Unit 5, GRE401


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Sustainable Development Indicators; Case: 'Growing Pains in China'

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  • http://www.footprintnetwork.org/gfn_sub.php?content=footprint_china
  • Unit 5, GRE401

    1. 1. 1Sustainable Development and Competitive Advantage Unit 5:Sustainable Development Indicators © Jeremy B Williams 2012
    2. 2. 2 Outline1) An introduction to indicators2) The Bellagio Principles3) Macro measures of sustainability4) Corporate measures5) The credibility of sustainability reporting6) Summary and conclusions © Jeremy B Williams 2012
    3. 3. 3 1) AN INTRODUCTION TO INDICATORS• Indicators help us to quantify and simplify phenomena in order to better understand the complexity of reality• They give historical perspective of the current state of affairs and clues as to the likely direction of change in these affairs into the future. © Jeremy B Williams 2012
    4. 4. 4 Are all indicators useful?• There are occasions where indicators are used frequently but inappropriately• The use of the rate of GDP growth as a measure of the change in value of national output of goods and services from year to year is perfectly valid• It is less appropriate to use such an index to make judgements about the level of societal welfare. © Jeremy B Williams 2012
    5. 5. 5 GDP and its detractors… ‘If a truckload of toxic chemicals spills somewhere, the money spent cleaning it up is added to the GDP. If nearby residents can no longer use their wells for water, their expenditures on bottled water is added to GDP. If theybecome sick from exposure to the substance, their medicalcosts are also added to the official measure of well-being’. Mike Nickerson, The Sustainability Project, Ontario, 1997 Source:http://www.foe.co.uk/campaigns/sustainable_development/progress/annex1.html © Jeremy B Williams 2012
    6. 6. 6 GDP and its detractors… ‘Unfortunately GDP figures are generally used without the caveat that they represent an income that cannot besustained. Current calculations ignore the degradation of the natural resource base and view the sale of non-renewable Barber B Conable Jr,resources entirely as income. A better way Former Republican must be found to measure the prosperity Congressman and Former President, World Bank, and progress of mankind.’ 1989 Source:http://www.foe.co.uk/campaigns/sustainable_development/progress/annex1.html © Jeremy B Williams 2012
    7. 7. 7GDP and its detractors… SimonKuznets, (creator ofGDP concept) 1962 „The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP... goals for „more‟ growth should specify of what and for what.‟ Source:http://www.foe.co.uk/campaigns/sustainable_development/progress/annex1.html © Jeremy B Williams 2012
    8. 8. 8 Criticisms of GDP as an indicator of economic well-beingTraditional criticisms: Contemporary criticisms:• Measurement problems: • The counting of „defensive‟ The underground economy expenditures as positive Domestic production contributions to GDP Quality and composition of • Failure to account for changes output in the value of „natural• Leisure time capital‟.• Income distribution © Jeremy B Williams 2012
    9. 9. 9 So what makes a good sustainability indicator?• A key element in the design of a sustainability indicator is to have an appreciation of the values, goals and aspirations of the target audience• This indicator will provide useful feedback on issues the community knows about, but it will also provide information about issues that are central to sustainable development, yet poorly understood; e.g. ecosystem health and how this might impact on human health• Different communities will have much in common, but sometimes this commonality might manifest itself in different ways. © Jeremy B Williams 2012
    10. 10. 10 Balance between general and specific criteria• Indicators will be selected based on general selection criteria (e.g. simplicity, validity, time-series data, affordability of data, ability to aggregate information, sensitivity and reliability), but also on the basis of context-specific conditions• Sustainability practitioners must avoid falling into the same trap as the national income accountants – a careful selection process is required to determine the indicator that is most relevant to a given context (i.e. region, economic sector, institution) © Jeremy B Williams 2012
