Sustainable Development: winners and losers (26 March 1996)

To be sure, the transition to sustainable development will produce both winners and losers. But the winners will be those who are leading the process of change and the losers will be those who lag it and are left behind.


Speech by Maurice Strong, Senior Adviser to the President of World Bank, to the Globe '96 Trade Rair and Conference, held at Vancouver, British Columbia, on 26 March 1996.

I am pleased to join in welcoming all of you to beautiful British Columbia to this opening session of the Globe 1996 Trade Fair and Conference and in congratulating Chairman William Saywell, President John Wiebe and their Globe Foundation team on the outstanding job they have done in organizing what promises to be the best ever in the Globe series of conferences and trade fairs which have become such milestones on the global environmental calendar.

There can be no better evidence of this than the very fact that you and the participants, represent a galaxy of the world's leading policy makers and practitioners in the environmental field. I am honoured to be here today alongside the Hon. Sergio Marchi, Dr. William Saywell, Mr. David Buzzelli, and Mr. Amory Lovins. I believe you will be duly impressed, and kept fully engaged by the range of sessions offered during the Conference and by the extensive array of the latest environmental technologies, products and services displayed in the Trade Fair.

Policy and action

The very fact that this Globe series combine so effectively a policy conference with a trade fair makes an important statement about the need for a close and continuing link between policy and action and for inter-action between policy-makers and practitioners, particularly those in the business community who are on the leading edge of the action process.

It is axiomatic to acknowledge that we now live in a world in which knowledge applied through technology, design and sophisticated information and management systems has become the principal source of added value and competitive advantage. It is a world, too, in which some of the principal risks we face have arisen through the unforeseen consequences of technological change. Who, for example, could have foreseen that the advent of the automobile and petroleum-based energy economy could produce changes in climate that could profoundly change the nature of and prospects for life on this planet? Or that the dramatic advances in medical science could produce an explosion in the human population that would outpace our capacity to provide even the basic of livelihoods for millions of the world's poor and underprivileged?

The good news is that research and development has produced a plethora of new technologies and products, especially in the environmental field, which can provide us with some of the solutions to these problems. Many of them in evidence here at Globe's International Trade Fair and Exhibition.

Enlarged context

As the environmental movement has evolved from Stockholm through the Brundtland Commission to the Earth Summit in Rio de Janeiro, we have enlarged the context in which we must view and deal with the challenge of protecting and improving the environment to embrace the complex system of relationships through which our economic aspirations and behaviour must be reconciled with our environmental and social goals. What we have come to call sustainable development provides the larger framework for achieving a positive synthesis between the environmental, social and economic goals. This, I submit, is no mere passing phase, but a fundamental process of civilizational change required to move us on to the pathway to a secure and sustainable future in the 21st century. As policy and business leaders, you are on the leading edge of this process.

The Earth Summit held in Rio de Janeiro in June 1992was designed to initiate this change of course. In the Declaration of Rio it set out basic principles to guide this change and its Agenda 21 set out a comprehensive program for giving effect to it. The Conventions on Climate Change and Biodiversity agreed and opened for signature at Rio established the legal framework and modalities for concerted international action on these two critically important issues. And it launched the process of negotiating the Convention on Desertification -of special importance to many developing countries.

The road from Rio has had its high points and its low points. But what has actually happened since Rio, I am constantly asked. The short answer is a great deal more than most people realize, but a great deal less than is necessary if we are to effect the change of course called for at Rio. Most of the progress has been made at the level of civil society. Professional societies, notably engineers, architects and educators have made a professional commitment to sustainable development. Some 1600 cities and towns are developing their own local versions of Agenda 21. Important industrial sectors, including the tourism and travel industry, now the world's largest industry, have developed their Agenda 21. A re-constituted and expanded World Business Council for Sustainable Development, with a growing number of regional and national counterparts, is leading a major transition to sustainable development within the business community. It met here Bjorn Stigson and some 100 National Councils for Sustainable Development, bringing together representatives of both government and civil society, have been established in every region of the world as primary instruments for implementation of the results of Rio in their own countries.

The Earth Council, another product of the Earth Summit is, I am pleased to say, facilitating this process and helping to build the kind of bridges and partnerships required to effect cooperative solutions.

