Working Papers

Climates of Change: Sustainability Challenges for Enterprise

Editor: Dr Mick Blowfield: mick.blowfield[at]smithschool.ox.ac.uk

Some of the world’s leading academics are contributing to the first Smith School working paper series, launched in September 2009.

The series brings together diverse research on the challenges industry faces in adapting to our changing climate and adopting sustainable ethics and practices.

Authors cover a range of disciplines. The first three papers were also published in The Economics and Politics of Climate Change.

Working paper 006: Outsourcing governance: Fairtrade’s message for C21 global governance.  

April 1, 2010

Dolan C, Blowfield M, Outsourcing governance: Fairtrade’s message for C21 global governance. Working paper 005. Climates of Change: Sustainability Challenges for Enterprise. Smith School of Enterprise and the Environment, University of Oxford, UK. 

Abstract

Globalisation and global challenges demand new governance models.  The perceived success of the value chain as a governance mechanism for delivering better social and environmental outcomes has led a growing number of mainstream companies to incorporate brands associated with initiatives such as Fairtrade, the Forest Stewardship Council, and Rainforest Alliance into their procurement and marketing strategies.  By buying from ethically certified producers and selling ethically labelled products, retailers and manufacturers are effectively outsourcing a significant part of their supply chain governance to third parties considered to have greater moral credibility than the companies themselves.

This paper explores the implications of such outsourcing for the companies concerned, and in particular the dangers to both corporate reputation, and to the wider credibility of alternative  governance models.  Drawing on empirical data from a longitudinal study of Kenyan communities producing for Fairtrade, and situating this within debates about voluntary self-regulation, value chain governance, and international development, the paper details how Fairtrade initiatives have been adopted as part of a governance outsourcing strategy, and the extent to which they are able to helps companies meet their societal responsibilities.  The paper concludes with a discussion of the lessons for corporate strategy and the management of governance issues. The paper brings together ethical governance theory and empirical findings to examine the shifting nature of governance in global value chains, and the implications of this shift for mainstream companies. In particular, it examines one of the more mature models of ethical value chain governance, Fairtrade, and how this is being used by business.

Working paper 005: Co-optimization of Enhanced Oil Recovery and Carbon Sequestration

18 February 2010

Leach A, Mason CF, van ‘t Veld K, Co-optimization of Enhanced Oil Recovery and Carbon Sequestration. Working paper 005. Climates of Change: Sustainability Challenges for Enterprise. Smith School of Enterprise and the Environment, University of Oxford, UK.

Abstract

In this paper, we present an economic analysis of CO2-enhanced oil recovery (EOR). This technique entails injection of CO2 into mature oil fields in a manner that reduces the oil’s viscosity, thereby enhancing the rate of extraction. As part of this process, significant quantities of CO2 remain sequestered in the reservoir. If CO2 emissions are regulated, oil producers using EOR should therefore be able to earn revenues from sequestration as well as from oil production. We develop a theoretical framework that analyses the dynamic co-optimisation of oil extraction and CO2 sequestration, through the producer’s choice of the fraction of CO2 in the injection stream at each moment. We find that the optimal fraction of CO2 is likely to decline monotonically over time, and reach zero before the optimal termination time. Numerical simulations, based on an ongoing EOR project in Wyoming, confirm this result. We also find that cumulative sequestration is less responsive to the carbon tax than to the oil price. Only at very high taxes does a trade-off between revenues from oil output and sequestration arise.

Working paper 004: Government failure and market failure: On the inefficiency of environmental and energy policy

17 December 2009

Antoff D and Hahn R, Government failure and market failure: On the inefficiency of environmental and energy policy. Working Paper 004. Climates of Change: Sustainability Challenges for Enterprise. Smith School of Enterprise and the Environment, University of Oxford, UK.

Abstract

In this essay, we describe some important themes in energy and environmental policy. There are two main reasons for our interest in these policies. First, such policies will likely be important in the coming decades as issues related to climate change and energy security come to the fore. Second, there are important lessons to be learned from a careful review of the actual performance of energy and environmental policies. We undertake a selective survey of the literature to highlight what is known about the efficiency of particular kinds of policies, laws and regulations in these areas. There are three key contributions of this paper. The first is to synthesize a large literature on energy and environmental policy in a way that can be easily digested by both non-experts and experts. The second contribution is to suggest that, if history is a guide, then we should not expect many interventions in these policy areas to come close to maximizing net economic benefits. The third is to suggest what might be needed for the development of more efficient energy and environmental policies.

Working Paper 003: India and climate change mitigation

23 October 2009

Joshi, V and Patel, UR, India and climate change mitigation. Working Paper 003. Climates of Change: Sustainability Challenges for Enterprise. Smith School of Enterprise and the Environment, University of Oxford, UK.

Working Paper 002: International carbon finance and the Clean Development Mechanism

3 September 2009

Hepburn, C. International carbonfinance and the Clean Development Mechanism. Working Paper 002. Climates of Change: Sustainability Challenges for Enterprise. Smith School of Enterprise and the Environment, University of Oxford, UK.

Abstract:

The international carbon-finance framework is at the heart of the global deal on climate change, because many of the opportunities to reduce emissions are in developing countries, who have other pressing priorities for their resources. Therefore rich countries are being asked to provide large-scale flows of ‘carbon finance’ to poor countries, and the carbon-finance flows required are at least an order of magnitude greater than flows occurring through existing mechanisms. This paper addresses the design of an international carbon-finance framework for the 2012–2020 period, with a focus on reform of the Clean Development Mechanism (CDM) and its complements and substitutes. The paper outlines how the CDM functions and discusses key areas where the CDM performance needs improving: environmental integrity; scale; and the provision of ‘carbon leverage’ to maximise the carbon ‘bang for buck’. Incremental and more radical reform options are examined.

Working Paper 001: EU climate change policy – a critique

3 September 2009

Helm, D, EU climate change policy – a critique. Working Paper 001, Climates of Change: Sustainability Challenges for Enterprise. Smith School of Enterprise and the Environment, University of Oxford, UK.