II. Our Current Approach Is
Doomed to Fail

Pick up a newspaper or turn on TV news and you’ll find a world in constant crisis. Climate change. Income inequality. Corporate tax avoidance. Antibiotic resistance. Water shortages. Communities devastated by jobs shipped overseas. Inhumane working conditions at those same outsourced jobs. And so it goes, from the big, in-your-face problems to the more hidden but equally daunting ones you never really knew existed, like the swelling worldwide accumulation of non-biodegradable waste, typified by a giant, Texas-sized patch of plastic floating in the north Pacific Ocean. Only the worst part isn’t just that these problems exist, but that they continue to grow.

So what’s to be done? Well, the common thread with these problems is that they are largely caused by corporate irresponsibility. Businesses produce most of the world’s manmade CO2, use most of the water, do most of the unfair paying, and so on. If we want to fix these problems, the best place to start is with our laws that regulate businesses. On this point, most pundits and politicians agree. But how exactly to regulate businesses is where they sharply divide.

To those on the right, we have too many laws and they’re too strict. Get the government and all of the red tape out of the way so that our job creators can innovate! Yet, to those on the left we have too few laws and they’re too lax. The only way to get companies to pay their workers better and stop polluting so much is to force them to do so with stiffer laws!

Really, though, both sides miss the point. Our laws have consistently failed to fix such huge problems—and will continue to fail to do so—because of neither their number nor their strictness. Our laws fail us because of how they are structured.

Motivation Problems

Just about all labor and environmental regulations set up a minimum or maximum bar that businesses have to meet: a minimum fuel efficiency for cars, maximum mercury levels in factory emissions, minimum percentage of income paid as taxes, etc. To simplify, let’s call these minimum bar laws. Minimum bar laws have historically done us a lot of good by setting a baseline of decency, raising us (in much of the world, at least) above the horrid lows of unfettered, late 19th century-style capitalism, with its eighteen-hour work days, widespread child labor, unlivable pay, blackened skies and rivers, domineering monopolies, and factory equipment that once chopped off limbs with impunity (to say nothing, of course, of the much lower lows of the slavery that came before). Such mostly eliminated issues we can call baseline problems, because all that’s needed to solve them are laws that give a baseline that businesses cannot dip below. Look closely at most any once-rampant-but-now-resolved baseline problem (like factory pay rates once so low in the US, at a dollar a day, that President FDR often called them “starvation wages”1) and you’ll find a minimum bar law (like the US minimum wage, instituted in 1938) keeping it largely at bay.

Mill-working children in Alabama in 1910.

Library of Congress

But while minimum bar laws do a rather good job with baseline problems, they don’t do a very good job with that current batch of seemingly insolvable problems like global warming and income inequality. Such problems we can more aptly call motivation problems. Motivation problems require more than just a baseline to keep something bad from becoming excessive. They require consistent motivation for those involved to get better and better until that something bad has disappeared entirely.

Consider the common problem of losing weight. Cutting out double fudge sundaes from your diet is a baseline problem. Losing all hundred and fifty excess pounds, on the other hand, is a motivation problem. Nixing the sundaes is tough, but really all that’s required is a simple rule and some fortitude to see it through. No more sundaes. No excuses. Done. Losing 150 pounds is exponentially more difficult, though, not only because it requires much more work, but also because there’s no simple answer as to how to actually make it happen. Let’s say you add a gym routine, salads at every meal, and healthier snacks. However, you only end up with the time to hit the gym twice a week, and after workouts you reward yourself with a Gatorade and snack bars. Plus, salads for lunch make you hangry in the afternoon and, without really noticing it, you boost your mood with sugary, calorie-filled sodas. After losing only eight pounds, you go back to the drawing board, deciding to bike to work and cut out all dairy. A month later you reassess again.

Get the idea? Motivation problems have no simple fix. To solve them you have to get rid of pretty much all the bad behavior that feeds into such problems, not just the worst excesses of it—you have to completely change how you eat and exercise, not just get rid of a few fudge sundaes. That requires a long road of tough change upon tough change. And if you don’t have a strong motivation to push through that long, hard road, you won’t (hence the name “motivation” problems). In that light, it’s no wonder why it’s so hard to lose weight and why most people fail trying.

Of course, fudge sundaes and losing weight are just the tip of the iceberg. Such duos of baseline and motivation problems are everywhere. If smoking less than two packs a day is a baseline problem, then quitting smoking altogether is a motivation problem. If getting your eight-year-old to behave during family photos is a baseline problem, then getting him to behave all the time is a motivation problem. One is tough but doable. The other is a seemingly impossible nightmare. What makes it all much worse is that people generally try to fix motivation problems like they’d fix baseline problems: with one or two simple, strict rules, rules that attack the worst excesses of bad behavior. No more than two cigarettes an hour. Hit your sister again and you’re going to your room. No more fudge sundaes. But for motivation problems these rules don’t really get at the real issue. They don’t give the motivation needed to go deeper and make much bigger changes. And that is why they fail.

Trying to Fix Motivation Problems with Minimum Bar Laws

If the starvation wages of the 1930’s were a baseline problem, growing income inequality in general is a motivation problem. Governments around the world have passed quite a few laws over the last hundred years to fight the stubbornly large pay gap between the rich and the poor: minimum wages, progressive tax codes, free health care, food stamps, public housing. And yet over all of that time economic inequality hasn’t just persisted, it has grown.

So why have laws like the minimum wage failed to curb rising income inequality? Because income inequality is a motivation problem. Like cutting out sundaes, the minimum wage only nibbles at the edges. It does a great job eliminating dollar-a-day wages for those at the bottom, sure, but what then? Does it motivate companies to pay the rest of their lower- and mid-level employees any better? Does it motivate them to stop shelling out million-dollar bonuses to the executives already making millions? Does it motivate them to substantially shrink their massive pay gaps overall, pay gaps in which those at the top regularly make hundreds of times more per hour than those at the bottom? (Unfortunately the answer is a pretty clear no.) Above that minimum wage, companies can still pay their workers as unfairly as they like. Hence, income inequality is largely unaffected.

Sadly this is typical for minimum bar laws. Because they knock out the excesses of bad behavior but do little to motivate businesses to weed out the rest of it, minimum bar laws are consistently great for baseline problems and consistently awful for motivation problems.

Take pesticides. In the 1940’s, US farmers began widespread use of the now infamous insecticide DDT. The chemical decimated crop-ravaging bugs but also, after working its way up the food chain, helped drive many predatory bird species to the brink of extinction, the bald eagle included. In 1972, the US banned the use of DDT. Along with other minimum bar laws that protected nesting habitats, the ban helped such bird populations come roaring back, including an estimated nineteen-fold increase in the US bald eagle population since the 1960’s.2,3

Jeff Vanuga/USDA Natural Resources Conservation Service

In the decades since, the EPA has instituted more minimum bars to address other pesticide-related baseline problems like human overdose. It has banned dozens more pesticides and classified many others as “restricted use” to keep them out of the hands of the general public. For those pesticides allowed in large-scale agriculture, the EPA also sets what it calls “tolerances,” or maximum allowable amounts of pesticide residue on foods sold in the country (such as 0.2 parts per million of atrazine allowable on corn or 8 parts per million of glyphosate allowable on flax meal4). Such measures do a great job of keeping the average citizen from consuming one large, potentially lethal dose of a chemical. An estimated 300,000 people die in eastern Asia alone from such pesticide ingestion each year,5 but only twenty-three do so in the US.6

Minimum bar laws here do another great job tackling a baseline problem. Case closed. All is right in the world. Right…?

But what if those small, legally permissible amounts of pesticides are still harmful? We now know that when we eat foods with pesticides in or on them, these chemicals stay in our bodies and build up there throughout our lives. More research is still needed, but many studies have so far linked this kind of normal, long-term pesticide consumption to a slew of major health issues in humans, including higher rates of cancer,7,8 suicide,9 Parkinson’s disease,10 birth defects,11 fetal death,12 ADHD13, and even a lowered IQ.14 And this isn’t just a concern for those who live on or near a farm. Eight years after the US ban of DDT, researchers still found the chemical or its byproducts in the blood of 99% of Americans tested.15 In Europe, where pesticide protections are generally stricter than they are in the US, scientists studying the breast milk of 130 mothers in Finland and Denmark from 1997 to 2001 found pesticides present in every sample. And that wasn’t just a trace amount of one random pesticide or another. Eight separate organochloride pesticides each showed up in all 130 samples.16 In other words, harmful pesticides are not just inside all of us but are there at such a high concentration that they reliably spill over into our bodily fluids. And given that pesticide use has quadrupled worldwide since 1961,17,18 it’s hard to imagine that health complications from pesticide use will do anything but proliferate in the future.

This low-level pesticide consumption is a classic example of a motivation problem. To fix it we would need to do more than just set some limits on pesticide use. We would need to motivate farmers to completely phase out such toxic pesticides.

It’s also a classic example of a motivation problem created by the partial failure of minimum bar laws. An urgent problem arises (in this case human death and the near extinction of predatory bird species). Minimum bar laws are created to limit the bad thing our companies are doing that created that problem (unchecked use of toxic pesticides). The immediate problem dies down (birds come back, fewer people die). However, companies can still mostly do that same bad thing, just less of it, so they keep doing as much as they can (continued industrial use of synthetic pesticides). Less of the bad thing still ends up causing plenty of other problems (widespread long-term health effects of pesticide consumption). Bad thing is deemed too important to totally outlaw (pesticides seen as critical to high crop yields and feeding the world). Lawmakers bicker only about whether to make minimum bar laws stricter or more lax. Little changes. No one proposes different kinds of laws that better motivate companies to do less of the bad thing (to use fewer toxic pesticides). The motivation problem steadily grows with no solution in sight.

This pattern is typical of minimum bar laws. And if we are to ever break this pattern, we need to recognize the difference between baseline and motivation problems and stop trying to use the same fixes for both of them. Minimum bar laws simply aren’t designed for motivation problems. Thus, to properly address motivation problems, we need to abandon the minimum bar law for laws that instead give those who are behaving irresponsibly a much stronger motivation to improve. We need, in other words, a law like Corporate Responsibility Rankings.

The Tragedy of the Commons

It gets worse, though. To help fully appreciate the need for laws that better motivate companies to improve, we should here note that income inequality, global warming, and the other major conundrums we face don’t just qualify as motivation problems. They really belong to the thorniest type of motivation problems: the tragedy of the commons. Popularized by Garret Hardin in his famous 1968 article in the journal Science, a tragedy of the commons occurs when some sort of common good is open for everyone in the community to use. In the classic example, anyone’s cattle can graze on a public pasture (a.k.a. a commons) and enjoy the common good of free grass. But when too many cows graze for too long, the grass becomes overeaten and over-trampled and dies off.

You’re likely thinking that this can’t be that tough to fix. Each herdsman should limit the number of cattle he lets onto the commons. After all, doing so benefits everyone. Then the grass comes back and all is well. It’s that simple, right?

Not quite. See, each herdsman gains more from putting each new cow onto the commons (a gain that only he receives) than he loses due to the overgrazing destruction caused by his one cow (a loss that’s spread out and shared by everyone). The selfish math therefore encourages each herdsman to add more cows. What’s more, any herdsman who tries to be altruistic by limiting his cow-on-pasture time only hurts himself, watching his herd stagnate while everyone else’s herds flourish. Consequently, each herdsman inevitably makes the same self-interested (yet short-sighted) decision, adding more and more cows until the common good of the pasture is destroyed.

