Facing The Future


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This collection of contributions from 35 leading thinkers and practitioners associated with the Programme was published to launch the second decade of The Prince of Wales's Business & the Environment Programme (BEP). It focuses on engaging the world of business in a reflective, challenging conversation about its pivotal role in shaping humanity's future and furthering sustainable development.

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Facing The Future

  2. 2. INTRODUCTION This publication marks the 10th Anniversary of HRH The Prince of Wales’s Business & the Environment Programme and seeks to engage the world of business in a reflective, challenging conversation about its pivotal role in shaping humanity’s future. © The University of Cambridge Programme for Industry. For 10 years, The Prince of Wales’ Business & the We hope the ideas, warnings and practical solutions All rights reserved. Environment Programme, through its Senior Executives’ contained within these pages will help business, Seminars and its alumni programme, has helped business government and civil society chart a common path to a HRH The Prince of Wales’s Business & the Environment leaders realise their organisation’s potential in creating a sustainable future for our planet and its people Programme is developed and run by the University of more sustainable future for all. Our more than 1,000 alumni, in the months and years ahead. Cambridge Programme for Industry. Apart from any fair diverse, cross-sectoral core faculty and external contributors dealing for the purposes of research or private study or represent a rich source of international expertise and Acknowledgements criticism or review as permitted under the Copyright, experience drawn from across the worlds of business, We would like to thank all those who contributed to this Designs and Patents Act, 1998, this publication may academia, public service and civil society. publication, including those who advised on the overall only be reproduced, stored or transmitted, in any form concept: Pat Delbridge, Professor Tom Gladwin, Professor or by any means, with the prior permission in writing This publication features contributions from 35 alumni, Tim O’Riordan, Professor Jorgen Randers and Peter Willis. In of the publishers, or in the case or reprographic faculty and seminar contributors from around the world, all particular we would like to thank Polly Ghazi for helping to reproduction in accordance with the terms of licences of whom wield considerable influence in their fields. They design the structure and for conducting the interviews upon issued by the Copyright Licensing Agency. Enquiries include top executives from multinational companies, the which the publication is based. The responsibility for the concerning reproduction outside those terms should executive director of a UN agency, leading civil society publication lies with the Programme Directors: Polly Courtice be sent to the University of Cambridge Programme thinkers from rich and poor nations, and the UK Prime and Jonathon Porritt. Editorial Team: Polly Courtice and for Industry. Minister, the Rt Hon Tony Blair, MP. Lindsay Hooper. ISBN 0 903428 27X 3
  3. 3. CONTENTS CONTENTS The articles in this publication address six key themes critical to facing the challenge of sustainable development: Foreword HRH The Prince of wales 6 Ben Cohen I Co-founder, Ben and Jerry’s Ice Cream 42 4 Age of insecurity 66 6 Power of civil society 92 Dr Vandana Shiva I Director, Research Foundation 44 How do we address the environmental and How can and do NGOs, consumers and citizens Business & the Environment Programme 8 for Science, Technology and Ecology social problems exacerbating global insecurity? influence business and government to pursue and the Sustainability Agenda Professor Tom Gladwin I Professor of 68 more sustainable policies and practice? Chad Holliday I Chairman & CEO of DuPont 46 BEP milestones 14 Sustainable Enterprise, University of Michigan Jean-Paul Jeanrenaud I Head of Business 94 Paul Gilding I Founder & Executive Chairman, Ecos 46 Lise Kingo I Executive Vice-President, 71 and Industry Relations, WWF International Fred Phaswana I Chairman, Transnet 48 1 Limits to growth 16 Novo Nordisk Sarah Severn I Director of Sustainable Business 96 Is humankind approaching the limits to growth and Dr Melissa Lane I Lecturer in History, University 50 Development, Nike Will Day I UNDP Special Advisor, former Chief 73 how do we adapt? of Cambridge Executive, Care International Colin Hines I Associate, International Forum 98 Professor Jorgen Randers I Norwegian Professor Rod Aspinwall I Chair, Sustainable 52 on Globalisation 18 Professor Klaus Töpfer I Executive Director, 75 School of Management Development Forum for Wales United Nations Environment Programme Caroline Southey I Editor, Financial Mail 100 The Rt Hon Tony Blair, MP I UK Prime Minister 20 Chris Pomfret I Former Marketing and 78 Penny Newman I CEO, Café Direct 102 3 Adaptive technology 54 Richard Sandbrook I Senior Advisor, UNDP 23 Environment Co-ordinator, Unilever Can technological ingenuity alone overcome climate Malcolm Brinded I Executive Director of Oil 25 Business & the Environment programme: 104 change, resource depletion and other sustainability & Gas Exploration, Shell 5 Whose rules? 