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Remarks by UNEP Executive Director, Achim Steiner to 2010 Summit of China Green Companies

Chengdu, 23 April, 2010 - Distinguished delegates, members of the China Entrepreneur Club and Chengdu Municipal Government, Co-organizers of this meeting with UNEP

We live in a world of challenges

  • Six billion people to feed, clothe, house and to generate employment for, rising to nine billion by 2050

We live in a world increasingly defined by natural resource constraints

  • Fisheries, healthy productive soils, biodiversity and other ecosystems such as forests, freshwaters and the atmosphere degraded, damaged and in many cases in fast decline

We also live in a world of rising expectations

  • People want higher standards of living everywhere; the poor and those championing the cause of the poor want a solution to poverty; two billion people without access to electricity cannot wait forever

  • A rising affluent, vocal and curious middle-class, not just in developed economies but increasingly in countries like China are scrutinizing more and more the environmental footprint of companies, their products and services

  • Scrutiny that is going global and is interested not just in the company, but in its supply chains and relationships from the source of raw materials to its transportation chain right up to the shop and outlet and to the disposal of the product

We also live at a moment of inordinate opportunity

  • All the solutions, be they technological or scientific are in large part already out there being deployed; starting to be deployed or close to uptake if only they can be scaled-up and fast-tracked nationally and globally.

  • Many companies, in part as a result of the recent financial and economic crisis, are beginning to look less short, but more medium and long term.

  • A global, interconnected economy means that companies who set sustainability standards in one place can perhaps mirror or at least transfer some of the knowledge and practices across its global operations-sustainable multi-nationals are becoming part of the landscape.

It is increasingly a bottom line issue and linked with a company's reputation or 'reputational value'.

Those operating low sustainability standards on one Continent when compared to another will increasingly face poor Public Relations costs and a loss of market share.

Why? Cause increasingly in the eyes of consumers, Corporation X or Y should meet similar standards wherever they operate rather than divide the world into differing ones-it is an attitude that in turn sends a signal that sustainability is not core, more an inconvenience

Ladies and gentlemen,

There are also those companies who might wish to put up smoke screens or pull the wool over the public's eyes-either by omission or by appearing to green wash their environmental performance.

Those days are also rapidly coming to an end as the force of transparency and requests for authoritative reporting becoming ever more sophisticated and powerful.

A multitude of organizations and Non Governmental bodies are building reporting standards covering everything from a company's carbon footprint to its impact on ecosystems such as forests and freshwaters.

The latest example is the Securities and Exchange Commission in the United States. It is now requiring carbon disclosure by the companies it lists.

Meanwhile watchdog bodies and private citizens have via the Internet access to data and knowledge on a company's national and global activities unprecedented only say five years ago.

Again literally at a click of a button, anyone can research in depth many corporations' environmental, social and ethical footprint in different parts of the globe and this trend will continue.

Meanwhile, the lending criteria of banks including the World Bank are also coming under increasing scrutiny.

The recent row over South Africa's planned coal-fired power station-its first in 15 years-is a case in point.

While the World Bank voted in favour of the close to $4 billion loan, concern by several countries did secure provisions on improved energy efficiency and investments in renewables in South Africa.

Institutional investors are also looking at shareholder value in a broader and more sustainability-focused way.

A recent report by UNEP's Finance Initiative and its assets branch and compiled by lawyers reached a key conclusion.

Namely that pension funds, trust funds and other asset managers who do not take environmental, social and other wider factors into their investment decisions could face legal action from customers and beneficiaries..

So distinguished delegates,

The forces that are requiring and requesting a fundamental shift from the old, brown economy of the 20th century, towards a new low carbon, resource efficient Green Economy are proliferating, becoming more intense and are unlikely to evaporate into the night air.

A recent survey in the United States showed that close to 80 per cent of consumers are just as likely if not more likely to buy environmentally responsible products now as they were before the financial and economics crisis.

Indeed, the exciting and perhaps most radical outcome of the recent financial and economic crisis, is not the crisis itself.

