California Proposition 23: A Practitioner’s View
Advancing environmental stewardship is not a convenience, but a fundamental value for companies like Cisco. The demands of business in a global economy are many, but social responsibility isn’t a “nice-to-do” that can be excused until another day. Our customers, employees, shareholders and other stakeholders expect the highest standards of conduct from Cisco in our corporate governance, in our treatment of our employees, in our social programs, and in our environmental efforts. Not just when it isn’t too much bother, but every day and around the world. Sustaining progress on all these fronts requires perseverance, ingenuity, and most of all, long-term commitment throughout our organization as we also focus on the expanding needs of our customers for innovative products, solutions and services, and our shareholders expectations for increased revenue and profitability.
In September 2006, Cisco announced our first greenhouse gas (GHG) reduction goal―to cut our air travel―at the Clinton Global Initiative. In 2007, we joined the U.S. Environmental Protection Agency Climate Leaders program, and later announced a broader, more aggressive GHG reduction goal covering not only our air travel, but also GHG emissions from Cisco operations worldwide. Since 2003, we’ve also reported to, and are strong supporters of, the Carbon Disclosure Project, the world’s preeminent GHG reporting inventory.
We’ve had some success in reducing our emissions. Through the end of our FY2009, we’ve cut our emissions (in absolute terms) by about 40% when compared to the commitment 2007 baselines.
Our progress has been the result of constant effort, extensive collaboration, and the buy-in of all the diverse business functions worldwide within Cisco―understanding the science of climate change, its potential impact on Cisco’s business, and our contribution to both the problem and the solution. Our initial work was grassroots in nature, but lasting organizational commitment needed leadership, in Cisco’s case by John Chambers, our Chairman and CEO, and our senior executive-led EcoBoard. A pleasant side-effect from what was borne of social responsibility has been Cisco’s development of new products and solutions that are helping Cisco and our customers to reduce our collective carbon footprint.
California’s AB32―produced by the legislature and Governor―is serving the same purpose for California as Cisco’s CEO and EcoBoard do inside Cisco, to provide consistent, long-term leadership to address both the problem of, but also the opportunities for reducing GHG emissions. The approach embodied in AB32 is similar to the arc followed by Cisco. Public reporting and verification is first to foster transparency and a common understanding of the problem. Then reduction goals are set to address the problem and focus the organization. Initiatives are created to take advantage of opportunities. Climate change is an extremely difficult problem because of its direct linkage to energy use, which touches every facet of a modern society. Economic downturns as well as the recoveries continually shift the challenges to progress. But Cisco is maintaining its focus―redesigning business processes for improved efficiency and cost savings, and entering new markets to help our customers do the same, all while improving our bottom line.
Cisco’s success has depended on the perseverance, ingenuity and commitment mentioned at the beginning of this posting. California’s success addressing our collective GHG emissions depends on a similar level of sustained commitment. Climate change is complex and, if there are valid concerns with the impact of AB32, then the forum to address any such problems is in the open and public regulatory processes established by AB32, or with the legislature, or with the Governor―who already has authority in AB32 to adjust deadlines under certain circumstances.
Proposition 23 simply ignores the problem and misses the opportunities. As a global bellwether and thought leader but also a part of the problem, California must be part of the solution. California must not cede leadership in either venture capital funding or the development of innovative green technology solutions to reduce the carbon footprint of our modern society. Cisco’s success has been based on acknowledging the very real problem, engaging our stakeholders, and supporting the use of free-market forces to provide green technology solutions. The same approach, embodied in AB32, will also work for California.
There are studies cited by backers and opponents of Proposition 23 pointing to job gains or losses from AB32 implementation. Given the inaccuracies of doing any such analysis, it might be more practical to use actual experience as a guide. Cisco’s focus is on the very real problem of climate change―which will not go away if Prop 23 passes―and our corporate responsibility to be a part of the solution. Our focus is also on very real and substantial business opportunities, opportunities that also won’t go away with the passage of Prop 23. These opportunities will simply be taken up to the benefit of other states, countries and regions. Sticking our collective head in the sand won’t change reality, either the existence of the problem or the need for solutions. California citizens and companies can drive the global actions to improve energy efficiency and reduce GHG emissions, or lose moral and economic leadership by supporting the status quo.
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