The Trump administration is currently embroiled in an internal debate about whether to pull the US out of the Paris Climate Agreement. White House strategist Stephen Bannon and Environmental Protection Agency head Scott Pruit are leading the charge to exit, while Ivanka Trump, Secretary of State Rex Tillerson, and a long list of multinational companies are trying to convince Trump to remain. Below is a recent letter from some of those companies, making the business case for remaining:
April 26, 2017
Dear Mr. President,
We write to express our support for continued participation by the United States in the Paris climate change agreement.
Climate change presents U.S. companies with both business risks and business opportunities. U.S. business interests are best served by a stable and practical framework facilitating an effective and balanced global response. We believe the Paris Agreement provides such a framework.
Companies based or operating in the United States benefit from U.S. participation in the agreement in many ways:
• Strengthening competitiveness – By requiring action by all parties, developed and developing countries alike, the agreement ensures a more balanced global effort, reducing the risk of competitive imbalances for U.S. companies.
• Supporting sound investment – By setting clearer long-term objectives, and by improving transparency, the agreement provides greater clarity on policy direction, enabling better long-term planning and investment.
• Creating jobs, markets and growth – By committing all countries to action, the agreement expands markets for innovative clean technologies, generating jobs and economic growth. U.S. companies are well positioned to lead, and lack of U.S. participation could put their access to these growing markets at risk.
• Minimizing costs – By encouraging market-based implementation, the agreement helps companies innovate to achieve environmental objectives at the lowest possible cost.
• Reducing business risks – By strengthening global action over time, the agreement will reduce future climate damages, including physical harm to business facilities and operations, declining agricultural productivity and water supplies, and disruption of global supply chains.
As businesses concerned with the well-being of our customers, our investors, our communities, and our suppliers, we are strengthening our climate resilience, and we are investing in renewables, efficiency, nuclear, biofuels, carbon capture, sequestration, and other innovative technologies that can help achieve a clean energy transition. For this transition to succeed, however, governments must lead as well. We urge that the United States remain a party to the Paris Agreement, work constructively with other nations to implement the agreement, and work to strengthen international support for a broad range of innovative technologies.
We believe that as other countries invest in advanced technologies and move forward with the Paris Agreement, the United States can best exercise global leadership and advance U.S. interests by remaining a full partner in this vital global effort.
We appreciate the opportunity to share our views and would welcome the opportunity to provide further input as the Administration continues to shape its climate policies.
Sincerely,
Apple | BHP | Billiton | BP | DuPont | General Mills | Google | Intel | Microsoft | National Grid | Novartis Corporation | PG&E | Rio Tinto | Schneider Electric | Shell | Unilever | Walmart
The flawed belief that American companies and workers will benefit from rolling back environmental regulations hit home for me last week while I was attending a talk by General Motors CEO Mary Barra at the Stanford Graduate School of Business. While I greatly respect Barra for succeeding in a male-dominated industry, I found her claim that GM is a tech company that just happens to make cars, and that GM is leading her industry in all things innovation and environment, to ring hollow. Here we were in the Bay Area, where the likes of Tesla, Uber, Lyft, Google's Waymo, and Apple are truly innovating, and working to make transportation safer and more environmentally sustainable. Meanwhile, Barra lobbied the Trump administration to kill the 2022-2025 Corporate Average Fuel Economy (CAFE) standards from her seat on Trump's Strategic and Policy Forum, apparantly with some success — in March, Trump ordered the EPA to reopen a review of those standards.
Weakened environmental standards allow GM to cut research and development spending and to sell more large trucks and SUVs in the short-term, but it weakens the company in the long-term. Traditional Japanese, European, and Chinese automakers, along with new transportation upstarts worldwide, will continue to improve the efficiency and costs of their products. The painful pattern of the American automaker's boom and bust/government bailout dictated by protective trade policies and the price level of energy prices is set to continue. Investors recognize this — the market cap of Tesla now exceeds that of GM, Ford, and Fiat Chrysler. Likewise for Uber. The combined market cap of Toyota, Honda, and Nissan is twice that of GM, Ford, and Fiat Chrysler's combined market cap. And VW, Daimler, and BMW are not far behind the Japanese automakers in their combined market cap.
Trump's environmental, trade, and immigration policies risk doing serious and lasting damage to American economic competitiveness. Human talent and financial capital know few borders in today's modern world. Let's not let America's overall economic competitiveness in the world go the way of America's automotive industry.