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A new generation of alliances (8 April 1997)



To be sure, the United Nations and its organizations and agencies need to change to reflect the immense changes that have taken place in the world since it was created and meet the growing needs of the world community which must deal with the process of rapid and continuing change as it moves into the 21st century.

Article on the role of the private sector, published by the Yale School of Environmental Studies, in collaboration with the United Nations Development Programme's, (UNDP), Public Private Partnerships Programme.

This year in which we mark the fifth anniversary of the United Nations Conference on Environment and Development - the "Earth Summit" - held in Rio de Janeiro, Brazil, in June 1992, also marks the twenty-fifth anniversary of the UN Conference on the Human Environment held in Stockholm, Sweden, in June 1972 which put the environment issue on the international agenda. It therefore provides an especially opportune occasion re-examine our views and perspectives on progress and prospects in respect of global environmental issues in light of experience since these two major milestones in the development of the environmental movement.

The Stockholm conference led to a proliferation of new environmental initiatives and the creation of the United Nations Environment Program, headquartered in Nairobi, Kenya, as well as national environmental ministries or agencies in most countries. However, despite progress in many areas, it became evident by the mid-1980s that, overall, the environment was still deteriorating and the economic behaviour largely responsible for this was continuing. In response, the United Nations General Assembly established the World Commission for Environment and Development under the Chairmanship of Norway's Gro Harlem Brundtland. one of the world community's most enlightened and respected leaders. Its report "Our Common Future" made the case for sustainable development as the only viable pathway to a secure and hopeful future for the human community. Its recommendations led to a decision by the UN General Assembly in December 1989 to hold a new conference, the UN Conference for Environment and Development, on the twentieth anniversary of the Stockholm conference, and to accept the invitation of Brazil to host it. To underscore the importance of the conference, it was decided that it should be held at the, "Summit" level and it is now known universally as the "Earth Summit".

A remarkable event

It proved to be a remarkable event. Never before had so many of the world's political leaders come together and the fact that they came to consider issues critical to the planet's future put these issues under an enormous international spotlight. The pressure generated by an unprecedented level of people's participation and media coverage helped to move governments to agree on a set of principles, "The Declaration of Rio", and a comprehensive program of action to give effect to these principles, "Agenda 21". It also produced agreement on two historic framework conventions, one on Climate Change and the other on Biodiversity, which have since come into effect. And it launched the negotiating process which has since led to agreement on a Convention on Desertification, an Issue of special importance to many developing countries, particularly the arid regions of Sub-Saharan Africa.

Despite shortcomings, the agreements reached at Rio represent the most comprehensive program ever agreed by governments for the shaping of the human future. And the fact that most of them were represented by their head of government gives them a unique degree of political authority. But as experience since then has demonstrated, it does not ensure their implementation.

So far, the record is mixed. There have been many positive achievements which demonstrate that the transition to sustainable development called for at Rio is possible. But these positive examples still fall short of what is required to effect the fundamental change of course required to ensure a sustainable future for the human community. To some degree this is understandable. Fundamental change does not come quickly or easily and the five years that have elapsed since the Earth Summit, and even the twenty-five years that have passed since the Stockholm conference, are too short to have expected such fundamental change to have occurred, Nevertheless, we cannot afford to be complacent in light of evidence that we continue along a pathway that is not sustainable while the driving forces of population growth in developing countries and unsustainable patterns of production and consumption in industrialized countries persist.

Climate change


Climate change is a case in point. Although the latest report of the Intergovernmental Panel on Climate Change points to growing scientific evidence that human activities are a major contributor, it is apparent that even the modest targets by the parties to the Convention on Climate Change will not be achieved and, indeed, that C02 emissions continue to increase. It is essential and timely, therefore, that in this important anniversary year we take a fresh look at the changes that have occurred since Stockholm and Rio and how they should impact on the policies and actions through which we seek to achieve a sustainable mode of life on our planet as we move into the twenty-first century. The forces that are shaping our future are complex and diverse and do not lend themselves to simplistic analysis or solutions. But there are three major factors which I believe need to he highlighted. They are:

 

  • The resurgence of growth in the global economy and movement of the primary locus of growth to the rapidly developing countries of Asia and Latin America. As this growth is based largely on the experience and example of the more mature industrialized countries, it is producing acute environmental problems and undermining the sustainability of national development in these countries while contributing increasingly to global environmental risks.
  • The several-fold increase in private investment in developing countries which is now some four times greater than Official Development Assistance (ODA). This has given rise to a growing dichotomy between the more rapidly developing countries for which ODA is becoming relatively less important and the least developed countries, particularly those of Sub-Saharan Africa, which continue to be heavily dependent on ODA.
  • Increasing evidence that traditional governments and management models based largely on individual sectors and disciplines are inadequate for the management of it complex and systemic cause and effect system on which a successful transition to sustainable development depends.


