Climate Denial Crock of the Week

Elizabeth Kubler-Ross classically defined the stages of grief 50 years ago – Denial, anger, bargaining, depression and acceptance.
We’ve known for decades that the fossil fuel industry as we know it has to go away for the planet to live. The industry’s response has been stuck in the “Denial” stage for too long. Some indications lately that we are oscillating between “anger” and “bargaining”.
University of Michigan Business prof Andrew Hoffman uses the metaphor of hospice care to investigate the process of putting the fossil industry down as humanely as possible. Obviously, extricating society from an enterprise that has been woven so tightly into our cultural, industrial, and economic system over a century is going to be traumatic. It’s time we thought more deeply about it.

Dr. Hoffman is the Holcim Professor of Sustainable Enterprise at the University of Michigan.

Andrew Hoffman PhD in Stanford Social Innovation Review:

History has marked the repeated demise of once thriving sectors because of the competitive forces of what Joseph Schumpeter termed “creative destruction,”²⁰ where the market “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” The typewriter industry disappeared with the rise of personal computers, and the incandescent-lightbulb industry has dimmed as more energy-efficient lighting alternatives, such as compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs), have become more cost competitive.

Creative destruction has also forced individual companies to remake themselves. Finnish multinational Nokia was founded in 1865 as a paper mill and has since expanded into cable, rubber boots, tires, and ultimately telecommunications hardware and software. 3M began in 1902 as the Minnesota Mining and Manufacturing Company, making sandpaper and grinding wheels; today the firm makes a wide variety of products, such as personal protective equipment, window films, dental and orthodontic products, medical products, car-care products, health-care software, and Post-it Notes. But these examples represent adaptation to shifting market conditions, not entire sectors disappearing for non-market-related reasons.

We have also witnessed the end of specific sectors because of government regulation—such as legislation in the United States that banned DDT application in 1972, that gutted the asbestos industry in 1989, and that is poised to end the industry for per- and polyfluoroalkyl substances (PFAS) today. But these sectors were not nearly as intertwined with the global economy and society as fossil fuels.²¹

Today, a vast physical, economic, and political network undergirds the oil, coal, gas, and related chemicals sector. It cannot simply be replaced without massive political, social, and technological disruption. So, instead of “creative destruction,” we face the challenge of managing “compassionate destruction,” in which we guide all the complex and expansive elements of the fossil-fuel sector through a just and orderly transition to a carbon-free economy.

Ever since coal-powered steam engines gave rise to the industrial revolution, fossil fuels have provided the energy that powers most of the world’s economic activity. While nuclear and renewable sources of energy are available, almost 80 percent of primary energy use still comes from carbon-based fuels, and ending it will not be easy. BlackRock CEO Larry Fink warns, “Divesting from entire sectors—or simply passing carbon-intensive assets from public markets to private markets—will not get the world to net zero.” Focusing solely on cutting supply and not reducing demand, he argues, will simply drive up energy prices and encourage more of a backlash against green-energy efforts.²²But the complexity, centrality, and interconnectedness of fossil fuels in the economy creates a paradox. The demise of the sector must be carefully orchestrated, and that will take time. But the urgency compelled by changes already underway in the natural environment means that the endgame needs to be undertaken quickly.

The patient needs urgent care. To consider such care, we acknowledge that corporations have been endowed with certain rights and responsibilities historically enjoyed by human beings and ask the obvious follow-on question: If a corporation is a person, can a corporation be assisted in death just as a person can be? And, if so, how do we provide compassionate assistance and comfort to the dying patient, as well as to those affected by the passing? To negotiate these questions, we offer three different models for consideration.

Triage | Our first model, triage, is an approach that requires making difficult decisions in the face of conflicting priorities and limited resources. According to the US Department of Defense’s guidance on emergency war surgery, it involves “a process of sorting to identify and prioritize treatment given the limitations of the current situation, the mission, and available resources (time, equipment, supplies, personnel, and evacuation capabilities).” ²³ It entails the allocation of treatments for different conditions of the patient, and, in more extreme cases, the decision to remove an ailing limb or organ. How might corporate triage be applied to a fossil-fuel company?

We find one recent example from 2021, when investor Third Point called for Royal Dutch Shell to be split into “multiple stand-alone companies,” separating sustainable business lines from legacy fossil-fuel lines. Third Point argued that amputation of the extraction business, designed to maximize the survival of Shell, would force the company to accelerate a shift to lower-carbon businesses while presenting a vision for the corporation’s survival after the “operation.”²⁴ In this case, an outside investor prescribed the triage-based approach, but companies in other industries have applied it to themselves. Following the Russian invasion of Ukraine in 2022, bp abandoned its 19.75 percent stake in the Russian fossil-fuel company Rosneft, incurring charges of up to $25 billion.²⁵

But triage can also bring about a new kind of entity, becoming truly transformative. In 2022, a billionaire and a Canadian asset-management firm launched an unusual joint bid to take over the Australian energy company AGL Energy and turn it into a renewable-energy company by shutting down its coal power plants earlier than planned.²⁶ Similarly, CVS Pharmacy used triage in 2014 to transition from a drugstore to a health-care company by ending the sale of tobacco. While tobacco comprised a profitable portion of the business at the time, President and CEO Larry Merlo stated that “the sale of tobacco products is inconsistent with our purpose,” which was “helping people on their path to better health.”²⁷