80 The next 10 years challenges? Peter Woicke I Executive Vice-President, 28 How do we re-shape local, national, international and Jonathan Lash I President, World Resources 56 BEP 108 International Finance Corporation corporate governance to promote and embed Institute sustainable development? Bill McDonough I Founding Partner and 30 Dr Wolfgang Schneider I Vice-President for 58 Programme publications 109 Principal, William McDonough and Partners Michael Meacher I MP for Oldham West and 82 Government and Environmental Affairs, Ford Europe Royton and former UK Environment Minis ter How to join the Business & the 110 Jeremy Pelczer I Chief Executive, American Water 32 Dr Jeremy Leggett I Chief Executive, Solarcentury 61 Madeleine Jacobs I Senior Vice President & 85 Environment Programme Dr Karl-Henrik Robèrt I Founder, The 62 Head of Group Sustainable Development, ABN Amro 2 Transformative leadership 34 Natural Step Dr Paul Ekins I Head of the Environment Group, 87 Who should take a lead and what must they do? Debra Dunn I Senior Vice-President, 64 Policy Studies Institute Caroline Lucas I Green Party MEP for South 37 Hewlett Packard Professor Tim O’Riordan I Professor of 88 East England Environmental Sciences, University of East Anglia Lord Browne of Madingley I Chairman and 40 Iqbal Surve I CEO of Sekunjalo Investments 90 Chief Executive of BP 4 Business & the Environment Programme: FACING THE FUTURE 5
  4. 4. INTRODUCTION sophisticated understanding of the situations in which Each individual business leader has enormous potential to FOREWORD different technologies will, and will not, bring long term enhance the capacity to deliver sustainable development, benefits to mankind. Indeed, I would argue that the need helping to secure the long-term future of their company and HRH The Prince of Wales for wisdom and restraint in our actions has never been the societies within which it operates. They can do this by To 10th Anniversary Report for the Business and the Environment Programme greater. But at the moment, that kind of wisdom is in drawing attention to the short term thinking of financial worryingly short supply. markets; by rejecting policy and strategy papers that fail to address sustainability; by appointing, promoting and Another of the Programme’s hallmarks has been its rewarding people who have the right priorities; and by asking conviction that changing conventional corporate mindsets is difficult questions about everything from procurement ‘Facing the Future’is a highly about exactly what the barriers are to a sustainable as important as changing corporate behaviour. To act policies to waste minimisation. They can also establish appropriate subject to mark the economy. Looking at the results, one of the things I found responsibly in the world, we have to see the world for what dialogue with people – such as the NGOs – who will ask tenth anniversary of an organisation fascinating was the extent to which the different Dialogues it is, not for what we might like it to be. It's all very well, for awkward and challenging questions, and they can take an dedicated to sustainability. So I – whether in South Africa, the United States or Cambridge – instance, to talk meaningfully of the need for 'globalisation open and transparent approach to reporting what they and couldn’t be more pleased that some identified pretty much the same list of barriers each time. with a human face’but the reality is often very different. Left their companies do. That is why this programme is aimed so of the many committed and And right at the top of the list was short-term thinking. to its own devices, globalisation will continue to sow the directly at the leaders of the business community. thoughtful individuals who have participated in the seeds for ever greater poverty, disease and hunger in the Programme have agreed to share their insights in this The inability of most of us to think or plan clearly much cities of the developing world, and the loss of viable, self- Many of the well-argued articles in this report demonstrate publication. The topics covered here are a rich and eclectic beyond the pressures of the next few months is at the heart sufficient rural populations. Such intractable social problems that good progress has been made on some of the major mix, but none of the articles is less than thought-provoking of many of the sharpest sustainability dilemmas we face may seem a long way away from the Business and the sustainability challenges over the last ten years, very often and together they indicate the sheer breadth of the today. Part of the problem, of course, is the sheer pace of Environment Programme's core agenda – let alone the daily through individual acts of leadership. I am delighted that my sustainability agenda that confronts us all. change, especially when it comes to the development and reality of hard-pressed business people dealing with the short Business and the Environment Programme has been able to introduction of new technologies. No-one would dispute term pressures I mentioned earlier. But it seems to me we play a part in that process and I hope that this report will This is a Programme that has always tried to persuade the fact that technology delivers many important benefits are now at a watershed, with crucial choices to be made. And encourage others to ‘Face the Future’, and have the courage participants and alumni to reach out beyond the usual to mankind. But if we are serious about sustainability I think I believe the business community has an unprecedented of their convictions in addressing the manifold challenges of material about 'the business case for sustainable we have to recognise that the same technological capability opportunity to help reshape the global economy in order sustainability. development'. I am aware, for instance, of the Sustainable also enables us to change the life-support systems of our both to improve the lives of the world's poor and to protect Economy Dialogue that has been running over the last few planet, very directly, very quickly, and in many cases, the life support systems of our planet. years, encouraging people to think much more deeply irreversibly. I believe we need to develop a much more 6 Business & the Environment Programme: FACING THE FUTURE 7
