The ethics of catastrophic risk

Ian Dunlop

This article was published in Living Ethics: issue 78 summer 2009

The tortuous path of the emissions trading scheme (ETS) through Federal Parliament represents an absolute low point in the development of Australian public policy, particularly from an ethical and moral perspective, writes Ian Dunlop.

The stream of recent scientific reports on climate change clearly indicates that we now run a rapidly increasing risk of catastrophic failure of some part of the climatic system which may seriously damage society as we know it. On the balance of probabilities, human greenhouse gas emissions are the primary cause. But while ‘catastrophe’ may be gradually entering the politically acceptable climate lexicon, we have yet to draw the logical conclusions.

Despite twenty years of negotiation, virtually nothing has been done to address the problem, with human emissions accelerating in excess of the worst predictions. The impact can already be seen in, inter alia, the rapid melt of Arctic summer sea-ice, declining natural carbon sinks, accelerating ice-sheet melt, ocean acidification, carbon dioxide emissions from the Arctic permafrost and methane hydrate emissions from the Arctic seabed. These major changes are happening at the 0.8oC temperature increase we have already experienced relative to pre-industrial conditions, let alone the additional 0.6oC to 3.5oC to which we may already be committed as the full effect of historic emissions is felt. None of this can be explained by the sceptics’ arguments.

The weak, inconsistent, compromises which now represent Australian climate change policy, built around out-dated science, would, if adopted globally, probably result in catastrophic temperature increases of around 3-4oC by 2050, representing devastation for large parts of Australia, let alone the world.

To pretend that Australia is a leader on climate change, as Prime Minister Rudd would have us believe, is hypocrisy of the highest order. Government and Opposition, along with major corporations, are well aware, from their scientific advisers, of this rapidly deteriorating picture, and the need for far more aggressive policy and action.

Prudent risk management now dictates that our global response must be raised to an entirely different, emergency level, built around the latest science; it cannot be based on incremental change to ‘business-as-usual’ and ‘the art-of-the-politically-possible’, which characterise both the Copenhagen process and the national debate. The continuing refusal of our leaders to honestly acknowledge this fact raises fundamental concerns over national and corporate governance.

We need effective emissions trading. But our proposed scheme contravenes virtually every recommendation of the government’s own advice in the Garnaut Report1, and overseas experience. The emission reduction targets are far too weak, there are escape clauses at every turn, compensation to established emitters is obscene. The net result is that implementation in its current form will make money for carbon traders and banks, windfall profits for high emitting fossil-fuel industries, but do nothing to reduce emissions. Worse, it will slow innovation toward a low-carbon economy, create great investment uncertainty due to the scheme’s inadequacy, in the process undermining the credibility of emissions trading and destroying our enormous opportunities, competitiveness and job creation potential as we enter the low carbon world.

The history of major reform in Australia indicates that once policy is implemented, it is almost impossible to change for years to come. Given the urgency to reduce carbon emissions, to implement policy in the full knowledge that it cannot address catastrophic risk in the limited time available, as now proposed, is a serious breach of fiduciary responsibility to the electorate. Current policy needs major revision.

The national debate has been dominated by economics and cost benefit analysis, but if catastrophic outcomes are in serious prospect, our approach must be based far more on moral and ethical considerations. Intergenerational equity must be a prime consideration, as should the implications of irreversible climatic shifts.

Corporately, directors have a fiduciary duty to act honestly, in good faith and to the best of their ability in the interests of the company in perpetuity – the last two words have been conveniently forgotten in recent years as business worships at the altar of short-term incentives.

Corporations have the intellectual capacity, and obligation, to understand the latest science, and they must be the powerhouse driving the solutions. Business proudly proclaims “we know how to do risk management!”; climate change is likely to be the major risk affecting companies in the coming decade, yet business leaders are silent on its implications when they know full well what may be in train. It is utterly irresponsible of them to allow lowest-common-denominator industry organisations to take the running, with denial, delaying tactics and special pleading for unwarranted compensation, as they have been doing for more than a decade. Why are business leaders not publicly supporting the impassioned pleas from leading scientists to take these matters far more seriously? Any sense of urgency to alert shareholders to these risks is absent. Again, a serious breach of fiduciary responsibility.

We are witnessing a rerun of the denial and obfuscation that still characterises the tobacco and asbestos sagas, but this time the consequences will be far worse. ‘Knowledge is responsibility’ – directors, and government, should think carefully not just about the legal implications, but particularly about the moral and ethical dimensions of their inaction – not least, what will you tell your grandchildren?

The missing ingredient to handle catastrophic risk is statesmanship, political and corporate; the ability to set aside parochial short-term expediency, take a long-term principled position in the interests of humanity, then carry it through. It requires a preparedness to honestly articulate the real climate challenge we now face, set out the solutions and implementation path, however unpalatable, and build a coalition for change. It also requires corporate responsibility to be taken to an entirely different level, voluntarily exiting industries that are no longer environmentally tenable, rather than fighting tooth-and-nail to preserve the status quo in the interests of short-term reward.