Paul Hohnen welcomes the morphing of the sustainable development agenda into a green growth agenda and considers what needs to happen next
Whether you are returning from the northern summer break, or hoping for the first signs of a southern spring, here are three propositions to reflect on concerning the future direction of the sustainability agenda.
The first is that the great challenge and prize of the 21st century will be to create an industrial revolution based on green growth.
This is not to say that avoiding double dip recession, fostering job-creating growth, and improving respect for human rights are not important: they are. It’s just that none of them – individually or collectively - will be sustainable in the long term unless green growth is achieved.
The second is that the prize will not be won without harnessing the full creativity and power of the private sector. Governments and civil society must and will play important roles, but unless business gets fully on board, green growth will not be delivered.
The third proposition is that this engagement will not be achieved without more and better information on organizational sustainability performance. When historians look back on this century, they may well ask how we for so long ignored data vital for assessing long term performance prospects.
Let’s consider briefly the case for each of these propositions.
Green industrial revolution
Paralleling the great agricultural ‘green’ revolutions, the green industrial revolution will be all about providing more with less. As we look into the future, incidents such as the Deepwater Horizon disaster underline the fact that the search for remaining stocks of raw materials comes at ever higher costs, and risks.
Whether measured in terms of increased political, technological or environmental costs, meeting a growing world demand with declining natural assets is forcing smart business in two main directions. To improve the efficiency of use of existing natural capital (i.e.to do more with less), or to substitute increasingly scarce or sensitive commodities with alternative sustainable materials (i.e.to make things differently).
We can all think of examples. Boeing’s new Dreamliner aircraft, with best in class fuel efficient engines and a composite body is an example of both approaches at work together.
Firms such as Siemens, Philips and General Electric understand this trend and are beginning to integrate it into their business strategies and products. Many start-ups are now founded on a green model.
Government interest in the green growth agenda is also set to be revisited.
Two decades after the ‘Earth Summit’, the United Nations will convene another high level meeting in 2012. Its focus will be on two themes: the need for a green economy and the institutional framework for sustainable development.
The backdrop to this decision is a marked sense that past sustainability commitments have largely not been met, and that there is an urgent need to add fresh impetus and coherence to the global policy agenda.
At the national level, there is also movement. Korea, chair of this year’s G20 Summit, has dedicated a large portion of its stimulus package to green industry and is in the process of creating a Global Green Growth Institute (GGGI).
More jobs, innovation, growth and competitiveness are all seen as dividends of a green economy.
Sustainability is a serious business
While the language of sustainable development always contained the notion of balancing economic, social and environmental, the reality has been (and still is) that short term financial returns rule. It’s still more profitable to chop down a forest than replant one.
As noted, however, the competition for non-renewable or polluting raw materials is ultimately a losing game. That’s why, for example, the smart end of the fishing industry has already moved into aqua-culture or plant protein, leaving others in the costly hunt for fewer wild fish.
And while governments will increasingly play a key role in shaping market behavior, it will be the business sector that has to find the technologies, funding mechanisms and marketing strategies that make the transition to more resource efficient and less polluting products and services work. If the past is anything to go by, consumer power alone will be insufficient to drive the change.
Measuring global goods
But for this to be successful, there is the problem of not having the relevant green data. In the past, investors and business (not to mention governments) have not seriously asked for or used sustainability performance information. But without it, how to identify the industries of the future and to reward ‘green’ growth? Here, financial data alone will be seen as increasingly insufficient.
This ‘materiality’ gap is set to change. Consider three recent straws in the wind.
First, the 2010 Global Reporting Initiative (GRI) conference saw strong support for proposals to make sustainability reporting mandatory by 2015 (e.g. on the Danish ‘comply or explain’ model) and to develop a global standard for integrated financial and non-financial reporting by 2020.
More significantly, leaders of the G20 nations at their Toronto Summit on 27 June made a telling reference to non-financial reporting. “As we pursue strong, sustainable and more balanced growth”, they said, “we continue to encourage work on measurement methods to take into account social and environmental dimensions of economic development.”
And earlier this month, a high level group comprising global accounting standards bodies, accounting firms, national stock exchanges, and academic institutions, supported by the GRI and The Accounting for Sustainability Initiative, launched the International Integrated Reporting Committee (IIRC).
The IIRC’s remit is “to create a globally accepted framework for accounting for sustainability. This is defined as “a framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format – put briefly, in an “integrated” format.”
The best news in all of the above is that the green industry revolution is not solely government, business or NGO driven.
All the main stakeholder groups are now engaged and driving the process of change.
That’s why this time around, serious change is on the cards.
Paul Hohnen speaks, writes and consults on sustainability and CSR issues. An Associate Fellow of Chatham House, he is a member of Ethical Corporation’s Editorial Advisory Board. For more information, see www.hohnen.net / paul@hohnen.net