Why This Wharton MBA Professor Is Running For The U.S. Senate

‘The climate imperative is that every business needs to think about the climate, because everyone has to be part of the solution to the climate problem,’ Orts says. (Courtesy photo)

What do you see as business’ role in combating climate change?

First of all, it’s helpful to begin with the understanding that this is a very complex phenomenon. When people just say ‘business’ and business does ‘x’, it’s really an oversimplification. There are a lot of different kinds of businesses.There’s the fossil fuel industry side of business, and then there’s the renewable energy side. There are very large businesses that are multinational and have an interest and then there are lots of medium size and small businesses. There are some businesses that are oriented very strictly to maximizing profit. 

And then there are students graduating from business schools, and I think this is increasing, who don’t want to be part of just maximizing profit. They want to be part of a company that has values, that wants to maximize profit without destroying the planet.

There are people who believe that business can do no wrong. There are people on the other side of the spectrum who also don’t understand that business is an intrinsic part of our global civilization. There’s no way that we continue to reproduce ourselves in our economy without a business framework. At the same time, you have to think about what is the purpose of business? The answer cannot be, in my view, just making money. If that is the answer, then we will destroy our climate and that’s not a very good argument for business. You cannot destroy the underlying natural basis of your entire civilization, just to maximize profits. 

In April, you wrote a piece for the Berkeley Haas School of Business’ California Management Review called ‘The Climate Imperative for Business.’ Tell us, what is the climate imperative?

The climate imperative is that every business needs to think about the climate, because everyone has to be part of the solution to the climate problem. 

I generally think about the role of business in our society. Business has to be part of providing goods and services that are good for people. If it means destroying the climate, that’s not really good for people. It’s not good for our children or grandchildren. 

I wrote the piece with a colleague of mine, Brian Berkey, who is a philosopher. And in philosophy, we have this idea of a categorical imperative, the idea that you don’t kill somebody else to get ahead. It’s not something that you do a cost benefit analysis about the moral principle. There are some things that are just right and wrong. So we argue that today, it’s imperative from an ethical point of view that you can’t act in a way to make the climate problem worse. We know, with a high degree of certainty, that continuing to produce greenhouse gases in the atmosphere is killing people already. So, you have to behave in a way that is helping to be part of the solution to the complex but solvable climate problem. 

What roles do governments and politicians play?

I think one of the biggest fallacies that has infected the understanding of people in business schools and in business, is the idea that somehow government is always bad. Government can never solve a problem and therefore, you just let the free market rip and things will be fine. If you look at it from an environmental perspective, you have a well known problem that economists call externalities. Greenhouse gases are a huge externality, and you just simply cannot incorporate that into the business framework without a government structure. You need to have the government to solve certain kinds of collective action problems. 

Having said that, it’s also true that there are huge weaknesses in government’s dealing with the climate problem. For example, a lot of people say,  ‘Well the climate problem is easy. All we have to do is figure out the externality, put a cost on that externality, tax all the products that are using it, and then the markets will work and we will have a solution.’ Unfortunately, it doesn’t work that way. 

The government has to play a role, including an international role.The U.S. government is giving a lot of subsidies to fossil fuel companies, and what we need to do is switch the incentives. We need more incentives going toward renewable energy and more incentives going toward smart grids, rather than pipelines. In that respect, the government is key. You have to have the government to get the policy framework right. 

And that’s why, that’s one reason why I’m coming from business school and I’m jumping into politics. The business solutions are actually there. We can move to a renewable energy economy. It’s not that easy to achieve, but we can do it and a lot of businesses are going to make a lot of money in the transition. 

(Interview continues on the following page.)