But the fact that unlike the past, when environmental concerns were relegated down the league table of importance, this crisis on top of others such as the fuel and food price ones has triggered a fundamental re-think and transformative action towards a new and more sustainable developmental approach.

Action that according to UNEP's Green Economy team is happening at different levels and scales globally, but perhaps is most keenly being witnessed in Asia including in China.

Ladies and gentlemen,

in response to the financial and economic crises, UNEP in collaboration with others launched its Global Green New Deal.

It suggested that one per cent of global GDP, invested in environmentally-related sectors, could rev up the global economy; secure of boost employment and begin setting the stage for Green Economic growth.

Professor Edward Barbier, one of the authors of the UNEP brief and a leading environmental economist, has assessed how far countries have so far gone.

  • Of the $3 trillion spent or earmarked globally for the fiscal stimulus, just over $460 billion is aimed at green investments.

  • This is equal to around 15 per cent of the total fiscal stimulus or around 0.7 per cent of the G20's GDP.

China and the Republic of Korea lead the way at three per cent of GDP, followed by Saudi Arabia, 1.7 per cent; Australia, 1.2 per cent and Japan, 0.8 per cent.

This is followed by the United States, with 0.7 per cent of GDP; Germany, 0.5 per cent; France 0.3 per cent and Canada, South Africa and the United Kingdom, 0.2 per cent.

Both China and the Republic of Korea are embedding these policy choices in medium-term planning.

For example in the Republic of Korea the government has a five-year green-growth investment plan.

It will spend $60 billion to cut carbon dependency with the aim of boosting economic growth to 2020 and generating up to 1.8 million jobs.

So again, there is evidence that in whole or in part, some fundamental re-shaping of national economies and the global one is underway-one with an increasing emphasis on corporate, social responsibility; environmental and social governance or whatever term you favour..

There are of course some reality checks that need to be flagged-the outcome of the UN climate convention meeting in Copenhagen being one.

First the good news.

The UN climate convention meeting provided an 'economic stimulus' with developed economies pledging immediate funding of $30 billion over three years.

This could rise to $100 billion a year by 2020.

The funds will assist developing economies to not only adapt to climate change but to also assist in a transition to a low carbon economy.

Some of the funds will also be earmarked for investments in forests under the Reduced Emissions from Deforestation and forest Degradation (REDD).

UN-REDD, of which UNEP is a key part, is preparing some nine countries including Papua New Guinea, Panama and the Democratic Republic of Congo for this new opportunity.

So all in all, business opportunities in areas such as renewable and clean or cleaner energy generation: ones too in natural resource management.

The Copenhagen Accord, to which over 100 countries have now associated themselves, is also the first cooperative climate document bringing together developed and developing economies on emission reductions and constraints.

If all the pledges and intentions outlined are fully met, then this too can provide Green investment opportunities.

But distinguished delegates,

there is also much more work to be done.

Copenhagen failed to deliver an international regulatory framework or legally binding treaty, so we do not have a global price on carbon.

There remains debate as to the pace and scale of the $30 billion investment alongside concerns as to how much of this will be new and how much will old, or re-packaged money.

Meanwhile there is a sense of increasing bilateralism in the air.

Only a few weeks ago General Electric of America and the state of California announced cooperation with China's Ministry of Railways.

The plan is to use Chinese railway technology to assist in the development of the state's high speed rail links.

A fascinating reflection of the way geopolitics are shaping the current world.

But also underlining that while the big and rapidly growing economies have the finance, know-how and capacity to receive and to invest significant sums.

Others, waiting at the station or on their way there, may find themselves left at the high speed rail platform with the sign indicating the destination 'Green Growth, but without a ticket or long after the locomotive has gone.

What are the prospects for small island states and for many smaller economies on continents such as Africa, Latin America and Asia?

Many of these still require pre-investment assistance and capacity building if they are to also enjoy economic growth, and more importantly sustainable Green Growth.

