A collage of images, featuring most prominently a person holding a sign reading "no justice no peace"

Category: Climate

Climate / Economics / Environment / General / Health

 by 

Redefining limited liability

Different phases of economic development call for different institutional arrangements. When an institution outlives the economic circumstances for which it was designed, it can lead to unintended negative consequences. The limited liability of corporations, at least under certain conditions, represents an example for such an institution.

Limited liability is one of the key features that distinguishes a partnership from a business corporation. When a partnership goes bankrupt, it is not just the capital of the partnership that is liable but also the private wealth of each of the partners. When a corporation goes bankrupt, by contrast, the reach of the creditors is limited to the capital that shareholders have invested in the corporation. They are off the hook as far as their private wealth is concerned.

It is easy to see why this arrangement leads to a significant increase in the capital that corporations are able to raise compared to partnerships. Which investor would turn down a setup with significant potential upside in terms of capital gain but limited downside? The justification for limited liability from a social perspective is equally obvious. Separating individual property from corporate property in this way hugely enhances financing capacity and thus output across the economy.

Limited liability under climate change

Limited liability worked well under conditions where any growth was good growth. However, independently of whether that was ever true, it is certainly not true in the 21st century. Some economic growth generates negative externalities in the form of social and environmental costs. Corporations only pay for the private costs of their production, whereas the social and environmental costs are borne by society as a whole.

The classic example in this category are greenhouse gas emissions. Corporations in the fossil fuel sector only pay for the private costs of getting the stuff out of the ground. Beyond the insufficient forms of carbon pricing in place today, corporations do not pay for the human and environmental costs measured in human deaths, respiratory disease from pollution, extreme weather events such as heat domes or atmospheric rivers, food shortages due to droughts, and loss in biodiversity. The results are overproduction and overconsumption of carbon-intensive products at inefficiently low prices.

Investor liability as a complement to carbon pricing

The conventional wisdom in the discipline of economics tells us that the most efficient way to reduce fossil fuel production and use to efficient levels is a form of carbon pricing, for example by charging a carbon tax. It is true that carbon taxes could be effective if they were both high enough and progressive. However, they clearly fall short on both counts today.

The above considerations point to a complementary regulatory lever. Under conditions of climate change, the justification for limited liability breaks down. Letting shareholders off the hook is not a good idea when doing so amplifies irresponsible corporate behaviour in the form of overproduction. Instead, in order to convince corporations to meet the challenge of producing sustainably, we have an interest to ensure that both the corporations and their investors have some skin in the game.

Note that this does necessarily imply that investors would have to be liable with all of their wealth, but a limited liability rather than zero liability would encourage corporations to price in negative externalities right away rather than wait for adequate levels of carbon pricing. One might also envisage a progressive form of liability where wealthier investors have more skin in the game than their less well-off counterparts. Indeed, if they did not, their incentives to invest responsibly would be reduced.

Extending the corporate time horizon

Corporations, their managers, and their shareholders are often criticized for maximising profit in the short-term. The current forms of carbon pricing have not succeeded in changing that. Redefining limited liability in the way sketched above promises to have an immediate impact in this regard. After all, under this arrangement, and in contrast to carbon pricing, it is not primarily up to the government to ensure that negative externalities are priced in, but it is up to the corporation and its investors. If the corporation and its shareholders get the numbers wrong, they will have to pay for it.

Some people will no doubt object that liability of this sort would represent a form of red tape restricting private business activity. They have things the wrong way round. Limited liability for shareholders is an enormous privilege bestowed on the corporate sector and its investors. As shown above, this privilege is no longer warranted, at least not for sectors with significant negative externalities. Today, corporations in the fossil fuel sector are able to privatise gains while they socialise losses. This is untenable. Reforming liability arrangements for these kinds of corporations offers one promising path of reform.

Animals / Climate / Distribution / Environment / General / Social justice

 by 

From the Vault: Nature, Animals, and the Environment

While Justice Everywhere takes a short break over the summer, we recall some of the highlights from our 2023-24 season. 

Student climate strike in Melbourne, Australia (2021). John Englart from Fawkner, Australia, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

Here are a few highlights from this year’s posts on issues relating to nature, the environment, and animals:

***

Stay tuned for even more on this topic in our 2024-25 season!

Justice Everywhere will return in full swing in September with fresh weekly posts by our cooperative of regular authors (published on Mondays), in addition to our Journal of Applied Philosophy series and other special series (published on Thursdays). If you would like to contribute a guest post on a topical justice-based issue (broadly construed), please feel free to get in touch with us at justice.everywhere.blog@gmail.com.

Climate / Environment / General / International / Social justice

 by 

Is This Climate Justice? The Australia-Tuvalu Falepili Union

Michael Coghlan, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

This is a guest post by Virginia De Biasio

In November 2023, Australia and Tuvalu, a small island country in the Pacific Ocean extremely vulnerable to climate change, signed the “Falepili Union” treaty. The treaty’s alleged purpose is to help Tuvalu to face the increasingly ravaging effects of climate change.

“Falepili” is a Tuvaluan word for giving to neighbours without expecting anything in return, as if they were family. It stands for the values of good neighbourliness, care and mutual respect. Not very surprisingly, the Falepili Union is a lot more than a friendly and mutually respectful treaty. Framed as climate justice, the treaty is underpinned by Australia’s geopolitical interests and a – not so respectful after all – form of neo-colonialism.

