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Australia
in the Context of a Sustainable Asia: The Honourable Dr David Kemp, MP, Minister for the Environment and Heritage; distinguished guests; ladies and gentlemen, I would like to welcome you to this forum and dialogue on 'Australia in the Context of a Sustainable Asia', hosted by the Asia Society AustralAsia Centre, the World Business Council for Sustainable Development and the Business Council of Australia. The 1992 Rio Earth Summit saw business depicted as the villain in the piece in the emerging paradigm called sustainable development. Ten years later, business is recognised as a positive contributor to sustainable development at the World Summit on Sustainable Development (WSSD), held this year in Johannesburg. I want to pursue this shift in positioning of business, reflecting on why it occurred and the lessons to be learnt for greater business engagement in international policy developments around sustainability issues, drawing upon the greenhouse issue to illustrate some of my points. The WSSD's central theme was the alleviation of poverty through sustainable development. Importantly, the agenda moved the public policy debate on sustainability beyond the narrow environmental interests that characterised the Rio Summit. Instead, the focus was on pragmatic issues of balancing competing interests, seeking trade-offs and looking for practical on-the-ground solutions beyond traditional command and control approaches that can stifle economic growth and prosperity. The World Summit was something of a watershed for business. The positive shift in sentiment towards business is attributable, in part, to improvements in sustainability performance. But business is also learning the important lesson of being an active participant in the shaping of international policy around sustainability issues—those areas associated with the intersection of economic, social and environmental factors, overlain by the politics of the self-interest of nations. More recently, the sustainability agenda has broadened to governance matters, including transparency of reporting and accountability, in light of corporate failures such as Enron, as well as to the role of the corporation in the context of social responsibility. Our own company, WMC, is illustrative of the very significant changes taking place in the area of greater transparency to meet changing community expectations. WMC’s 2001 Sustainability Report was rated as equal twelfth amongst the best sustainability reports of activity globally by the 'SustainAbility'/United Nations Environment Programme (UNEP) evaluation, released a few days ago. This is pleasing especially as we had shifted largely to electronic format to reduce costs and encourage smaller companies to do likewise. Regrettably, no other Australian company was rated within the top 50 but five were in the next fifty. At the Johannesburg Summit, through participation in government delegations, presentations and interventions on the floor and a major series of side events, business was seen to be part of the solution to poverty alleviation. Such positive recognition is attributable to the International Chamber of Commerce and the World Business Council for Sustainable Development that both did such a splendid job of coordination and representation. In contrast to the business profile, the participation of Non-Government Organisations (NGOs) at the Summit was more muted than at Rio, as the focus moved from protest to the pursuit of practical solutions to real problems associated with people’s livelihoods and their very existence. This was evident also from some of the protest banners that urged government delegates to: 'Give us trade, not aid', perhaps in recognition that a healthy and openly trading economy is the best way to fight poverty. The Summit also confirmed for me the emergence of a division within the ranks of the NGO movement between those of the 'old guard' seeking to maintain the rage and conflict and those more enlightened groups similarly pursuing practical solutions involving trade-offs which, for some of them, may mean sacrificing purist dogma in the interests of achieving real outcomes. So why has business through WBCSD and ICC devoted so many resources to its participation at the World Summit in pursuit of sustainable development? Let me give you my perspective. We live in a different world to that in which we operated
10 years ago. Communities want and demand the economic benefits
of development as well as, but not instead of, quality of life needs,
fair treatment and a safe and clean environment. Society looks for,
and expects, business to be a long-term, net-positive contributor
to economic, social and environmental wellbeing, in effect a net-positive
contributor to sustainable development. Because implementation of sustainable development
is still at an early stage across different countries and cultures,
new ideas and practices abound. Consequently, under the prescript
of sustainable development there is an extensive global dialogue
taking place, through intergovernmental and government bureaucracies.
