Rio+20 - Re-focusing the Economy and Catalyzing Global Governance and Institutional Reform
Audience: NGOs, public and private sectors, government and academia
I would like to address you on the Green Economy and also touch on something called International Environmental Governance.
And to mention as well Rio+20 -Ladies and Gentlemen -the world is again on the Road to Rio nearly 20 years after the Earth Summit of 1992 that laid the foundations for contemporary sustainable development.
But it is a world markedly changed since the days of the end of the Cold War and the notion that the peace dividend would be invested to solve multiple challenges.
The geopolitics of the world we live in are part of that change-the rise of the BRICS - Brazil, Russia, India, China and South Africa.
Shifting perceptions on the role and relevance of the United Nations and the emergence of the G20 are also part of that change.
Meanwhile, many of the realities that were glimpsed in the early 1990s-from climate change to loss of biodiversity and from land degradation to increasing scarcity of freshwaters-are becoming less theory and more reality.
The prudence and the precaution to act has become an imperative-many politicians know this, the private sector is increasingly concerned as are city and provincial leaders right up to the individual citizen.
The imperative in the second decade of the 21st century is to find the means and the mechanisms for action that take us beyond the narrow and sometimes sterile debates of North and South; rich and poor and resource-rich versus resource-scarce economies.
But towards a direction that can deliver a path that will allow seven billion people, rising to nine billion by 2050 to thrive and indeed survive in some kind of cooperate competition rather than a destructive one.
The responsibility of this generation is not to reinvent sustainable development, but to help it evolve.
To take the unfulfilled promises of Rio 1992 and deliver them: that is the challenge for this generation and one that no longer should be shouldered, but must be.
We are in a world where an oil price can boomerang in as little as 12 months or so from the US$40 or so a barrel level to over US$100.
And it is a world so interlinked and intertwined economically that a drought or a flood in one nation, on one day, can next day move food and fuel markets.
And it is a world where science assesses that climate change will become an increasing threat to lives and livelihoods.
And it is a world where many sustainability challenges, from global warming to persistent organic pollutants - that respect no one's national boundaries or wealth levels - so there is abundant reason to be part of the solution rather than part of the indifference.
But in common with many countries these green shoots need watering and the question for some would be why?
In part because a transition to a low-carbon, resource-efficient Green Economy makes abundant sense.
What is lacking is perhaps a sense of direction, a compass for change and a deep sense that if one embraces it, decisive and definitive change will occur.
Recently, we launched A Transition to a Green Economy in order to evaluate the risks and opportunities.
The report, involving experts and economists worldwide, suggests that investing two per cent of global GDP annually-or currently around US$1.3 trillion- in ten key sectors could kick start a green economic transition if backed by smart enabling public policies and measures.
Financing could in part come from the phasing-down close to a trillion dollars-worth of 'harmful' subsidies covering fossil fuels to fertilizers and fisheries.
The Green Economy study showcases countries where transitions are already underway.
- The Republic of Korea where recycling has grown by 14 per cent and contributed US$1.6 billion to the economy after the introduction of a producer-responsibility law covering tires to old batteries.
- Uganda, where policies to encourage sustainable agriculture have triggered a growth in certified organic farmers from around 45,000 in 2004 to over 200,000 now.
In 2011, installed capacity of photovoltaics will likely be 50 GW-equivalent to 50 nuclear reactors-in countries ranging from Bangladesh and Morocco to Germany and the United Arab Emirates.
There will be challenges-jobs may be initially lost in fishing to restore over-exploited stocks. But overall a Green Economy up to 2050 generates more employment than is lost from the old 'brown' sectors.
So, a Green Economy makes economic, social and environmental sense.
It is also perhaps the way the world is evolving anyway - a world in which international and thus domestic markets are moving.
Staying outside this envelope risks being left behind technologically and in a market place where consumers and bilateral trade partners are increasingly looking at the sustainability of goods and services.
Only a few weeks ago I was in Brazil, where I met with some of the ministers, government officials and members of civil society involved in planning Rio+20.
The World Economic Forum also held a meeting to examine the engagement of private business.
Some of the biggest companies, such as Kraft Foods to Coca Cola, were there, many signaling their engagement in the process and desire to engage in the outcome.
Not to be part of the choir or pay lip service paid to the private sector, but be equal, or something approaching equal, partners with the many who have seen the sustainability writing on the wall in the global market place.
For me, the intellectual effort emerging towards Rio+20 by its Brazilian hosts and the wider international community, was proof - if proof were needed -that the world's now seventh largest economy is among those wishing to realize a fresh direction.
The three messages I came away with, and which I would like to share and in a sense challenge you to engage upon as part of the Road to Rio, are these:
No Need to Re-Invent the Wheel
1. The world is indeed rich in sustainability solutions if only we knew how best to harvest them and bring them into the mainstream.