  5. 5. INTRODUCTION BUSINESS & THE ENVIRONMENT The 10 years since the Business & the Environment Programme held its first seminar for business leaders has PROGRAMME AND THE witnessed a profusion of new initiatives, new thinking and SUSTAINABILITY AGENDA new practice in the field of corporate sustainability. Hundreds of companies have used the ‘triple bottom line’ accounting to start thinking in a much more integrated way Polly Courtice about their wider responsibilities. Many are increasingly Director of the University of Cambridge Programme for Industry I Co-Director of the Business & the Environment Programme geared to their different stakeholders, including employees, consumers, host communities, business suppliers and NGOs, Jonathon Porritt and are now measuring and reporting on environmental and Chairman of the UK Sustainable Development Commission I Director of Forum for the Future I social areas of concern. Co-Director of the Business & the Environment Programme. These leaders accept the constraints to business-as-usual that It is more than 40 years since Rachel Carson’s landmark nevertheless business leaders, academics and civil society will need to be imposed to negotiate the sustainable book, ‘Silent Spring’, marked the beginning of the modern leaders – some featured in this publication – who really are business funnel depicted on this page. But even amongst environmental movement. Over the last 50 years the confronting the business-as-usual mindset. We salute these these leaders, there is real uncertainty as to how a broad business community has made a slow but steady journey pioneers. In a world where there seems to be less and less enough consensus about the need for radical change can be towards more environmental and socially responsible trust between big business and society at large, their voices established. Participants at the Business & the Environment behaviour. The table overleaf gives an overview of that have a critical contribution to make in establishing the Seminars, for example, are constantly wrestling with the journey, driven by a complex mixture of external pressure, foundations of a genuinely sustainable economy. different ‘boundary conditions’ that constrain the contribution commercial opportunity and internal business leadership. the business community can make. It is governments, after What the table does not show, however – and this lies at the Yet, despite the well-publicised progress made by corporate all, that determine the legal and fiduciary framework within heart of our work within the Programme – is that society’s ‘first movers’, whose executives include many Business & which companies must operate; it is consumers who are best response, and the business community’s response as part of the Environment Programme alumni, faculty and placed to use their purchasing power preferentially to reward that, still falls far short of what is needed if we are to reach contributors, it is difficult not to be perturbed at how proactive companies and punish the laggards; and it is our goal of a sustainable future for coming generations. relatively few companies are engaged strategically and investors who have it in their power (theoretically, at least) systematically in the sustainable development agenda, and to strike the right balance between securing a good return on While that is the sober and challenging conclusion we feel how many are still testing the ground in a somewhat their investments and minimising the damage done through we have to draw from the available evidence, there are apprehensive and half–hearted way. those investments to the environment, developing countries and the prospects of future generations. 8 Business & the Environment Programme: FACING THE FUTURE 9
  6. 6. INTRODUCTION BUSINESS AND SUSTAINABILITY: TRENDS AND TRANSITIONS DECADE < 70s 1970s 1980s 1990s 2000s TRIGGER EVENTS • Silent Spring (‘62) • First Earth Day (’70) • Bhopal (‘84) • Earth Summit (’92) • Millennium Development Goals (’00) • Acid rain concerns • UN Conference on the Human • Ozone Hole (’85) • Shell: Brent Spar and Nigeria (’95) • Anti-globalisation movement (civil protest at Davos, IMF meetings) Environment – Stockholm (’72) • WCED-Brundtland Report (’87) • World Summit on Social De velopment – Copenhagen (’95) • US rejects Kyoto Protocol (‘01) • Limits to Growth (’72) • Exxon Valdez (’89) • ‘Mad Cow Disease’ BSE (’96) • September 11th terrorist attacks (‘01) • Love Canal (’78) • Chernobyl (‘86) • Kyoto Protocol (’97) • WSSD in Johannesburg (’02) • Oil crisis (’78) • Montreal Protocol (’87) • GMO concerns (98-99) • Accounting scandals (Enron, Worldcom, Tyco) • Three Mile Island (’79) • Seattle WTO riots (’99) • World Social Forum meetings INSTITUTIONAL • Rise of environmental • Environmental laws and regulations • US Superfund • Business Charters (CERES principles; ICC principles, Keidanren Charter) • UN Global Compact launched CONTEXT NGOs • Growth of environmental ministries • Growth of Multilateral Environmental • WBCSD formed • Global Reporting Initiative (GRI) guideline s • US EPA established and enforcement bodies Agreements • ISO 14000 series, SA 8000 • Growth in socially responsible investment and increased • Chemical industry’s Responsible Care • Partnerships (e.g. Forest Stewardship Council, Ethical Trading shareholder activism programme Initiative) • Equator and London Principles • Waste minimisation clubs • Dow Jones Sustainability Index • SIGMA Management Framework • Green consumerism • Producer responsibility regulations (eco-labelling and product • Development of ISO Guideline on CSR • Initial business charters (e.g. Valdez take-back) • Business partnership initiatives Principles) • Supply chain management and audits • Uptake of climate-change related mechanisms (emissions trading, CDM) BUSINESS RESPONSE COMPLIANCE BEYOND COMPLIANCE CHANGING