% of the salmon remained. Public pressure moved government and resource managers to take steps to restore both water and habitat for Chinook salmon, “innovating” California’s hatchery and conservation programs. The salmon population rebounded.

Innovation altered the course of my classmate’s alarmist scenarios, and it’s exciting to see how innovators are beginning to alter the course of climate change as well. Entrepreneur Elon Musk with his Tesla electric car, solar and battery initiatives is one example; successful airline executive Richard Branson, founder of Virgin Atlantic Airways, is investing in renewable energy projects for his jet fuel and his Caribbean venture.

Innovators, businesses, governments and public opinion come together to create adaptations that will shift a trend away from disaster. As described in an excellent New York Times op-ed piece by Robert Jay Lifton, this shift or “swerve” is a “major historical change in consciousness that is neither predictable nor orderly.”  Lifton compares the climate change swerve that’s happening now to the nuclear swerve that shifted us during the Reagan era from a nuclear build-up to the non-proliferation treaty of 1986.

In both cases, Lifton says, experience, economics and ethics coalesced. Climate change economics have shifted practices in every industry, perhaps most notably in insurance, agriculture, and the military. Secondly, and for the first time, most Americans are experiencing the kind of extreme weather that my classmate saw in subtropical Florida. Now, the ethics component is gaining widespread public acceptance too. As Lifton says,

“People (who) came to feel that it was deeply wrong, perhaps evil, to engage in nuclear war, are coming to an awareness that it is deeply wrong, perhaps evil, to destroy our habitat and create a legacy of suffering for our children and grandchildren.”

The questions my classmate posed are important to address. Just as we need competitors to create industries and innovation, we need “rationalists,” as my classmate believes himself to be, to keep us “alarmists” engaged.

Photo courtesy of jcookfisher via Flickr cc.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 9,100+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,100+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 339 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By Carol Pierson Holding

Three recent headlines offer disturbing news to climate advocates. Together, they show catastrophic aggression from the fossil fuel producers.

First, Huffington Post reported on predictions from the International Energy Agency (IEA) that the U.S. will by bypass both Saudi Arabia and Russia in oil production by 2016 “at the latest,” a year earlier than it predicted in 2012. The U.S. will be world leader in oil production, subsuming climate to energy self-sufficiency.

The second astonishing headline covered the Climate Accountability Institute’s most recent study, as reported by Suzanne Goldenberg for The Guardian: “Just 90 companies caused two-thirds of man-made global warming emissions.” The list is topped by state-owned monopolies in China and Russia, with well over 8% each, and includes 50 fossil fuel investor-owned firms, including such widely recognized brands as Chevron, Exxon, BP, Royal Dutch Shell, British Coal Corp, Peabody Energy and BHP Billiton.

[csrhubwidget company="Chevron-Corp" size="650x100" hash="c9c0f7"]

The list’s top 20 produced nearly 30% of historical emissions. Chevron alone produced 3.5% of total global emissions and Exxon produced 3.2%; the U.K.’s BP and Shell are close behind. We’ve known the primary sources of carbon emissions for some time, but this study quantifies the relative damage each has done. It’s shocking all over again.

The third depressing headline is about the failure of the UN Framework Convention on Climate Change which just concluded two weeks of meetings in Warsaw on Friday. As the New York Times reported, talks stalled because the developed countries refused to pay the $100 billion they’d promised to underdeveloped countries, which suffer the worst of climate change impacts.

But it’s not just developed countries that are responsible for emissions. As Naomi Oreskes, professor of the history of science at Harvard and co-founder of the Climate Accountability Institute, explained in The Guardian article, "There are all kinds of countries that have produced a tremendous amount of historical emissions that we do not normally talk about. We do not normally talk about Mexico or Poland or Venezuela. So then it's not just rich v poor, it is also producers v consumers, and resource rich v resource poor ."

Not surprisingly, the entities most at fault for carbon emissions flaunt their disdain for the U.N.’s process. As evidence, the environmental NGO 350.org cites this fact: “The Polish government not only allowed corporate sponsors for the talks, but co-sponsored a major coal summit during the negotiations. It’s hard to see the U.N. gaining any traction around proposed financial consequences for countries.

But there are consequences for investor-owned companies. We know who those companies are, and now we know how much each is to blame.

Compare the problem of assigning blame and penalties for emissions to the 2008 financial crisis. At first, the task seemed impossible. It was too complex. The problem was systemic. Those who might be at fault were just too powerful. There was no way to parse the blame.

But with the force of public outrage and regulatory will and enough time to unravel specific causes, that’s changing.

Five years later, JP Morgan is the first to be fined, $13 billion for corrupt mortgage practices alone. And while many argue that financial penalties have not hurt the bank, it suspended stock buybacks last year and more could happen again to accommodate growing fines and penalties. And at least one analyst, Oppenheimer’s Charles Peabody, cut the bank’s 2013 earnings estimate by 12.5%.

So far, the only blame fossil fuel companies have suffered has been for oil spills such as Chevron’s currently contested $19 billion fine for polluting in Ecuador. But fossil fuel industry hubris towards global warming is pushing the same combination of public outrage and regulatory will as resulted in financial penalties for powerful banks. And now, thanks to the IEA report, we have the piece that took longest in punishing the banks, a way to quantitatively parse blame.

It’s a long game but it looks like the most recent combination of events —the U.S. becoming the world’s top oil producer, specific emissions numbers making it easier to assign blame, and failure at the U.N. — might just enable a remedy, at least in the U.S., forcing financial penalties on fossil fuel companies that more accurately reflect their true costs.

Picture courtesy of lightsinmotion via Flickr cc.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 8,400+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 8,400+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 290+ data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.