Simone Ramella/Flickr

Sound far-fetched? Take a look at global warming. For decades almost every country in the world has recognized the grave danger of climate change and signed on to global treaties pledging to reduce greenhouse gas production. And yet, the problem continues to get worse and worse. Why? Because it’s a commons motivation problem. Each of us—each country, each business, each individual—gains much more from using fossil fuels to drive our cars and power our buildings (a gain each individual solely enjoys) than each of us loses from the seemingly abstract, far off problem of a warming planet (a loss that’s spread out among everyone, no less). On the other hand, investing time and money to try to stop climate change (by, say, switching to biodiesel cars and solar power-run offices) drains the do-gooder financially (a loss solely absorbed by the do-gooder) while spreading out among everyone the very abstract, miniscule-seeming gain of slightly less CO2 in the atmosphere.

The math of a commons motivation problem is simple and unavoidable. It pays to not care. Hence, almost no one does (in any meaningful way, at least).

It’s that selfish math that explains why so many otherwise good people in business routinely make incredibly selfish, destructive decisions—to do little to nothing to cut their business’s huge carbon footprints, to pay their lower level employees as little as possible, to keep their money offshore to avoid billions in tax payments, to suck up as much water from dying rivers and aquifers as they can, to worry little about the illness and death caused by the toxic chemicals they’ve created. Why care about the bigger problems you’re feeding into if caring will only cost you more money while giving you no tangible benefit?

Commons motivation problems aren’t just the tough task of losing weight. At least when you lose weight you directly gain from it. To fix a commons motivation problem you have to motivate everyone not only to fight the long fight to turn around entrenched bad behavior, but also to do so for what is most likely a personal loss. That’s quite a tall order.

GCM Problems

But…you want a challenge, you say? You want to make the commons motivation problem even harder to solve? Well, for one last level up in difficulty, try adding more people. With commons problems, the more people the more selfish the math. Imagine you’re one of just two herdsmen on the commons. Add another cow to your herd and you’ll reap a full half of the loss from overgrazing. Not great. That loss might even convince you to hold back. Up it to ten herdsmen on the commons, though, and now you still get the whole gain of one new cow but only absorb a tenth of the overgrazing loss. That’s a much more enticing deal. The more people involved, the lower the cost each individual faces for being selfish.

Simultaneously, making a pact to cooperate becomes all the harder with more people due to inevitable trust issues. Let’s say you and I make a pact to put no more than ten cows per day on the commons. Since it’s just the two of us then I can probably trust you, if only because I can look you in the eye when we shake hands and I can watch your herd from next door. But what about when there are ten herdsmen, a hundred, or even a thousand? How can I trust so many others not to cheat? And if they’re going to cheat…then why shouldn’t I, too?

Basically the more people involved, the less any of them will want to work together towards a common good. Take this progression to its logical conclusion and the toughest commons problem is the one that involves the maximum number of people—all seven billion. That’s seven billion people who face almost zero individual loss from being selfish and who have almost zero trust in one another. To solve such an impossible problem as global warming, that’s seven billion people you’ll have to keep extra motivated to all go against what they naturally, quite strongly want to do. Hence, the global commons motivation (GCM) problem is arguably the hardest problem humanity has ever faced.

It should therefore be of little surprise that that slew of thorny problems that we consistently see blowing up in the news these days—corporate tax evasion, water shortages, outsourced jobs, inhumane working conditions, antibiotic resistance, non-biodegradable waste accumulation, toxic chemical exposure, and the biggest two, global warming and income inequality—are all GCM problems.

How to Stop the Unstoppable

So, again, what’s to be done? It sure sounds like a good defeated shoulder shrug is the best option on the table.

But as hard as any motivation problem is to solve—GCM problems included—the key is really quite simple. Find those who have the power to fix the problem and then give them a strong, consistent motivation to do so.

Think of what human drive and ingenuity have accomplished when sufficiently motivated to do so. Domesticated crops, controlled fire, spoken and written languages, climate-controlled homes, electricity, and magical machines that can accomplish almost anything we set them to do. We can now fly in hours what once took thousands of years of migration to traverse. We can now access all of historical thought on a pocket-sized device. Such accomplishments are mind-blowing. Shifting to renewable energy sources and paying everyone decent wages should be nothing by comparison. All we have to do to squash problems like climate change and income inequality is to motivate people in the right direction.

So why have we fallen so flat against GCM problems? Minimum bar laws, our main line of attack against corporate irresponsibility for over a century, aren’t fixing GCM problems because they weren’t designed to do so. They curb excessive bad behavior and thus solve baseline problems. They don’t motivate companies to wipe out that bad behavior all together and thus don’t solve motivation problems. Upgrade those to global commons motivation problems—the most entrenched, difficult motivation problems humanity has ever faced—and these laws go from ill-suited to hopelessly outmatched. And just as our current minimum bar laws have failed us, so too will newer versions, no matter how many such laws we pass or how strict we make them. Pesticide tolerances will never keep people from getting sick from pesticides. Raising the minimum wage will never wipe out income inequality. A carbon tax will never stamp out global warming.

In recent decades, other attempts to tackle GCM problems have arisen outside of the traditional minimum bar law: watchdog websites like Dow Jones Sustainability Index, phone apps like Good Guide, and other product labels like USDA Organic and Fair Trade. While these voluntary transparency programs have novel strengths, they also still have critical weaknesses (which we’ll discuss in greater depth later). Just like minimum bar laws, they fall far short because they don’t give companies the strong motivation needed to beat the selfish math of the GCM problem.

The only option on the table that can seriously address our motivation problems is Corporate Responsibility Rankings. CR Rankings would give companies that strong motivation needed to consistently work toward being more socially responsible. That consistent improvement would in turn put us on the unprecedented path to wiping out a wide slew of GCM problems.

If we are to fully appreciate the critical need for Corporate Responsibility Rankings, we must first fully appreciate a.) the failure of all other approaches to motivate businesses to improve and b.) how CR Rankings would be different. So let’s take a closer look. Minimum bar laws and voluntary transparency programs tend to fail to motivate businesses to improve in predictable ways. That is, they share one or more of five key flaws: being absolute, pass/fail, localized, voluntary, and specific. These are the flaws of motivation that doom such well-intentioned attempts to fail.

Why Minimum Bar Laws Fail

1. Absolute vs. Relative

For now let’s stick with minimum bar laws (we’ll get to voluntary transparency programs later). The first flaw of the MBL is that it’s almost always absolute. This means that companies are judged by how they compare to a minimum bar, not by how they compare to each other. A state math exam is absolute. It judges a class of students by how many of them can get a minimum number of algebra and geometry questions right. Basketball teams, on the other hand, are judged relatively. They are, in other words, compared to each other. There is no set level of basketball performance that makes a team “good,” like shot percentage or how high they can jump. Instead, being good means winning more than the other teams in the league.

Daniel Hughes/Wikimedia Commons

So what’s the problem with being absolute? Well, to understand, let’s first look to how a free market works, which is inherently relative rather than absolute. In other words, in the capitalistic marketplace we judge the quality and cost of a product by how they compare with the quality and cost of similar products. This TV looks okay, but a rival model costs less, has a clearer picture, and is several inches wider. Easy choice. We don’t, that is, judge a television by some arbitrary, absolute standard set by, say, a government. Imagine if Congress had decided how big, expensive, and technologically advanced TVs needed to be back when they first hit the market. They would have been required to be bulky boxes with tiny black and white screens and ten thousand dollar price tags. Even worse, TVs would have stayed that way until Congress got past its typically endless bickering and raised the standard.

This idea is clearly absurd. However, real absolute standards suffer the same problem of not keeping up with a changing world. The minimum wage, for example, is always steadily falling behind inflation and the rising costs of living. Note in the graph how every time Congress raises the minimum wage its real value (in red) slants back down again until the next legislative bump. Because of such slants, its overall value has actually been steadily declining since the late 1960’s (a 33.2% percent drop, to be specific).19,20 Making this drop in value even more ridiculous, it took place while the inflation-adjusted GDP created by the average US worker doubled.21,22 Our workers are twice as valuable yet somehow paid less. Clearly the minimum wage hasn’t kept up with economic reality at all.

What’s more, absolute minimum bar standards tend to be pretty arbitrarily set in the first place and therefore tend to be even more insufficient to address systemic problems. Why set the federal minimum wage at $7.25 an hour, for example? Few economists would argue that working full-time at for $7.25 an hour is enough to support a family most anywhere in the United States. The $7.25 minimum wage, like most absolute standards, seems much less motivated by what makes economic sense than by what politicians thought would pass in Congress at the time.

Because they’re pretty arbitrarily set and easily become stuck in time, absolute standards don’t motivate companies to improve much at all. Just like an absolute standard of boxy, expensive TVs would have failed to push TV makers to make better TVs, the minimum wage has failed to encourage businesses to pay their workers much better.

The Never-Ending Competition of Relative

CR Rankings, on the other hand, would all be relative. There would be no set standard of how well a company should pay its workers. Instead, a company’s pay would be judged by how it compares to the pay of all other companies in the market.

Why does this difference matter? Well, when judged relatively companies constantly fight to outdo each other. Think back to those TVs from before. Just like in any industry today, TV companies had to fight for sales from the get-go in the 1940’s. That pressure led to a constant stream of innovations, such as cable TV in 1948, remote controls in 1950, color TV in 1953, wireless remote controls in 1956, taped broadcasting in 1956, signal sent by satellite in 1962, plasma display monitors in 1964, VHS recording in 1976, home theater surround sound in 1982, widescreen TV in 1993, flat screen TVs in 1995, DVD players in 1996, high definition broadcasts in 1996, and the DVR in 1999, just to name a few. All of these innovations and more took place while TV screens and resolutions grew tens of times larger, and yet while the average inflation-adjusted price of a television simultaneously dropped just as precipitously. Think about that. A product that became arguably hundreds of times better became drastically less expensive, not the other way around. Living in a capitalist world, we’re so used to such dramatic transformations that they almost seem banal, but really the evolution of the TV is nearly miraculous.

And what caused this miraculous transformation? Every day for the last seventy years, TV companies have had to fight tooth and nail to beat out their competitors, all because when you the customer walk into a store to buy a TV, you compare the available TVs and pick the best one. Because their products are judged relatively, TV makers can never rest on their laurels. If one company slacks off and stops innovating, its rival will get ahead with a better and cheaper product and start beating the slacker for sales. A relative market creates such constant competition, which consequently leads to constant improvement.

Now imagine how the market would work with Corporate Responsibility Rankings. Customers would still compare TVs based on quality and price, but now also based on their CRR. Higher rankings would inevitably attract more customers, forcing companies to find ways to boost their rankings and beat out competitors. Less plastic wrap packaging could be a start for one business, followed by small raises for lower level employees. The next year rankings competition heats up, leading to bigger raises and new, regular donations to the local food bank. Corporate headquarters might even decide to take last year’s surplus in the R&D department and plug it into research for a new biodegradable plastic packaging material. Bit by bit such improvements would build up, and just like with the television, many of our huge intractable problems we’ve been facing could see miraculous transformations over the years.

In other words, because they’re relative, CR Rankings would push companies to constantly strive to do better and not stagnate along with arbitrary, stuck-in-time absolute regulations.