COURSE STRATEGIC INTEGRATION ORGANISATIONAL Denial Resistant adaptation Compliance and cost avoidance Institutionalisation and innovation Evolving business models STRATEGY Minimum regulatory standards Continual improvement • Compliance • Risk minimisation • Environmental management systems • Corporate governance • End-of pipe solutions • Impact reduction • Environmental/sustainability reporting • Integrated sustainability management • Focus on hazardous waste emissions • Pre-emption of regulation • Cleaner production/eco-efficiency • Focus on human rights and transparency and chemical releases • Total Quality Management • Stakeholder engagement • Sustainable production and consumption • Remediation and abatement measures • Initial environmental and social audits • Focus on products • Design for environment, life cycle assessment, shift from • Social managements systems products to service • Ethical trading/supply chain initiatives • Promoting sustainable livelihoods MANAGEMENT • Pollution control and compliance • Environmental impact assessments/TQEM • Strategic environmental management/Environmental cost • Integrated management systems SYSTEMS & TOOLS • Pollution prevention and waste • Environmental and social management accounting/Cost benefit analysis • Corporate social responsibility/Sustainability reporting management systems codes (ISO, EMAS, SA 8000, • Product stewardship/Partnerships/Stakeholder participation • Design for sustainability EITI)/Voluntary agreements Source: P Courtice & P Willis, 2005, based on N Acutt (unpubl. PhD thesis) and B Nattrass & M Altomare: The Natural Step for Business (New Society Publishers, Canada, 1999), with additional material by J Hanks . 10 Business & the Environment Programme: FACING THE FUTURE 11
  7. 7. INTRODUCTION This publication includes a collection of insights from times out of a 1000. That doesn’t make those pioneering development or corporate responsibility specialists on organisations involved in the Business & the Environment examples less important. But it does raise the key questions, which so much of the delivery in companies still depends. THE BUSINESS BENEFITS OF Programme and provides a host of encouraging pointers to posed by several non-corporate contributors (Michael The aim has been to empower the practitioners by ensuring SUSTAINABLE DEVELOPMENT the future. Their experience reflects the very real business Meacher, Vandana Shiva, Tom Gladwin, Caroline Lucas and that senior executives in all mainstream functions begin to ECO-EFFICIENCY benefits of sustainable development which we emphasise others): Will the world make the transition to sustainable get a handle on both the risks and the opportunities that 1 Reduced costs to our delegates. development in time? Will our technological ingenuity sustainable wealth creation entails. This ensures that 2 Costs avoided (Design for Environment, enable us to pass through the narrowing resources funnel sustainable development is not delegated down to a group Eco-innovation) But this publication also reflects the uncertainty described before we run out of cheap oil or fuel wood, or before of hard-pressed champions who then become the dumping 3 Optimal investment strategies above about how far to go with the sustainability agenda. poverty, climate change, population growth or water ground for a host of challenges that should be owned at QUALITY MANAGEMENT Set against the magnitude of the challenge, some of the shortages combine to trigger social unrest on a global scale? board or management team level. 4 Better risk management solutions appear limited or insubstantial: one company in 5 Greater responsiveness in volatile markets India supplying local villages with small dam technologies As The Prince of Wales points out in his Foreword, the mission We would claim some success in changing corporate hearts 6 Staff motivation/commitment to help control monsoon water; six million of the world’s of his Business & the Environment Programme is to wrestle and minds, but freely admit that our impact has been 7 Enhanced intellectual capital poorest people provided with water and sanitation by 2015 with, and find solutions to, these uncomfortable questions. limited. Even one thousand alumni over 10 years can make (meeting the Millennium Development Goals would require only a small contribution to collective corporate capacity to LICENCE TO OPERATE 260,000 people a day receiving the same services) a few Why do so many companies still find it so hard to break get on top of these challenges. Believing as passionately as 8 Reduced costs of compliance/planning permits/licences millions invested in renewables when tens of billions are ranks, even when they know they’re being held back by the we do in the potential of leading companies to act as ‘a 9 Enhanced reputation with all key stakeholders still being pumped into unsustainable fossil fuels; a risk-averse mediocrity of their competitors and the ‘lowest force for good’ in the world today, we appreciate that we partnership that provides 112 megawatts of green energy common denominator’ approach of so many of the trade too have to raise our game and make as big a contribution 10 Influence with regulator (the equivalent of taking 98,000 vehicles off the road), associations to which they keep paying their dues? Why do to that process as we possibly can. MARKET ADVANTAGE when hundreds of thousands of (old technology) new cars so few business leaders question publicly the manner in 11 Stronger brands will be purchased this year in developing countries; an which fund managers and institutional investors pursue 12 Customer preference/loyalty e-inclusion programme reaching around 300,000 people, unrealistic short-term gains at the expense of long-term 13 Lower costs of capital when three billion people still live on less than $2 a day. value creation? How do we get across that such short- “No man can make a greater 14 New products/processes/services termism is costing the planet dear and threatening the mistake than he who did nothing 15 Attracting the right talent These are small steps, when viewed against the backdrop of well-being of future generations? because he could do only a little.” SUSTAINABLE PROFITS an economic system driven by short-term profit Edmund Burke engraved in the gardens of 16 New business/increased market share maximisation, where responsibility to shareholders trumps A hallmark of the Programme right from the start is that our Madingley Hall, venue for the UK Seminar 17 Enhanced shareholder value responsibility to a secure, sustainable and civilised world 999 delegates are not (in the main) the sustainable 12 Business & the Environment Programme: FACING THE FUTURE 13
