6 August 2022
Robert C. Hinkley
1. Corporations are free to pursue any legal business.
2. When that pursuit results in harm to the public interest, it’s the role of government to enact and enforce laws which make it stop and, if the harm is severe, to do so quickly.
3. Companies don’t start out to severely harm the environment. Usually, new technology discovers the harm only after a business is already successful, billions are invested in it and thousands rely on it for jobs.
4. In the face of competing interests, extensive lobbying, and sometimes disinformation, government often finds itself powerless to pass laws which make companies stop their destructive behaviour.
5. The most pressing example of this problem is the continuing emission of significant quantities of greenhouse gases (GHGs) by industries which contribute significantly to global warming and climate change.
6. Even when all countries agree, trying to solve the climate change problem by each country agreeing to pass stricter environmental laws is not working (or, at least, not working rapidly enough).
7. If governments are unable to enact environmental laws which protect the Earth from climate change, then another solution must be found.
8. Instead of trying to cobble together a wide assortment of complex new laws country by country, governments should simply require company directors to stop their company's severe abuse of the environment.
9. The key to implementing this solution is to cut back on the freedom which comes with corporate charters.
a. Companies should not be permitted to engage in businesses which severely harm the environment.
b. Directors of companies which are discovered to be harming the environment should have a duty
(i) to mitigate that harm and
(ii) in cases where the harm is severe, (e.g., the emission of significant quantities of GHGs), to stop.
10.This requirement can be imposed on company directors by making a relatively simple change to the corporate law.
11.The current duty of directors in the corporate law to:
a. “act in the best interest of their company” should be amended to
b. “act in the best interest of their company but not at the expense of severe harm to the environment.”
12.This change is known as the Code for Corporate Citizenship (Code).[1]
13.The Code will dramatically change business by balancing the pursuit of company interest with a requirement that management safeguard the environment from severe harm—a huge benefit for the planet.
14.By passing the risk of causing severe harm on to the private sector, the Code will bring a halt to the emission by corporations of significant quantities of GHGs.[2]
15.It will cause company directors to always consider, and be more cautious with, the environment.
16. The Code should also spur investment in the development of new technologies which will better protect the environment.
17.Environmental organizations, labor unions, religious congregations, and other concerned citizens should devote a portion of their energies towards mobilizing their members behind this simple common-sense change.
[1] See, https://www.codeforcorporatecitizenship.com/post/a-call-to-action. [2] Legislatures may want to lessen the financial burden of the Code on the companies affected by allowing for a grace period during which the change occurs or speed up the change by offering financial incentives in the form of subsidies and/or tax concessions.