Herein lie the many traps and pitfalls for business in engaging
in this process, for engage you must or others will represent your
interests for you. Differences in approaches and views exist even within countries, not just between countries or blocks of countries. Here, I include bureaucracies and external stakeholders, such as NGOs and business. Some see sustainable development as nature taking pre-eminence over mankind in the order of spiritual importance. For some, it is to facilitate political agendas in a command economy to re-order society having regard to the collapse of communism. For others, it provides a focal point for protest against society. And for others, it is an expression descriptive of a desire to improve society, from their perspective. This presents corporations with a complex economic and social environment within which to operate, given that there may be little consistency of approaches and attitudes between different locations. International debates and negotiations that take place over sustainable development issues take on final expression through formal international conventions and intergovernmental agreements. The 1992 Climate Change Convention is one example that emanated from the Rio Summit. It must be remembered that conventions have the force of international law to bind the parties to common actions. In the case of the Climate Change Convention, the resulting Kyoto Protocol establishes binding national targets on greenhouse gas emission reductions of developed countries that, in the case of Australia, the Australian Greenhouse Office (AGO) advises would result in massive shifts of wealth. And, it should not be forgotten, the Protocol establishes a central compliance agency empowered, through surveillance, to impose sanctions on any defaulting countries. There exist intellectual, though not necessarily always intelligent, constructs around these agreements to justify the actions proposed under them. Foundation principles, such as the Precautionary Principle and concepts such as 'Sustainable Consumption and Production' have already been established that can drive negotiations towards perverse outcomes for business. For example, interpreted at its extreme, the Precautionary Principle obliges or prevents the taking of any action unless one can prove no harm will be done—how do you prove a negative? Sustainable consumption and production policies can also result in government-decreed reductions in the manufacture and use of materials on the basis that someone somewhere thinks they are not good for us. International actions through conventions and protocols, such as the Kyoto Protocol, should have a strong basis in sound science, and be continually reviewed to ensure the relevant connection between cause, effect and remediation. Many of you know my concern that there is little continuing emphasis on the scientific understanding behind climate change predictions and anyone wanting to question the science is pejoratively referred to as a sceptic. Given the enormity of the social and economic changes needed to reduce greenhouse gasses to affect the so-called climate change impacts, one would expect that such predicted impacts would need to be proved beyond reasonable doubt. But this is not the case. It is relevant to remember here that Dr Graham Pearman, Head of the CSIRO Division of Atmospheric Research, said, I quote: 'The reality of the Protocol as it is at the moment is that even if all of the nations were able to achieve those targets it would hardly make any difference.' (Dr Pearman was referring to CO2 concentrations and their impact on global climate.) The critical issue about the Kyoto Protocol is not in its contribution to climate environmental benefits. Rather the Protocol would bind nation states to taxes and policy powers that could cripple economies. I say this, however, without resiling in any way from our own corporation’s responsibility and commitment to achieve best environmental practices. Business debate about ratification of the Kyoto Protocol has been in the Australian news recently. I don’t wish to fuel this debate any further other than to note that it is healthy that we all should have a full understanding about the implications of ratification. Such a critical national interest issue is properly for governments to decide upon. In this context, I note that the Australian Government has indicated that we will not be ratifying Kyoto because it is not in our national interest to do so. I support this decision. There is currently debate also about whether Australia should increase its population size over time to 50 million. There are good national interest reasons to consider doing so—from growing and developing our economy through to strategic national defence issues. But it must be remembered that Australia is the 'lucky country' because of its endowment of energy and other natural resources. Capping the utilisation of our energy sources under Kyoto, unless we pursue a radical shift away from present technology, potentially limits the growth of our nation—we should debate the impact of these linked issues and not view them separately. International conventions and protocols to address sustainability issues may have lofty and laudable goals but their genesis is no different from those of any other multi-lateral negotiation. Not surprisingly, governments, through their delegations, pursue self-interest. So too do those at the periphery, the so-called stakeholders, such as NGOs and business. Trade-offs are made, advantages for sovereign states are pursued and stakeholders lobby extensively for their respective positions to take prominence. In this context, there is an underlying concern that the European Union and its member countries wish to change the rules of the WTO to include environment protection as a ground for restricting trade and to promote the use of the Precautionary Principle as an executive tool in the management of trade rules. This is a reflection of their own economic insecurity assumed to flow from the reduction of tariff and non-tariff barriers promised at the Uruguay round of trade talks but yet to be fulfilled. The consistent prevention of market access to what is now the largest trading block of countries, namely the European Union, and its lavish subsidies of agricultural exports to the detriment of developing countries, promotes a sound foundation for these