Each of these phenomena underscores the critically important role of the private sector in the the movement to sustainable development. For, unless the rapidly developing countries of Asia and Latin America make the transition to a sustainable development pathway, there is little prospect that the goal of global sustainability can be achieved. And as private initiative is the primary driving force in these rapidly growing economies and private capital their principal source of financing, the private sector must become the primary vehicle for the achievement of sustainable development. This is particularly true as more and more developing countries move to privatization of such key sectors as water, waste disposal, electric power and transport. And the very scale and intensity of the sustainable development challenge requires a heavy reliance on technological solutions for which the private sector is the primary vehicle. At the same time, the systemic nature of sustainable development requires a much greater degree of cooperation both amongst key industry actors and financial institutions and between them and governments.

While there has been a significant increase in the awareness of these issues since the Earth Summit, and in large part because of it, this is still evidenced far more at the level of rhetoric than of concrete action. So while more and more leaders in industry and government are talking of change, overall the powerful forces of inertia continue to propel us along a pathway that is unsustainable. Nevertheless, there have been some very positive developments since the Earth Summit which demonstrate that the transition to sustain ability is feasible and have produced an impressive number of practical examples of success on which we can build and new institutional mechanisms to facilitate and support the process. Let me cite a few of these.

Examples of business success


The World Business Council for Sustainable Development, WBCSD, has taken an enlightened lead in stimulating the commitment to sustainable development on the part of its membership of more than 120 multi-national corporations. It has also developed several national and regional counterparts, A recent example is the National Business Council for Sustainable Development. which brings together more than 90 of the leading corporations in Brazil. The World Business Council for Sustainable Development has produced two books following its influential report to the Earth Council "Changing Course". One of these, "Financing Change" makes a strong and compelling case for the use of the financial markets to finance sustainable development. And, more recently, "Signals of Change" documented specific examples of business progress towards sustainable development based on its eco-efficiency concept. This is a management approach designed to produce greater efficiency in the use of energy. materials and services and in the prevention, disposal and recycling of wastes so as to create value both for the companies concerned and society. WBCSD is also promoting the use of life-cycle analysis to reduce the environmental impacts of products and production processes and is promoting the development of a global network of business organizations committed to sustainable development. And it is helping its member companies to identity and pursue new business and investment opportunities based on the application of sustainable development principles. Amongst the specific examples documented in "Signals of Change" are:

  1. The successful experience of 3M through which Pollution Prevention Pays (PPP) program first introduced in 1975 which has prevented more than 1.4 billion pounds of releases to the environment while saving the company more than $750 million.
  2. The initiation by Sony Corporation of its "Green Plus" project which has resulted in the design of a new television set series which uses 14% less material as compared to the previous design and has a goal to make all Sony products environmentally friendly by the end of the year 2000.
  3. Adoption by Fiat Auto of a policy of reducing pollution and other environmental impacts at its own plants and requiring that its suppliers accept high environmental standards.
  4. Adoption by the chemical industry of its Responsible Care program to improve the environmental performance of the industry. The US chemical industry alone has reduced emissions of toxic chemicals by more than 60% in the past six years while production grew by 20%.


Sustainable energy development


Business is also made encouraging progress towards developing closed-loop production systems, including sponsorship by the pulp and paper industry of a major project by the International Institute for Environment and Development designed to develop a sustainable paper cycle.

In the field of energy, which is at the centre of many of the most important environmental problems, including climate change, the E7 consisting of the seven principal electric power utilities in the world, has initiated a program to promote energy efficiency and sustainable energy development, A number of individual companies including Ontario Hydro in Canada and Electrobras in Brazil have instituted major energy efficiency programs which have effected substantial reductions in energy use by both the companies and their customers while contributing to improved financial performance.

More than 2500 companies worldwide have signed the Business Charter for Sustainable Development adopted by the International Chamber of Commerce in 1990 and many international and sectoral industry associations have adopted their own charters. The World Tourism and Travel Council, representing the world's largest single industry which has an especially close relationship with the environment has, in cooperation with the Earth Council, launched its own Agenda 21 based on Rio's Global Agenda 21. And the critically important road transport industry, through the International Road Transport Union has taken similar action. The engineering profession through its principal international professional bodies representing some 15 million members have committed their profession to sustainable development.

