The Stern Review’s report on the economics of climate change published on 30 October 2006 is an impressive document that calls for action to meet a global challenge on a civilisational scale. It is also unlikely – on present evidence – to have the effect required, for one simple reason.

Today’s vested political and economic interests are likely to prevent us from effectively addressing climate change, and so securing a decent future on this planet. It’s ghastly, it sticks in the throat, and it’s awesome to think it even as I write it. But it’s probably true.

Jared Diamond argues that this self-destructive spiral might have been halted if those with the power to enforce the cutting down of wood had far earlier suffered the economic and political consequences of this process. As economists would have it, these leaders succeed for too long to “externalise” these costs onto the shoulders, and ultimately the lives of others.

But surely, some might argue, this could not happen to the rich countries of the world, with the knowledge they have, their many institutions for collective action and capacity to hold those with power to account?

Here, however, is exactly where the problem lies: a lack of accountability where it really matters. In the microcosmic areas of social life - fines for taking our children on holiday before the school break, or for allowing our dogs to do what is natural to them in the park – we are overwhelmed by accountability mechanisms. Yet on big, important, collective issues, accountability mechanisms are either non-existent or failing. After all, no rich-nation leader will pay the human and financial costs of the Iraq war, or compensate for the poverty resulting from the failure of the Doha trade round.

Jared Diamond’s story shines a sad and disturbing light on our current situation. Our elite do not feel enough pain to allow, let alone lead in making the changes we need.

So what is to be done? Pragmatism and a hard-headed reading of history suggest that “the people” are unlikely to resolve our current crisis. Far from it, we are more likely to degenerate into a toxic blend of hedonism and divided fundamentalisms. Faced with an apparently insoluble problem, the citizens of the world will unite in partying until the curtain comes down.

photo by KellyK

The terms of debate

Yet there is an alternative – unpalatable but essential. If we cannot make those with power feel the pain, can we help them to profit from taking us along the right path?

This would involve rewarding political leaders who take a stand on climate change, who are willing to tell citizens the tough story, make enemies of those who would deny, and dedicate themselves to creating coalitions of the unwilling. Such political leaders must be empowered, whether by the ballot-box or the amplifying effects of global civil society and the media. And those leaders who choose to pipe an old tune, whoever and wherever they are, along with their advisors and sponsors, must be exposed in their naked splendour for all to see.

And that brings us to business leaders. Business will not solve climate change by what it does not do; compliance will only ever be a marginal part of any serious solution. Business will make a difference by what it does and does best: inventing, making and selling new products and services. (That is why our Accountability Rating of the world’s largest hundred companies measures how smart rather than how moral they are in embedding social and environmental dynamics into their business models and practices).

Co-opting those who can make, or prevent, change requires that “corporate responsibility” grows up and becomes a driver in shaping a global, responsible competitiveness between nations and regions. We need global markets where money is to be made by doing the right thing, creating value and profit by “internalising externalities” that will otherwise destroy us.

Business cannot, and will not do this on its own. Reshaping markets requires unlikely alliances between business, governments and civil society. We have proven we can do this across such diverse challenges as labour standards, access to life-saving drugs, corruption and animal rights. We can and must do it for climate change, reshaping the terms on which business is done to our collective good.

On Easter Island, no leader emerged from any of the dozen clans to reshape timber markets. It is instructive to consider which countries or regions - today’s global “clans” - will provide leadership in driving forward responsible competitiveness tomorrow.

Europe has enormous potential, with its leadership on Kyoto and its history of linking social inclusion and markets. But a region characterized (by Nick Robins) as having a “responsibility surplus and an innovation deficit” has to date failed to turn this “social good” to its competitive advantage.  

The United States too is an unlikely candidate, essentially the mirror-image of Europe's strengths and weaknesses, over-innovating without focus on the things that count. Directing its business community towards long-term issues is, with some notable exceptions, a contradiction in terms. It would require a seismic shift in the time-horizons and interests of the American electorate and its investment community, unlikely although not impossible on both counts.

Perhaps then we need to bet on China for leadership. We might point today to its dirty economy in more senses than one. But China's culture and practice of decision-making is like no other, rooted in a history of long-termism. Could it be that tackling climate change will be China's equivalent of the moai in the era of their creation: a powerful symbol of emerging leadership?

Simon Zadek is chief executive of AccountAbility.

AccountAbility’s report Responsible Competititveness in Europe: enhancing European competitiveness through responsible business practices was launched on 23 November 2006