Political will

It is at the level of governments that the recession in political will and budgetary austerity since Rio is most evident, both in lagging domestic commitments and the reduction in support for international programs particularly in the United States. While a few countries, notably Japan, have enacted new and strengthened environmental legislation and increased development assistance, the general trend in other major industrialized countries has been in the other direction. This has been particularly true of the United States in which there has been a major movement in Congress to roll back some of the environmental measures enacted during the past two decades. Fortunately, this movement seems now to be encountering strong resistance from a revitalized public concern.

Canada, I have to say, is subject to some of the same tendencies, and I am sure Minister Marchi, that you will find strong support here for your efforts to ensure that our nations environment leadership does not become a victim of the current tendency to be pre-occupied with short-term pressures and priorities. I want to pay particular tribute to our host province, British Columbia. Under the leadership of former Premier, Mike Harcourt, which I am confident that Premier Clark will continue, and with the cooperation of industry and the environmental community, BC has produced some courageous and cooperative solutions to a number of especially difficult and controversial issues, notably in the natural resource field. I particularly applaud the initiative announced yesterday to establish here in Vancouver an International Environmental Business Centre.

It is also encouraging to note that many developing countries have responded positively to the results of the Earth Summit and some, like China, have enacted their own national versions of Agenda 21. They have done this despite the fact that the additional international funding required to enable them to implement the results of Rio has not materialized and, in fact, overall development assistance has declined.

Next year on the fifth anniversary of the Earth Summit the United Nations General Assembly will be reviewing its results. As a contribution to this process the Earth Council, in cooperation with the governments of Brazil and Rio de Janeiro and a number of other leading non-governmental organizations, will be convening a Rio +5 assembly to provide the contribution by the various sectors of civil society to this review process. Its purpose is to re-ignite the spirit of Rio and revitalize the policy and action processes generated by the Earth Summit.

The rapidly developing countries of Asia and Latin America are leading the resurgence of growth in the world economy. Unfortunately, for the most part this growth in both consumption and production is following the same patterns established by the more mature industrialized countries. It is a pathway that is clearly not sustainable, either for these countries themselves, or for the world community. Indeed, the battle to achieve a sustainable and secure future for humanity will be won or lost in the developing countries,

Right to grow

Yet we cannot deny these countries the right to grow. It would be clearly hypocritical simply to lecture them not to repeat our mistakes, particularly while we continue to resist significant changes in our own patterns of production and consumption. They will be far more influenced by our example than by our exhortations, and this is why the theme of this event "Bringing International Markets to North America" is so much on target.

The more mature industrialized countries, notably the United States and Canada, still account for a disproportionate share of the world's waste and pollution. Nevertheless, significant progress has been made in recent years in effecting more efficient use of energy and materials, as well as in pollution prevention and control. The products and services on display here at Globe '96 make it clear that many practical and cost-efficient solutions are available. And it is encouraging to note, Minister Marchi, that Environment Canada has supported establishment of an environmental technology investment fund" -"Technology Partnerships -Canada" to stimulate and support Canadian leadership in this field which is one of the most rapidly growing and promising sectors of the economy. It is also important in an era in which official development assistance to developing countries is declining that special priority be accorded to measures which make the latest environmental technologies accessible, and affordable, to developing countries.

The evidence produced at the Earth Summit, and confirmed since then, makes it clear that economic efficiency is the key to environmental protection -efficiency in the use of energy and materials as well as in the prevention, re-cycling and disposal of wastes. The Business Council for Sustainable Development in its landmark report to Rio "Changing Course", called for a major transformation of our industrial civilization based on eco-efficiency. Its author, the Swiss Industrialist, Stephan Schmidheiny, and his colleagues have produced a follow-up "Financing Change" which I commend to you as another seminal contribution to the process of implementing eco-efficiency through the financial markets.

Principal source of resource flows

As you will know, private investment is now the principal source of resource flows to the rapidly developing countries. Official development assistance is in decline, but is still vitally important to the poorest developing countries and as a catalyst and support for private investment. If private investment does not become a positive vehicle for sustainable development in developing countries, the prospects for a sustainable future for the human community will clearly not be realized and the 21st century could witness the decline if not the demise of our industrial civilization.