views to go forward. As a consequence, to the extent that there are genuine environmental issues that do, indeed, warrant global focus and attention, the loss of necessary integrity, through invoking environmental pre-eminence as a means of pursuing restrictive trade agendas, detracts from the value of the proposition put forward for consideration. In the lesser developed countries, it gives rise to acceptance of a conspiracy theory of interests regarding international environmental issues. Here, I have focused largely at the country level; but companies, too, seek to promote favourable outcomes to negotiations when it comes to pursuing competitive advantage. It is with this in mind that I wish to relate to you a conversation which took place in October 1997 that had a profound impact on me. My interlocutor was the chief executive of a very large resources-based corporation. We had been discussing similar issues but we differed strongly on approaches. Thinking that I had not really understood his position, and desperately trying to get his point across, he spoke forcefully as his finger struck repeatedly on my chest: 'Hugh, don’t you understand? My organisation is run by Greenpeace today, and it is my job to ensure that Greenpeace is running yours tomorrow.' The lesson of the pursuit of self-interest through flawed policy approaches can be a costly one. Do not believe that there must necessarily be a consistent point of view in these matters anywhere—within corporations or between them, between political contestants or between countries. Self-interest pervades across all participants in the international policy arena. So this is the environment within which the critical role of business involvement has to be pursued. Business must engage in this intellectual debate. Others will not necessarily do it for us and we too have something positive to contribute. To not do so risks adverse policy and regulatory consequences. To engage effectively, business must have a fundamental understanding of sustainable development and its constructs. It must be prepared to advance and promote its views but also be flexible and adaptable in its approaches, taking account of changing community attitudes. Business must also match its sustainability performance to those changing expectations; be prepared to defend the good practices we undertake, such as best environmental management, but to also condemn the indefensible. Business reputation, built upon good economic, social and environmental performance, is paramount in the ability to make others see and appreciate your views and perspectives. Finally, the sustainability agenda, to state or remind us of the obvious, is still continuing to evolve. Corporate governance and transparency were identified as a focus for future global action at the Summit, perhaps by way of yet another international convention. Again, business will be under intense scrutiny and possible regulatory control. I am not arguing about the desirability or otherwise for greater government oversight of corporate governance. But I am urging business to be fully involved in this global sustainability debate and not to leave it to some narrower interests of a few countries along with our colleagues in the verification service sector to come up with their own solution, unguided by the practical realities of the real business environment. I am pleased we have the opportunity to share views
and ideas on this important topic of sustainable development, co-hosted
by the Asia Society AustralAsia Centre, the World Business Council
for Sustainable Development and the Business Council of Australia.
It is important that we engage all of the leading international
and national institutions on an issue that is so complex, having,
as it does, a long-term perspective, when, regrettably, we tend
to operate in a world of short-term objectives. The Honourable Dr David Kemp, MP, Minister for the Environment and Heritage; distinguished guests; ladies and gentlemen, I would like to welcome you to this forum and dialogue on 'Australia in the Context of a Sustainable Asia', hosted by the Asia Society AustralAsia Centre, the World Business Council for Sustainable Development and the Business Council of Australia. The 1992 Rio Earth Summit saw business depicted as the villain in the piece in the emerging paradigm called sustainable development. Ten years later, business is recognised as a positive contributor to sustainable development at the World Summit on Sustainable Development (WSSD), held this year in Johannesburg. I want to pursue this shift in positioning of business, reflecting on why it occurred and the lessons to be learnt for greater business engagement in international policy developments around sustainability issues, drawing upon the greenhouse issue to illustrate some of my points. The WSSD's central theme was the alleviation of poverty through sustainable development. Importantly, the agenda moved the public policy debate on sustainability beyond the narrow environmental interests that characterised the Rio Summit. Instead, the focus was on pragmatic issues of balancing competing interests, seeking trade-offs and looking for practical on-the-ground solutions beyond traditional command and control approaches that can stifle economic growth and prosperity. The World Summit was something of a watershed for business. The positive shift in sentiment towards business is attributable, in part, to improvements in sustainability performance. But business is also learning the important lesson of being an active participant in the shaping of international policy around sustainability issues—those areas associated with the intersection of economic, social and environmental factors, overlain by the politics of the self-interest of nations. More recently, the sustainability agenda has broadened to governance matters, including transparency of reporting and accountability, in light of corporate failures such as Enron, as well as to the role of the corporation in the context of social responsibility. Our own company, WMC, is illustrative of the very significant changes taking place in the area of greater transparency to meet changing community expectations. WMC’s 2001 Sustainability Report was rated as equal twelfth amongst the best sustainability reports of activity globally by the 'SustainAbility'/United Nations Environment Programme (UNEP) evaluation, released