Precious biological resources


At the level of governance one of the most promising and innovative developments has been the establishment of some 100 National Councils for Sustainable Development, or similar bodies, based on the recommendation of Rio's Agenda 21. These bring together representatives of various sectors of civil society to consult with each other and with governments and develop cooperative approaches to the development of national agendas for sustainable development and cooperative measures for implementing them. The Earth Council which was formed as a direct result of the Earth Summit, is playing a unique role in catalyzing and facilitating the development of these networks and linkages amongst them. It took the lead in organizing the Rio +5 Forum and the first regional meetings of National Councils for Sustainable Development of the developing world.

It has taken a number of other policy initiatives of particular interest to business. One of these is the area of emissions trading through the design of a Global Emissions Trading System (GETS) and the creation, in cooperation with the government of Costa Rica, of a marketable debt instrument based on the utilization of tropical forest areas of Costa Rica to provide offsets for CF2 emissions in the United States and elsewhere. While the concepts of emission trading and joint implementation are still controversial at this initial stage of their development, they offer a promising opportunity of providing the most cost-effective means of effective reductions in the emissions of carbon dioxide and other harmful substances while channelling new financial resources to developing countries and helping to conserve their precious biological resources.

At a time when all governments are experiencing severe financial constraints and that this limits the amount of new funding available to support the transition to sustainable development, it is particularly important that better use be made of existing resources. A recent study commissioned by the Earth Council makes it clear that literally hundreds of billions of dollars are being used by both industrialized and developing countries today to subsidize activities that are unsustainable in environmental terms and unnecessarily costly and wasteful in economic terms. The study indicates that the world is spending at least $700 billion a year on subsidies in just four sectors: water, agriculture, energy and road transport, much of it providing disincentives to sustainable development. Indeed some, including subsidies on water and energy in developing countries, actually serve to impair access and increase the cost of these vital services to the poor. Re-deployment of these subsidies could provide positive incentives to sustainable development while releasing funds more than sufficient to enable more developed countries to increase both Official Development Assistance and developing countries to meet the internal costs of financing their transition to sustainable development.

Custodians of biological resources


Developing countries serve as custodians of most of the biological resources on which the sustainability and well-being of the world community depends. The indispensable services they provide have always been taken for granted and treated as free goods, We must now begin to place an economic value on them if we are to expect developing countries to maintain them largely for the benefit of the rest of the world. Doing so would not only ensure the conservation of these precious resources, but provide an additional source of revenue flows to these countries which would represent a wise investment by the international community, rather than an act of aid or charity. And it would present a new generation of opportunities for private entrepreneurship and investment.

The old maxim that "knowledge is power" is now being accompanied by the realization that "knowledge is money" and therefore a primary economic resource. The growing drive to convert knowledge into proprietary intellectual property could tend to reduce the total stock of knowledge and restrict access to the products of research and development for those who do not have the means to purchase it. This could especially disadvantage those, particularly in developing countries whose needs are greatest. Yet it is in our common interest to ensure that they have access to the best state-of-the-art technologies and techniques so that in the course of their own development they do not add unnecessarily to the pressures on the Earth's environment and resources.

It is clearly in the interest of the more developed countries to ensure that developing countries have access to the latest state-of-the-art technologies and support for development of the research and development capabilities they require to make the transition to sustainahility. Here again the private sector is the principal vehicle for technology cooperation and transfer but their role must be facilitated by supportive policies pn the part of government and financial assistance to developing countries.

Multi-lateral organizations and particularly the United Nations and its specialized agencies, including the World Bank and the International Monetary Fund, provide the basic international framework for development of the cooperative arrangements and mobilization or resources required to support developing countries in their transition to sustainable development. The role of these international organizations is indispensable to the effective functioning of our global technological civilization, management of our relationships with each other and our impacts on the Earth's environment and life-support systems. World government is neither necessary nor desirable, but a world system for management of issues which can only at best be managed cooperatively. It is not necessary for nations to yield sovereignty to international organizations, but rather to use such organizations to facilitate the exercise of national sovereignty in cooperation with other nations in those areas where individual nations, even the most powerful, cannot effectively exercise it alone, Thus international organizations are the servants, not the masters, of nation states, which remain the principal repositories of sovereignty in the global system of governance.

Lack of support for the UN


The United Nations is the centrepiece of this system of organizations which consists also of a large number of regional and special purpose organizations that are not part of the United Nations system but in most cases have dose and cooperative links with it. As the realities of interdependence in the economic, security, environmental and other areas of human activity have made it necessary or desirable for nations to cooperate in dealing with issues which are vital to their interests and the future of their citizens, the objective need for more effective international institutions to facilitate and give effect to such cooperation is greater than ever. And this need can only increase in the period ahead. Yet support for the United Nations organizations has sunk to the lowest level since it was created more than fifty years ago in the aftermath of World War 11.

