When Biden entered office, a new era began. Not to sound too grandiose, but the changing political structure of our government — including both the executive and legislative branches — has far-reaching effects on how individuals and businesses operate. Aside from actual government policies affecting business, the mere anticipation of economic or social change can have substantial impacts on the economy itself. Like how an expected inflation causes actual increase in inflation with a given employment level, corporate expectations of the Biden administration’s actions relating to environmental policy are already impacting how they consider the environment — at least, how they appear to consider it.
Since the US rejoined the Paris Climate Agreement almost immediately after Biden took office — an action that surely had a dramatic impact emphasizing the president’s commitment to environmental remediation — , automakers like General Motors started investing more in electric vehicles as well as technologies to improve their efficiency, according to Reuters. Grist Newsletter also reports that even the American Petroleum Industry (API), a former harsh opponent of the proposed carbon tax, now is discussing a statement supporting it. Why? According to Megan Bloomgren, vice president of communications for API, they want to focus “on supporting a new U.S. contribution to the global Paris agreement.”
Okay, but really, why? A carbon tax has no ostensible benefit to the API; in fact, the oil industry would be the most hurt by it. And the idea that a megacorporation like API suddenly considers morality in its operations is improbable at best. Could this fast response to the new government be more sinister than it seems?
The most probable scenario is that the American Petroleum Industry now considers a carbon tax as likely to occur in the near future. Essentially, they want to minimize their losses by cooperating with the government and taking part in negotiations on this matter. Seeing as the new president has emphatically stated his commitment to creating environmental solutions, the corporation sees the most favorable outcome as one in which they align, if reluctantly, with those incoming changes. This would also prevent more powerful and effective solutions from being imposed on corporations, like strict regulations.
This is a single example of how companies have recently been choosing to vocally support environmental solutions, when in reality it’s to protect their bottom line. Not that it’s wholly surprising, but that’s not the only deceptive behavior that has been occurring lately. Over the past few months, many large businesses, including Citigroup, Ford, American Airlines, have stated their commitments to zero net emissions. This sounds nice until you consider that only about 17 percent of these firms have any stated plans as to how they will do this, according to The Hill, and these companies generally produce copious emissions. Businesses can say all they want and even set arbitrary, faraway dates for these measures, but ultimately there is no one holding them to those claims, and they are still free to do what they want at their own pace. Without proper oversight, there is reason for worry that these proclaimed goals are meaningless.
While businesses observe and react to governmental decisions, the flip side of this relationship is dubious. The government can impose occasional restrictions and sign slow-acting policies, but for true environmental remediation through industry adjustment, the government must provide oversight and guidance to make sure that the solutions are enacted properly and promptly. Fundamentally, big businesses — the ones that contribute roughly a quarter of greenhouse gas emissions to the ozone — are not motivated by environmental concerns and will do as little as possible in terms of addressing them to maximize profit. This neglects the fact that the environment around us is inarguably a source of economic value, even though we don’t typically think of it as one. True and keen government action is needed to realize and preserve this value.
What are your thoughts? How should the interaction between businesses and the government work in your opinion? We’d love for you to share in the comments.