    11. 11. 11 Relevant indicators• e.g. salination is important to farmers in central Queensland, but less significant to fishing communities in NSW. © Jeremy B Williams 2012
    12. 12. 12 The evolution of sustainability of indicators• Early efforts at sustainability reporting followed the Brundtland Report in the shape of national State of the Environment (SoE) reports using the DPSIR model © Jeremy B Williams 2012
    13. 13. 13 DPSIR• Driving Forces – the underlying human activities underpinning environmental change• Pressure – exerted on the environment and natural resources; e.g. soil degradation• State – current state of play, trends• Impact – the consequences of pressure on the environment• Response – government policies and management strategies © Jeremy B Williams 2012
    14. 14. 14 2) THE BELLAGIO PRINCIPLES• Developed in Bellagio, Italy, in 1996 by an international group of practitioners and researchers, the Bellagio Principles may be looked upon as an overarching guide, serving to link theory and practice. © Jeremy B Williams 2012
    15. 15. 15 Overview of the 10 Principles• The principles focus on the assessment of progress toward sustainability in 4 areas:• Principle 1: a vision of sustainable development and clear goals that provide a practical definition of that vision• Principles 2 – 5: deal with the content of any assessment and the need to merge a sense of the overall system with a practical focus on current priority issues• Principles 6 – 8: deal with key issues of the process of assessment• Principles 9 & 10: deal with the necessity of establishing a continuing capacity for assessment. Source: http://www.iisd.org/measure/principles/bp.asp © Jeremy B Williams 2012
    16. 16. 16 3) MACRO MEASURES OF SUSTAINABILITY• Leading examples include: – UN Human Development Index (HDI) – Genuine Progress Indicator (GPI) – Index of Sustainable Economic Welfare (ISEW) – Ecological Footprint © Jeremy B Williams 2012
    17. 17. 17 • 1 Norway The HDI • • 2 Australia 3 Netherlands • 4 USA • 5 New Zealand • 6 Canada • 7 Ireland • 8 Liechtenstein • 9 Germany • 10 Sweden • 11 Switzerland Source: http://hdr.undp.org/en/statistics/ • 12 Japan• The 2011 Human Development • 18 Belgium Index places Norway no. 1 • 20 France • 26 Singapore• Focuses e.g. on adult • 28 UK literacy, life expectancy, level • 73 Brazil of education • 101 China • 134 India • 187 Congo © Jeremy B Williams 2012
    18. 18. 18 The GPI for AustraliaSource: http://www.gpionline.net/index.htm © Jeremy B Williams 2012
    19. 19. 19 The ISEW for the UKSource: http://www.gpionline.net/othergpi.htm © Jeremy B Williams 2012
    20. 20. 20 The GPI for the United States Further reading: Clifford Cobb, Ted Halstead, and Jonathan Rowe (1995), „If the GDP is Up, Why is America Down?‟, Atlantic Monthly Source: http://www.rprogress.org/newmedia/articles/9510_atlantic.pdfSource:http://www.foe.co.uk/campaigns/sustainable_development/progress/international.html © Jeremy B Williams 2012
    21. 21. 21 What the GPI counts that GDP doesn’t …• Personal consumption • Costs of noise pollution• Income distribution • Costs of irrigation water use• Public consumption expenditure • Costs of urban water pollution• Value of household and community • Costs of air pollution work • Costs of land degradation• Costs of unemployment • Costs of loss of native forests• Costs of underemployment • Costs of depletion of non-renewable• Costs of overwork energy resources• Private defensive expenditure on • Costs of climate change health and education • Costs of ozone depletion• Services of public capital • Costs of problem gambling• Costs of commuting • Value of advertising• Costs of transport accidents • Net capital growth• Costs of industrial accidents • Net foreign lending• Costs of crime Source: http://www.gpionline.net/whatis.htm © Jeremy B Williams 2012
    22. 22. 22 The ecological footprint• How many planets would we need if everyone lived like you? http://www.myfootprint.org © Jeremy B Williams 2012