To be sure, the United Nations and its organizations and agencies need to change to reflect the immense changes that have taken place in the world since it was created and meet the growing needs of the world community which must deal with the process of rapid and continuing change as it moves into the 21st century. The need for reform of the United Nations has long been recognized and has been subject to extensive analysis and a wide range of ideas and recommendations. Now, under the leadership of the new UN Secretary-General, Kofi Annan, major reforms have been initiated at the level of the secretariat while General Assembly President, Ambassador Razali is leading an accelerated reform process Oil the part of member states ill which ultimate responsibility resides. At the same time , World Bank President, James Wolfensohn, has initiated radical changes within the World Hank designed to improve its effectiveness as the world's leading development finance agency. And virtually all other UN agencies and organizations have undertaken programs of change and reform.

An important feature of the reform process in all these organizations is the necessity of developing much stronger links with the private sector and the various organizations of civil society and better mechanisms for consultation and cooperation with them. Already a number of promising and innovative partnerships have been developed by UN organizations. UNDP has been particularly active in promoting these partnerships. In 1995, it launched its Public-Private Partnership for the Urban Environment And at the recent Rio +5 Forum, UNDP signed a Partnership Agreement with the World Business Council for Sustainable Development.

Indeed, these private-public partnerships represent the wave of the future as the principal means of implementing sustainable development. In most cases the resources available for funding of sustainable development come principally from private sources - not only investment funds, but funding from private philanthropic sources, including foundations supported by private corporations. In the United States alone, corporate foundations now provide some $6 billion of philanthropic funding. Just as private investment has overtaken Official Development Assistance as the principal source of financial flows to developing countries, private foundations and voluntary organizations now provide more concessional funding to developing countries than the United Nations.

New leadership

But this is not to say that the role of the United Nations in sustainable development has been diminished. On the contrary, the need for the kind of leadership and facilitating services which only the United Nations can provide is greater than ever because of the increasingly diverse sources of funding and technical assistance and the need to support developing countries in their challenging task of accessing and making best use of these resources. The capacity to take the lead in mobilizing resources from a variety of sources around particular projects and programs and facilitating the targeting and effective use of such resources gives the UN a major multiplier in the use of the resources under its control. Thus, the UNDP's work in helping client countries to identify and prepare major projects for investment attracts investment capital many times in excess of its own expenditures. In more than billion dollars was invested in projects in which UNDP provided pre-investment assistance at a total cost of approximately.

The International Finance Corporation, the private sector investment organization of the World Bank Group, has played an indispensable role in supporting the flow of private capital to developing countries by taking a minority investment in promising enterprises and helping to develop domestic capital markets. The Global Environment Facility, GEF. the only new funding organization set up especially to finance sustainable development, is a unique tripartite partnership between the World Bank, the UNDP and the United Nations Environment Program. It provides incremental funding to support the sustainable development of major projects in which the total investment is many times greater than that provided by GEF.

A new generation of alliances


UN conferences have made a major contribution to making environment and sustainable development important issues for governments and the public and opening up new channels for participation of civil society and private business. The Earth Summit is a good example of this. Through the Business Council for Sustainable Development business was directly and influentially involved in preparations for the conference. And an unprecedented number of other civil society organizations participated at Rio, both directly in the conference and at the Global Forum, which accompanied it. This led to the establishment of a new generation of alliances and partnerships both amongst these organizations and between them and governments.

Amongst the most promising of these has been the development of Local Agendas 21 by some 1800 cities and towns around the world through the leadership of the International Council for Local Environmental Initiatives, These local initiatives bring together representatives of local government with business, community and other local organizations. They provide one of the most promising and effective means of linking action at the local level, where most action must take place, with the global issues defined by Rio's Agenda 21. This global-local inter-action is one of the most encouraging and promising developments to have occurred since and as a result of the Earth Summit and it opens up an immense: range of new opportunities for private-public partnerships at the local level as well as partnerships which link the global, national and local levels. The National Councils for Sustainable Development are proving to be extremely valuable instruments for forging these linkages.

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 t.he larger framework for achieving a positive synthesis between these three dimensions of development. This is no mere passing phase, but a fundamental process of civilizational change which is essential if we are to move 011 to the pathway to a secure and sustainable future in the new millennium. The traditional boundaries between the roles of government and the private sector have already been breached and must now give way to a new system of cooperative arrangements extending from the local to the global levels of governance.

The United Nations and its organizations and agencies have a role in this system which is indispensable and that no other organization could play. The current reform process must equip it to do this.