The Inflation Reduction Act (IRA) turns one year old next week — and unless you’ve just woken from a Rip Van Winkle-style slumber, you know it’s the United States’ most momentous climate legislation in a generation, intended to cut U.S. climate pollution by up to 42 percent by 2030.
As the anniversary approaches, I keep thinking about a talk that Columbia University economist and sustainable development authority Dr. Jeffrey Sachs gave at the CDP U.S. Workshop in May.
The main takeaway of Sachs’ talk? Business net zero plans are inadequate without real climate policy. And the IRA’s not it. So what is truly needed to confront the climate crisis?
The IRA is limited
Some of the main grounds of Sachs’ lecture have been well-trodden over the IRA’s first year: The legislation itself is not capable of delivering the carbon reductions promised because it’s essentially a set of tax incentives; its provisions are not a plan designed to bring about systemic decarbonization. “It is based on a set of tax credits, because the only thing that works in Washington is tax cuts,” he told a group of dozens of corporate and public sector executives, all of whom report environmental data through CDP.
The bill gets us part-way there, he said — it just isn’t enough. “So we’ll come to 2030 and we’ll hear, ‘Oh, we didn’t quite meet the 40 percent reduction target, but we made some progress. It was a good thing’,” said Sachs, who directs Columbia’s Center for Sustainable Development. “But this is really not such a good thing because we’re not just talking about the time it takes to reach decarbonization–we’re talking about avoiding tipping points.”
A broader, more comprehensive global plan
Without holistic policy to transform economic, political and physical systems — and specifically to overhaul energy, land use and transport — in which the IRA’s tax incentives operate, we simply won’t succeed. That, according to Sachs, “requires a global effort with national governments making national plans, with governments cooperating across borders within their regions, as well as globally. With subnational governments, especially our cities, having the financing and the means to invest in key infrastructure and with businesses aligned with those broader strategies.”
Business cannot solve this alone
Companies, in the above hierarchy, would nest in a broader policy framework, rather than attempting to aggregate emissions reductions largely in isolation. As Sachs put it: “This is not an exercise for individual businesses from the ground up to make individual plans that somehow add up to climate safety or decarbonization… Businesses, I want to emphasize, cannot [succeed in decarbonization] unless there is a national plan — dare I say, a strategy — for how the goals that we have set are actually going to be achieved.…This is driven by societal goals — for example, to keep warming below disastrous levels. And markets are inappropriate as the guide for that, because markets cannot solve this complex problem alone.”
Of course I’d heard similar arguments before — my job is to help sustainability leaders inside big and small companies to confront the climate crisis. I came to corporate sustainability after a stint in government that felt important, but sluggish, and was reassured by the pace, the will and the means for change I found inside big businesses. If government couldn’t get its act together on climate change, we’d find another way.
But Dr. Sachs’ call to action made me think anew about the responsibility of our field to demand more from government: to call for “plans for decarbonization that lay out the public side of the transformation to mid-century, the public investment strategy, the regulatory strategy, the industrial policies, the trade policies, the land use policies, the trans-boundary policies, the global financial cooperation policies.”
Business shouldn’t go it alone. It’s not entirely up to us, in corporate sustainability, to drive change. Let’s advocate for what we really need: a total system reboot.