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August 04, 2008

Tackling Climate Change with Business Insight

Glenn Hubbard
Dean and Russell L. Carson Professor of Finance and Economics
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Adapted from remarks delivered at the Kikkoman conference, “The Economics of Green: Finding a Balance between Economic Growth and the Environment,” hosted in honor of the 35th anniversary of Kikkoman’s opening of its plant in Walworth, Wisc. — the first manufacturing plant of a Japanese company in the United States.

The challenges of climate change have inspired myriad debates about how best to arrive at an appropriate solution. Within these debates, many wonder: Who is ideally suited to spearhead the charge?

We’ve already seen that, despite public policy foot-dragging, the business community has played a very constructive role in working to solve the problems caused by global climate change. And I believe that in the future, it should be business leaders who shape the proposals currently debated in the political process.

The demands of globalization have long motivated the business community to develop creative solutions to multifaceted problems.

In 1972, Yuzaburo Mogi ’61, chairman and CEO of Kikkoman Corporation, made Kikkoman the first Japanese company to open a manufacturing plant in the United States, an accomplishment that has proven its worth by withstanding the test of time.

Kikkoman has maintained positive relationships with the surrounding community in Wisconsin, and paved the way for other foreign transplants.

Today, the company is a model of corporate citizenship at every level — from the local to the global.

Mogi recently announced that Kikkoman will sponsor an Environmental Studies Scholarship in cooperation with the University of Wisconsin-Madison, and this fall will open a research and development laboratory in Madison’s University Research Park.

This is the kind of active partnering and collaboration that will be the key to delivering workable and sustainable answers to the potentially crippling environmental challenges we face.

As we move forward, the United States should lead and take action early in the mission of environmental stewardship, while encouraging and regularly reviewing the actions of other key nations. The work of the global community needs to be coordinated to address the seriousness of the problem — and it is possible to do this while protecting U.S. economic interests.

Comments

by Osifo A. | August 05, 2008 at 12:18 PM

Businesses should not lead the charge on providing solutions to climate change. It should be the responsibility of the government. The strong stance in the U.S. against greenhouse gas emissions is the result of pressures put on the government by numerous concerned citizens, not by businesses. This is not to say that businesses haven't followed the government's lead, they have, but if it was left to them, they would not spearhead the effort. A few months ago, i traveled to a country in the Americas to visit an oil and gas facility owned by a one of the largest energy corporations in the world and located in a rural town on the island. The company contributed a lot to the development of the surrounding community and they especially pride themselves in their "green" initiatives. One of which is planting new trees across the island. However, in the day to day operations of the facility they are not so green. I'll spare the technical details, the bottom line is they flare way more gas than they should and as a result release more than their fair share of greenhouse gases into the atmosphere. And this is the same with many oil and gas facilities situated in developing countries, I could go one and one about flaring in the Niger-Delta area of Nigeria. Such practices would never fly in the United States primarily because the government wouldn't allow it. Governments are better suited to spearhead the charge for environmentally friendlier practices. Businesses will not do it as it's not in their financial interest to do so, especially in countries where "green" isn't in. That's why proposed legislations like cap and trade won't work. Unless enforced around the world, the companies would most likely pick up and move to where its cheaper to operate.

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