Today at TILE we talked about the economics of climate change. What does the climate summit at Copenhagen mean for our global approach to climate change? Why can’t businesses, in general, see the impact they have on the environment? Why aren’t they more enthusiastic about switching to a greener model?

In economics, we talk a lot about supply and demand – the push and pull tension between what is available and what consumers want. In the area of climate change, tension is a constant because a lot of the conversations hinge on energy supply and demand. There is tension between developed nations and less developed nations, between traditional business metrics and “greater good” metrics, and between short-term and long-term outcomes.

Developed nations such as the U.S. and U.K. grew prosperous, in part, by using economically cheap yet environmentally costly fossil fuels. In fact, during America’s industrial boom, steel towns like Pittsburgh used to have “blackouts” during the day from all of the coal in the air. Developing nations point to this and claim that they should not be restricted by the rules more developed nations are trying to impose (like carbon reduction) yet did not observe in their own development. Another argument points out that while nations like China emit more carbon than the U.S. in total, Chinese individuals pollute far less than Americans do. Some statistics showing the climate footprint of an individual in the U.S. (19.78 tons of carbon emitted per person per year) versus China (4.58 tons), highlight the imbalance and the tension between developed and developing nations. (U.S. Energy Information Administration)

There are also international tensions between traditional definitions of “business good” and “greater good.” Businesses measure success with financial metrics – and climate metrics can often get in the way of profit! Businesses aren’t interested in (or rewarded for) sacrificing money in the bank today for cleaner air tomorrow. So it oftentimes takes legislation to influence corporate change. For example, if the international community takes a unified stance to increase restrictions on how much coal a company can use, it may limit production and increase the cost of their product in the short term. But it could also ensure that all companies around the globe are operating on a level playing field and mean a better, more healthy world tomorrow. Right now, what we see is that most businesses are driven by short-term instead of long-term considerations, but negotiations in Copenhagen will seek to create new rules both for how nations address climate change and how businesses operate.

So, are we at a point where we can change the game? Can we live in a world where countries, companies, and people think in terms of a “double bottom line” – economic growth balanced with longer term environmental rewards that benefit everyone? Lately, there are more and more examples of companies that “get it.” Stonyfield Farms is not only an incredibly profitable company but has been able to uphold an ambitious organic, environmental, and social mission even after its sale to Groupe Danone. In fact, it has begun to successfully spread these values into the larger organization. Consumers have started to vote with their wallets and demand more sustainable products and suppliers. Some corporate giants have heeded the call and begun to switch the way they do business. Carrotmob, on the other hand, is a web-based network of consumers that encourages local businesses to compete with one another for making the most socially responsible decisions. The reward for the winner is a “mob” of happy paying customers.

I hardly have to ask what this all means for the TILE Community. The youth of the world have the most to win or lose from this issue and it is important that you recognize the power you have right now. Nothing will change if you just talk about it. Take action – there is a lot you can do. First, vote with your wallet. Money is the most immediate way to communicate to companies that your demand for responsible products should lead them to increase supply. Second, consider investing in companies that practice a double bottom line. Your advisor can help you identify the companies that work for you and your portfolio. In essence, you’ll start to reward those companies by creating more demand not just for their product but also for their stock. Finally, be open to make those short- and long-term tradeoffs in your own life. It may be tough to push back against your high-carbon lifestyle at first… but there so much at stake.

- Amy