The Chevron Doctrine & the Sustainability Business Case
(And why this "pro-business" judicial coup is actually bad for business.)
I'm still reeling from last week's events, from the presidential debate to the raft of Supreme Court decisions, of which their reversal of the Chevron doctrine may be the most consequential. (Save the ruling due out tomorrow on the small matter of presidential immunity.)
Sanford Lewis got it right, calling it "a judicial coup against consumer and investor protections, and against environmental, health and safety regulation."
(Here's the decision. And here's Elena Justice Kagan's fierce dissent.)
I’m not a lawyer, but it strikes me as a profound misread of the U.S. Constitution – and a reading more ideological than judicial. It’s a capstone of a 50+ year strategic commitment, and legal and political project (going all the way back to the Powell Doctrine): to cast “government“ as the enemy of the people, rather than as the organized expression of our common will.
I’ll leave it to those with more expertise to deconstruct and challenge the legal basis and implications of this decision. But I will speak to the environmental—and business—implications.
Functionally, it’s a disaster. By declaring that only Congress or the courts can specify how to administratively implement acts of Congress, and stripping executive agencies of the ability to do so, the decision kicks out the legal foundation for most environmental policy of the last 50 years.
And it's not the gift to business it may seem to be.
Business wants predictability. The Supremes have delivered chaos. As Lewis notes "…when you take it to the big picture, it's hard to see how this level of disruption is going to be of benefit to the world of business driven by predictable affairs and relationships."
Think about it for a minute. How will a Congress of 535 elected officials, and a staff of 15-20,000—or for that matter Supreme Court of nine appointed justices, and staff of 500—ever be able to appropriate the responsibility of well over 100,000 Federal regulatory agency employees, or even begin to approximate their professional expertise? They can’t, and that’s exactly the point, and the intention: to cripple the ability of the body politic to regulate the impact of business on our physical bodies, and the physical world we share.
I’ll grant that regulations can seem burdensome, and often can be burdensome. But there are proven ways to serve and protect while reduce the burdens, without eliminating the protections of the intended.
But while these matters are fought over politically, there’s an important angle that I haven’t yet heard addressed. I’d be going too far to call it a silver lining in the dark clouds, but there’s something important to observe here. Regulatory constraints and voluntary initiatives have not been the only drivers of environmental and sustainability progress over these decades. Equally important—perhaps more important—have been companies' responses to consumer preference and pressure, and companies' own recognition of fundamental business risk and opportunity.
In the first case, consider the rise of the natural food and organic agriculture sectors, driven much more by consumer demand than by pesticide regulations. In the second case, think of the ongoing improvement in energy efficiency, And the growth and penetration of renewable energy technologies across the world, driven by the fundamental business logic of "waste less stuff in order to waste less money." And increasingly by recognition of the very real business risks that a chaotic climate future portends.
So the “business case for sustainability“ returns to center stage. Not in a fruitless debate over whether sustainability is profitable, or whether E.S.G. initiatives correlate to profit, but in a much more fundamental way. You see, the purpose of a business case, as I have argued, is not to tell you what to do, but to identify and guide how to best do it. Whether or not to address safety, quality, toxicity, planet, justice or inclusion are strategic and moral commitments, guided by risk and heart—by both the dispassionate and the deeply passionate. How to move effectively and profitably on those commitments are the job of the business case.
It echoes the old management rubric: either tell somebody what to do or how to do it, but not both. What to do is to "do business as though we actually belong to the living world." How to do that, and how to do that profitably, is the job of business.
Therein lies one of the keys to the kingdom: Succeed by outperforming—deliver better products and services, more efficiently, more economically, more profitably, and more in harmony with the living world on which all that we value ultimately depends.
Easy? Perhaps not. But prove me wrong. (It's called innovation. And leadership.)
This has implications for our now-threatened regulatory infrastructures, and the legislatures that are now poised to take on (or abandon) those responsibilities. One option: regulations that focus on outcomes to be achieved rather than prescriptions of how to achieve them might just be more effective in driving change, as well as more politically tolerable in the current political environment.
Our other task, of course—in addition to inventing new ways to do business—is to transform that political environment. And that’s the hard work of the next 128 days.