Climate Change, Corporate Social Responsibility, and Economic Crisis

Topics: Corporate Social Responsibility, Climate change , Economic Crisis
Summary: Last year Australia’s central bank hoped that several interest-rate cuts would mark a turning point for its slowing economy. That was before the worst bushfires in Australia’s history hit tourism, consumer confidence, and growth forecasts for this year. There is now a good chance the bank will cut interest rates again soon. Welcome to a world in which climate change’s economic impact is no longer distant and imperceptible. Puerto Rico never fully recovered from Hurricane Maria in 2017. Extreme drought in California and poorly maintained utility power lines led to severe wildfires in 2018, the utility’s bankruptcy, and multiple blackouts last year. Climate change can’t be directly blamed for any single extreme weather event, including Hurricane Maria or Australia’s bushfires. But it makes such events more likely. “They are starting to be more than tail events, they’re starting to affect economic outcomes,” said Robert Kaplan, president of the Dallas Federal Reserve Bank
Classroom Application: Corporate social responsibility continues to be an important topic in the field of business ethics. This article provides an opportunity for faculty and students to analyze and discuss various concerns and potential strategies that companies might undertake to deal with economic fluctuations and disruptions as a result of events associated with climate change.
Questions:
1. Some on Wall Street are starting to treat climate change the way they regard financial crises. The CEO of BlackRock said that climate would be a key criterion in how BlackRock invests its $7 trillion of client money. What are some of the challenges for business leaders given the increased emphasis on this variable (i.e., climate-related events) with regard to developing short-run and long-range business strategies?
2. Corporate social responsibility is often measured by looking at the “triple bottom line” (i.e., people, planet and profits). What are some of the key considerations for business executives in deciding how to balance these three areas or perhaps emphasize one at the expense of the other two?
3. According to the author of the article, “Worrying about climate change isn’t the same as doing something about it. Unlike financial crises, neither Wall Street nor central bankers have the tools to alter the forces making climate crises more likely: rising carbon dioxide emissions and economic development in vulnerable regions. Only political leaders can—and it isn’t clear they will.” What counter argument could you make to the author who offered this statement?