Therefore the international community, including the world of business, needs to re-discover and re-new their efforts to make the UN climate convention meeting in Cancun, Mexico at the end of this year.

Delegates,

The fundamental choice, between a slow, snail-like uptake towards a low carbon, resource efficient Green Economy is going to rest of several pillars.

These include leadership of governments and mobilization of political support among businesses and the general public for transformative policies.

These in turn can unleash the markets at a national but also global level.

Businessmen and women are in many ways the bridge and can be the catalysts.

It is in part the willingness of companies to innovate, to demonstrate and embrace new ideas and technologies-to see future business opportunities- that in turn can encourage governments to be bold.

In other words it can strengthen government resolve in what is possible by building the confidence that solutions to sustainability challenges are available or 'in the drawer' waiting for their moment.

Meanwhile, it is in the vested interests of many companies and their shareholders that laws, rules, regulations and smart fiscal policies and mechanisms are introduced by governments.

They can incentivize change among businesses and send price signals that reward innovation and Green Economy practices while penalizing those who prefer the status quo and are keen to continue to externalize rather than internalize costs.

Ladies and gentlemen,

it is perhaps the role of the United Nations to be in part the glue that binds these and other worlds.

One of the roles is normative-in other words setting out some basic, science-based, well proven and well-articulated ground rules or minimum standards to which all nations ands thus corporations can adhere.

What many term the level playing field.

This is key in a globalized world where more perhaps myopic corporations can shift manufacturing or production across Continents in order to avoid the sustainability challenges of the 21st world.

Secondly a body like UNEP is a knowledge bank or a knowledge broker.

One reason why I and my staff travel the world, including coming here to Chengdu in order to understand, to document and to share transformative ideas and actions.

One reason why, only this week in Seoul, Republic of Korea, UNEP co-hosted the Business 4 the Environment summit with around 1,000 delegates including senior CEOs from all corners of the globe.

This knowledge banking role works to enhance the response to global challenges-no society, no sector, no company in the developed or the developing world has exclusive ownership or rights on transformational ideas or activities.

It is also a resource for people like you here today in terms of navigating the complex and fast moving landscape of the global response to the challenges and opportunities six billion people face.

Markets are emerging for not just carbon but for water and for ecosystems services and the tools for measuring and managing environmental risk are mushrooming.

In the past few days I have picked up reports from, for example CERES entitled "The 21st Century Corporation: Roadmap to Sustainability"

BSR- Future Expectations of Corporate Environmental Performance.

The Green Race is On - the World Business Council for Sustainable Development.

Only this week UNEP and the organization Accountability produced a Climate Completive Index and a few weeks ago at the World Urban Forum a Greenhouse Gas Calculator for cities managing carbon footprints.

And there is the UN Global Compact, the Principles for Responsible Investment; a report by KPMG on the Copenhagen Accord and its significance to business and, and, andů.the list is long and ever more legion.

UNEP is involved in many of these initiatives; tools and reports either directly or indirectly.

So please look at this institution and its Finance Initiative and sectoral collaborations as an honest broker and as guide through the minefield, motorways and bur also sunny uplands and slopes of a new, rapidly evolving global economy.

The Green Economy- the need for a fundamental and decisive shift in the global economy towards a more intelligent and creative management of finite natural resources and the need to overcome poverty and meet the needs of a growing global population-is a reality whose time has come.

The question is whether it happens by design, by planning and by taking the long term view.

Or whether it happens by default as a result of increasing scarcity, degradation and rapid decline of our shared natural and nature-based assets.

I know wish route I would choose, and I am sure we would share a similar view.

I believe we have many of the necessary elements on paper: Some countries and corporations have taken the plans off the drawing board and into two dimensions.

Together and today, government, business, the multilateral institutions and civil society needs to take it to the next, three-dimensional, living and breathing phase.

Not just in one our two economies or a handful of pilot projects, but into the market-place; government development policies; local authorities and indeed houses and homes of all economies in all parts of the globe.

Thank you

 



 

 

Further Resources

UNEP: Green Economy Initiative

 

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