a few days ago. This is pleasing especially as we had shifted largely to electronic format to reduce costs and encourage smaller companies to do likewise. Regrettably, no other Australian company was rated within the top 50 but five were in the next fifty. At the Johannesburg Summit, through participation in government delegations, presentations and interventions on the floor and a major series of side events, business was seen to be part of the solution to poverty alleviation. Such positive recognition is attributable to the International Chamber of Commerce and the World Business Council for Sustainable Development that both did such a splendid job of coordination and representation. In contrast to the business profile, the participation of Non-Government Organisations (NGOs) at the Summit was more muted than at Rio, as the focus moved from protest to the pursuit of practical solutions to real problems associated with people’s livelihoods and their very existence. This was evident also from some of the protest banners that urged government delegates to: 'Give us trade, not aid', perhaps in recognition that a healthy and openly trading economy is the best way to fight poverty. The Summit also confirmed for me the emergence of a division within the ranks of the NGO movement between those of the 'old guard' seeking to maintain the rage and conflict and those more enlightened groups similarly pursuing practical solutions involving trade-offs which, for some of them, may mean sacrificing purist dogma in the interests of achieving real outcomes. So why has business through WBCSD and ICC devoted so many resources to its participation at the World Summit in pursuit of sustainable development? Let me give you my perspective. We live in a different world to that in which we operated
10 years ago. Communities want and demand the economic benefits
of development as well as, but not instead of, quality of life needs,
fair treatment and a safe and clean environment. Society looks for,
and expects, business to be a long-term, net-positive contributor
to economic, social and environmental wellbeing, in effect a net-positive
contributor to sustainable development. Because implementation of sustainable development
is still at an early stage across different countries and cultures,
new ideas and practices abound. Consequently, under the prescript
of sustainable development there is an extensive global dialogue
taking place, through intergovernmental and government bureaucracies.
Herein lie the many traps and pitfalls for business in engaging
in this process, for engage you must or others will represent your
interests for you. Differences in approaches and views exist even within countries, not just between countries or blocks of countries. Here, I include bureaucracies and external stakeholders, such as NGOs and business. Some see sustainable development as nature taking pre-eminence over mankind in the order of spiritual importance. For some, it is to facilitate political agendas in a command economy to re-order society having regard to the collapse of communism. For others, it provides a focal point for protest against society. And for others, it is an expression descriptive of a desire to improve society, from their perspective. This presents corporations with a complex economic and social environment within which to operate, given that there may be little consistency of approaches and attitudes between different locations. International debates and negotiations that take place over sustainable development issues take on final expression through formal international conventions and intergovernmental agreements. The 1992 Climate Change Convention is one example that emanated from the Rio Summit. It must be remembered that conventions have the force of international law to bind the parties to common actions. In the case of the Climate Change Convention, the resulting Kyoto Protocol establishes binding national targets on greenhouse gas emission reductions of developed countries that, in the case of Australia, the Australian Greenhouse Office (AGO) advises would result in massive shifts of wealth. And, it should not be forgotten, the Protocol establishes a central compliance agency empowered, through surveillance, to impose sanctions on any defaulting countries. There exist intellectual, though not necessarily always intelligent, constructs around these agreements to justify the actions proposed under them. Foundation principles, such as the Precautionary Principle and concepts such as 'Sustainable Consumption and Production' have already been established that can drive negotiations towards perverse outcomes for business. For example, interpreted at its extreme, the Precautionary Principle obliges or prevents the taking of any action unless one can prove no harm will be done—how do you prove a negative? Sustainable consumption and production policies can also result in government-decreed reductions in the manufacture and use of materials on the basis that someone somewhere thinks they are not good for us. International actions through conventions and protocols, such as the Kyoto Protocol, should have a strong basis in sound science, and be continually reviewed to ensure the relevant connection between cause, effect and remediation. Many of you know my concern that there is little continuing emphasis on the scientific understanding behind climate change predictions and anyone wanting to question the science is pejoratively referred to as a sceptic. Given the enormity of the social and economic changes needed to reduce greenhouse gasses to affect the so-called climate change impacts, one would expect that such predicted impacts would need to be proved beyond reasonable doubt. But this is not the case. It is relevant to remember here that Dr Graham Pearman, Head of the CSIRO Division of Atmospheric Research, said, I quote: 'The reality of the Protocol as it is at the moment is that even if all of the nations were able to achieve those targets it would hardly make any difference.' (Dr Pearman was referring to CO2 concentrations and their impact on global climate.) The critical issue about the Kyoto Protocol is not in its contribution to climate environmental benefits. Rather the Protocol would bind nation states to taxes and policy powers that could cripple economies. I say this, however, without resiling in any way from our own corporation’s