2. Pass/Fail vs. Incremental

The second major flaw of minimum bar laws is that they are almost always pass/fail. In a pass/fail system, you pass when above a minimum standard and fail when below it. A driver’s license test decides whether you can drive, and a bouncer decides whether to let you into the club. For both, you either pass or fail. There is no middle ground. An incremental system, on the other hand, has many levels of success. School grading, for example, has quite a few number and letter grades possible.

Jason T. Poplin/Wikimedia Commons

Pass/fail systems have their place, of course. Beyond driver’s licenses and getting into clubs, pesticide restrictions keep people from dying of overdose, and overtime restrictions keep most of us from working marathon hours. OSHA’s 25-parts-per-million limit on methylene chloride prevents most unnecessary deaths among bathroom refinishers. Those are great achievements. For such baseline problems, pass/fail regulations work just fine.

However, pass/fail systems fall far short with motivation problems for a pretty simple reason: they encourage you to just barely pass.

Aiming To Just Barely Pass

Imagine if tomorrow all schools changed from the incremental system of letter grades to pass/fail instead. No A’s, B’s, C’s, D’s, or F’s anymore, much less the plusses and minuses. Just pass or fail. What do you think would happen? How many students do you honestly think would keep diligently studying, taking notes, and sweating over the perfection of their essays once they knew they had done just enough to pass? You get the idea. It’s obvious that at that point most would toss the books aside and go straight for the TV.

Our regulatory system for businesses, meanwhile, is almost entirely composed of pass/fail measures: pesticide tolerances, the minimum wage, overtime pay, income taxes, CO2 emissions limits, ozone standards, CAFE standards, etc. Why, then, should we expect our businesses to strive to improve any more than students in a pass/fail class? In pretty much every regard, each company’s motivation is for their labor and environmental practices to just barely pass. Doing any more—by using fewer pesticides, by paying their workers more, by installing solar panels on their roofs—will actively hurt businesses by costing them more money. That will in turn drive up the price of their products and then make them vulnerable to defeat by their rivals. If your clothing store gives raises to the clerks, all the customer is going to see is the higher price tag (so it’s likely she’ll go buy that new shirt somewhere else). Thus, pass/fail regulations tend to create a race to the bottom, with businesses fighting to do less than (or just as little as) their competitors, as can be seen with the compliance of most corporations with most labor and environmental laws.

Take the minimum wage. An employee working full-time at the US minimum wage in 2017 makes $15,080 a year.23 Notice how, in the graph below, income in the United States clusters just above that minimum wage mark. This is pretty typical for any country with a minimum wage.

Distribution of income above minimum wage

Or take CAFE Standards. CAFE (Corporate Average Fuel Economy) refers to the average fuel efficiency of all cars sold by a particular car manufacturer. In the US, each car company must meet a minimum pass/fail standard for fuel efficiency each year or else pay fines. From their beginning in 1978 up to 2013, CAFE Standards slowly rose from 18 to 33.5 mpg for passenger cars. During those 36 years, the actual industry-wide CAFE consistently just barely passed, hovering an average 2.04 mpg above each year’s standards.24,25 In fact, as evidence of how just barely passing these results are, the EPA runs its own more rigorous tests of fuel economy every year, tests which include more realistic driving conditions like cold weather, more aggressive gas pedal accelerations, and use of air conditioning in the test car. Using those slightly adjusted numbers, the average fuel economy of all passenger cars sold in the US has only ever passed the CAFE standard once in 1980. Every other year they have fallen short.26,27

So if pass/fail laws only encourage companies to just barely pass, what happens when we push such laws to fix our motivation problems? Unsurprisingly, not much. From the time CAFE Standards passed in Congress to the year when they had become nearly twice as strict (1975-2013), gasoline consumption did drop a bit per person in the US…but gasoline use still grew a sizeable 21.89% overall (thanks to population growth).28,29 Meanwhile, petroleum use for transportation—which includes gasoline but also other oil-based fuels like diesel and jet fuel—actually increased 1.27% per person in that same span, and ballooned by 48.27% overall.30-32 Whatever the impact CAFE Standards have had on oil consumption, it’s clear that that impact is not nearly enough even if our goal is just to somewhat slow down global warming, much less completely eliminate it.

And what about the minimum wage? Since the US minimum wage was instituted in 1938 and has been raised twenty-two times since, pretty much every major index of income inequality shows it to have grown here. Whatever the benefits of the minimum wage, it is clearly an insufficient tool to attack income inequality.

Distribution of income above minimum wage

Now, to be fair, the supporter of pass/fail measures would likely bring up two points to defend them. The first is that, even though those subject to pass/fail measures often cluster just above the passing mark, often there are plenty that exceed the mark comfortably. Let’s look back at the minimum wage and the graph of US income distribution from above. Although pay clusters just above the minimum wage, the vast majority of workers still make more than the minimum. This is entirely true. However, such situations still reveal the inherent weakness of these pass/fail bars because even when companies safely exceed these bars, the bars then exert all the less pressure on those companies to improve. The minimum wage may force a company to pay more to the workers at the very bottom of the pay scale, but what about workers making $20 an hour or $30 an hour? The law does just about nothing to pressure companies to raise the pay of such employees. Once again we see that pass/fail regulations let companies get complacent and stop improving.

The same goes for companies below a high minimum bar. USDA Organic, for instance, is only awarded to the elite food makers that use 95% or more pesticide-free ingredients. For any food maker well below this standard, what good would it do to try to get a little better by dropping your pesticide use by, say, a couple percent? You aren’t going to get the USDA seal either way, so forget it. Whether with a low or high minimum bar, the only companies motivated to get better are those right around the bar. The rest have little motivation to improve.

The second likely defense of the pass/fail regulation is that if companies stop improving under such a regulation, then we can just raise the bar to pass. The Obama Administration recently raised CAFE Standards quite a bit, for example. This isn’t the worst option but it isn’t all that great either. We address this issue much more in But…Isn’t It Impossible?, but for now suffice it to say that pass/fail regulations tend to be raised quite sluggishly thanks to the sluggish governments that run them. We’ve already seen how the minimum wage gets raised so infrequently that it has fallen behind the slow rise of inflation. As far as CAFE Standards go, before the Obama Administration raised them in 2011 they had sat unchanged for twenty years. If that’s the reality of how often political gridlock will allow pass/fail regulations to go up, then it sounds like a pretty poor option to rely on. And no matter what, even when pass/fail regulations do get raised more regularly, the pace of improvement it encourages still pales in comparison to the swift change seen under incremental systems.

When No Grade Is Ever Good Enough

With no one passing grade, incremental systems encourage bit-by-bit improvements. Remember those lazy students from the pass/fail class? Give them back the full range of scores from 0 to 100 and you’ll see a constant struggle to learn the formulas, finish the homework, and master every concept so as to bump that grade a little bit up and then a little bit more. The vast majority of our schools use an incremental grading system and for a very good reason: to much better motivate our students.

It’s the same with those television makers from before. There’s no pass/fail line for what makes a good TV—it can pretty much always be made better. A company trying to outdo its rivals might streamline its remote control, drop the price a bit, and make the screen a bit bigger. But why not expand the screen even more and add an internet connection too? Then it’ll sell even better. Because each little positive change bumps up sales a little bit, incremental systems like the TV market encourage almost limitless improvements. Such improvements can then build into miraculous transformations, like turning a kindergartener into a college graduate or the small, black and white box into the giant, flat screen TV.

Corporate Responsibility Rankings would be similarly incremental. By ranging from 0 to 10 and going down to the tenths place, CR Rankings would effectively give 101 possible grades for each company. While still simple and easy-to-understand, this incremental system would encourage businesses to always strive to do better with bit-by-bit improvement, much like students in a letter-grade system. And those improvements would build up. With pass/fail CAFE Standards, General Motors only has the incentive to barely boost the Cadillac’s miles per gallon efficiency until it just passes that year’s standard. But with incremental CR Rankings, it would have the incentive to continually boost that efficiency more and more for better and better rankings until the efficiency is as high as the company’s engineers could push it. With the pass/fail minimum wage, McDonalds only has the incentive to pay its cooks and cashiers at or near $7.25. But with CR Rankings, it would have the incentive to pay them $9, then $12, then $15, and then even higher. Each bump would get them better rankings, which would in turn help get them more customers.

So where pass/fail regulations encourage companies to just barely pass, the incremental CRR would encourage companies to continuously make bit-by-bit improvements to be more responsible. And just like with students and TVs, those bit-by-bit improvements could build into miraculous transformations, only these transformations would bring fleets of super-efficient vehicles and millions of well-paying restaurant jobs.

3. Localized vs. Universal

Any new system that fixes these first two problems, though, would still be deeply flawed if it did not address the third and arguably most difficult problem with minimum bar laws: that they are localized. They are, in other words, stuck in one place, in one country, state, or even city. The EPA’s regulation of lead paint, for instance, stops at the nation’s borders.

A Foxconn electronics factory in Shenzhen, China, where workers reportedly earn less than US $20 a day.

Steve Jurvetson/Wikimedia Commons

And yet in an ever-globalizing economy, corporations are not stuck in one place. As communication and transportation technologies continue to improve, companies can more easily than ever move some or even all of their operations to another state or country, depending on the economic winds of the season. Headquarters in New York, finances in Switzerland, and manufacturing in India, Malaysia, and the Dominican Republic. Sound familiar? Such multinational corporations (MNCs) make up an ever-growing portion of our economy. While still tallying less than 1% of the actual number of US companies, MNCs have accounted for 31% of overall gains in US GDP since 1990 and now make up a whopping half of all US exports.33 And with multinationals dominating the global economy, jobs move more easily than ever. An estimated half-million jobs migrate every year from the US to China alone.34

Now, there’s no doubt that globalization partly stems from benign economic needs. Businesses may do so to boost sales in foreign countries or to gain other strengths such countries have to offer, like better IT resources, a stronger manufacturing infrastructure, more plentiful raw materials, or more plentiful workers.

But there’s also little doubt that the number one reason to globalize is that it’s cheaper. Why so cheap? Because companies can spend less on wages, taxes, and environmentally sound practices wherever regulatory laws are laxer. Pretty simple. Note how so many American companies like Apple and Verizon keep their money offshore so as to pay next to nothing in taxes. Or how the garment industry has shifted en masse to Bangladesh, where the minimum wage is a paltry $19 a month35,36 and workplace safety standards are almost nonexistent.

Or for a perhaps even uglier consequence of the globalization profit motive, look to Baotou, China. Most of the world’s rare earth metals—metals needed for electronics like smart phones and flat screen TVs—are now processed in Baotou. Why Baotou? Because processing rare earth metals leaves behind one heck of a cocktail of toxic chemicals, and the Chinese government does almost nothing to regulate what’s done with them. It’s hard to imagine a cheaper disposal method: pipes pour such leftover chemicals straight into a massive manmade lake of black radioactive sludge on the outskirts of the city, a lake constantly growing and already so large that it’s easily visible on Google Maps.37 Reports have begun to filter out of sheep and crops dying out nearby38 as well as the locals having their teeth fall out and hair turn prematurely white.39 Official studies confirmed that nearby residents have especially high rates of cancer, skin and respiratory diseases, and osteoporosis, but the Chinese government has since stopped publishing the results of toxicity tests to squelch any bad press.40

So what do we have to thank for these shady corporate practices? Localized laws. Because most of our regulatory laws are localized, our increasingly mobile companies can now just pick up and move to wherever the local laws are the laxest (and therefore cheapest to obey). For the tax avoidance game, that’s places like Ireland and Cyprus. For textiles, that’s Bangladesh. For rare earth metals, that’s China. And the more companies can move to avoid localized laws, the more ineffective those laws become at stopping our global problems. Someone gets paid poorly, just somewhere else. Fossil fuels still get burned, just somewhere else. Stopping GCM problems therefore becomes a game of global whack-a-mole. Make the laws stricter in one place, and then the problem just pops up somewhere else.

