Capitalism can’t combat climate change

Capitalism cannot be the vehicle to combat climate change.

Capitalism is built on a foundation of creating profit. The most popular way of creating profit is through reducing input costs. This is often seen in labour costs, but it can be in the cost of raw materials, too.

Let’s take Nestlé for example. In Ontario, Nestlé pays about $500 for every 1,000,000 litres of water they extract. You can buy a case of 24-500 ml bottles at Walmart for around $2.25, which works out to about 25¢ per litre. They pay 5/100 of a cent per litre to access the water they bottle. That’s a 50,000% profit margin.

Nestlé has little incentive to curb their water usage nor pay more to access that water. Both reducing the amount of water they extract and increasing how much they pay to extract it threatens their ability to create profit. And for Nestlé, creating profit has more value than securing reliable drinking water sources for the general public.

Same goes for energy usage. Coal is cheap, which makes coal-generated electricity cheap. If utility companies switch to more expensive energy sources to generate electricity, it threatens their ability to create profit. Conventional petroleum fuel products are cheaper than other automobile fuel sources. If transportation companies switch to more expensive fuel sources to power their fleets, it threatens their ability to create profit.

It’s the same reason oil and gas companies lobby for low royalty rates, why Brazilian ranching companies want to raze the Amazon, and why smartphone companies have no desire to facilitate the reduction of war and conflict in the mining of coltan, which they use in their products.

Commercial and industrial endeavours are the primary drivers of climate change. Until they change their behaviour, climate change will not stop, let alone reverse. And if we wait for them to altruistically implement change in the resources they consume, we’ll be waiting a long time.