The key to a better environment is pay

Recent environmental protests and the strong showing of Green parties in the EU parliamentary elections have underlined a growing public impatience with the slow progress being made by western governments to combat global warming and pollution. But how can change be achieved fast enough to avoid breaching the Paris 2 degrees global warming threshold and finding ourselves at the point of no return?

Across the EU the last 20 years has seen a significant reduction in pollution from sulphur oxides, but very little change in other pollutants – and even an increase in atmospheric ammonia emissions. Overall greenhouse gas emissions are falling across Europe – but at a barely perceptible level – with some countries doing little, or nothing, to combat the problem.

In Cyprus, for instance, emissions are now over 50% higher than they were in 1990. This is largely because of its archaic public transport system and aging private vehicles. The government has never sought to rid the roads of highly polluting older vehicles through a scrappage scheme, or even carry out a feasibility study for a much-needed electric tram and rail system. By contrast, Germany and France have made huge commitments to climate-related expenditure – accounting for more than 70% of the EU total.

At the heart of this problem is not only governments, but also companies that continue their over-reliance on fossil fuels. Apart from the application of old-style clean air Acts and the charging of environmental taxes, little has been done to bring home the sustainability message to company board rooms. One way this can be done is through building in environmental objectives to Corporate Social Responsibility (CSR) policies. Outside Europe this has led to concerted action by Modi’s government in India to hold companies to their word. Thus, in 2018 the Indian government sent more than 5,000 notices to companies that had not fulfilled their CSR responsibilities and issued warnings of prosecution proceedings to more than 250 businesses for non-compliance.

But CSR alone is too weak an instrument to achieve fast or significant change. It is also a non-starter in the USA where the Trump administration remains in total denial that global warming actually exists. To achieve the necessary pace of change it is necessary to hit Boardroom pay where it hurts, by building environmental management into the often-huge bonus schemes enjoyed by Company Directors. One company to begin this in 2019 is BP plc with a new 10% weighting being introduced for the CEO and Finance Director’s multimillion annual bonus payouts. Overall, financial performance still accounts for 50% of the weighting that determines the bonus paid, but at least it is a start.

“The way ahead”, according to Robin Chater, Secretary-General of the Federation of International Employers (FedEE), “is to take the lead from BP. Governments across the globe must insist that pay systems reward good environmental practices. This should not just be at a Boardroom level, but throughout management. There could also be tax concessions for bonus payments linked to environmental performance targets. Once everyone sees a financial link between their actions and a cleaner, healthier, sustainable world – rather than just having to believe in abstract concepts like “global warming” – substantial changes will happen. But things need to be done quickly to head off the otherwise inevitable disaster”.

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