What’s more, this law avoidance makes it all the harder to enact new minimum bar laws or make the current ones stricter. Who, after all, wants to pass stricter laws if doing so might scare away more companies (and their jobs) to another country? This is a fair concern. It’s largely why politicians of the last few decades have mostly run and hid under the covers whenever anyone has suggested raising the minimum wage, closing corporate tax loopholes, or enacting tough greenhouse gas emissions standards. It’s also largely why the governments of countries like China and Bangladesh want those antiquated regulatory laws. Businesses flock to them because of their laxer pollution and labor laws, so why fight that huge boost to the economy?

Thus, localized laws feed this race to the bottom and have arguably become the most glaring weakness in our policy approach to fighting GCM problems.

With Universal Laws There’s Nowhere to Run to (Baby)

Corporate Responsibility Rankings, though, would be universal. A universal law is one that regulates your actions wherever they take place. And the advantage of the universal law is pretty simple. You can no longer avoid that law by going somewhere else.

Imagine, for example, a mother dealing with a teenage son who has gotten some less than impressive grades at school. Her first line of attack is to rule out TV and cell phone use until homework is done each school night. This localized rule sounds pretty good at first, but it’s limited to the house and more specifically limited to the parts of the house where she can physically watch him. He plays nice at the dinner table, but who knows what he’s doing up in his room and at friends’ houses? Another lackluster report card later, she wisely institutes a universal rule instead: from now on his grades will be tied to cell phone and car privileges. The better the grades, the bigger the data plan and more unlimited car use. D’s or lower mean the cell phone and car get revoked altogether. Notice it doesn’t matter where he does his work. He just has to get it all done and done well if he wants to get the things he wants at home. Because of this new universal rule, he should likely be in for some better grades next quarter.

In a similar way, CR Rankings would incorporate the wages a company pays, the pollution it creates, and the taxes it pays, wherever it may do so. It’ll be cheaper to keep your money offshore in a low-tax haven, sure, but your CR Community Ranking will tank because of it. The same goes for that Bangladesh sweatshop labor you employ and the toxic pollution you’re dumping in that Chinese reservoir. Avoid local laws to lower your bills, great, but you’re also going to lower your CR Rankings (which in turn means fewer customers). Consequently, in order for businesses to keep their rankings up and keep customers happy, they would have to actually stop such irresponsible behavior altogether, not just move it somewhere else to avoid stiffer localized laws. This change would in effect end that globalization whack-a-mole game and allow us to finally start fixing GCM problems, not just appear to be fixing them.

Now, as good as that sounds, some will no doubt object here. But you can’t make a universal law without all countries agreeing to pass that same law! Right?

Well, not necessarily. While ideally a universal law would be adopted and enforced by all nations (and CRR is no exception), it doesn’t have to be. Here’s how it works. Localized laws deal solely with what’s done within that jurisdiction. You must pay your workers X dollars when working in this state. You must filter your smokestack emissions to X degree while generating power in this country, etc. A universal law, on the other hand, says that in order to do something here in this jurisdiction, you must first do X wherever you are coming from. In order for a company to sell its goods in the US (and any other country that adopts CR Rankings), the CRR system would require that company to first provide all required data, such as where it gets its resources and how much it’s paying its employees, wherever it’s doing so.

If you’re suspicious of how this would work, we actually already have some universal laws on the books. CAFE standards are a great example. In order to sell its cars in the United States, a company must first abide by the minimum fuel efficiency required here or else face fines. Note that the law doesn’t state that all cars made in the US have to abide by the standards, but instead all cars sold in the US. That’s the key difference. The former would be a classic localized law; the latter is universal. So instead of just forcing American car manufacturers like Ford and General Motors to abide by the rule, this setup means all carmakers around the world who want to sell cars in the US have to abide by it, from Toyota to Volkswagen. Because of this setup, CAFE standards affect the fuel economy of cars made pretty much everywhere, not just those made here in the US. (Therefore, if it weren’t for their inherent weaknesses from being absolute and pass/fail, CAFE Standards might have been a model law in the era of globalization.)

And it works. Today there are many stricter fuel economy laws on the books elsewhere in the world, but in the 1970’s and 80’s CAFE standards were the only sheriff in town. And even in those first years, fuel efficiency from foreign carmakers jumped nearly as much as it did for domestic carmakers (imports went up 5.1 mpg in the first five years of CAFE versus 5.7 mpg for American-made cars).41

It’s All About Leverage

Of course, in order to make such a universal law work—a law that hasn’t actually been passed in the rest of the world’s countries—there’s a bit of a catch. It needs quite a bit of leverage.

See, if carmakers didn’t really care about selling cars in the US then they might turn up their noses at CAFE standards and say, well, thanks but no thanks. If you’re going to pass a law like that then we’ll just sell our inefficient cars somewhere else. It’s the same idea with that slacking teenager’s homework rules. If he didn’t care about being able to use his phone and car, then he’d probably keep right on slacking. To make these rules work, you need leverage. You need to offer something that the one behaving badly will really want.

Before dawn on Black Friday, a crowd stretches all the way across the front of this Target store.


But that’s the beauty of making universal laws like CAFE Standards in a high-consumption country like the US (i.e., a place where people buy a ton of stuff). The US car market is the second biggest in the world. Any decently large car company would be crazy to avoid the US market, so it more or less has to abide by such rules if it wants to sell cars and stay competitive. Thus, to get all of those American car sales, they have to put up with American rules for fuel efficiency. So long as a universal law has such leverage, it only needs to be passed in one country to have a huge global impact.

But while on the topic, there’s an even more important point to make about leverage. Universal laws like CR Rankings don’t just have enough leverage to work—they should actually have much more leverage than localized laws do, and accordingly have much more power to effect change. The reason is that universal laws target consumption, not work.

Let’s break that down. The classic localized law targets work. That is to say, laws like the minimum wage and the Clean Air Act regulate the work being done at offices and factories to make sure that this work is done responsibly. This would seem to make good sense. If you want to stop undesirable behaviors like low pay and pollution, aim for them directly at the source. The problem with this approach, however, is that the affluent nations more likely to pass such stricter localized laws don’t constitute that much of the global workforce. And because these stricter laws exist where less work is being done, they therefore aren’t able to regulate that much of the wages being paid and the pollution being produced. The United States, for example, hosts only 4.61% of the world’s workforce.42,43 That isn’t very much. So no matter how strict we make our localized laws, they are inherently limited in how much corporate irresponsibility they can stop.

Distribution of income above minimum wage

On the other hand, the US tallies up a whopping 28.72% of global consumption.44,45 That is, we buy over a fourth of all stuff sold in the world. That may be a headache for those running our landfills, but it’s great for universal laws like CAFE standards and CR Rankings that target our consumption. By regulating all of those sales, such laws affect roughly a fourth of the world’s pollution, wages, and other corporate behavior. That gives universal laws roughly five times the leverage of localized laws here in the US. Meanwhile, that same leverage gap extends across other more affluent countries. If we lump together what are often called the “developed nations” (the European Union plus the United States, Iceland, Norway, Switzerland, Canada, Australia, Israel, Japan, and New Zealand), these countries combine to form just 14.7% of the global workforce46,47 while amassing 61.73% of global consumption.48,49 That’s still over four times more buying than working.

The takeaway? When trying to reduce corporate irresponsibility in an affluent nation like the US, localized laws (e.g., most of our labor and environmental laws) operate from a place of weakness. Universal laws, on the other hand, operate from a place of much greater strength.

If our goal is to attack GCM problems then the difference is pretty clear. Localized laws, instead of actually stopping the bad behavior that feeds these problems, just tend to scare it away to somewhere else. Universal laws stop that bad behavior, no matter where it tries to hide. Plus, because universal laws focus on consumption instead of work, they regulate much more of that bad behavior than localized laws do, even if the law is only passed in one country. Universal laws are therefore the much stronger, more reliable choice to get the job done. And because CR Rankings are universal, they would regulate much more of that corporate bad behavior that feeds GCM problems than localized laws like the minimum wage and Clean Air Act do.

The Motivation to Improve Scorecard

Now that we’ve gotten through the first three of five flaws to our current approach, take a look at the following table to see how all of the minimum bar laws we’ve discussed so far stack up.

Motivation to Improve Scorecard

Obviously, the results don’t look too good for minimum bar laws. Because such laws are absolute, they stay stuck in time at arbitrary, usually insufficient levels. What’s more, because minimum bar laws are usually pass/fail, businesses have no incentive to do any better once above such bars. And because minimum bar laws are localized, the only real incentive businesses have is to do even less than the minimum bars require by moving somewhere else in the world and avoiding them completely.

Given how thoroughly our regulatory laws fail to motivate businesses to improve, it’s no surprise that they fail to fix the motivation problems that arise largely from corporate irresponsibility. If we are to ever seriously address global warming, income inequality, and so many other seemingly impossible worldwide problems, minimum bar laws will never really do the job, no matter how many we pass nor how strict we make them. To fix these problems we instead need to motivate businesses to constantly improve with a system that is relative, incremental, and universal and Corporate Responsibility Rankings meet all three criteria.

Why Everything Else We’re Doing Fails, Too

Of course, we the advocates of CR Rankings definitely aren’t the only ones to abandon the minimum bar law and try to find better ways to motivate companies to be more responsible. Since the 1990s, there has been an explosion of alternative options. The US government has begun passing a new breed of environmental laws like USDA Organic and Energy Star, laws that aim more to reward the good companies than to punish the bad. Meanwhile, non-governmental organizations (NGOs) have arguably led the pack, creating a slew of corporate social responsibility (CSR) product labels like Fair Trade Certified and Rainforest Alliance, green building certification systems like LEED, and CSR ratings systems like the Dow Jones Sustainability Index. To simplify, let’s call this new breed of laws and NGOs voluntary transparency programs, since they most all aim to foster corporate transparency with companies that voluntarily opt in.

Voluntary Transparency Program product labels

A sampling of the Voluntary Transparency Program product labels that have proliferated in recent years

One main advantage of these approaches is that they tend to be universal. So whereas the US minimum wage does nothing to ensure that the cell phone you buy really benefits the Chinese factory workers who made it, a Fair Trade label can pretty well assure that your banana does benefit the Brazilian farmers who grew it.

Beyond that, though, these new programs sadly still fall quite short. For starters they tend to be absolute and pass/fail just as much as normal government regulations do. USDA Organic doesn’t compare one company to another, and either a product passes Fairtrade International’s standards or it doesn’t. Right off the bat these new approaches still give a critical lack of motivation for businesses.

4. Voluntary vs. Mandatory

Arguably even worse, though, is the fact that voluntary transparency programs are almost all voluntary (hence the name). No business has to don the Rainforest Alliance label or join the Dow Jones Sustainability Index. Instead, it can volunteer to do so if it meets the standards of the particular program (like using 95% or more organic ingredients to get the USDA Organic seal).