    23. 23. 23 4) CORPORATE MEASURES• One of the leaders in the quest to develop internationally accepted standards for triple bottom line reporting is the Global Reporting Initiative (GRI) http://www.globalreporting.org/• 1st draft of reporting guidelines (G1) was piloted by 21 companies during 1999-2000• 2nd version of the guidelines (G2) was released in 2002• Version 3 (G3) came out in 2006• Since this time, more than 1500 companies worldwide have used the guidelines, making it the de facto global standard for reporting © Jeremy B Williams 2012
    24. 24. 24 5) THE CREDIBILITY OF SUSTAINABILITY REPORTING• FTSE4Good index has come under attack because > 3/4 of the FTSE 100 are in it – questions are being asked about the stringency of standards• Similar criticisms have been levelled at the Dow Jones Sustainability Indexes (DJSI). © Jeremy B Williams 2012
    25. 25. 25 ‘Greenwash’• „Greenwash‟ is defined as disinformation disseminated by a business so as to present an environmentally responsible public image• BP, the world‟s second largest oil company and one of the world‟s largest corporations, advertised its new identity as a leader in moving the world „Beyond Petroleum‟• It made much its $45 million purchase of the largest solar energy corporation, Solarex. But BP continues to spend billions on oil exploration in Alaska alone. © Jeremy B Williams 2012
    26. 26. 26 ‘Greenwash’ (cont’d)• Shell, the world‟s third largest oil company, continues with its ad series „Profits or Principles‟ which touts Shell‟s commitment to renewable energy sources and features photos of lush green forests, yet Shell spends < 1% of its annual investments on renewables. © Jeremy B Williams 2012
    27. 27. 27 6) SUMMARY AND CONCLUSIONS• Sustainability indicators are important because, in the words of Peter Drucker, “what isn‟t measured, isn‟t managed”• The SoE reporting that emerged after the Brundtland Report provided a useful impetus for sustainability reporting• Approaches have become more sophisticated as efforts like the Bellagio Principles project and the GRI have served to provide guidance to businesses and other organisations. © Jeremy B Williams 2012
    28. 28. 28 Summary and conclusions (cont’d)• Much remains to be done, and it would be fatuous to assume that sustainability reporting is an „advanced science‟• Greenwash is likely to prevail so long as the ecological consciousness of the majority of businesses remains underdeveloped of non- existent. © Jeremy B Williams 2012
    29. 29. 29© Jeremy B Williams 2012
    30. 30. 30 Case Study: Growing Pains in ChinaSustainable Development and Competitive Advantage © Jeremy B Williams 2012
    31. 31. 31Think © Jeremy B Williams 2012
    32. 32. 32 Calculating the ecological footprint• Official statistics on consumption are used to calculate the amount of biologically productive land and water area required to produce the resources consumed and to absorb the wastes generated using prevailing technology Image source: http://www.ew.govt.nz © Jeremy B Williams 2012
    33. 33. 33 Worldwide, there exists about 1.8 biologically productive global hectares per personImage source: www.adbusters.org © Jeremy B Williams 2012
    34. 34. 34Image source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
    35. 35. 35Image source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
    36. 36. 36© Jeremy B Williams 2012
    37. 37. 37 ChinaImage source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
    38. 38. 38© Jeremy B Williams 2012
    39. 39. 39 Environmental Cost of Chinas Growth (NYT, Aug 2007)The Cost ofEconomicGrowth inChina: A casestudyvideo.nytimes.com © Jeremy B Williams 2012
    40. 40. 40Discuss © Jeremy B Williams 2012
    41. 41. 41 Consider, for example …• What if all Chinese people lived like North Americans?• What needs to be measured (to be managed)?• Can ecological degradation be reversed? If so, how?• If not, what are the possible geopolitical consequences? © Jeremy B Williams 2012
    42. 42. 42Deliver © Jeremy B Williams 2012
    43. 43. 43 • The Chinese Environment Minister is very worried about the ecological consequences of rapid economicPan Yue, Minister of Chinas State growth …Environmental ProtectionAdministration © Jeremy B Williams 2012
    44. 44. 44• Fortunately for Mr Yue, a group of erudite, and highly respected ecological economists are confident they have the solutions• A number of teams from are scheduled to give a 10-minute presentation to Mr Yue. © Jeremy B Williams 2012