There is an urgent need to revitalize the processes of national action and international negotiations required to put in place the agreements and institutional arrangements required to support this process. In the meantime, however, we need not wait for this. A movement is already well underway by leading non-governmental organizations, including the World Resources Institute, the Earth Council and the WBCSD, as well as by the World Bank and the DECD, to develop with the cooperation of industry and other interested parties, voluntary guidelines for private investment in each major industry sector, beginning with forestry.

The World Bank Group, which includes the International Finance Corporation and the Multilateral Investment Guarantee Agency which invest in and provide guarantees for private sector ventures in the developing countries are, under the leadership of its dynamic new President, Jim Wolfensohn, himself a product of the private sector, taking the lead in developing a new generation of partnerships with the private sector, including non-governmental organizations as well as business. The goal is to ensure that official funds are deployed more effectively in levering and supporting private sector investment for sustainable development.

Direct and indirect subsidies

Finally, let me cite another factor that is essential to the process of effecting the transition to a sustainable industrial civilization. Over the years all governments have developed a series of direct and indirect subsidies to various sectors of the economy - from energy, agriculture, transport, and resource development, to name but a few. While these were designed to serve purposes unrelated to their environmental impacts, it is now clear that many of them, amounting to literally hundreds of billions of dollars, provide de facto subsidies to practices that are environmentally destructive and unsustainable. At the same time, they distort the effective functioning of the market economy, undermine economic efficiency and impose immense costs on consumers and taxpayers. The amounts involve go far beyond the costs estimated at the Earth Summit for effecting a transition to sustainable development and belie the popular notion that at a time of economic and budgetary stringency we cannot afford this transition. It is indeed these perverse or "inefficient" subsidies that can no longer afford and if they were rescinded or at least reoriented to provide positive incentives for sustainable practices, no new funding would be necessary.

Today's fiscal and tax systems have evolved over a period in which the immediate economic benefits of exploiting renewable resources were the driving consideration and the longer term environmental and economic costs less apparent. But now we need to ensure that these costs are accounted for and provide strong incentives for more efficient resource use and less environmentally destructive and wasteful patterns of production and consumption. Such a shift would also provide a major stimulus to the development and use of new technologies that foster "eco-efficiency and sustainable development".

Energy is an important case in point. For energy is at the centre of so many of our most pressing economic as well as environmental concerns. Meeting the exploding energy needs of developing countries, if they emulate our model, will place hurdens on their capital resources as well as on the environment which would neither be tolerable nor sustainable. Energy efficiency is clearly the best investment in both economic and environmental terms. The more mature industrialized countries have a major incentive to ensure that developing countries have access to the resources and technologies they will require to meet their energy needs on an efficient, sustainable basis. And we must also set them an example. Yet, ironically, as Canada's Jim MacNeill has pointed out, our Federal Government spends some $100 on incentives to develop and use fossil fuels for every $1 it spends to encourage energy efficiency.

Creating better business opportunities

I need not remind you that the transition to an environmentally driven economy creates more and better business opportunities and jobs than it negates. Consider how the Dutch flower industry, which is responsible for about 65% of world exports of cut flowers, has responded to its environmental problems. Intense cultivation of flowers in small areas was contaminating the soil and groundwater with pesticides, herbicides and fertilizers. Facing increasingly strict regulations, they understood that the only effective way to address the problem was to develop a closed-loop system. This solution led to other innovations along the value chain which increased productivity while reducing significantly environmental impacts. The net result is that the Netherlands has secured its position as the world leader in the flower business.

There are many other examples. In the Ruhr Valley in Germany today, environmental industries account for more jobs than the traditional iron and steel industry. Japan's MITI and its leading industrial association, Keidenren, have recognized that the new generation of industrial opportunity will be environment driven.

To be sure, the transition to sustainable development will produce both winners and losers. But the winners will be those who are leading the process of change and the losers will be those who lag it and are left behind. I believe that all industry will be environment driven in the new, sustainable industrial civilization. I know that this will also be one of the messages that David Buzzelli will be addressing when he speaks to us this morning about how businesses are seeking to increase their competitive advantage through environmental excellence. As Co-Chairman of the President's Council on Sustainable Development, he has led, together with Jonathan Lash of the World Resources Institute, a process which has just produced an impressive and persuasive report pointing the way to a "Sustainable America".

The industries represented here are in the vanguard of these changes. I am sure that the ideas generated and technologies displayed here, the new relationships and strategic partnerships established, will lend new vitality and impetus to this process. Nothing could be more important to our common future.