  8. 8. INTRODUCTION BEP MILESTONES 1994 1995 1997 1998 2001 2003 2004 2005 Programme Launch First Alumni Reunion First European Seminar, First London Lecture, First US Seminar, First Southern African Celebration of 10th ‘Facing the Future’ – Schloss Leopoldskron, delivered by James Wingspread, Racine, Seminar, Lanzerac Manor, Anniversary Windsor Castle event to First UK Senior Launch of the Alummi Salzburg, Austria Wolfensohn, President, Wisconsin Cape Town launch the next 10 years Executives’ Seminar held Network World Bank Group Third London Lecture, at Madingley Hall, 500th delegate Launch of the Sustainable delivered by the UK Launch of the 10th Cambridge Feasibility study for Feasibility study for registered Economy Dialogue Prime Minister, the Rt Anniversary Publication expansion of the extension of the Hon Tony Blair, MP ‘Facing the Future’ Programme Programme into the USA Second London Lecture, First Southern African internationally delivered by Gro Harlem Reunion First Reunion for US Publication of the Brundtland, Director Alumni in Ann Arbor, Sustainable Economy General, World Health Michigan Dialogue report, and Organisation launch of Phase II Publication of second Publication of the edition of Background Publication of Functional Background Briefings Briefings Briefings 1,000th delegate registered 14 Business & the Environment Programme: FACING THE FUTURE 15
  9. 9. LIMITS TO GROWTH The growth question is fundamental to the global sustainable development debate. It divides leading thinkers and players within corporations, governments, academia and civil society. Limits to 1 GROWTH? In this section: On the one side are those who believe that the world can sustain ever more economic growth and Professor Jorgen Randers I Norwegian School of Management consumption and that this path will alleviate endemic problems such as poverty and inequity. On the other The Rt Hon Tony Blair, MP I UK Prime Minister are those who believe unrestrained growth is Richard Sandbrook I Senior Advisor, UNDP unsustainable, will bust the Earth’s natural carrying Malcolm Brinded I Executive Director of Oil & Gas capacity and is inimical to sustainable development. Exploration, Shell Peter Woicke I Executive Vice-President, International Finance Corporation Bill McDonough I Founding Partner and Principal, William McDonough and Partners Jeremy Pelczer I Chief Executive, American Water 16 Business & the Environment Programme: FACING THE FUTURE 17
  10. 10. LIMITS TO GROWTH TAKING THE ROAD Thus, in my view, it is no longer enough in 2005 to be for or against economic growth. The ‘for’ crowd must split in LESS TRAVELLED two: i) those for growth, but within a sustainable footprint , and ii) those for growth without active regard for its Professor Jorgen Randers ecological footprint. I expect the first group – to which I Norwegian School of Management I Co-Author, Limits to Growth I Member of the Programme’s Core Faculty belong – to grow rapidly over the coming decades, as the global damage from unrestrained economic growth becomes increasingly apparent. The result will be a tremendous increase in efforts to reduce the ecological 1 “In 2005 it is no longer enough to be simply ‘for’ or ‘against’ footprint per unit of GDP by boosting dematerialisation and economic growth…” eco-efficiency. There will be many profitable opportunities for innovative firms. Business can and should be part of Ever since the 1970s, people have debated whether Year Update’, was published in 2004) my co-authors and I this first group. economic growth is necessary. Desirable? Possible? Some are less concerned about forms of economic growth with believe everlasting growth is essential for progress and to little impact on the physical environment. More worrisome At the start of the 21st century, the big question is this: can maintain societal calm. Others insist it is impossible within is growth which destroys the natural resources that we and will the global economy be dematerialised fast enough a physically finite world. Some demand that economic depend on. to avoid the destruction of the global environment? On this growth is made sustainable. Passions run high and rational issue the jury is still out. Meanwhile the response from any exchange has been limited. Luckily, both the debate and the conceptual framework for Wackernagel, M. and William E. Rees, Our Ecological Footprint: Reducing Human responsible global citizen, organisation or institution should Impact on the Earth. New Society Publishers, Gabriola Island. 