The San Diego World Trade Center last week convened a one-day session with this enticing title. Framing the issue of world trade in this way reminded me of the broad goals that motivate my work to find cleaner, greener ways for industry to function. I do believe that trade, if done with respect for people and the environment, can bring both peace and prosperity. That’s a big “if,” to be sure, but I know that it’s possible.
Economists say that trade leaves both parties better off: each party gives up something it needs less of (say, money, or fish) and receives something it needs more of (say, grain, or flat-screen TV’s). The trouble is in the externalities – the side-effects of the transaction whose costs aren’t paid by either party. This is why we suffer from the effects of air pollution related to trade through our local ports. Most of the policies and rules taking effect now are designed to move the costs of those externalities onto the parties that benefit directly from trade.
The San Diego session was notable for its diverse speakers. We heard from academics, consultants, and policy analysts, as well as business leaders pursuing socially and environmentally sustainable models. The kickoff was provided by Ted London of the University of Michigan, who talked about the ethical implications of reaching the approximately four billion humans on the planet who live in abject poverty, outside the mainstream economy. I was inspired to hear him recommend treating them not just as potential customers or a “market,” but as business partners, even mentors. After all, they are usually using maximum human ingenuity to deal with a very minimum of resources. Professor London pointed out that poverty is the single biggest threat to world stability and peace. Another speaker observed that world trade has promoted peace simply by raising the cost of war, which disrupts the flow of goods and money.
We also heard from Karen Cebreros, a local entrepreneur who founded Elan Organic Coffees. The company works with indigenous people in Peru and elsewhere to produce shade-grown coffee that doesn’t damage the environment and to ensure that workers are paid fairly. Her coffees are now part of the blend used by McDonald’s, another speaker on the program. Their VP for Corporate Social Responsibility, Bob Langert, highlighted the company’s recent programs to halt South American rainforest loss, procure sustainable fish, and adopt animal welfare standards. One strength of having a retail giant like McDonald’s embrace such practices is that it keeps sustainability from being a luxury item, affordable only at a premium price.
Often corporate programs like these are undertaken in response to customer pressure. Sometimes they cost the company more than business as usual, though this expense is offset by avoiding the loss of sales. Sometimes a socially and environmentally sustainable model actually saves money – hey, it’s not unheard of – and these are the models we need to be looking for. As fossil fuel and other global commodities get more expensive, a more conducive climate will be created for “corporate social responsibility” – though at the conference it was observed that this term sounds like a burden. Ideally, companies in the global economy will behave in sustainable ways not because some rule says they have to, but because it’s truly the most profitable way to do business. Karen Cebreros’s advice to a questioner on this point was direct: “Feel the fear and do it anyway.”
Earlier this year in the Journal of Commerce, an executive with Trailer Bridge, a U.S. freight carrier, called for the shipping industry to voluntarily embrace cleaner fuels. According to John McCown, “Once its provocativeness wears off and the facts are examined, it becomes clearer that dealing with the root cause of the vessel emissions issue will be more efficient and economical than a hodgepodge of never-ending prophylactic methods.” Though I have yet to hear of the entire industry falling in line, some shipping lines have seen this logic, and I appreciated this refreshing example of leadership. We need lots more of it to ensure that trade and commerce indeed bring us, as soon as possible, to a peaceful and prosperous future.