responsibility and commitment to achieve best environmental practices. Business debate about ratification of the Kyoto Protocol has been in the Australian news recently. I don’t wish to fuel this debate any further other than to note that it is healthy that we all should have a full understanding about the implications of ratification. Such a critical national interest issue is properly for governments to decide upon. In this context, I note that the Australian Government has indicated that we will not be ratifying Kyoto because it is not in our national interest to do so. I support this decision. There is currently debate also about whether Australia should increase its population size over time to 50 million. There are good national interest reasons to consider doing so—from growing and developing our economy through to strategic national defence issues. But it must be remembered that Australia is the 'lucky country' because of its endowment of energy and other natural resources. Capping the utilisation of our energy sources under Kyoto, unless we pursue a radical shift away from present technology, potentially limits the growth of our nation—we should debate the impact of these linked issues and not view them separately. International conventions and protocols to address sustainability issues may have lofty and laudable goals but their genesis is no different from those of any other multi-lateral negotiation. Not surprisingly, governments, through their delegations, pursue self-interest. So too do those at the periphery, the so-called stakeholders, such as NGOs and business. Trade-offs are made, advantages for sovereign states are pursued and stakeholders lobby extensively for their respective positions to take prominence. In this context, there is an underlying concern that the European Union and its member countries wish to change the rules of the WTO to include environment protection as a ground for restricting trade and to promote the use of the Precautionary Principle as an executive tool in the management of trade rules. This is a reflection of their own economic insecurity assumed to flow from the reduction of tariff and non-tariff barriers promised at the Uruguay round of trade talks but yet to be fulfilled. The consistent prevention of market access to what is now the largest trading block of countries, namely the European Union, and its lavish subsidies of agricultural exports to the detriment of developing countries, promotes a sound foundation for these views to go forward. As a consequence, to the extent that there are genuine environmental issues that do, indeed, warrant global focus and attention, the loss of necessary integrity, through invoking environmental pre-eminence as a means of pursuing restrictive trade agendas, detracts from the value of the proposition put forward for consideration. In the lesser developed countries, it gives rise to acceptance of a conspiracy theory of interests regarding international environmental issues. Here, I have focused largely at the country level; but companies, too, seek to promote favourable outcomes to negotiations when it comes to pursuing competitive advantage. It is with this in mind that I wish to relate to you a conversation which took place in October 1997 that had a profound impact on me. My interlocutor was the chief executive of a very large resources-based corporation. We had been discussing similar issues but we differed strongly on approaches. Thinking that I had not really understood his position, and desperately trying to get his point across, he spoke forcefully as his finger struck repeatedly on my chest: 'Hugh, don’t you understand? My organisation is run by Greenpeace today, and it is my job to ensure that Greenpeace is running yours tomorrow.' The lesson of the pursuit of self-interest through flawed policy approaches can be a costly one. Do not believe that there must necessarily be a consistent point of view in these matters anywhere—within corporations or between them, between political contestants or between countries. Self-interest pervades across all participants in the international policy arena. So this is the environment within which the critical role of business involvement has to be pursued. Business must engage in this intellectual debate. Others will not necessarily do it for us and we too have something positive to contribute. To not do so risks adverse policy and regulatory consequences. To engage effectively, business must have a fundamental understanding of sustainable development and its constructs. It must be prepared to advance and promote its views but also be flexible and adaptable in its approaches, taking account of changing community attitudes. Business must also match its sustainability performance to those changing expectations; be prepared to defend the good practices we undertake, such as best environmental management, but to also condemn the indefensible. Business reputation, built upon good economic, social and environmental performance, is paramount in the ability to make others see and appreciate your views and perspectives. Finally, the sustainability agenda, to state or remind us of the obvious, is still continuing to evolve. Corporate governance and transparency were identified as a focus for future global action at the Summit, perhaps by way of yet another international convention. Again, business will be under intense scrutiny and possible regulatory control. I am not arguing about the desirability or otherwise for greater government oversight of corporate governance. But I am urging business to be fully involved in this global sustainability debate and not to leave it to some narrower interests of a few countries along with our colleagues in the verification service sector to come up with their own solution, unguided by the practical realities of the real business environment. I am pleased we have the opportunity to share views and ideas on this important topic of sustainable development, co-hosted by the Asia Society AustralAsia Centre, the World Business Council for Sustainable Development and the Business Council of Australia. It is important that we engage all of the leading international and national institutions on an issue that is so complex, having, as it does, a long-term perspective, when, regrettably, we tend to operate in a world of short-term objectives.
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