Ethical Performance
inside intelligence for responsible business


the temperature rises following Bush’s decision to reject Kyoto

May 2001

There are at least four conclusions business can draw from the furore surrounding president George Bush’s decision not to back the Kyoto protocol. The first, and most important, is that in the field of environmental and social performance, companies do not have to wait for governments to set a legal framework. In fact, they don’t even have to wait for governments to point a way forward. If a company sees a good business and moral case for helping the world meet the protocol targets for reducing emissions, then the only approval needed is that of the board of directors.

The CERES conference in Atlanta last month, though by no means completely representative of the US corporate world, certainly gave a strong indication that a number of US companies now realise this, and will be pressing ahead with their plans to meet energy and emissions reduction targets regardless of Bush’s stance.

Second, the decision by Bush serves as a general reminder of the risks companies may face when they make political donations. Companies on both sides of the Atlantic have in the past suffered reputational challenges because they have given money to political parties. There is of course nothing inherently wrong with political donations – indeed, they may be regarded as one way in which a company can choose to fulfil its social obligations – but shareholder approval can help to mitigate the risk. Some SRI analysts include political donations of any sort as a criterion in company assessments.

Third, the Bush decision has raised the temperature in terms of public attitudes to multinationals. It has given ammunition to some non-governmental organizations, which are already talking about boycott campaigns – not just against US multinationals, but those based in other countries too.

Fourth, it has demonstrated that corporate sustainability policies involve making a long term commitment. For many companies, implementing these policies involves making big investment decisions, which cannot in practice be thrown off course by short term political twists.



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