Business must battle the Green surge

The Greens are riding high in the polls, says Matthew Lynn. It’s time for business to face up to that challenge.

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Baerbock and Habeck: leading Germany's Green revival

The Greens are riding high in the polls. It's time for business to face up to that challenge.

In Bavaria, they came first in several of the biggest cities and overtook the Social Democrats as the main party of the left. In Luxembourg, they took 15% of the vote in elections this month. In Brussels, they went to second place, and in the Netherlands their support almost quadrupled in elections last year and they are now a major force in parliament. So far, the UK is exempt from the trend, but right across Europe support for Green parties is surging.

In Germany, they are now polling ahead of the SPD nationally and at the next round of elections may well be the second-largest party, or even the first. A Green-led coalition government in Berlin is now a real possibility in the next few years.

In tune with the millennials

In part, that's a reflection of the way centre-left politics has been taken over by the university-educated middle-class. The Greens are much more tuned into their political views than were old-style, union-based parties of the industrial working class. In part, it is also a reflection of the same turmoil that has seen populist, anti-establishment parities come to power in other countries the Greens are outside the old, cosy club. And, in fairness, it reflects the fact environmental issues are genuinely more important than in the past.

However, Green policies pose a huge challenge to business and to investors. The traditional centre-left parties they are starting to replace were often dominated by trade unions, and they supported higher taxes and more redistribution. But on the whole, they also wanted the corporate sector to generate more wealth. They differed on how the pie should be divided, but they were in favour of having as big a pie as possible to argue about.

The Greens are different. Environmentalists have a fundamentally anti-growth and anti-business worldview.They are in favour of less work, lower output, higher benefits and taxes, and they instinctively adopt positions that are hostile to corporations. Unlike old-style social democrats, they don't believe in any form of growth, and they don't want to work with the corporate sector.

As they get into power, as may be inevitable in the next few years, that is going to create a far more hostile environment for the private sector. Companies will get hit with higher taxes, new regulations and charges, and more restrictions on launching innovative new products. Business can either sit back and accept that, or else it can start taking the argument back to its increasingly powerful opponents. Like how? In three ways.

Three ways to fight back

First, business needs to explain how much it already does to protect resources. In almost any sector you look, it is private companies that are reducing the drain on our resources. In car manufacturing, for example, electric vehicles are going to do a huge amount to counter climate change, and the car industry is pouring billions into that. As a general rule, resources cost money, so companies have plenty of incentives to use as few of them as possible.

Next, business needs to convince people that the best way to help the environment is to be richer. Why? Because green causes cost money. It is not advanced, developed countries such as Germany that generate the most pollution it is the developing world. As countries become wealthier, they always start spending more on preserving the environment, in part because they have the money to do so, and in part because simply surviving becomes less of a priority.

Finally, business needs to point out that only full employment can deliver improved conditions for workers. The Green parties have made a lot of progress with causes such as four-day working weeks, more generous parental leave, longer holidays, and more generous benefits such as universal basic incomes.

But the best way to improve the rights of workers is not through legislation, but through full employment and faster growth that way companies are forced to be more generous simply to attract staff. None of that is going to happen if businesses are not allowed to thrive.

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