The question is why so many of these local success stories towards sustainability are often trapped at that level?why do they remain in the legion of reports produced by the UN or WWF or the World Economic Forum that have piled up and often gathered dust on shelves worldwide.
Why have they not been scaled-up and replicated everywhere already?
In part the answer might rest in information overload and in the way information is filtered, approved and conveyed to policymakers for action.
Perhaps national forums of civil society, government officials, researchers and companies, could come together over the next few months and bridge the credibility and relevance gap by subjecting these myriad of inspiring pathways to some kind of peer review, rationalization and evaluation-
And then transmit the best and the most scaleable through to the Rio+20 preparations for rubber stamping, replication and support by heads of state, the UN system; regional banks and private enterprise.
Because one thing that Rio+20 does not need to do in a world awash with experience and good ideas, is the time-consuming and costly re-inventions of the wheel.
Vision and Concrete Goals
2. Secondly, we need an overarching vision backed by some concrete goals that will support a Green Economy transition which could be kick-started almost immediately-some of which have been accepted by governments, but whose implementation remains patchy or unfulfilled.
Let me mention some broad thrusts.
- the need to change from an economic model of growth to a sustainable model of Development;
- the need to apply, say a triple helix approach, to economic/environmental/social attributes of development that brings these three elements together rather than leave them as separate pillars;
- the need for new measures of progress;
- the need for development with equity;
- the need for enhanced investment in public involvement;
- the need to put Least Developed Countries on a fast runway to development.
Let me perhaps suggest a few for concrete expressions of this vision as illustrative ideas that are circling the Rio+20 preparatory debates in wider society-ones which perhaps also underline the need for the participation of a broad section of society.
Ones that also underline the crucial role of governments and of heads of state in terms of policymaking and a passion towards a decisive, game-changing development path.
Ones that equally require the private sector to advise governments what they believe they need for re-directing private capital into new notions of value.
- Fossil fuel subsidies range from US$400 - US$650 billion per year, depending on the price of oil. About 75% - 80% of that is given out in the form of consumption subsidies, where governments fix the price of transport fuel, kerosene, or electricity generated from fossil fuels and pay the difference between that price and the world market price.
Most of the consumption subsidies are provided in the developing countries, which can pay a high price.
When the oil price peaked in 2008, Indonesia stated that its subsidies to fossil fuels were higher than government investment in health, education and infrastructure development taken together.
Taking an average figure of half a trillion dollars per year, we are subsidising fossil fuels at a rate of eight times what it would cost annually to fully implement the Millennium Development Goals.
Or four times what it would cost to bring Official Development Aid up to the 0.7% target.
Fossil fuel subsidies amount to a huge inducement to prefer carbon-based fuels over the alternatives and seriously tilt the playing field away from renewables.
Just eliminating fossil fuel subsidies, according to the International Energy Agency, would provide 40% of the carbon reduction needed to hold global warming to the 2 degree ceiling.
Efforts are underway to reform these subsidies - mostly motivated by a need to reduce national deficits in a time of economic crisis.
The G-20 has a commitment (to phase out, over the medium term, inefficient fossil fuel subsidies that contribute to wasteful consumption).
There is also a Friends of Fossil Fuel Subsidy Reform that has been created, with Costa Rica, Denmark, New Zealand, Norway and Switzerland as members. There is a tipping point coming which could be finalized at Rio+20.
But Rio+20 cannot just be about subsidies.
- Public purchasing accounts for 23% of GDP on average around the globe. In some countries, like Brazil and India, it approaches 50%. In the OECD, it averages 15% of very large economies.
The 23% can easily enough tip entire markets into the sustainability space. It is calculated that if California, Illinois, Ohio, New York and New England adopt a new fuel efficiency standard, it would become the new standard for the US because it will no longer be worthwhile for it to produce to a lower standard.
The same is true in virtually all markets - the tipping point is reached well below the 50% range.
So governments could commit to introducing sustainability criteria in their purchasing in a set programme, beginning immediately with what is ready today - forest products, fish products and organic food.
And widening the circle as agreed standards emerge and as markets are available to provide the desired goods. This pledge is fully possible at Rio + 20.
- While perverse incentives like subsidies are part of the problem, less well known are things like investment agreements.
There are over 2,600 bilateral investment treaties. Most contain clauses under which government action - for example legislating a preference for clean energy - can be attacked as a form of indirect expropriation by those invested in conventional energy.
Disputes are settled with reference to contract law only, and behind closed doors. There is no provision for the defense of public interest.
More recently, these agreements and contracts between investors and host governments contain stabilization clauses that freeze the situation at the time of the investment.
This has a chilling effect on progress in social or environmental legislation, especially since settlements can run into the billions.
Could this be another outcome for Rio+20?
There are many other possibilities that can reviewed, shelved or brought forward for Rio +20.
We can also find a new way of defining wealth that expands GDP beyond its current, narrow definition.