Euthanasia | Our second model, euthanasia, is defined by the Merriam-Webster dictionary as “the act or practice of killing or permitting the death of hopelessly sick or injured individuals (such as persons or domestic animals) in a relatively painless way for reasons of mercy.”²⁸

The idea is not alien to economics. John Maynard Keynes once called for “the euthanasia of the rentier” class, those who extract profits or rents but do not create wealth in the aggregate economy²⁹ and who, in the words of Joseph Stiglitz, “destroy wealth as a byproduct of their taking it away from others.” ³⁰ At present, fossil-fuel companies produce petroleum that is burned to support our economy but create greenhouse-gas emissions that are destroying wealth for others, through the facilitated increase in droughts, wildfires, food insecurity, water scarcity, coastal flooding, disease proliferation, and the social unrest that may result. A future in which we address climate change may require that the entire sector be euthanized.

Deciding on corporate euthanasia compassionately demands a deliberative process. For human patients, decisions on euthanasia require protocols including a terminal diagnosis; certification by a consulting physician; a psychological examination; and an explanation of alternatives, including palliative care, hospice, and pain-management options. For corporate patients, a similar protocol may be necessary. Most likely, that protocol will be guided by the government but should include the patient and those affected.

For example, in 1964, the US Surgeon General recommended that drastic controls on cigarette smoking be established to protect public health. Tobacco companies such as R.J. Reynolds and Brown & Williamson stood to lose billions of dollars in revenues if cigarettes were linked to cancer, and mounted a multipronged campaign to create doubt and confusion in the science of cigarette-caused cancer.³¹ As a result, it took four decades for cigarettes to be controlled by government regulation, and countless people were made sick or died as a result. But finally, in 1998, the four largest US tobacco companies entered into the Tobacco Master Settlement Agreement (MSA), which required the companies to make annual payments to the 46 participating states in compensation for medical costs of caring for people with smoking-related illnesses. The MSA also dissolved several tobacco trade groups (such as the Tobacco Institute) and prohibited most forms of tobacco advertising.³²

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Hospice | Our third model, hospice, can be triggered if the patient comes to accept his or her terminal condition. The US National Institute on Aging explains hospice as a treatment regimen that “provides comprehensive comfort care as well as support for the family, but … attempts to cure the person’s illness are stopped. Hospice is provided for a person with a terminal illness whose doctor believes he or she has six months or less to live if the illness runs its natural course.” ⁴⁰

Just as doctors are trained to preserve the patient, business leaders are trained to preserve the business. While bankruptcy and liquidation are situations that many of them face, these decisions are not undertaken when individual business financials are sound. Yet, as doctors have become increasingly concerned with the quality of life, not with merely prolonging its duration, business leaders must do the same, determining when there exists no viable path that can balance the needs of the Earth and humanity against those of the corporation. They must plan for death of an organization, a decision that affects many stakeholders in multiple ways and has a comparable emotional journey for those most involved. Employees often tie their identities to their work, and deciding to let go and move on can be challenging for them. For customers, investors, suppliers, and others, that critical decision may be equally vexing.

Signs that this treatment regimen is possible are emerging, as some leaders within the fossil-fuel sector are discussing whether their prognosis is terminal. While many continue to remain in one of the first four stages of grief that psychiatrist Elisabeth Kübler-Ross associated with coming to terms with death—denial, anger, bargaining, and depression—others are moving toward acceptance⁴¹ that the science of climate change is real and that their industry is the chief cause of the crisis. For example, the International Energy Agency, a multilateral group whose mandate is to assure global energy security and stability, issued a report in 2021 that called for investment in new oil and natural-gas projects to stop immediately, and for sales of new gasoline- and diesel-powered vehicles to end by 2035, so that the global energy industry can achieve net-zero carbon emissions by 2050.⁴²

Critical to this deliberative process is a sense of control and dignity, something hospice seeks to provide by managing physical, social, and emotional complexities. The core of the hospice approach is the “belief that each of us has the right to die pain-free and with dignity, and that families will receive the necessary support to do so” ⁴³ through compassionate care, counseling, and support to surviving family and friends. In the same way, corporate hospice can help those within or associated with a company or sector to come to terms with and plan for the end of what they know and to look toward what is to come.

Whatever form it takes, death is not merely an end but the beginning of a transformation into something else—whether that something else is a spiritual transition of the soul or the physical transition of the body. In a similar way, does the complex network that constitutes the fossil-fuel sector truly die, or does it become something new? Just as in organ donation, some of the sector’s economic and human assets may be redeployed toward some new purpose. People working in the industry have incredible financial, analytical, and geophysical expertise that can (and should) be recognized as a potential asset for a sustainable future. Additionally, the brand value of the logos of Shell, ExxonMobil, and bp have legacy value for drawing electric-car owners to recharging stations as symbols of refueling and replenishing. Even some physical assets will be redeployed—in 2021, an idled oil refinery in Newfoundland, Canada, was bought and will be converted to make biofuels from used cooking oil, corn oil, and animal fat.⁴⁴ The process that brings us to this outcome must be based on compassionate treatment, informed and deliberate consent, and consultation with affected parties and others.

Much more food for thought at the link.