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

Category: Environment

Climate / Economics / Environment / General / Health

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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

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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:

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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

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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.

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Climate / Distribution / Economics / Environment / General

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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.

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Environment / Governance / Moral values / Technology

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Driving for Values

Smart cities are full of sensors and collect large amounts of data. One reason for doing so is to get real-time information about traffic flows. A next step is to steer the traffic in a way that contributes to the realisation of values such as safety and sustainability. Think of steering cars around schools to improve the safety of children, or of keeping certain areas car-free to improve air quality. Is it legitimate for cities to nudge their citizens to make moral choices when participating in traffic? Would a system that limits a person’s options for the sake of improving quality of life in the city come at the cost of restricting that person’s autonomy? In a transdisciplinary research project, we (i.e., members of the ESDiT programme and the Responsible Sensing Lab) explored how a navigation app that suggests routes based on shared values, would affect users’ experiences of autonomy. We did so by letting people try out speculative prototypes of such an app on a mobile phone and ask them questions about how they experienced different features of the app. During several interviews and a focus group, we gained insights about the conditions under which people find such an app acceptable and about the features that increase or decrease their feeling of autonomy.

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Animals / Climate / Economics / Environment / General

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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.
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Climate / Democracy / Environment

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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.

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Academia / Education / Environment / General / Pedagogy / Teaching / Teaching Philosophy

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Why We Should ‘Environmentalise’ the Curriculum

A photograph of a group of people sitting on a frosty hillside. One person is standing up and talking to the others.
Outdoor Philosophy Session by the Critique Environmental Working Group: Place-Based Ecological Reflection Exercise in Holyrood Park, Edinburgh. Photo supplied by authors.

This is a guestpost in Justice Everywhere’s Teaching Philosophy series. It is written by Talia Shoval, Grace Garland and Joseph Conrad, of the Environmental Working Group of the University of Edinburgh’s Centre for Ethics and Critical Thought (Critique).

In this blogpost, we share insights from the exploratory journey we undertook into ‘environmentalising’ the curriculum: a project aimed at bringing the environment to the fore of learning and teaching in higher education. After briefly explaining the guiding rationale, we sketch the contours of the environmentalising project and suggest trajectories for moving forward.

As political theorists working on issues concerning the environment, we start from the working observation that environmental issues tend to be downplayed—or worse, altogether overlooked—in the context of academic learning and teaching, as well as in scholarly research. The environment, when it is mentioned, is often treated as a miscellaneous category, an ‘Other’ that falls outside the remit of and constitutes the backdrop to human affairs. This tendency is exemplified by the lack of environmental materials in syllabi across the social sciences and humanities. Even when environmental issues are present, they are discussed, more often than not, in human-centred ways. Juxtaposed with the evidence of environmental degradation all around, this felt odd, and somewhat disquieting. Our initial intuition told us that the environment should take up much more space in academic curricula and common research, learning, and teaching practices—even in the social sciences, including politics and ethics.

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