Notice & Comment

Harnessing Regulatory Shaming to Overcome Corporate Climate Obstruction, by Sharon Yadin

For several decades, the oil and gas industry has been extensively involved in a campaign of climate denial aimed at safeguarding their financial interests and evading regulation. In order to obstruct fossil fuel regulation, the industry has knowingly misled the public and policymakers about its role in the climate crisis. As it turns out, major oil and gas companies have implemented organized climate policy obstruction tactics, which extend to aggressive lobbying and litigation as well as media campaigns, all while fully knowing the devastating implications of burning oil, coal, and gas for the planet and for the people who inhabit it. 

In a new article, I explain the mechanism of climate obstruction tactics and argue that regulation by shaming is an adequate, fitting, and justified tool for dealing with this crucial regulatory challenge. Generally, regulatory shaming refers to the practice by regulators in the executive branch of intentionally publishing details of corporate misdeeds in a manner that conveys a negative message to the public about misbehaving corporations, so as to encourage them to comply with mandatory norms and/or adopt voluntary norms, utilizing social pressure and corporate reputational sensitivities. Regulatory shaming is usually conducted through publications concerning illegal, inappropriate, or immoral corporate activities, as well as adverse corporate characteristics, using, for example, statements, rankings, ratings, scoring, and labeling. It can offer a quick, effective, and efficient regulatory response in various fields.

In the context of climate change, regulators worldwide are now adopting or considering adopting shaming schemes such as naming and shaming firms for noncompliance with climate lawsranking firms according to their climate and environmental actions, and labeling products according to their climate impacts. In the U.S., companies’ emissions are publicized in a regulatory database that enables comparisons between firms, and a pending rule will soon require firms to include detailed climate reports in their filings to the SEC.  

Climate obstruction refers to any illegitimate, deceptive corporate activity that aims to impede or disrupt climate legislation and regulation. The article points to the ways in which obstruction tactics such as climate denial and climate washing exacerbate climate change and develops a theory of justifications for regulatory climate shaming as a tool for overcoming them. Generally, climate denial, mostly known as the rejection of climate change science, carries diversified meanings, and now also includes, for example, “climate delay” –– rhetoric focused on arguing that climate change is not an urgent problem and that technology will eventually solve it so nothing should be done. Climate washing is a more recent phenomenon, referring to intentionally misleading climate-related corporate marketing campaigns, statements, labels, and investment ratings, for example by falsely stating that a firm or a product is “net-zero.”

Importantly, climate washing is not only misleading consumers and investors but also sets back climate policies by giving the false impression of effective self-regulation and silencing criticism. In the same vein, climate denial is not a simple case of corporate noncompliance with rules and regulations, but a sophisticated, deceptive tactic aimed at delegitimizing climate policies. The novelty of this analysis lies in the focus on indirect corporate contribution to climate change through obstruction tactics, rather than on direct contribution through greenhouse gas emissions, which is the current regulatory focus. 

I argue that these are meta-regulation problems that warrant unconventional regulatory strategies such as shaming. I show that regulatory climate shaming can not only induce compliance but also fight climate obstruction, which is a much more central challenge for climate policies. Namely, I contend that since regulatory shaming harnesses credible information sharing by the government and publicly assigns liability to industries and companies that often deny it or shift it elsewhere (e.g., to consumers), it is a suitable tool for combating corporate disinformation and deception. 

I further argue that regulatory shaming is highly suitable for fighting climate washing––a practice focused on corporate reputation enhancement––by leveraging corporate reputational vulnerabilities and disseminating reliable information on corporate climate performance. In other words, regulatory climate shaming can potentially counteract the ill-gained corporate reputational benefits of climate washing by demonstrating to company stakeholders that climate representations made by the company are incorrect, partial, or misleading. I also contend that since industries are using delaying tactics to impede hard-law climate regulation, regulators are justified in developing alternative soft-law tools, such as shaming. 

More broadly, I assert that in order to be effective in their fight against climate change, regulators must widen their scope of activity from legislating rules and regulations, issuing permits, monitoring compliance, investigating, sanctioning, and litigating, to tools based on communication, information sharing, public engagement, mobilizing public opinion, and conveying normative, evaluative messages to stakeholders about corporate actors and activities.

The climate change crisis is currently one of the world’s greatest challenges, with environmental, social, financial, health, and security implications that cannot be overstated. While the idea of shaming, especially by the state, is somewhat controversial, regulatory shaming should be used by regulators, alongside other regulatory tools, to mitigate climate change. Since international and national regulatory efforts on the climate change front have mostly failed so far, we need to consider developing policies that target the climate reputation of firms that are exacerbating the climate crisis. 

Companies in various sectors are clearly sensitive to the perceptions and attitudes of stakeholders about the company’s climate performance, or else they would not go to the trouble of climate washing, for example. While command and control can only marginally deter the “carbon majors” responsible for most greenhouse gas emissions, regulatory shaming can influence corporate behavior by focusing on public opinion and activism.

For instance, regulatory climate shaming could stimulate critical public discourse and media coverage; enable consumer action, such as boycotts; influence investor preferences; encourage climate litigation; inspire academic research; prompt regulatory action; advance political support for climate legislation; induce action by NGOs; and stimulate pressure from employees. Policymakers need to seriously consider shaming as part of their strategies for dealing with climate change, sooner rather than later. 

Sharon Yadin (@Sharon_Yadin) is a Senior Lecturer of Law and Regulation at the Yezreel Valley College School of Public Administration and Public Policy. Her book, “Fighting Climate Change Through Shaming” was recently published by Cambridge University Press.

Print Friendly, PDF & Email