Business leaders disagree on whether New Jersey should rejoin the Regional Greenhouse Gas Initiative or not. The source of this disagreement can be traced back to fundamentally different perspectives on the mission of business and the role of government in the market.
For those who believe that the purpose of a business — and the duty of its leadership — is to maximize profits for the benefit of shareholders, keeping a company’s costs as low as possible is a top priority.
While appealingly simple, narrowly focusing on the company’s bottom line ignores the interests of others who are also affected by what the business produces and how it functions, such as employees and their families, communities in which the business operates and interconnected networks of suppliers. Some companies lower costs by shifting them to other stakeholders. Because of this, government has a role to play in writing rules and policies that ensure the pursuit of private commercial interests also serve the greater good.
Energy is a prime example. For decades, fossil fuels have been considered to be the cheapest source of energy. But we now know that the price of conventional energy sources does not include the cascading costs that come from air pollution, skyrocketing asthma rates, health care rates, increased levels of carbon in the atmosphere and the escalating expense of climate disruption.
What’s good for a company’s bottom line may impose other costs for the rest of us. That’s why smart public policies are so important — policies that are designed for the common good; policies that are adaptive to changing market, societal and environmental conditions; policies that combine pragmatism with foresight. One such forward-thinking policy is RGGI.
As a cap-and-trade system, RGGI is a way of doing two critical things that are necessary to addressing the climate change crisis: lowering carbon emissions, and lowering the economic, societal and environmental costs of energy in total.
RGGI is not the only solution to decarbonizing the economy; there is no one policy that will solve this complex challenge. Still, RGGI is an important complement to the state’s Energy Master Plan that is being developed as a multifaceted strategic roadmap to achieve Gov. Phil Murphy’s goal of reaching 100 percent renewable energy by 2050.
Passing judgment on RGGI through the typical business lens of “maximizing shareholder profits” seems myopic and void of long-term considerations for people and business.
Thankfully, there is a growing network of businesses who view the purpose and the impact of their work through a wider, values-driven, longer-range lens in which earning a profit and contributing to the common good go hand-in-hand. These business leaders view their responsibility to include the inter-related interests of their shareholders, employees, communities and the environment. At the same time, these innovative businesspeople look beyond their next quarter’s earnings or fiscal year so they can make sustainability-oriented investments that will yield substantial cost savings to all stakeholders over the long run.
To New Jersey’s values-driven business leaders, RGGI and the governor’s commitment to a clean energy plan are positive steps toward:
- Creating a more vibrant, sustainable and equitable economy fueled by clean energy, which itself generates fiscal savings over the long-term.
- Redefining competitive advantage based on a combination of a company’s net economic, social and environmental impacts — often described as “triple bottom line.”
- Demonstrating how market-driven innovation and smart public policy can work together to create shared and sustainable prosperity for all.
This is not a pie-in-the sky vision. Ongoing technological advances continue to drive down the cost of renewable energy sources, with homeowners and businesses alike reducing their energy costs by investing in energy efficiency improvements and distributed power generation such as solar panels. Private investment continues to fund clean energy technologies like offshore wind that will create tens of thousands of family-sustaining 21st century jobs. And the CEO of Black Rock, the world’s largest asset manager, has given notice that it is now directing its investments into companies who combine profitability with a larger social purpose.
RGGI also has a strong record of boosting the economy in our state and the region. From 2009 to 2011, New Jersey’s participation in the program produced both economic and environmental benefits, including more than $150 million in growth and 1,700 job-years added to the state’s economy. In its first decade, RGGI has generated a net positive economic impact of $4 billion, created tens of thousands of additional job years and lowered energy costs for all participating states. It’s time for New Jersey’s businesses and consumers to share in these benefits once again.
What’s more, RGGI is a way of slowing the inertia of an outmoded energy system while skillfully steering the economy in a more sustainable direction, because it’s increasingly obvious that staying on the “business as usual” course will be dangerous for us all.
Richard Lawton is executive director of the New Jersey Sustainable Business Council, a network of businesses working to advance market and policy solutions for a more vibrant, sustainable and equitable economy. In his 30-year career with Fortune 500 companies, he held several executive positions and spearheaded change initiatives that improved profits while reducing environmental impacts. He holds an MBA in Sustainability.