1996. sustainable development have grown in sophistication over be to work hard to reduce the ecological footprint of their I have been closer to this debate than most. In 1972 my 30 years. The advent (and tentative operationalisation) of local economy, in whatever way proves politically feasible: colleagues and I published ‘The Limits to Growth’, triggering the concept of humanity’s ‘ecological footprint’ has made dematerialisation, redistribution of footprint from rich to a fierce but, I believe, ultimately futile debate for and simple and understandable the crucial distinction between poor or reduced consumption. Given that the desire for against traditional economic growth, between economists, traditional economic growth (or GDP) and its physical continued economic growth is unlikely to abate over the environmentalists and others around the world. Our book consequences. If they so chose, enlightened politicians next generation this will not be an easy road, but it is one did not denounce all growth as bad. Rather, there was an could pledge ‘to increase human welfare while ensuring we must tread. explicit focus on the physical consequences of growth – the human ecological footprint remains below what the resource use, emissions and biodiversity loss – for a finite global ecosystem can sustain’ and then evaluate all their planet Earth. Both then and now (‘Limits to Growth: The 30 actions against this ecological measuring stick . 18 Business & the Environment Programme: FACING THE FUTURE 19
  11. 11. LIMITS TO GROWTH TOWARDS A GREEN INDUSTRIAL REVOLUTION The Rt Hon Tony Blair, MP The UK Prime Minister 1 “a challenge so far-reaching in its impact and irreversible in its destructive Climate change will be a top priority for our [2005] G8 presidency. There is huge scope for improving energy power, that it alters radically human existence” efficiency and promoting the uptake of existing low carbon technologies like photovoltaics, fuel cells and carbon It is now plain that the emission of modelling, climate change means that as soon as the 2040s, sequestration. We need to build an international consensus greenhouse gases, associated with one year in two is likely to be even warmer than 2003. on how we can speed up the introduction of these industrialisation and strong technologies. In short, we need to develop the new green economic growth from a world Just as science and technology has given us the evidence industrial revolution that can confront and overcome the population that has increased to measure the danger of climate change, so it can help us challenge of climate change. sixfold in 200 years, is causing find safety from it. The potential for innovation, for global warming at a rate that began as significant, has scientific discovery and hence for business investment and Extracted from the Business & the Environment Programme’s 10th Left to Right: Sir Nick Scheele, President of the Ford Motor Company and become alarming and is simply unsustainable in the long- growth, is enormous. With the right framework for action, Anniversary Lecture, London, September 2004. Chairman of the Business & the Environment Programme Management term. And by long-term I do not mean centuries ahead. I the very act of solving it can unleash a new and benign Committee. Polly Courtice, Director of the Cambridge Programme for Industry and Co-Director of the Business & the Environment Programme. mean within the lifetime of my children and possibly within commercial force…providing jobs, technology spin-offs and The Rt Hon Tony Blair, The UK Prime Minister, MP, Jonathon Porritt, my own. And by unsustainable, I do not mean a new business opportunities as well as protecting the world Chairman of the UK Sustainable Development Commission and Co-Director of the Business & the Environment Programme, Professor Alison Richard, phenomenon causing problems of adjustment. I mean a we live in. Vice-Chancellor of the University of Cambridge and member of the challenge so far-reaching in its impact and irreversible in its Business & the Environment Programme Management Committee. destructive power, that it alters radically human existence. The UK has shown that it can have a strongly growing There is good evidence that the [2003] European heat wave economy while addressing environmental issues. Between was influenced by global warming. It resulted in 26,000 1990 and 2002 the UK economy grew by 36%, while premature deaths and cost $13.5 billion. On the latest greenhouse gas emissions fell by around 15%. 20 Business & the Environment Programme: FACING THE FUTURE 21
  12. 12. LIMITS TO GROWTH THE SUSTAINABLE ECONOMY ASSET OR LIABILITY? DIALOGUE THE POPULATION CHALLENGE In 2003, The Prince of Wales’s Business & the Environment Programme Richard Sandbrook launched a major initiative to clarify what business leaders believe should Senior advisor to UNDP I Member of the Programme’s Guest Faculty be the fundamental goal of today’s economies and how the corporate sector could help global progress towards this goal. 1 Several hundred senior executives, including By the end of 2004, the Sustainable Economy Dialogue “With two billion more people on the way in poor countries, how can global BEP alumni, Programme delegates and a select group had been run 11 times at BEP events, involving nearly companies re-think their business for the ‘have-not’ world?” from outside the Programme, were given the 400 participants who spent between five and seven opportunity to enquire deeply into three critical – yet hours in small -g roup sessions focused on these The direst predictions about a population ‘bomb’, made them born into poverty. In the meantime consumption per seldom asked – questions facing the global business questions. The results indicate a surprising degree of back in the 1970s by US academic Paul Ehrlich and others, head accelerates almost everywhere; unemployment community, namely: agreement among corporate executives about the have not come to pass. The pessimists had predicted among young people – almost half the world’s population fundamental goal of a good economy. There is also spiralling human populations across the developing world, is under 24 – is rising steeply in the poor world; and the Q1: FUNDAMENTAL GOAL widespread, albeit less consistent, agreement