Today’s Wall Street Journal includes an interesting op-ed co-authored by Al Gore. It urges businesses to incorporate the principles of sustainability into their accounting and accountability systems, with respect to their environmental, social and ethical performance. Mr. Gore provides several examples of firms that are already doing this, with varying degrees of governmental stimulus nudging them along.
I was struck by two aspects of this piece. First, the general tone seems conciliatory and the measures it advocates fairly uncontroversial, at least from the perspective of large, international enterprises, many of which are currently addressing these issues in a variety of ways. Probably the most helpful suggestion he could make at this point would be for the creation of consistent standards for measuring sustainability.
I also suspect neither Mr. Gore nor his critics are prepared for the possibility that the cost of meeting recognizing many of these externalities may not be as large as he implies, nor the role of regulation quite so positive in optimizing the planetary balance. Consider the greenhouse gas emissions from automobiles. If I lived in Europe, I would pay approximately $1,200 more per year in fuel taxes, most of it intended to discourage me from driving and to thereby reduce both my petroleum consumption and CO2 emissions. Instead, I pay TerraPass $40 per year to negate my CO2 liability. While this doesn’t cause me to drive less, it leaves me with $1,160 after tax dollars with which to buy organic produce, donate to charity, or invest in my retirement savings. Markets are all about price discovery, and they often shatter the best ex ante estimates of economists and pundits.
Finally, I have to wonder if this op-ed represents a softening of the strident anti-business tone that alienated many centrist voters during Vice President Gore's 2000 campaign. As someone reminded me the other day, in 2008 Mr. Gore will have been out of office precisely as long as Richard Nixon in 1968, another sitting vice president who failed in his first bid for the presidency.