(more…)

Climate / General / Technology

 by 

Why Conscious AI Would Be Bad for the Environment

Image credit to Griffin Kiegiel and Sami Aksu

This is a guest post by Griffin Kiegiel.

Since the meteoric rise of ChatGPT in 2021, artificial intelligence systems (AI) have been implemented into everything from smartphones and electric vehicles, to toasters and toothbrushes. The long-term effects of this rapid adoption remain to be seen, but we can be certain of one thing: AI uses a lot of energy that we can’t spare. ChatGPT reportedly uses more than 500,000 kilowatt-hours of electricity daily, which is massive compared to the 29 kilowatt-hours consumed by the average American household.

As the global temperature and ocean levels rise, it is our responsibility to limit our collective environmental impact as much as possible. If the benefits of AI don’t outweigh the risks associated with increasing our rate of energy consumption, then we may be obligated to shut down AI for the sake of environmental conservation. However, if AI becomes conscious, shutting them down may be akin to murder, morally trapping us in an unsustainable system.

(more…)

Climate / Distribution / Economics / Environment / General

 by 

The climate justice debate has a baseline problem

Humanity faces a number of daunting challenges in the 21st century. Climate change and socioeconomic injustice figure prominently on this list. When it comes to tackling these challenges, two possible strategies divide policy makers.

On the one hand, there are those who point out that addressing either of these problems on their own is a mammoth task, and that taking them on simultaneously is simply utopian. This view sometimes comes with a dose of optimism about technological solutions to climate change. On the other hand, an increasing number of voices argue that climate action can’t be separated from social justice. In particular, advocates of the latter position highlight the “triple inequality of climate change”: The global rich tend to pollute disproportionately and thus bear a heightened responsibility for climate change, the global poor are more vulnerable to its effects, and poor countries have fewer resources available for mitigation and adaptation. In political philosophy, we find a parallel divide between “isolationists” and “integrationists” respectively.

My point here will be to suggest that the case for integrationism is even stronger that even most of its ardent supporters acknowledge. To see why, consider the first of the inequalities mentioned in the previous paragraph. Studies suggest that, across countries, the top decile of polluters are responsible for about 50% of emissions, while the bottom 50% of polluters are only responsible for about 10% of emissions. Wealth strongly correlates with carbon-intensive activities – think everything from private jets and yachts, via mansion-size homes, to multiple trips by airplane per year or multiple cars in a single household.

(more…)

Animals / Climate / Economics / Environment / General

 by 

How the animal industry undermines consumers’ autonomy

In this post, Rubén Marciel (UPF and UB) and Pablo Magaña (UPF) discuss their article recently published in the Journal of Applied Philosophy on the ethical legitimacy of misleading commercial speech for ‘green’ or ‘ethically produced’ animal products.

Photo by Mae Mu with Unsplash Licence.
(more…)

Climate / Democracy / Environment

 by 

What is next for the environmental movement in the UK?

Almost 5 years ago today, on the 31st of October 2018, Extinction Rebellion was publicly launched outside the UK Parliament. Since then, it has been one of the most influential environmental movements in the UK and in other parts of the world, instrumental in changing the public conversation and in leading to the declaration of a climate emergency by the UK parliament in 2019. Using non-violent civil disobedience and mass arrests as the main tactics, in its first few years the movement organised a number of often theatrical actions which included blocking roads and bridges, with activists gluing and locking themselves in public spaces. The question of whether public disruption was indeed the right tactic for Extinction Rebellion, and the environmental movement more broadly, has dominated conversations inside and outside the movement ever since.

(more…)

Climate / Duties / Moral values

 by 

Should you be grateful to nature?

In this post, Max Lewis (University of Helsinki) discusses their recent article in Journal of Applied Philosophy about the kinds of gratitude appropriate for our relationship with nature.

If someone provides you with a gift or does you a favor, you should be grateful to them for what they did. This seems undeniable. In fact, failing to be grateful to them would make you morally criticizable. But here’s a puzzle. Nature provides you with an abundance of benefits you did not earn and are not owed. This too seems undeniable. But, if you are like most people, you are not grateful to nature. You are like the boy in the classic children’s book The Giving Tree: always taking from nature, but never giving back. After all, if you were grateful, you would try to pay nature back.

Image by shameersrk from Pixabay

So, are you morally criticizable for your lack of gratitude? Fortunately, I think not. In On Gratitude to Nature, I argue that we do not owe nature any gratitude. Nonetheless, it can be appropriate to be grateful for nature in numerous ways.

(more…)

Climate / Moral values

 by 

Throwing tomato soup at van Gogh

In October, the environmental group Just Stop Oil staged a number of nonviolent direct actions across London. The most visible of these actions was the throwing of tomato soup at Vincent van Gogh’s Sunflowers at the National Gallery. This action has been highly controversial and has attracted a number of criticisms, both from those who are usually critical of this kind of environmental activism as well as from people who tend to be sympathetic with the cause, and in some cases the methods chosen by these groups, including some who are themselves part of the environmental movement. There were two main kinds of criticism made. First, some felt that the painting was the wrong target for such a protest, often reacting angrily out of fear that that painting had been damaged, which was soon revealed not to be the case. Second, many argued that this kind of action is to be criticised for strategic reasons as it does attract attention, but it mainly alienates people from the cause.

(more…)