The World is in Your Hands


1 March 2007 Björn Stigson


Your business urgently needs to wake up to the realities of sustainable development, says Björn Stigson. The president of the World Business Council for Sustainable Development warns that failure to do so will put your future profits and markets at risk.


Climate change and environmental issues are becoming increasingly important as they impact business. The unpredictability of our climate, which underpins vital systems such as agriculture and insurance, is only the tip of the iceberg.

The UN Millennium Ecosystem Assessment, conducted by over 1,000 scientists, found that two-thirds of the ecosystems supplying resources to people and businesses, including climate, fresh water and wild fisheries, are being degraded. Society's response will have a far-reaching impact on business, especially as it will have to pay more for any ecosystem services it uses.

However, without clear guidance from world leaders, business cannot tackle these challenges. Business must be able to anticipate future developments, and it needs the involvement of all concerned to meet these challenges.

THE PROACTIVE APPROACH

There are two basic responses to such developments: the ostrich approach and the proactive approach. The World Business Council for Sustainable Development (WBCSD) has chosen the latter.

At the UN Framework Convention on Climate Change's Conference of the Parties in November 2006, the WBCSD stated: "Governments must start building the future policy frameworks, and it is necessary for us in business to begin to respond to those policies in time to meet the future emission reduction targets. Governments need to send a clear signal that the carbon markets will continue beyond 2012. Otherwise, carbon markets will not and cannot work to meet the climate protection goals."

The WBCSD presented a draft report on energy and climate policy directions to 2050. It calls on governments to create the long-term framework conditions that business needs to invest in a sustainable future: "Before business invests, it evaluates the future. It gauges long-term supply and demand, assesses the prevailing economic conditions, including tax structures and policy frameworks, and decides on an investment strategy."

The report argued that business cannot invest seriously in limiting greenhouse gas emissions unless governments 'provide clear signals as to where we are headed long term'.

This proactive stance has proved controversial among other business groups and some commentators have questioned why the WBCSD is supporting the environment. The reason is simple: it is not about wanting to be on the side of the environment; it is about being on the side of reality: a carbon-constrained world is one of the absolute realities of this century.

BUSINESS IN SOCIETY

Since the WBCSD was founded in the early 1990s, it has been debating what role business should play in society.

"Businesses cannot seriously reduce greenhouse emissions until governments set long-term targets."

In early 2006, eight WBCSD members and corporate leaders published From Challenge to Opportunity: The Role of Business in Tomorrow's Society. They also published the Manifesto for Tomorrow's Global Business, which reached the unsurprising conclusion that: "Our major contribution to society will... come through our core business rather than through our philanthropic programmes."

Their other main conclusion was more challenging: "We believe that the leading global companies of 2020 will be those that provide goods and services and reach new customers in ways that address the world's major challenges – including poverty, climate change, resource depletion globalisation and demographic shifts."

The report notes that: "While many businesses can point to specific activities as evidence that they are already applying such a model, we believe that to apply it at scale, and at the heart of business strategy, is extremely demanding."

The WBCSD has also opened a focus area on ecosystems, working with governments and NGOs to find businesslike ways of protecting and enhancing ecosystems. Many of these methods will doubtless involve market-based approaches, such as certification and green-labelling schemes.

REACHING OUT TO TOMORROW'S WORLD

The emerging economic giants, such as China and India, and rapid population growth in the developing world pose another challenge. China's rise, given that it is based on manufacturing, is important because its greenhouse gas emissions are increasing, its use of water is unsustainable and the consequences of its search for resources, particularly in Africa, are unclear.

By 2050, approximately 85% of the global population will live in developing countries. Major corporations know they must do more business where there are more people, and the challenge is to reach these new markets in ways that promote sustainable economic development.

The WBCSD has been working on ways to do business with the poor that also help them work their way out of poverty. One approach is through its work with Dutch development agency SNV, which specialises in developing small business around the world. Together, they are holding meetings of businesses leaders in eight Latin American countries to develop local businesses.

Although the World Commission on Environment and Development's report, Our Common Future, said some positive things about how governments can support sustainable development, it was so positive about the role business can play. Assuming corporations to be mindless machines for maximising profits, cut off from other sectors of society, it warned them not to waste resources or pollute the world's resources.

Times have changed: there is a realisation that no single part of society can solve the future sustainable development challenges alone. We need partnerships between governments and business that have the acceptance and support of civil society.

"The World Business Council has outlined key proposals to drive change after the Kyoto Protocol expires in 2012."

THE WAY FORWARD

Conservationists are moving away from the idea that preserving ecosystems necessitates isolating them from human systems. They are now working towards remodelling human systems so that they fit into the realities of ecosystems.

Portugal is developing a business and biodiversity integration project for its EU presidency in the second half of 2007. It proposes that existing business accountability frameworks – such as sustainable development and corporate social responsibility, reporting and certification – should be adapted to measure and certify the biodiversity used by industry.

At the same time, the NGO community is also changing its tactics. The World Conservation Union (IUCN) has launched a 12-month discussion on the future of sustainability, seeking to recast sustainable development with greater focus on the environment, ecosystem conservation, payments for ecosystem services and internalisation of environment costs.

Meanwhile, the UN Environment Programme and IUCN are spearheading stakeholder thinking and debate on the concept of payments for ecosystem services, while WWF-US is seeking to set up an NGO-private sector forum to promote it. At the same time, WWF-UK, on behalf of WWF International, is developing a new business engagement strategy, called one planet business.

The only way for corporations to maximise future profits is by acknowledging their social and environmental responsibilities. And they can only provide solutions to these challenges with the input of governments and NGOs.