For far too long, successful business ventures have come at the expense of sustainability and environmental protection. The main critique of business’s environmental impact arises from many companies’ failure to consider long-term sustainability when chasing short-term profits, a tradeoff that often comes at the expense of scarce natural resources. In allowing businesses to profit while they operate in a way that harms the public, the U.S. government is unable to hold many businesses responsible for the damage they do to the environment.
If we as a Georgetown University community and the American public as a whole want business to work for the environment, we have to realign economic incentives with environmental regulations. By creating financial incentives for individuals and corporations alike, a system of environmentally conscious capitalism will facilitate a continuous drive to innovate and create more sustainable products and services to satisfy consumers’ growing environmental concerns. Sustainability-focused businesses and entrepreneurial innovation must be at the forefront of the battle to stop climate change. Consequently, organizations that are putting people and the planet first are rewriting the narrative of sustainable business, and that change is beginning right here at Georgetown with initiatives like the MBA Certificate in Sustainable Business and the Fossil Fuel Divestment Campaign.
When it comes to fostering systematic changes within the capitalist system, the battle begins at the policy level: giving businesses an economic motivation to be sustainable. Despite inaction at the federal level under the past administration, state and local governments are beginning to implement these kinds of solutions, which are quickly gaining traction. Ranging from cap-and-trade systems for carbon permits to government subsidies for research and development, these measures will all have lasting effects on capitalism’s environmental impact. More specifically, a policy lever like cap and trade harnesses market forces to establish a price on carbon that creates incentives to innovate and reduce emissions.
On the other hand, the United States’ archaic dependence on fossil fuels has created a misalignment of market subsidies, with $5.2 trillion in annual global subsidies going toward fossil fuels. This unfair advantage given to fossil fuel producers and oil and gas lobbyists over clean energy alternatives distorts market incentives and artificially lowers the price of fossil fuels. Despite this setback, renewable energy generation outpaced coal generation in 2019 for the first time in more than 130 years. Our nation’s growing movement toward a clean energy grid will bring significant economic growth by creating thousands of high-quality jobs for local communities and revolutionizing the transportation industry with electric vehicles. Similarly, Georgetown has taken advantage of government incentives like Renewable Energy Certificates, which has allowed the university to offset all of its emissions since 2013 while financially rewarding renewable energy producers.
Despite the market failure arising from fossil fuels, many companies are implementing a sustainability-focused business model and are being rewarded for their innovation. For example, Tesla has revolutionized the electric vehicle market, which has contributed to its meteoric rise to a $331 million profit in the third quarter of 2020 and into the S&P 500. At Georgetown, Business for Impact — a faculty-organized initiative in the McDonough School of Business — has created a powerful network of company partners and students emphasizing the triple bottom line approach, which pushes businesses to be conscientious of their social impact in addition to their profits. Both of these organizations and countless others are utilizing consumer demand and sustainable business models in the free market system to do good for the environment.
With the promising growth of renewable energy and the growing community of those passionate about the intersection of sustainability and business, companies centering their business model on sustainability will continue to prosper. As more and more businesses make sustainability pledges, they will play a pivotal role in the transition to a more equitable and sustainable world.
Most importantly, I have learned there is a community of business-minded people like me — particularly college students — who share a love for the environment and are eager to create meaningful change at Georgetown and beyond. Whether it be working with Business for Impact, consulting for a sustainability startup, volunteering at a Washington, D.C. nonprofit or even taking one of Georgetown’s many environmentally focused classes, now is the time to be part of the community at the intersection of business and sustainability here at Georgetown. Let’s make business the solution for the world’s environmental problems.
Scott Kase is a sophomore in the McDonough School of Business.