On the surface, being voluntary sounds like such a pleasing, nonthreatening word. It sounds much better, in fact, than the alternative: a mandatory system, wherein everyone has to participate. (Your natural reaction to hearing the word “mandatory” is probably to shrink back and think, eesh, that can’t be good.) But voluntary systems share a simple, somewhat obvious problem. If you’re trying to get people to volunteer to do something they don’t want to do, then hardly anyone will actually volunteer to do it. Ask people to voluntarily pet puppies, drink free beer, and get paid to boot, and you’ll never once have trouble finding willing participants. But what about when you want volunteers to dig a ditch in the hot sun? Or take a 10% pay cut? Or…spend big money to switch over to greener wind power? Good luck with that (you’re gonna need it). Almost no one volunteers to do things they don’t naturally want to do. It’s pretty simple.

Which brings us back to GCM problems. Remember that fixing GCM problems requires everyone to do exactly that, to do the hard things they don’t naturally want to do. So why should we ever expect a voluntary system to get people to make those needed sacrifices? You want me to give my employees more money and pay even more to lower my carbon footprint…but this is totally up to me? Okay, no thanks then! Trying to fix GCM problems with a voluntary system is an almost perfect recipe for failure.

When We Need Everyone To Volunteer

But wait a second, you might say. Aren’t there plenty of voluntary systems out there that ask people to make sacrifices…and actually succeed in doing so? National Public Radio, for example, gets most of its funding from voluntary donors. Joining the US military means years of hardship and possibly death, and yet for decades it has filled its rolls solely with volunteers (enough volunteers to make it by far the largest army in the world, no less). Maybe voluntary isn’t so bad after all. Could voluntary CSR product labels, apps, and watchdog websites work just as well?

Sabrina Johnson/U.S. Air Force

Unfortunately no. If we examine the voluntary systems that require sacrifice and yet actually succeed, there is an obvious trend. These voluntary systems succeed when only some of the whole group is needed to volunteer. Despite the massive size of the US military, less than 0.5% of the overall population actually serves in it.50 And when it comes to public radio, listen to the frustrated desperation of any pledge drive and it’s pretty clear that the vast majority of listeners don’t donate. But, luckily for them, that low level of volunteerism is really all that NPR and the military need to work. If everyone had to voluntarily join the military or donate to NPR for them to work, then, well, we could forget about seeing camouflage uniforms and hearing Ira Glass’s voice on a regular basis.

But remember that the issues like global warming and income inequality that bedevil us are GCM problems. For such a commons problem, we really do need everyone to chip in, not just a kind-hearted few. Why? Well, those few volunteers may generously cut back their use of the common good, but what then? Everyone’s motivation in a commons problem is to be selfish. The less altruistic ones will, at best, shrug their shoulders and do nothing to pitch in. Even worse, some of the non-volunteers will typically then swoop in and use up that newly up-for-grabs portion of the common good that the few volunteers are no longer using. Joe kindly kept his cows from eating too much grass this month, which means—jackpot!—more grass for Jane’s herd to gobble up instead. Therefore, any small gains made by the volunteers are wiped out and nothing really improves.

Take CSR labels, like those of the fair trade movement. Fair trade labels generally ensure that the product was made ethically—with decent pay for workers, no child labor, etc. The makers of Fair Trade Certified (one of the most widespread of such labels) boast that over one billion pounds of coffee have been sold with the label since its inception in 1998,51 one of the label’s signature achievements thus far. That total sounds pretty impressive, but it only amounts to 0.36% of global coffee bean sales over those years.52,53 Fair Trade International, the other of the biggest two fair trade organizations, prides itself on now protecting 1.5 million workers through its labels.54 Again, that’s something, a huge boost to those particular workers, but that tally still only amounts to about 0.044% of the global workforce.55,56 Seeing the picture? Each of these voluntary product labels only draws a tiny sliver of the overall market. Perhaps the most successful of the voluntary labels is USDA Organic. Since the beginning of the organic seal in 2002, sales have boomed. Organics now make up a whopping 4% of all US food sales.57 But in the grand scheme of things 4% is still only a sliver. The vast majority of the food sold in the US still does not qualify for the organic logo.

The issue here is, as usual, one of motivation. If the vast majority of companies don’t participate in these voluntary programs, then what motivation do these programs give most companies to be any more responsible? The answer is pretty much none. Companies that opt out of voluntary programs get no punishment for doing so. (Think about it. How can you punish a business—with, say, fines or a product label that criticizes it—when that business can just un-volunteer to avoid the punishment?)

Therefore, when we look to these voluntary programs to help fix GCM problems, unsurprisingly not much happens. Despite fair trade labels, child labor and awful wages are still endemic on coffee plantations worldwide. Despite the success of the USDA Organic’s first decade of existence, global pesticide sales have continued to boom, up an estimated 45.2% during that span (from 2001 to 2012)58,59 and projected to grow another 76% by 2019.60

Volunteering to Stop Global Warming

For perhaps the biggest, most frustrating failure of a voluntary system, we have the world’s response to global warming. Since 1995, the United Nations has hosted twenty-three massive global conferences on climate change with delegates from virtually every world nation present. (The latest few were in Paris, Marrakech, and Bonn, as you may have seen in the news.) The major achievement of these conferences up until Paris has been forging the Kyoto Protocol in 1997 and updating it multiple times since. The treaty commits virtually the entire world (currently 192 of the world’s 206 sovereign states) to pledge to reduce greenhouse gas (GHG) production.

On the surface that sounds like a major achievement. A hundred and ninety-two countries all agreed to anything? That’s huge! But, alas, the Kyoto Protocol is completely voluntary. Each country can more or less do or not do whatever it wants to try to curb its GHG emissions with no real threat of punishment if it comes up short. No fines, no tariffs, no loss of trade access, etc. Some countries set specific “binding” targets within the treaty (such as, “we pledge to reduce carbon emissions 15% by 2020”), but, if they don’t achieve their targets by the deadline, all the “binding” part makes them to do is then create new targets for a later deadline. In terms of punishments, that’s it. Kyoto’s approach is like trying to get a smoker to cut her pack-a-day routine in half just by having her sign a pledge to do so. If that isn’t weak enough, with no actual punishments or rewards to motivate her, the only consequence if she fails to cut down is she then has to sign a new pledge to cut her smoking even more, down to a fourth of a pack a day. If she couldn’t achieve the first target, though, what good will it do to have her just make up another target (much less a stricter one)? Any smoker would tell you that plan isn’t gonna cut it. And yet with Kyoto, we put the fate of the world’s ecosystems in the hands of similarly weak enforcement mechanisms.

So after two decades, how has the climate pact fared? To its credit, some altruistic volunteers have stepped forward and legitimately cut their greenhouse gas emissions (notably many members of the European Union). However, most of the rest of the world’s countries have continued to churn out CO2 as usual, and an opportunistic few (notably China) have drastically increased their CO2 production, largely by gobbling up all of the dirty manufacturing work that fled Europe during that span. In other words, Kyoto has followed the classic script of a voluntary program trying (and failing) to fix a commons problem. For such a voluntary system to work we would need everyone to step up and make big sacrifices, but there’s no motivation for the more selfish ones at the bottom end of the spectrum—i.e., the bad boys—to shape up. So those bad boys haven’t. Of the ten largest GHG producing countries in 2010—countries which all together account for 62.2% of global GHG production61—only one has met its Kyoto reduction targets (Germany).62 All nine others have either set targets initially then backed out (Russia and Japan),63 never set targets at all (China, India, Brazil, Indonesia, and Iran), completely left the treaty altogether (Canada), or never ratified the treaty in the first place (United States).64 Hence, the end result shouldn’t be surprising. Since these global UN conferences began in 1995, yearly global carbon dioxide production has continued to soar, up over 53% overall since.65,66

Of course, in December 2015 the world came to a new agreement in Paris at COP-21. This time, every country made its own target for GHG reductions, a major improvement over Kyoto (where only 37 of the 192 ratifying countries made reduction targets). But…the agreement is still completely voluntary. And with it come the problems of any voluntary approach. First, no country has to sacrifice more than it cares to. Even though every country has volunteered its own reductions targets this time around, those targets aren’t enough. Even if every country meets its Paris target, climate scientists estimate that global temperatures will still increase by another 1.7-2o Celsius by 2100.67 That far exceeds the 1o Celsius increase over current temperatures that is widely seen by scientists and governments worldwide as the line we must not cross, as roughly the point at which the damage from global warming will go from merely awful to cataclysmic. And that’s only if every country meets its Paris target, a prospect that is itself almost laughably unrealistic. Just like Kyoto, Paris has no rewards for those who follow through and no punishments for countries that fall short. As New York Times columnist David Brooks imagined how economic-mastermind Alexander Hamilton would have put it, it’s a system “perfectly designed to ensure cheating.”68 And the first cracks have already shown. After historically offering its first GHG reduction target in 2015, China shortly thereafter was forced to admit that its government had lied and the country is burning 17% more coal than it previously reported.69 Then there’s the United States, which is now poised to withdraw from the Paris Agreement altogether after conservative backlash to the plan. And in November 2017, the New York Times reported that “no major industrialized country is currently on track to fulfill its pledge.”70 Déjà vu, anyone?

In short, to fix GCM problems like climate change people must do that which is very much against their own interest, to take one for the team, so to speak. And no voluntary system will ever push people nearly enough to take one for the team.

Making Everyone Pitch In, Not Just The Kindhearted Few

Where voluntary systems fail to fix GCM problems, though, mandatory systems do much better. If asking for donations were the government’s voluntary option to fund our schools, roads, and police stations, then taxes are the mandatory approach. It’s easy to pooh-pooh a mandatory system like taxes, but taxes are extremely effective. No one wants to be taxed, but we collectively realize that it’s the only effective way to pay for the things that we all collectively need.

Ryan Farr/Corporate Responsibility Association

To see some mandatory muscle being flexed, take a look at sanitation grades. Similar to other such initiatives around the country, the New York City health department mandated in July of 2010 that all restaurants post a sanitation grade in their front windows. The city reviews the restaurant’s cleanliness then assesses something similar to a school grade, peaking at A but only going down to C. And most importantly the grades are mandatory—any restaurant with an embarrassing C grade to still put it up in the window. It therefore stands to reason that almost any such restaurant would then do everything it could to turn that ship around, improve its cleanliness, and get its grade bumped up so as not to scare away potential customers. And as the FiveThirtyEight blog reported in 2014, the system has been quite effective. Through the first three years of New York’s sanitation grade program—a blink of an eye in the normal timeline of public policies—B grades were roughly cut in half and C grades dropped from around 15% of all restaurants to almost 0%.71

Like taxes and sanitation grades, CR Rankings would be mandatory. Any company that sells its products or services in the United States would have to give the required data to the government and then print the rankings on its products and storefronts. Should CRR be adopted in other countries, the same would go for any businesses looking to sell their goods there, too.

