Beloved burrito chain, Chipotle, and tech empire, Apple, have been in the news in recent weeks for two different, but ultimately related, reasons.
In a filing with the Securities and Exchange Commission, Chipotle warned that the effects of climate change might lead them to “temporarily suspend serving menu items, such as guacamole or one or more of our salsas, rather than paying the increased cost for the ingredients.” The threat of a guacamole freeze set off a mild media panic hereafter known as the ‘Guacpocalypse.’ (Chipotle has since responded that this is “routine ‘risk factor’ disclosure” being taken out of proportion and that removing guacamole is highly unlikely even though prices have risen in the past due to weather.)
Meanwhile, Apple made headlines when its CEO, Tim Cook, responded angrily to a representative from a conservative think tank who questioned Apple’s investments in clean energy. Cook replied, “If you want me to do things only for [return-on-investment] reasons, you should get out of this stock.” Apple previously abandoned the Chamber of Commerce over the group’s opposition to cap-and-trade legislation that ultimately failed to pass Congress.
You might now be asking yourself, “Wait — don’t businesses want us to ignore climate change?” The fact is, some businesses face a lot of risks from climate change — and they know it.
As Chipotle’s filing made clear, climate change has a direct effect on businesses that rely on agriculture.
A prime example of this is California’s historic drought. While there is some debate over whether climate change caused it, many scientists do believe it has made the drought worse. Further, a state like California is highly susceptible to a lack of water. In 2011, California produced 195,000 tons of avocados, about 86 percent of total US production. They also produce vast amounts of other water-intensive crops.
The ongoing drought, however, affects more than just California. It is expected to drive up national food prices by as much as 10 to 15 percent. Restaurants are not the only businesses that will feel the pinch, though; as food prices rise, consumers will have less disposable income to spend elsewhere.
A Tough Business Climate
Other adverse effects of climate change range from added stress on the power grid to higher healthcare costs and disruptions to transportation infrastructure. All of this ultimately poses additional costs to businesses; for example, a weakened power grid hampers the ability to operate. Additionally, healthcare costs shrink the bottom line, and transportation issues make it harder to get products to stores.
While there has been very little movement in Congress — indeed, a large number of members deny climate change is even real — it isn’t totally unreasonable to expect that statements from businesses could go a long way in shifting public opinion. After all, learning guacamole might be harder to come by got a lot of people stirred up. Imagine what the loss of a more necessary consumer good might do.
Roughly 29 major companies, including the “Big Five” oil companies, already factor a carbon tax into their financial plans, despite lack of action in Congress. As TCF Policy Associate Neil Bhatiya noted, there are other incentives for companies to support a carbon tax besides environmental ones. For example, 70 major investors, with combined assets of $3 trillion, called on fossil fuel and power companies to assess the risks associated with climate change. Additionally, the reinsurance industry —companies offering insurance to insurance providers—said understanding the effects of climate change is crucial to its survival.
Even small business owners, many of them Republicans, support a number of policy actions to tackle climate change.
Who Holds The Power?
None of this is to say the business community is unanimous. Groups like the Chamber of Commerce have opposed climate change legislation in the past, despite (falsely) claiming they have “never questioned the science behind global warming,”causing a number of major corporations, including Apple, to drop their memberships in protest.
That said, the Chamber still has a significant war chest, and they are more than willing to use it. Since 1998, they have spent more than $1 billion on lobbying, nearly four times as much as the next closest organization. They have also spent millions on elections, backing Republicans who feature many climate deniers in their ranks.
And yes, there are companies that do not take the same forward-thinking view. In many cases, these are big companies that contribute heavily to climate change and, ironically, have a lot to lose from it.
ExxonMobil needs roads to transport gasoline; Walmart probably does not want to see healthcare costs rise; Carnival Cruises (the worst in the “consumer discretionary” industry) would probably like its destinations to be spared from climate disasters.
What companies like Apple and Chipotle have realized—and what some other companies and policymakers still need to—is, whatever the costs of addressing climate change are, they don’t come close to what inaction will cost them.
There are groups like the American Sustainable Business Council* already taking this tack and pushing for federal action on climate change. Gathering like-minded businesses together to make the case for climate action is the best way to change the debate; if the climate-change-denier phenomenon proves anything, it’s that simply pointing at the data won’t do the trick. Showing people the business community actually favors action on climate change eliminates the most powerful argument against it.
Sometimes, it’s as simple as, “Fix the climate or the guac gets it.”
*Disclosure: Zachary Bernstein is currently employed by the American Sustainable Business Council.