on what triggering widespread food shortages and mass migrations. unfunded retirement of a growing percentage in the rich What is the fundamental goal or purpose of a good keeps humanity from attaining this goal. The world keeps many a chancellor awake. economy? participants identified 10 – 15 failings, which have one Instead, in the early 1990s, at UN conferences on Q2: CURRENT FAILINGS thing in common: all are deeply embedded in the population in Cairo and on women in Beijing, the world’s So where does business come in? How can corporations Why do current economies fail to achieve this structure of modern society. Participants also offered a governments agreed on what needed to be done to harness the tremendous human capital which large fundamental goal? rich palate of ideas for business actions to address contain human growth, namely, increase women’s literacy, populations offer, while actively supporting social trends Q3: BUSINESS ACTION current failings. Our full findings will now be published rights and wellbeing and reduce childhood mortality. World which prevent the stresses of over-population? What can business do to help eliminate these failings? in ‘The Sustainable Economy Dialogue: Report and population projections are now falling as country after Reflections’. We hope they will provide rich material for country comes below the magical 2.14 births per couple In some senses the answers are obvious and well tried. corporate deliberation and action worldwide. (the point at which birth and death rates are equal). Southern African companies are directly involved in national Nevertheless, we cannot get complacent. While population thinking on birth control and HIV/AIDS. Unilever, taking a growth has slowed, it will not peak for 50 years or so. more indirect approach, has made the needs of female Within 30 years, two billion more people will enter the consumers – clean water, hygiene, family welfare – world – 97% of them in developing countries, most of fundamental to their business case. 22 Business & the Environment Programme: FACING THE FUTURE 23
  13. 13. LIMITS TO GROWTH The real stretch is how businesses can grow to accommodate pro-poor solutions for future markets. The ENERGY DILEMMAS overall rationale is clear: as OECD markets become saturated, future markets need to be developed elsewhere. Malcolm Brinded Executive Director of Oil & Gas Exploration, Shell I Alumnus of the Programme Yet so are the difficulties: poor people, in highly populated countries, cannot offer much demand for products, given that two billion of them live on less than $2 per day. The solutions, in such circumstances, are complex. There is 1 There are two main sustainability challenges that we, as a Multinational energy companies will play a crucial role in no doubt that the future global company that wants to company and an industry, must help the world address. One meeting exploding demand in the developing world. operate in the ‘have not’ world will have to radically rethink is to help lift billions of people out of poverty by providing Realistically, most of this energy in the coming decades will how it does its business. The issue is how to create them with the modern energy needed for economic still be supplied by hydrocarbons, which is why Shell is livelihoods that generate household income for the one growth. The other is to do this in an environmentally investing approximately $15 billion per year to find and thing that is in abundant supply – labour. The capital- responsible way that responds, in particular, to growing deliver new oil and gas supplies. intensive solutions we apply are not apposite. Take the concern about climate change. mining sector. In Tanzania some 15-20% of the population Why hydrocarbons? Because alternatives like solar power or relies on small-scale mining for their income. Can the big About two billion people still live without electricity. They bio-fuels are currently more expensive to produce and will mining houses outsource their raw material supply to them? rely on firewood or dung for cooking or heating, sources of simply not be available in the quantities needed for several Can the sugar manufacturers, the brewers and the food fuel which are denuding their forests, damaging their health decades. With government support and private sector industry do the same with small farmers? Can the paper and squeezing out work and study time – especially for initiative, our energy scenarios envision bio-fuels, wind and industry source its raw materials from a mass of growers women and girls who collect the bulk of it. By 2050, solar power growing by as much as 10% per year. But even rather than from vast capital-intensive plantations? developing countries will be home to about 50% more then, they would only meet about 5% of global demand by people and use five times more energy, doubling global 2020. The global energy system is simply too big for For the corporate sector to be a part of the solution to the energy demand. alternatives to make a significant impact more quickly. That coming unemployment crisis and the wretchedness that is why we expect the transition to low carbon alternatives flows from it, then it has to rethink life in a world of six to happen gradually, over this century. billion plus – and do so now. 24 Business & the Environment Programme: FACING THE FUTURE 25