And being mandatory, CR Rankings would operate from a place of much greater strength than voluntary programs. First, it would affect a much wider breadth of businesses. Specifically that’s something on the order of twenty-five times more farmers than USDA Organic, eighty times more coffee bean growers than Fair Trade Certified, and at least 650 times more of the world’s workers than Fair Trade International.72 And just like mandatory sanitation grades, CR Rankings would excel in motivating those on the low end of the performance scale (i.e., those businesses behaving the most badly) to improve. If the embarrassing C grade is enough to get a restaurant to start regularly scrubbing its counters and floors to perfection, an embarrassing 2.9 Workers ranking would push that same restaurant to give long-awaited raises to its cooks and wait staff. An embarrassing 3.3 Environment ranking could motivate a shipping company to roll out new biodiesel engines and more aerodynamic trucks. And an embarrassing 1.7 Community ranking would encourage a tech company to stop avoiding its taxes with offshore accounts and start donating more of its profits to Habitat for Humanity.

Because it is mandatory, CRR would affect much more of the market than voluntary programs do. And because companies in the lower end of the market couldn’t just opt out, they would have to suffer through the embarrassment of low rankings and thus have a painfully strong motivation to improve.

Why Not Just Make an App?

Before we move on from the voluntary vs mandatory debate, we should first discuss the smart phone app. We often get the question: CR Rankings sound great, but why involve the government at all? Why not just make an app that rates companies? An app sounds like a sleek, easy solution, especially compared to the monumental task of getting a major piece of legislation passed in this country. For now let’s ignore some of the other glaring weaknesses with just making CRR an app—it would be limited to those with the money for a smart phone, and you’d have to annoyingly dig through your phone for rankings every time you’d want to buy something responsibly. Instead, let’s focus on a much bigger weakness. If it were just a phone app, CRR would have to be voluntary.

See, to adequately assess a company’s level of responsibility, we have to use quite a bit of data that is currently not made known to the public: how much a business pays all of its employees, what chemicals are used in its products, how much electricity it uses, how much gasoline it burns, how much it recycles, what other companies it uses to ship its products and mop its floors, etc.

Now, let’s say we were to abandon the legislative approach. Forget the government. Let’s join the trend and just make Corporate Responsibility Rankings a smart phone app. Well, remember that we would still need to get all of that data about companies to adequately assess them. To do so without an act of law that would make companies give that data to the government, though, we’d have to rely on companies to voluntarily step forward and give the data. Just like other CSR product labels and apps, CR Rankings would then become voluntary and would thus be forced to work only with the tiny group of all companies that would want to volunteer. CRR would then inevitably have just as little oomph as other voluntary programs.

What’s more, the hidden, extra reason why a voluntary system is inherently flawed is that it pretty much also has to be absolute. Remember how absolute and relative systems work? In a relative system, each company is compared to each other (not to a set standard). However, in order to compare two companies, say Pepsi vs Coke, you need them both to participate. It’d be pretty hard to say if Pepsi has a lower carbon footprint than Coke does if Coke decides, “eh, no thanks,” and doesn’t participate in the rankings system. Without Coke’s data, we couldn’t adequately compare the two companies, a problem that would of course only compound when we go from one company deciding to opt out to the vast majority of all companies doing so. So the only real remaining option to assess Pepsi’s carbon footprint (and that of any other volunteering companies) would be to set an absolute standard. And as an absolute standard, the CR Ranking of “good” would suffer the usual problems of an absolute standard, becoming fairly arbitrary and likely also awkwardly stuck in time.

So why not just make an app and skip the government? Because CRR would have to be voluntary and absolute to do so, pretty much guaranteeing that the program would be just as impotent as its predecessors.

5. Specific vs. Comprehensive

The fifth and final flaw in our efforts to solve GCM problems is that they tend to be specific. A specific law or NGO program is one that targets one single problem. Child labor laws, for example, target hours worked by children. One problem—that’s it. When it comes to the environment, there are now over four hundred different eco-labels in existence,73 stemming in large part from the specific nature of each label. USDA Organic focuses on synthetic pesticide and other harmful chemical use. Carbon Trust labels exclusively deal with carbon footprint. Green-e even more specifically tracks a company’s percentage of electricity coming from renewable energy sources. You get the idea.

A comprehensive approach, on the other hand, aims to tackle many issues at once. The Clean Air Act, for example, targets all air pollutants that someone could create, not just one specific pollutant. The law currently regulates 187 different hazardous air pollutants, to be precise.74

Like the Clean Air Act, the Nutrition Facts label uses a comprehensive approach to help foster better health.

Chuck Kennedy/White House

Of course, calling specificity a flaw seems counterintuitive. Shouldn’t specific approaches be the best? Shouldn’t we focus our energy on one issue at a time? After all, the more we carefully tailor each law or program to one specific problem, the more effectively we should eliminate that problem. Try to do too many things at once and you’ll only do a worse job with each of them. Right…? Yet strangely enough, specific is easily the worse option for several reasons.

Damned With One, Damned With A Ton

The first downfall of the specific approach is that it tends to present a bad choice. One specific program won’t accomplish very much. But try to fix that by making more and more specific programs and you’ll potentially create something worse: a giant mess of confusion.

Voluntary transparency programs, you’ll recall, aim to create more transparency with businesses and thus help consumers make better choices. Buy this box of crackers because it’s USDA Organic. Don’t buy that air conditioner because it doesn’t have the Energy Star seal, etc. Each label adds transparency, and that’s something. But because each one only focuses on one specific thing it doesn’t really add all that much transparency.

Take USDA Organic. It’ll plainly tell you that the milk you’re buying was made with no synthetic pesticides. That’s great to know. Next time you drink a glass you can rest easy, knowing you’re treating your body and the environment that little bit better. But if you really care about the environmental impact of that bottle of milk, the USDA Organic seal is just the beginning. For starters, how much water is used on the farm? What’s the farm’s carbon footprint, including the gas burned by the tractors and the methane produced by the cows? Were the cows fed antibiotics their whole lives, a practice that helps further the problem of antibiotic resistance? And what about the other social costs of that milk, like, how much the farmhands got paid to make it, how safe their working conditions were, whether any of the money you paid went to charity, etc?

Hence, a specific approach just doesn’t really do very much. For the same space a USDA Organic label takes up on a box of cereal, a comprehensive label like CR Rankings would tell us many, many times more information. That’s a huge missed opportunity.

Now, the proponent of the specific approach would probably say here that all we need on that cereal box is just more specific labels like Carbon Trust, Green-e, and Fair Trade International. Each one shows a little more of the picture that that first USDA Organic label missed. But to even come close to fully gauging the social responsibility of that milk company it would take hundreds of such labels. And there’s the rub. When it comes to specific labels, the fewer a product has, the less we really know about its social impact. The more it has, the more maddeningly overwhelming and confusing it becomes to try to look to the labels for guidance. Thus, such labels can never really be all that helpful. This is one big reason why the social impact of products hardly factors into anyone’s purchases, and as a result why such labels give businesses little motivation to be more socially responsible.

Imagine instead a product label that would be comprehensive, one that would combine everything a company does behind the scenes into one simple ranking. Carbon footprint, worker pay, working conditions, money given to charity, tax evasion, pesticide use, other air pollution. It would all be there in one place. Corporate Responsibility Rankings would wipe away the confusing clutter of specific product labels, apps, and websites and therefore be almost infinitely more helpful.

In this respect CR Rankings are pretty similar to Nutrition Facts. Imagine if, instead of one comprehensive Nutrition Facts label that tells you the level of every nutrient in your food, each food item sported some random accumulation of separate labels that told you a few bits about the nutrients within. Low Sodium Guarantee! High Protein Certified. USDA Vitamins Gold Star! Some products might have three such labels, some might have none. Trying to assess the nutritional content of any food that way would be a nightmare. Nutrition Facts makes the process much easier and the information much more accurate. By being similarly comprehensive, CR Rankings would do the same vitally important job.

To be fair, Nutrition Facts can be a bit confusing in its own right. To really use them well, you’d have to know how your body uses protein and sodium, how vitamin C is different from D, what the heck Riboflavin is, and how to navigate the other dozens of bits of information on the label. Comprehensive systems can run the risk of being fairly confusing too. CR Rankings, however, avoid this pitfall. Like Nutrition Facts, they contain a ton of good information, and yet they would then synthesize all that information into one simple ranking. CR Rankings would thus contain vastly more information than the typical specific product label and yet do so while being incredibly easy to understand. That’s the beautiful simplicity of a well-designed comprehensive system.

Comprehensive Depth

Specific laws aren’t just flawed because they focus too much on one narrow issue, though. They also focus too much on one narrow part of a product’s lifecycle.

To explain, let’s take another look at that dairy farm. Earlier we discussed the need to address many issues at once if we are to accurately assess a company’s environmental impact. We don’t just want to know about pesticide use, but also about the carbon footprint, water use, and antibiotic use at the farm.

A milk truck in Finland.

David Smith/Wikimedia Commons

But to fully assess the milk company’s environmental impact, we really have to go much deeper. That is, we have to take into account the impact of all of the companies that worked together to create that jug of milk in your fridge. The farm matters, obviously, but so does the processing plant that evaporates, separates, pasteurizes, and then bottles the milk. Don’t forget the trucking company that brought the milk from the farm to the plant and then from the plant to the grocery store. The store itself matters, too, as do the businesses that made the tractors, the pasteurizing equipment, the plastic bottles that hold the milk, the trucks that did the trucking, and all of the grain and corn needed to feed the cows. All of those pieces of the milk puzzle required plenty of gasoline, water, coal-powered electricity, non-biodegradable plastic, mined metals, toxic cleaning chemicals, and much more. In other words, that gallon of milk leaves behind an extensive, complicated environmental impact.

If addressing many issues at once we can call comprehensive width, then simultaneously addressing all of the hands that came together to make one product we can call comprehensive depth. And if ratings programs need to have comprehensive width to accurately rate a company’s impact on the world, they must also have comprehensive depth. The Dow Jones Sustainability Index, for example, has comprehensive width because it rates companies on dozens of different sustainability factors. That’s great, but the index doesn’t have any comprehensive depth. When the DJSI rates a company, it specifically focuses on the direct actions of that company, not on the other companies that work with it to produce a single product or service.

Enter CR Rankings. CRR would have a complete comprehensive depth never before seen. Each company’s rankings would include its own responsibility data (RD)—how much a it pays its workers, how much it pollutes, etc—but would also include the RD of all of the other companies that helped to bring its products to the market. This would be accomplished with a process called branching.

For a more in-depth look at how branching would work click here, but for now let’s briefly discuss the basics. Imagine that one trucking company transports all of that milk company’s finished bottles to stores. If that job requires 20% of all of the trucking company’s services one year (i.e., 80% of its work went to shipping other products), then in a way the trucking company is really just a part of the milk company 20% of the time, its trucks and drivers and support team all working as part of the process of getting the milk to its customers. Therefore, 20% of the trucking company’s RD would be absorbed by the milk company into its RD to make its own CR Rankings. That’s twenty percent of the wages paid to truck drivers and twenty percent of the trucks’ gas burned, all factored into the rankings you read on the milk bottle. But branching would actually go much deeper than that. Beyond the truck company’s wages and gas use, it also matters how responsibly the metal was mined that built the truck in the first place. That’s part of what brought you that bottle of milk, too. As such, part of the mining company’s RD would have been absorbed by the trucking company before the trucking company’s RD was absorbed by the milk company. Thus, the environmental impact of the mining would also factor into the milk company’s rankings, too. The same would go for every other big and small factor that went into making the milk. CRR would therefore have an unparalleled level of comprehensive depth, reflecting all of the companies that worked together to make any product, not just the one whose name is on the box.

