Climate change progress demands greater business accountability

COP28 – the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change – is of crucial importance to get the global economy on a pathway toward limiting global warming to 1.5 degrees Celsius above pre-industrial levels. Yet, it has been mired in controversy before it even started, and headlines continue to emerge that cast doubt on the likelihood of breakthrough success.  

A key sticking point is the need to come to an agreement on phasing out coal, oil, and gas, and the role of the fossil fuel industry in trying to prevent such an agreement. This year’s conference is hosted by the United Arab Emirates, the seventh-largest largest oil and gas producer globally and a key member of the OPEC (Organization of Petroleum Exporting Countries). COP28 president Sultan Al Jaber is simultaneously the head of the state oil company Adnoc (Abu Dhabi National Oil Company), which has plans to significantly expand its oil and gas production.  

The UAE insists on its role as bridge to the oil and gas industry, with Al Jaber stating that “Not having oil and gas and high-emitting industries on the same table is not the right thing to do. You need to bring them all. We need to reimagine this relationship between producers and consumers. We need this integrated approach.” Yet, simultaneously, evidence has emerged that the UAE aimed to use its core role of hosting the Presidency to facilitate oil and gas deals for Adnoc.  

The UAE has aimed to using the COP28 Presidency to facilitate oil and gas deals for the national oil company

More overtly, a couple of days into the conference, Sultan Al Jaber stated that “There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what’s going to achieve 1.5C”, drawing ire from a wide range of leading scientists as well as the UN Secretary General Antonio Guterres who insisted that “The science is clear: The 1.5C limit is only possible if we ultimately stop burning all fossil fuels”.  

While this year’s meeting, which puts fossil fuel phaseout on the agenda in a country whose wealth is built on fossil fuel extraction, may be a culmination of the internal contradictions relevant to climate change governance, it is by no means a novel scenario. Representatives of fossil fuel companies have dwarfed the size of most countries’ delegations in recent COPs as well, with 503 lobbyists attending COP26 in Glasgow and 636 attending COP27 in Sharm el-Sheikh. This year, analysts counted 2,456 attendees affiliated with oil and gas industries. 

Furthermore, COPs are not the only place that such lobby groups arrive in force: during the development of the European Green Deal, representatives of the oil and gas industry exerted heavy pressure on policy-makers, with the result that natural gas was labeled as ‘sustainable investment’ in the EU’s Sustainable Finance Taxonomy – a decision that is now being challenged by Greenpeace at the European Court of Justice. 

A framework for stronger accountability 

These developments highlight the crucial role that businesses play in influencing or obstructing progressive policies meant to tackle crucial environmental challenges. In my piece “Business accountability in the Anthropocene", I highlight the important status of businesses in four domains:  

• First, companies are the locus of the vast majority of production processes of the goods and services that circulate in our economy, meaning that businesses are also key resource users – and, indeed, are increasingly seen as ‘keystone actors’ for reducing fossil fuel use, promoting global water security, and managing sustainable marine ecosystems and biospheres.  
• Second, they shape consumers’ choice environment by making more sustainable goods and services available to conscientious consumers.  
• Third, businesses influence societal culture, particularly the perception of desirable lifestyles, via their use of advertisement.  
• Fourth, their influence on policymakers via corporate political activity – including the lobbying processes seen at COPs and elsewhere – decisively shapes the political action space, including the Overton window of what are acceptable and feasible policy pathways.  

This expansive and multifaceted influence, I argue, requires us to rethink the accountability of businesses in the Anthropocene – this new geological age in which many conditions and processes on Earth are profoundly altered by human impact. If humanity is arriving at an inflection point where the surpassing of planetary boundaries puts our collective future at risk, we need to hold businesses – and actors within them – to a higher standard.  

In my piece, I draw on an interdisciplinary literature review to outline the following four lines of re-thinking that have emerged in academia and practice on the accountability of businesses:  

1. The Anthropocene calls for a new purpose of business—to create sustainable value for society while respecting planetary boundaries. Underpinned by the requisite legislative changes to business and corporate governance law, such a new purpose could be furthered by alternative enterprise design and ownership architectures.  
2. Given the important but diffuse environmental impacts of business ecosystems, businesses should hold expanded but shared accountability for productive activities along supply chains and business networks.  
3. To change the corporate and personal costs of doing harm and appropriately hold perpetrators to account, collective as well as individual liability for environmental harms perpetrated by businesses should be enforced via legal avenues.  
4. As businesses' influence within the Anthropocene also extends to individual consumption behavior (via advertising) and political processes (via lobbying), they should also be accountable for such non-productive activities. Indeed, given the planetary challenges facing us, the UN Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment is clear that “businesses should support, rather than oppose, public policies intended to effectively address climate change”.  

End carbon majors influence

Focusing on the role of fossil fuel companies in particular, scholars distinguish two main moral duties: the (retroactive) duty of reparation and the (prospective) duty of decarbonization, which entails “a large-scale transformation that carbon majors ought to undergo in order to reduce and eventually eliminate carbon emissions from their entire business model.” 

Clearly, the current actions of fossil fuel companies – whether privately or state-owned, and whether in multilateral or domestic political action arenas – are evidence of the opposite trend. We have plentiful evidence that companies are planning for expanded fossil fuel production in the coming decade – and even evidence of carbon majors aiming to artificially increase demand by subsidizing fossil fuel infrastructure in developing countries. This is simply unacceptable.  

Why offer carbon majors the space to influence policymaking in the first place?

In my piece, I highlight legal trends that are increasing the likelihood that companies or decision-makers will be held legally liable for endangering present and future generations. Such changes to case law may make current attitudes increasingly costly for businesses as a whole – who may enter bankruptcy if they are asked to pay compensation for climate change-related damages – and their executives, who might in the future be held criminally liable for crimes against humanity or against future generations.  

But why offer carbon majors the space to influence policymaking in the first place? Given the stakes, there is a pressing need for laws on lobbying and business influence that removes adverse corporate political activity – especially in areas where we have scientifically indisputable evidence that we need to phase out certain business models.  

Ahead of COP28, over 133 US and European politicians, alongside over 425 civil society organizations worldwide, endorsed a letter calling for the removal of the persistent interference from the fossil fuel industry from COP28 and all future international climate talks, including by requiring that companies participating in COPs submit an audited corporate political influencing statement that discloses climate-related lobbying, campaign contributions, and funding of trade associations and organizations active on energy and climate issues. Hopefully, such recommendations will be followed in years to come.