The common perception of environmental protection and regulation is that the federal government creates the laws, and then targets businesses and consumers for enforcement. But Wharton legal studies and business ethics professor Sarah E. Light says that’s only part of the story — that private businesses often enact policies that influence environmental practices far beyond their walls.
In this interview with Knowledge at Wharton, Light also discusses related research that shows the military, which has increasingly been investing in areas such as renewable energy, also has a surprising and important role to play in encouraging environmental stewardship.
Edited excerpts from the conversation appear below.
On taking a new perspective on environmental regulation:
Before coming to Wharton, I spent 10 years as a federal prosecutor in New York. I was an assistant United States attorney for the Southern District of New York, and in that capacity, I participated in traditional law enforcement, particularly with respect to environmental law. The traditional model of environmental law is that Congress passes legislation, and the government enforces it against business firms, which are the polluters. That’s kind of the traditional understanding of what environmental law is.
In my research, I flip that around [by asking], “What if the government is not the regulator, but instead, private firms are the regulators? And what if the government is not the regulator, but instead, is a polluter?” My research falls into two categories right now: The first is exploring the role of the government as a polluter, and the second is exploring the role of business firms as sources of environmental standards.
On how the military is investing in renewables:
On the side of my research that focuses on the government as polluter, I think one of the key takeaways is that the military does not always stand opposed to the idea of environmental protection. There tends to be two narratives about the role that the military plays in society with respect to the environment. One is that the environment and national security stand opposed to one another, and that the environment needs to bend if national security is an issue.
“People who self-identify as liberal were more likely to want to purchase renewable energy from their utility when they learned that the Department of Defense was actively using renewable energy technology.”
But what I suggest in my paper, “The Military Environmental Complex,” is that right now, because the military is the nation’s largest consumer of fossil fuels, and because many thousands of soldiers have died guarding field convoys in recent conflicts in Iraq and Afghanistan, the military has a tremendous internal incentive to reduce its fossil fuel use and replace it with renewables, and it is investing heavily in that right now. That turns the traditional narrative on its head and suggests that the military actually has a very important role to play in supporting the development of clean and renewable energy technology.
On how firms can be sources of environmental protection:
“The other side of my research focuses on the idea that business firms can be a source of environmental standards — I think that fact in and of itself is surprising. When you study environmental law in a traditional law school environment, the focus tends to be on the laws that Congress passes, and businesses [are cast] as polluters and the targets of government regulation. But what I think is of great interest is that firms can themselves be sources of environmental standards. So, for example, if Walmart imposes requirements on its supply chain that suppliers need to disclose their greenhouse gas emissions in order to have contracts with Walmart, that in and of itself is an environmental standard.
Similarly, nonprofit organizations like the Marine Stewardship Counsel or the Forest Stewardship Council create certification programs whereby you can certify a fishery or fish catching, or forest/timber practices as sustainable. And in order to warrant the certification, the business needs to comply with certain rules, which are then audited by third parties. Those are themselves environmental governance, though maybe not in the most traditional sense. I think it can be eye-opening for people to understand that certain forms of corporate environmental social responsibility actually have broader implications than just for the firms themselves.
On how the military going green influences consumers:
I think the most surprising conclusion is the common connection with some empirical work that I’ve been doing with colleagues here at Wharton to test the hypothesis that I put out in an article called “Valuing National Security.” In “The Military Environmental Complex,” I suggest that the military is playing an important role in stimulating innovation in technological advancement in the clean energy arena. In “Valuing National Security,” I suggest that the military, by focusing on renewable energy development and reducing its fossil fuel use, actually has the potential to affect policy debate and individual behavior in the climate change arena. The mere fact that the Department of Defense is using solar panels has the potential to drive individuals to want to use solar panels — at least, that’s the hypothesis.
I’ve been working with colleagues here at Wharton to test this hypothesis empirically, and [recently] we received some preliminary test results. We suspected that the difference would be among conservative survey participants, people who generally don’t tend to favor environmental protection, but who do tend to value the role of the military in society. What we found was that people who self-identify as liberal were more likely to want to purchase renewable energy from their utility when they learned that the Department of Defense was actively using renewable energy technology. The sample size wasn’t large enough for conservatives, so we don’t know yet what the result is on that front, but we plan to follow up with additional testing.