  14. 14. LIMITS TO GROWTH Shell long-term energy secenarios The Energy Challenge technology is also promising. Our patented coal gasification process reduces carbon emissions by about 20%, (and local emissions by more than 85%) compared with conventional coal combustion, and can help fast growing coal users like China and India manage their emissions. Carbon dioxide sequestration will also become an increasingly important part of the solution. Responding to climate change and delivering the energy 1 needed to alleviate poverty will seriously challenge the global energy system. It will demand concerted effort and effective partnerships. Government policies will need to support international energy markets and promote climate protection. Energy users must use energy responsibly. Energy companies and equipment makers must apply better It is also why we take a long-term view of our investments and society find better (more convenient, cheaper or technologies and make the massive investments needed. in renewables and hydrogen (nearly $1 bn over the last five cleaner). years). We are building commercially viable new energy As an industry and as a company, we have a role and a businesses by driving down costs and expanding the market The pressing question is how to deal with the responsibility to meet this challenge effectively. for biofuels, solar and wind power and hydrogen. environmental impacts, and especially the climate risks, from the continued growth of hydrocarbon use in the Will we run out of hydrocarbons before alternatives are meantime? Using more natural gas instead of coal is an “Responding to climate change available on a mass scale? No. There is still a lot of coal, oil important part of the answer. Gas is the cleanest burning and gas to be found and produced. Oil sands and shale fossil fuel with carbon emissions half those from modern and delivering the energy needed alone contain many times more oil than Saudi Arabia. coal-fired power plants. (Our Malampaya project in the to alleviate poverty will seriously Instead, the world will shift away from hydrocarbons for the Philippines, for example, already supplies 30% of the challenge the global energy same reason we shifted from wood to coal or from horses country’s output.) Growth in the world’s global Liquefied system.” to cars – because we develop alternatives that customers Natural Gas (LNG) business is therefore vital. New coal 26 Business & the Environment Programme: FACING THE FUTURE 27
  15. 15. LIMITS TO GROWTH SUSTAINABILITY TIGERS: Multinational companies operating in developing nations could learn from such approaches. Through innovative government has a huge opportunity to turn the situation to advantage. One idea we have discussed is inviting all the BALANCING GROWTH AND CSR IN thinking, such initiatives could be applied on a national and major automakers into China, but only allowing them to EMERGING NATIONS regional scale. They also need to look more to local suppliers, to building local capacity which will assist social build advanced hybrid and fuel efficient cars. This is the kind of circumstance where government influence and business development. partnership are extremely important to sustainable Peter Woicke outcomes. Executive Vice-President of the International Finance Corporation I Contributor to the Programme’s Seminars The sustainable development implications of China’s emergence as a consuming giant are enormous. How Will emerging countries develop sustainably? What is 1 As the private sector lending arm of the World Bank, the where a small minority own a vast majority of assets, is a can business help China leapfrog the industrial era? the role of business in making this happen? International Finance Corporation (IFC) has a remit to classic case.) They therefore have a genuine stake in China is extremely worried about the environmental impact I think the next 10 years will be crunch time. Major equity support ecologically and socially sustainable projects in poverty reduction and sustainable development. of its growth. Government officials constantly ask me about investors such as the pension funds are still not addressing developing countries. Peter Woicke reflects on emerging accessing environmental technologies. One of the most environmental and social responsibility, neither are Wall world approaches to the sustainability agenda. Can you give some examples? frightening prospects, in energy terms, is the policy that Street analysts. If we could persuade these players to take In China, the focus tends to be on corporate governance, every Chinese family should have a car by 2020. Yet, the CSR seriously, the impact would be swift and huge. What is the role of corporate social responsibility in treating minority shareholders better, for example. In Brazil, developing nations? entrepreneurs are engaging in local politics. When President In my admittedly rather harsh view, Northern multinationals Lula came to power many municipal governments lacked have largely adopted corporate social responsibility (CSR) the management capacity to distribute food under his Zero policies because of NGO and consumer pressure. The Hunger Programme. The IFC worked with national difference in countries such as China, India, Brazil and corporations to help municipalities set up better distribution Russia, in my experience, is that companies view CSR as key systems. In India, the emphasis is on social responsibility. We to long-term survival. Their CEOs want to become important work with one major company in a very poor area, whose national, regional and eventually global, players. They owner supplied villagers with the hydro-technology to build believe to succeed at this level you not only need a good small dams to control the monsoon waters. The subsistence bottom line, but also good environmental and social farmers now have enough water year-round. Ask the owner policies. They also recognise that the instability in regional why he did this and he says “well, it didn’t cost me very capital markets which harms their business is largely due to much and I can’t afford to operate in an area where there huge inequities in income distribution. (Latin America, could be social disturbances if inequities persist.” 28 Business & the Environment Programme: FACING THE FUTURE 29