Comprehensive depth matters for a couple big reasons. First, it creates an accuracy to any ratings program that would otherwise be sorely missing. Do we want a product label that actually tells the whole impact of the product we’re buying or just one small part of it? Only telling one small part of that impact is a frustrating insult to the concerned shopper. And yet, that is essentially what we get with the current product labels and other ratings programs available. With the comprehensive depth that branching brings, CR Rankings would provide an exponentially more accurate view of a product’s social impact.

The Effectiveness of Group Punishments

Another huge impact of comprehensive depth is that it allows for a more effective form of punishment—punishment that affects the whole group.

To explain, let’s first look to the Harry Potter books. What do the professors at Hogwarts school generally do when a student behaves in an unbecoming way? Ten points off from Gryffindor! That is, they levy a punishment to the entire group in the form of points off from a yearlong house competition. Sometimes Hogwarts students do get detention, a punishment given only to the offending individual, but not nearly as often as losing points for the whole house that the student belongs to, be it Gryffindor, Hufflepuff, Slytherin, or Ravenclaw. This is quite a clever punishment strategy, one that no doubt accounts for much of the relatively good behavior of the students there (and one which real schools might be wise to copy). But why?

Well, let’s also look to an example that might be a bit more relatable. Imagine you’re on a high school sports team with a bit of a troublemaker. She sometimes shows up late, wisecracks, and even directly disobeys the coach. At first the coach punishes the troublemaker with a slew of unpleasant tasks: pushups, laps around the field, etc. But, unsurprisingly, the troublemaker keeps at it, continuing to act up each practice. The next week, the coach tries something different and, each time the troublemaker acts up, punishes the whole team. Everyone has to run laps each time she shows up late.

Which punishment strategy do you think would be more effective? The answer, to anyone who’s ever experienced a situation like this, should be obvious. Punishing the whole team works much better. First, by making twenty people run laps instead of one, that obviously deals out twenty times the pain to the team. The team now has all the more of an incentive to behave. Second, though, group punishments also make the appeal of misbehaving disappear. Try to see it from the troublemaker’s perspective. She acts out because it benefits her. By utilizing her above average boldness and wit, she comes to look cool in front of her peers. That’s well worth the punishment of doing a few pushups. But what happens when everyone else has to do the pushups, too? They quickly come to resent her and that coolness evaporates. If acting out means she has to do pushups and be despised by her peers, what motivation does the troublemaker now have to continue? The same goes for any would-be troublemakers at Hogwarts, who would almost always rather behave than punish their peers and, in so doing, make themselves unwanted outcasts.

Comprehensive depth, meanwhile, allows for similar group punishments. With CR Rankings, each company’s rankings are tied to all of the other companies it works with. Consequently, a low ranking for one company lowers the rankings of its associates. And with similar group punishments to those at Hogwarts and on the practice field come similar benefits. Each dock in rankings would motivate not just one company to shape up, but maybe more like twenty. That gives CRR more bang for its buck. Even better, these group punishments would end the cool appeal of a different troublemaker: the badly behaving business partner.

Imagine a cleaning service business that pays its workers poorly, uses cheap (but more toxic) cleaning chemicals, and cheats on its tax bills by paying workers under the table. This irresponsibility sounds bad when you hear it stated pointblank like that, but it allows the company to keep its hourly charge low, which means lots of office buildings in the area hire its crews to regularly clean their offices at night. Of course, the cleaning business may face some individual punishments for its bad behavior—higher turnover of employees, the occasional strike, employee complaints that need to be hushed, and the threat of an audit from the IRS—but these punishments are nothing compared to the benefit of steady business. Therefore, the cleaning business carries on.

Now imagine how things would look with CRR on the scene. That bad behavior would earn the cleaning business a low CR Ranking. More importantly, though, each of the companies that use that cleaning service would then have its own CR Rankings drop thanks to the cleaning service. Suddenly the cleaning service no longer looks like such an attractive option to other local businesses, and it gets dropped by many if not most of its previous customers. Because the whole group gets punished for the cleaning service’s bad behavior, that bad behavior turns from an asset into a liability. For the first time, the cleaning service would then have a strong motivation to turn its act around. Thus, because comprehensive depth leads to group punishment, it gives much stronger motivation for companies to improve.

With CR Rankings, any company that behaves badly would suddenly find not just fewer customers willing to buy its products, but also fewer fellow companies willing to work with it. That’s quite a potent combo to push it to be more responsible.

Overall, the difference between specific and comprehensive programs is pretty significant. The specific law or NGO program tends to do little while often confusing the consumer. The comprehensive does more while giving greater clarity. And by combining comprehensive width and depth, CR Rankings would give consumers the most accurate possible view of the behind-the-scenes behavior of companies while affecting every possible aspect of that behavior with all of the companies that work together to form one product. In other words, because CRR would be comprehensive, it would give maximum clarity to the consumer and maximum motivation to businesses to be more responsible.

How to Best Fix Motivation Problems

Now that we’ve come this far, let’s take a look back at our Motivation to Improve scorecard. This time, however, we’ve expanded the chart to include our final two flaws (voluntary and specific) as well as a sample list of voluntary transparency programs and other new attempts to deal with our GCM problems:

Motivation to Improve Scorecard

Looking to the chart, we see some obvious trends. Minimum bar laws tend to do a good job of being mandatory. Voluntary transparency programs tend to do a pretty good job of being universal. But aside from that, pretty much all options soundly fall flat across the board.

Keep in mind that these laws and NGO programs still do plenty of good. But that good is primarily in addressing baseline problems. To fight motivation problems—particularly GCM problems like global warming and income inequality, the thorniest, most persistent problems humanity has ever faced—we need to give those creating the problems a strong, consistent motivation to turn their selfish behavior around and start fixing those problems instead. And what should be clear from this chart is that our current approaches to GCM problems don’t come anywhere close to giving this needed motivation.

So this is our time to face reality. Should we continue to look to minimum bar laws and voluntary transparency programs to address GCM problems, we will continue to be dismayed at their failure, no matter how strict, how numerous, or how newly designed we make them. As long as they still harbor the same flaws of motivation, they will fail. Because the market forces of capitalism so profoundly push companies towards selfish irresponsibility, using these flawed approaches to combat GCM problems is like trying to swim upstream against a powerful, consistent current. Try as you may to make some bits of progress, you’ll note after time that you’ve really always been falling behind overall.

However, we do have one powerful option that would finally avoid these flaws. Because Corporate Responsibility Rankings would be relative, companies would always struggle to outdo each other for the higher ranking. Because CRR would be incremental, no company could ever get complacent with a mere passing grade, always pushing instead for more bit-by-bit improvements. Because CRR would be universal, companies would finally have to face the consequences of their bad behavior and not just avoid stricter regulations by moving somewhere else in the world. Because CRR would be mandatory, all the less responsible companies would still have to participate, giving them reason to turn things around, raise their rankings, and win back customers. And because CRR would be comprehensive, it would influence every aspect of a product’s creation and all the hands that came together to make it, all while giving consumers the clearest, simplest possible picture of a company’s behind-the-scenes behavior.

In other words, because Corporate Responsibility Rankings are relative, incremental, universal, mandatory, and comprehensive, they would give companies a thorough, never-ending motivation to be more socially responsible, a motivation much stronger than we’ve ever seen. Where the alternatives have failed to tackle GCM problems for so long, CRR would succeed.

So we have two options. We can try to swim harder and faster upstream and never slacken for a second—with more minimum bar laws and more voluntary transparency programs and more charities and more taxes on the rich and more government programs for the poor—and assume that someday this will be enough to nullify the constant, overwhelming current of capitalism. Or we can step back and realize that this exhausting approach, which the collective progressive movements across the globe have pursued consistently for the past century, is simply not enough for GCM problems. Instead, we can finally end this exhausting fight. Instead, we can unleash an equal and opposite force, a powerful current to push companies to be ever more, not less, responsible. By joining Corporate Responsibility Rankings with a free market forever focused on the bottom line, we can finally calm the waters and bring real balance to the currents of capitalism—thrift, efficiency, and quality products balanced by responsible care for our workers, environment, and communities.

This is our choice. It really shouldn’t be much of a choice, though. Exhausting failure versus graceful success. Which would you prefer? To fix global commons motivation problems, enacting CR Rankings is our only viable option.


1 “Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage.” US Department of Labor, 9 Dec. 2015, www.dol.gov/dol/aboutdol/history/flsa1938.htm.

2 “Fact Sheet: Natural History, Ecology, and History of Recovery.” Bald Eagle Fact Sheet, US Fish & Wildlife Service, June 2007, www.fws.gov/midwest/eagle/recovery/biologue.html.

3 According to the US government,2 only 487 nesting pairs of bald eagles in 1963 grew to 9,789 nesting pairs in the contiguous US by the time of the document’s publication (an over 1900% increase).

4 “Index to Pesticide Chemical Names, Part 180 Tolerance Information, and Food and Feed Commodities (by Commodity).” US Environmental Protection Agency Office of Pesticide Programs. 12 Dec. 2012, www2.epa.gov/sites/production/files/2015-01/documents/tolerances-commodity.pdf.

5 Gunnell, David, and Michael Eddleston. “Suicide by Intentional Ingestion of Pesticides: a Continuing Tragedy in Developing Countries.” International Journal of Epidemiology, US National Library of Medicine, Dec. 2003, www.ncbi.nlm.nih.gov/pmc/articles/PMC2001280/.

6 Langley, R L. Human Exposures to Pesticides in the United States. Journal of Agromedicine, 2012, www.ncbi.nlm.nih.gov/pubmed/22732070.

7 Chen, Mei, et al. “Residential Exposure to Pesticide During Childhood and Childhood Cancers: A Meta-Analysis.” Pediatrics, American Academy of Pediatrics, 1 Sept. 2015, pediatrics.aappublications.org/content/early/2015/09/08/peds.2015-0006.abstract.

8 Gilden, R C, et al. “Pesticides and Health Risks.” Journal of Obstetric, Gynecologic, and Neonatal Nursing : JOGNN., US National Library of Medicine, Jan. 2010, www.ncbi.nlm.nih.gov/pubmed/20409108.

9 Zhang, Jianmin, et al. “Pesticide Exposure and Suicidal Ideation in Rural Communities in Zhejiang Province, China.” WHO, World Health Organization, 28 July 2009, www.who.int/bulletin/volumes/87/10/08-054122/en/.

10 Ascherio, Alberto, et al. “Pesticide Exposure and Risk for Parkinson's Disease.” Annals of Neurology, Wiley Subscription Services, Inc., A Wiley Company, 26 June 2006, onlinelibrary.wiley.com/doi/10.1002/ana.20904/abstract.

11 Sanborn, M., et al. “Non-Cancer Health Effects of Pesticides: Systematic Review and Implications for Family Doctors.” Canadian Family Physician, College of Family Physicians of Canada, Oct. 2007, www.ncbi.nlm.nih.gov/pmc/articles/PMC2231436/.

12 Ibid.

13 II, Thomas H. Maugh. “Study Links Pesticide to ADHD in Children.” Los Angeles Times, Los Angeles Times, 16 May 2010, articles.latimes.com/2010/may/16/science/la-sci-pesticides-20100517.

14 Storrs, Carina. “Report: Pesticide Exposure Linked to Childhood Cancer, Lower IQ.” CNN, Cable News Network, 14 Sept. 2015, www.cnn.com/2015/09/14/health/pesticide-exposure-childhood-cancer/.