“I think it can be eye-opening for people to understand that certain forms of corporate environmental social responsibility actually have broader implications than just for the firms themselves.”
On the practical implications of her work:
There are really three practical implications of my research at this point. The first is that I think scholars and regulators need to be thinking much more broadly about what constitutes environmental law and environmental governance. It is not simply laws passed by Congress or regulations passed by the EPA; it includes private environmental governance — that is, actions by firms and nongovernmental organizations to set environmental standards.
The second implication relates to the work that I’m doing on valuing national security. I think it’s extremely important to recognize that if we want to change individual behaviors in the climate change context, we need to think broadly about how to frame climate change. We shouldn’t simply be framing climate change as an environmental issue; it needs to be framed as a national security issue, as well.
The third implication is very specific. One of the reasons why the military has been able to leverage its purchasing power to stimulate the development of renewable energy technologies is because Congress gave it a particular statutory authority. That authority allows it to enter into what are called “power purchase agreements,” whereby the military purchases power from an energy-generating entity. The military is able to enter into power purchase agreements for 30 years, which is necessary in order to allow the entity that builds the generating facility on military land to recoup its initial investment. You can’t do renewables on a very short time frame, because the upfront costs tend to be high. Other government agencies are limited to 10-year power purchasing agreements. I make a very specific recommendation in “The Military-Environmental Complex” that Congress should consider lengthening the term for other government agencies, as well, such that they could enter into these long-term 30-year power purchase agreements, because I think that would allow them to stimulate the development of renewable energy technology, as well.
On the broad implications of private governance:
My research focuses on environmental governance, but the point is broader, and I think it’s important to recognize the idea that private governance is not limited just to the environmental area, private governance exists in many areas. Firms [create private governance when] they set labor standards for their suppliers and in their supply chains. There are also private financial standards. Recently, two candidates for higher office entered into a contract whereby they agreed to certain campaign finance rules. So, rather than relying on Congress to set campaign finance rules, two candidates privately agreed that they would not accept certain money or not spend more than certain amounts. The phenomenon of private governance actually extends quite broadly, and I think it’s important to recognize that.
On recognition of climate change as a national security issue:
The news is full of stories recently about the impact of climate change. The Inter-governmental Panel on Climate Change has been releasing various working group reports, which demonstrate that climate change is happening, that climate change is anthropogenic and that the consequences of climate change may be dire for a society. In addition, a group of 16 retired generals from the military recently put out a report saying that climate change is posing a national security threat, and that climate change acts as a threat multiplier that destabilizes countries and has the potential to increase conflict and create climate refugees and other situations that the U.S. military is going to be called upon to address. So, I think the idea that climate change is a national security issue is certainly in the news.
“We shouldn’t simply be framing climate change as an environmental issue; it needs to be framed as a national security issue, as well.”
On what sets her research apart:
“I think what sets my research apart, in part, comes from where I’m situated and what my background is. Most lawyers who decide to become professors go on to teach in law schools, but I chose to come to a business school. Obviously, my research is very connected to the idea of the role that business plays in society. I think what sets my research apart, in part, is the fact that I’m kind of bridging these two worlds and trying to have a conversation, not only with other legal scholars, but also with business and management scholars.
On how she plans to follow up the research:
I’m following up on this research in a number of different ways. With respect to valuing national security, I am currently working with colleagues here at Wharton to empirically test the hypothesis — we are going to be following up with additional studies in which we frame climate change as a national security issue, or demonstrate military leadership with respect to renewable energy use, to see what impact that has on individual behaviors and beliefs, and on attitudes toward climate policy and reducing possible fuel use.
I’m also working with some colleagues here at Wharton on an empirical study to understand how business firms talk about climate change in their Securities and Exchange Commission disclosures. Do they talk about it as an issue of strategic advantage? Do they talk about it as an issue of environmental protection and morality? Do they talk about it as an issue of national security? And in particular, for major military contractors, how do they talk about climate change? And to the extent that the ways in which they’ve talked about climate change over time have changed, what can account for the change? Those are some empirical projects that I’m working on with colleagues here at Wharton. I’m also continuing to do my own work on more normative theories of private environmental governance, to try to argue about how it fits into larger views of what constitutes environmental law.
