Thoughts from a Beach : The Private Sector and Rio+20
Fortune’s “Brainstorm Green” meeting, at a sunny beach resort in California this week, could not have been better timed. It is exactly two months to Rio+20. So much intellectual energy was present here, so many great ideas, that the question begs to be asked : will those 193 government delegations at Rio+20, gathering in Rio in June to debate ‘Green Economy’ and global environmental governance deliver even a fraction of this energy, this thinking ?
We all know planetary boundaries are being approached or breached across several critical axes – including GHG emissions, nitrogen, biodiversity. Significant changes are urgently needed in the way we deal with earth’s resources.
Inter-governmental efforts so far have failed miserably. Founded at the first Rio summit, UNFCCC has failed to get governments to arrest GHG emissions. Its unequal twin UNCBD has been unable to get governments to slow down the rate of loss of biodiversity. These failures point to the need to recognize the vital role of the private sector in determining economic direction and hence resource use globally. The corporate world has to be brought to the table as responsible stewards of shared planetary resources, and not as value-neutral, self-interested exploiters of common wealth.
The private sector today produces almost everything we consume, generating 60% of global GDP and employment. Their advertising drives all consumer demand. Their production feeds this demand, and drives economic growth. Their growing profits and assets are the main magnets for global investment. We have become a ‘corporate’ world in more ways than one. Yet these are the good side of today’s corporation – there are also the bad. Corporate externalities, the unaccounted costs to society of “business as usual”, are an estimated US$ 4 Trillion, or 7% of GDP, every year.
Corporate lobbying often influences national policies to the detriment of the public good. Advertising often converts human insecurities into consumer demand. And excessive demand has already made our ecological footprint exceed the planet’s bio-capacity by 35%. We are now consuming nature’s capital, not its interest.
There is leadership for change (we saw great examples from CEO’s at the Fortune meeting) but it is too little, too late. I believe the “rules of the game” must be changed so that corporations are able to compete on the basis of innovation, resource conservation, and satisfaction of stakeholder demands – and not on the basis of who can best influence government regulations, avoid taxes, obtain subsidies. CSR will never suffice to lead us to tomorrow’s “Green Economy”: we need a new Corporate model .Corporations that discover, measure, and manage down their negative externalities. Corporations that work in a business environment free of perverse subsidies, and work for stakeholders, not just shareholders.
However, that new model will not just happen, it needs to be fed by investment, it needs a level playing field, and it needs new regulation in place. That means eliminating a trillion dollars per year of perverse subsidies for fossil fuels & unsustainable agriculture & fisheries. It means investing in a green economy. And it means making it mandatory to disclose corporate externalities. But who is to eliminate subsidies, seed investments, change corporate reporting ? Why, it is those same 193 governments who will meet at Rio+20 in two months! So, I do hope that the only thing in common between these two meetings will not just be two beautiful, sunny beaches.