November 17, 2010

Private Sector Has Key Role in Carbon Accounting, CWRU Professor Says

Jessica Green

When it comes to controlling carbon emissions, a Case Western Reserve University political scientist challenges conventional views that countries are the only ruler makers in international politics of climate change.

Jessica Green from Case Western Reserve University’s College of Arts and Sciences reports that today’s gold standard for measuring the carbon footprint of firms and organizations was created by the collaborative efforts of NGOs and the private sector—not by countries forging the Kyoto Protocol.

Green builds a strong case for how private business had key roles in shaping global changes in her research article, “Private Standards in the Climate Regime: The Greenhouse Gas Protocol,” for the journal Business and Politics

The World Resources Institute and the World Business Council on Sustainable Development filled a regulatory vacuum by creating the Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard in 2001 with input from business and nongovernmental leaders. The protocol sets standards, guidelines and tools to calculate an organization’s carbon footprint.

Eighteen percent of the U.S. Fortune 100 companies, 12 percent of the Global Fortune 100 and more than half the companies reporting through the Carbon Disclosure Project use the protocol.

More importantly, adoption by International Organization for Standardization (ISO), the world’s largest organization to set standards, is among the protocol’s biggest successes.

She writes about how the two NGOs collaborated to develop a credible, rigorous accounting protocol in 1999, as efforts to measure and eventually trade greenhouse gases were beginning to evolve.  Through a multi-stakeholder, peer-reviewed process, the creators of the protocol created a legitimate set of measurement standards. 

Funding from organizations such as the U.S. Environmental Protection Agency, Alcoa Foundation, British Petroleum and some charitable foundations strengthened the legitimacy of the protocol, she reports.

By the protocol’s publication in 2001, it had some 200 organizations involved.

Green argues that emerging markets created by the Kyoto Protocol, and the likelihood of future international regulation, spurred participants in the protocol to be prepared. Companies were apprehensive about the Kyoto deadlock and worried about the future high costs that might come if forced to enact changes quickly.

 “Virtually all GHG registries—which do not trade emissions, but simply require participants to report them—use some version of the Protocol,” Green writes.

The protocol jump-started businesses to voluntarily make changes before governments began regulations. It reduced transaction costs of implementing a measurement scheme, and enhanced the reputations for companies that took a proactive approach to managing their greenhouse gas emissions.

With the Kyoto Protocol pending, the assistant professor of political science said, it also gave the companies a competitive advantage prior to international regulations.

“Companies also could position themselves as climate leaders,” she said.

She also stated, “As the climate regime expands and the value of carbon markets grows, issues of GHG measurement and standards will only become more important.”

Green’s interest in the carbon emissions and the Protocol derived from her experiences working with the United Nations Framework Convention on Climate Change.  She later pursued the topic at the Woodrow Wilson School at Princeton University where she earned her PhD in political science.  She joined the Case Western Reserve University faculty this fall.

Green will discuss efforts to lessen carbon emissions when she gives a Public Policy talk at 12:30 p.m. Friday in Crawford Hall, Room 9.

Posted by: David Wilson, November 17, 2010 10:43 AM | News Topics:

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