15 "Toxicological Profile For DDT, DDE, and DDD." US Department of Health and Human Services, Sept. 2002, p. 267, www.atsdr.cdc.gov/toxprofiles/tp35.pdf.

16 Damgaard, Ida N. “Persistent Pesticides in Human Breast Milk and Cryptorchidism.” Environmental Health Perspectives, vol. 114, no. 7, 1 July 2006, pp. 1133–1138. JSTOR, www.jstor.org/stable/3651788.

17 Mnif, Wissem, et al. “Effect of Endocrine Disruptor Pesticides: A Review.” International Journal of Environmental Research and Public Health, Molecular Diversity Preservation International (MDPI), 16 June 2011, www.ncbi.nlm.nih.gov/pmc/articles/PMC3138025/.

18 Citing an increase in worldwide pesticide use from 0.49 kg/ha in 1961 to 2 kg/ha in 2004,17 that represents over four times as much pesticide use per hectare by 2004.

19 Kurtz, Annalyn, and Tal Yellin. “Minimum Wage since 1938.” CNN Money, Cable News Network, . Accessed 28 Aug. 2017.

20 The 33.2% drop is from the inflation-adjusted value of $10.86 in 1968 to the real-time value of $7.25 in 2015.

21 The Productivity–Pay Gap. Economic Policy Institute, Aug. 2016, www.epi.org/productivity-pay-gap/.

22 Using this productivity data, we get a 99.8% increase in productivity in the average US worker from 1968 to 2015, which in other words means the same almost doubling in GDP produced per hour of work.

23 What Are the Annual Earnings for a Full-Time Minimum Wage Worker? UC Davis Center for Poverty Research, 30 Aug. 2016, poverty.ucdavis.edu/faq/what-are-annual-earnings-full-time-minimum-wage-worker.

24 “Summary of Fuel Economy Performance (Public Version).” US Department of Transportation, 25 Apr. 2013.

25 This calculation takes the CAFE Standard from each year and compares it to the Fuel Economy Performance of Passenger Cars from 1978 to 2013.24

26 “Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 Through 2013.” Trends Report, US Environmental Protection Agency, Dec. 2013, p. 22, www.fueleconomy.gov/feg/pdfs/420r13011_EPA_LD_FE_2013_TRENDS.pdf.

27 This calculation compares the “Adj Fuel Economy” of passenger cars26 with the CAFE Standard24 from each year, to find that only in 1980 did the actual average fuel economy of passenger cars in the US just barely pass the CAFE Standard at 20.0 mpg.

28 U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels). US Energy Information Administration, 31 Aug. 2017, www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS1&f=A.

29 From 2,436,228 thousand barrels of gasoline used per day in 1975 to 2,969,425 used per day in 2013,28 that’s a 21.89% increase.

30 US Population by Year, Multpl, www.multpl.com/united-states-population/table. Accessed 5 Sept. 2017.

31 “Table 4-1: Overview of U.S. Petroleum Production, Imports, Exports, and Consumption (Million Barrels per Day) | Bureau of Transportation Statistics.” Bureau of Transportation Statistics, United States Department of Transportation, www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_04_01.html. Accessed 5 Sept. 2017.

32 Using population statistics for the US30 and overall oil consumption for transportation,31 we find that each American used 0.04144094 barrels of oil per day in 1975 and 0.4196711 barrels of oil used per capita per day (a 1.27% increase). Simply taking the oil consumption for transportation in 1975 vs. 201331 we get a 48.27% increase overall.

33 Cummings, James, et al. “Growth and Competitiveness in the United States: The Role of Its Multinational Companies.” McKinsey & Company, McKinsey Global Institute, June 2010, www.mckinsey.com/global-themes/americas/growth-and-competitiveness-in-us.

34 Scott, Robert E. "Rising China Trade Deficit Will Cost One-Half Million U.S. Jobs in 2010.” Issue Brief, Economic Policy Institute, Issue Brief #283, 20 Sept. 2010, www.epi.org/files/page/-/pdf/ib283.pdf.

35 “Minimum Wages in Bangladesh with Effect from 01-12-2013.” Current Minimum Wage Rates in Bangladesh, Wageindicator.org, 15 Mar. 2016, www.wageindicator.org/main/salary/minimum-wage/bangladesh.

36 Exchange Rate, exchangerate.guru/bdt/usd/1500/. Accessed 5 Sept. 2017.

37 Maughan, Tim. Future - The Dystopian Lake Filled by the World's Tech Lust. BBC, 2 Apr. 2015, www.bbc.com/future/story/20150402-the-worst-place-on-earth.

38 Kaiman, Jonathan. “Rare Earth Mining in China: the Bleak Social and Environmental Costs.”The Guardian, Guardian News and Media, 20 Mar. 2014, www.theguardian.com/sustainable-business/rare-earth-mining-china-social-environmental-costs.

39 Chinese Pay Price for World's Rare Earths Addiction. The Independent, 8 May 2011, www.independent.co.uk/environment/chinese-pay-price-for-worlds-rare-earths-addiction-2281309.html.

40 Douglas, Simon Parry and Ed Douglas. “In China, the True Cost of Britain's Clean, Green Wind Power Experiment: Pollution on a Disastrous Scale.” Daily Mail Online, Associated Newspapers, 15 Nov. 2011, www.dailymail.co.uk/home/moslive/article-1350811/In-China-true-cost-Britains-clean-green-wind-power-experiment-Pollution-disastrous-scale.html.

41 “Summary of Fuel Economy Performance (Public Version).” US Department of Transportation, 26 June 2014, www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/June_2014_Summary_Report.pdf.

42 “Country Comparison :: Labor Force.” CIA World Factbook, Central Intelligence Agency, www.cia.gov/library/publications/the-world-factbook/rankorder/2095rank.html. Accessed 29 Aug. 2016.

43 “World.” CIA World Factbook. Central Intelligence Agency, www.cia.gov/library/publications/the-world-factbook/geos/xx.html. Accessed 19 Aug. 2017.

44 Household Final Consumption Expenditure (Current US$). The World Bank, data.worldbank.org/indicator/NE.CON.PRVT.CD?end=2015&start=1960&year_high_desc=true. Accessed 15 Aug. 2017.

45 The United States’ 2015 HFCE of $12.284 trillion is 28.72% of the 2015 world HFCE total of $42.773 trillion.44

46 “Country Comparison.” CIA.

47 “World.” CIA.

48 Household. The World Bank.

49 The sum of these nations’ 2015 HFCE comes to $26.406 trillion, which is 61.73% of the world 2015 HFCE total of $42.773 trillion.48

50 Eikenberry, Karl W., and David M. Kennedy. Americans and Their Military, Drifting Apart. The New York Times, 26 May 2013, www.nytimes.com/2013/05/27/opinion/americans-and-their-military-drifting-apart.html.

51 “Fair Trade USA Announces 1 Billion Pounds of Certified Fair Trade Coffee.” Global Coffee Report, Apr. 2014, gcrmag.com/regions/view/fair-trade-usa-announces-1-billion-pounds-of-certified-fair-trade-coffee.

52 “Total Production.” Historical Data on the Global Coffee Trade, International Coffee Organization, www.ico.org/new_historical.asp.

53 Calculated by finding the percentage one billion pounds is of the total global coffee bean sales from 1997/98 to 2013/14 crop years.52

54 Fairtrade Farmers & Workers – Who, What, Where? Fairtrade International, 13 Apr. 2015, www.fairtrade.net/new/latest-news/single-view/article/fairtrade-farmers-workers-who-what-where.html.

55 “World.” CIA. Accessed 27 Dec. 2016.

56 This estimate finds that 1.5 million workers is 0.044% of the 2015 estimated global workforce of 3.395 billion.55

57 Organic Market Overview. United States Department of Agriculture, 4 Apr. 2017, www.ers.usda.gov/topics/natural-resources-environment/organic-agriculture/organic-market-overview/. Accessed 5 Sept. 2017.

58 Kiely, Timothy, et al. “Pesticides Industry Sales and Usage: 2000 and 2001 Market Estimates.” US Environmental Protection Agency, May 2004, p. 4.

59 Global Market For Pesticides To Reach $65.3 Billion In 2017. BCC Research, 8 Nov. 2012, www.bccresearch.com/pressroom/chm/global-market-pesticides-reach-$65.3-billion-2017.

60 Study Shows Global Pesticide Market to Reach $81 Billion in Five Years. Ag Professional, 18 Aug. 2015, www.agprofessional.com/news/study-shows-global-pesticide-market-reach-81-billion-five-years.

61 "Climate Analysis Indicators Tool (CAIT) Version 2.0. (Washington, DC: World Resources Institute, 2014)". World Resources Institute, cait.wri.org:80/historic. Accessed 27 June 2014.

62 Clark, Duncan. “Has the Kyoto Protocol Made Any Difference to Carbon Emissions?” The Guardian, Guardian News and Media, 26 Nov. 2012, www.theguardian.com/environment/blog/2012/nov/26/kyoto-protocol-carbon-emissions.

63 Kyoto Deal Loses Four Big Nations. The Sydney Morning Herald, 29 May 2011, www.smh.com.au/environment/climate-change/kyoto-deal-loses-four-big-nations-20110528-1f9dk.html.

64 Kyoto Protocol, United Nations: Framework Convention on Climate Change, unfccc.int/kyoto_protocol/items/3145.php. Accessed 29 Aug. 2017.

65 “Total Carbon Dioxide Emissions from the Consumption of Energy 2014.” International Energy Statistics, US Department of Energy, www.eia.gov/cfapps/ipdbproject/iedindex3.cfm. Accessed 5 Sept. 2017.

66 The CO2 created from the world’s consumption of energy rose from 21.935 billion tons in 1995 to 33.733 billion tons in 2014,65 a 53.79% rise.

67 Vaughan, Adam. “Paris Climate Deal: Key Points at a Glance.” The Guardian, Guardian News and Media, 12 Dec. 2015, www.theguardian.com/environment/2015/dec/12/paris-climate-deal-key-points.

68 Brooks, David. The Green Tech Solution. The New York Times, 1 Dec. 2015, www.nytimes.com/2015/12/01/opinion/the-green-tech-solution.html.

69 Ibid.

70 Fung, Kaiser. How Data Made Me A Believer In New York City's Restaurant Grades. FiveThirtyEight, 2 Sept. 2014, fivethirtyeight.com/features/how-data-made-me-a-believer-in-new-york-citys-restaurant-grades/.

71 Plumer, Brad And Nadja Popovich. Here’s How Far the World Is From Meeting Its Climate Goals. The New York Times, 6 Nov. 2017, www.nytimes.com/interactive/2017/11/06/climate/world-emissions-goals-far-off-course.html?_r=.

72 These numbers first compare the percentage of the US food market of USDA Organic (4%)57 to the percentage that CRR would regulate (100%), then compare the percentage of the global markets of Fair Trade Certified (0.36%),52,53 and Fair Trade International (0.044%)55.56 versus the United States’ percentage of the global consumption market as a whole (28.72%),44,45 using that to estimate the percentage of global coffee production affected by CRR.

73 Ecolabel Index, www.ecolabelindex.com/. Accessed 29 Aug. 2017.

74 Initial List of Hazardous Air Pollutants with Modifications. Environmental Protection Agency, www.epa.gov/haps/initial-list-hazardous-air-pollutants-modifications. Accessed 29 Aug. 2017.