The report Consumption Dilemma-Leverage Points for Accelerating Sustainable Growth prepared by Deloitte Touche Tohmatsu and the World Economic Forum, makes some interesting points.
It suggests the Genuine Progress Indicator, or GPI, as an alternative or evolved metric that measures the 'sustainability of income through economic and also social and environmental indicators.
The proposal points out that in the United States, GDP has grown steadily between 1950 and 2004, but as measured by GPI it has actually stagnated since the 1970s.
This gets us back to national wealth accounting-an issue that Brazil and around a dozen countries are addressing in respect to The Economics of Ecosystems and Biodiversity.
There are other suggestions such as between now and next year, can the process bring together these various proposals for a new measure of wealth and subject them to scrutiny, evaluation and ultimately an outcome at Rio+20-
Meanwhile, could Rio+20 provide the framework, financing and market mechanisms that for example could fast track plans such as Reduced Emissions from Deforestation and Forest Degradation (REDD)-
The timetables and targets, agreed at the Convention on Biological Diversity meeting last year in Nagoya, Japan, could also benefit from Rio+20.
If the world is to meet the targets, for example, for terrestrial and marine protected areas, there needs to be some prioritizing where maximum economic, environmental and social benefits can be realized and fast.
UNEP and other partners have already been mapping and overlaying these sustainable development opportunities against services provided by existing protected areas in order to prioritize investments and support.
This in turn echoes to the issue of science.
How can policy encourage sustainable scientific breakthroughs, including in areas such as agriculture and food production?
A few weeks ago Dupont announced it had achieved what may be a breakthrough in terms of farmed salmon production in Chile. It takes around 4.5kg of fishmeal and oil to produce one kg of salmon-wild fish, needed for the farmed salmon, provide the Omega 3 that makes eating salmon healthy. But Dupont managed to synthesize Omega 3 from sugars-the conversion is one-to-one, i.e., one, rather than 4.5 to one.
The company says that in a world awash with scientific ideas it would never have happened if Chile's public policymakers had not chosen to fund the research at the crucial, early stage and won over Dupont's Headquarters.
IEG and the Green Economy Go Beyond Environment
Thirdly and finally, let me touch on the other big theme of Rio+20-an international framework for sustainable development.
The fact is that our global, and in many cases national institutions, charged with managing sustainable development are 20, 30 or 40 years old.
They are simply not designed, nor have the architecture or influence to meet the challenges and deliver the opportunities of a different age.
There are those who have emphasized that Rio+20 is not an environmental summit.
I could not agree more. But this does not mean that the debate around the Green Economy, or for that matter new governance structures including in respect to the existing environmental ones, is simply about environment.
If one takes the view that natural resource mismanagement and rising scarcity globally alongside resource consumption and pollution will increasingly define economic and social prosperity, then they are not green agendas per se but global development ones.
Both the two themes for Rio+20 thus go to the heart of the current, and perhaps even more, the future economy of this world which needs designing now, or it will design itself by default.
Ladies and Gentlemen, time is very short.
The landscape and the ambition of Rio+20 cannot be agreed at the end of May or the beginning of June 2012-certainly if the political influence of heads of state is to be secured.
If they imagine it will be a re-run of Copenhagen and the climate negotiations, they will stay at home.
And a major opportunity to demonstrate that international cooperation through the UN is possible; the legitimacy of democratically-elected leaders to define and to deliver transformational change and a moment to seize a sustainable future for billions of people will be lost.
There will be risks in pursuing a far reaching agenda and in engaging early on global society towards concrete steps and goals.
But we all know that without some risk taking, we face another zero-sum gain - one that leaves the world nowhere and perhaps delivers not Rio+20, but Rio+0 or Rio minus 20.
One that may consign us all to ever greater stress, ever widening equity disparities and the kinds of destabilizing impacts glimpsed in 1992.
June 2012 needs to define a fresh moment in international cooperation, informed by national experiences.
A moment that soars above the minutiae of texts and tussles, into a new era of cooperative competition for ideas and actions-ones that defend and progress the interests of the poor and the vulnerable, grow economies, generate the jobs so urgently needed while keeping humanity's footprint within planetary boundaries.
Many countries have historically recognized the importance of leadership in international affairs-not least in the realm of environmental affairs and social justice.
By blending these elements and by bringing forward these qualities, they could make a positive contribution in shaping Rio+20 towards a transformative outcome.
Opportunities such as this only come round perhaps once every generation.
It is a moment for the leaders of the early 21st century to match the vision of a previous generation and take what they had achieved to the next level.
In doing so, there may be a possibility of forging a way to prosperity that echoes to the genuine aspirations of the many, rather than the few.
A path that keeps growth on track and generates livelihoods but in a way that shrinks humanity's widening footprint into a far more comfortable and sustainable footfall for current and future generations.