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Australia in the Context
of a Sustainable Asia: It is a great pleasure to be back in Australia and participate in this forum. The World Business Council for Sustainable Development's (WBCSD) cooperation with the Business Council of Australia (BCA) started in 1998, when the first WBCSD-BCA forum was organised. The objective for this cooperation was to create a forum for information and constructive dialogue between Australian and international players on sustainable development. I believe this objective has been well achieved. This year, for the first time, the Asia Society joined this partnership and played a very active and central role in bringing today’s conference to life. Warm thanks to Prue Holstein, in particular. I have been invited to provide you with a global perspective on business and sustainable development, and in particular how this linkage is likely to evolve in the era post the Johannesburg 2002 World Summit on Sustainable Development. World Business Council
for Sustainable Development Our member companies are drawn from 35 countries and more than 20 major industrial sectors and are represented in the council by their CEOs or equivalent. Four of our members are Australian: WMC, represented by Hugh Morgan; BHP Billiton, represented by Brian Gilbertson; Amcor, represented by Russell Jones; and, Western Power, represented by David Eiszele. We also benefit from a regional network of 40 national and regional business councils and partner organizations, representing over 1000 local members, mainly in developing countries. Our network has a strong presence in Asia, with Business Councils for Sustainable Development (BCSD) in Korea, Taiwan, Thailand, the Philippines and Malaysia. Our outreach efforts in that part of the globe will shortly be rewarded by a BCSD in China and one in Indonesia. Also, we have strengthened our links with the business community in Japan, through the newly formed Japan Business Federation. Our mission is to provide business leadership as a catalyst for change toward sustainable development and to promote eco-efficiency, innovation and corporate social responsibility (www.wbcsd.org). The evolution of sustainable
development The decade, from Stockholm to Johannesburg, has been focused on norms and principles for sustainable development. Johannesburg marks the start of a new phase with an emphasis on implementation of sustainable development. The World Summit on
Sustainable Development 's Plan of Implementation for Agenda 21 Business at WSSD Our ‘Business Day’, organized on 1 September, brought together business, government, NGO and civil society together under one roof to discuss the business case for sustainable development. UN Secretary-General Kofi Annan delivered his speech to a full house, preceded by premiers from Canada and Denmark. Over 900 participants and media people turned up, including some 50 CEOs. WBCSD and WSSD Through our publications leading up to Johannesburg,
we wanted to bring forward some key messages: Two sustainable development
agendas The first is a Public Policy Agenda driven by forces outside of business. This agenda is dealing with the framework conditions and policies that are set by society for business. Let me underline that this agenda is not something companies can choose to deal with. It is coming our way whether we like it or not. The second, the Business Agenda, focuses on the Business Case for Sustainable Development. It has to do with how you manage change toward sustainable development. Key issues of the Public Policy Agenda include the
following topics: Before I comment on these issues, let me touch upon some of the difficulties underlying the public policy agenda. Many goals by the international
community As part of the United Nations’ Millennium Assessment, its 189 member states agreed to a set of goals by year 2015. These goals cover many areas, including poverty alleviation; for example, reducing by half the number of people living on less than a dollar a day and those without access to safe drinking water or reducing by two-thirds the mortality rate of children under five years old. They also cover educational and gender issues. The 1992 Rio Declaration set the goal of 0.7 per cent of GDP for ODA (Official Development Assistance). The Kyoto Protocol has the target of, by 2012, reducing greenhouse gas emissions to approximately 5 per cent below 1990 levels. The difficulty with these goals is that they are political compromises. They are more or less binding and more or less supported by individual countries. They are also often challenged because of scientific uncertainty or unclear analytical underpinning. Not one agenda but
many Given what I have said, it is not strange that it is difficult for governments to come to concrete agreements at international Summits like in Johannesburg. The Public Policy Agenda From 1992 to 2002, the balance between the key elements of society has shifted. We have moved from a bipolar world made up of governments and NGOs to a tripartite world of governments, business and civil society working in partnership to find solutions to sustainable development issues. Johannesburg clearly brought partnerships to the forefront. The way forward will be characterised by partnerships between governments, business and civil society. At the same time, the roles between the partners are changing. The dominance of governments has diminished, while the influence of business has grown and civil society has matured. For business, the consequences of these changes lead
to more expectations—companies are seen as key solution providers.
The growing interaction between governments, business and civil
society is being strongly felt in global institutions and conferences.
But how do you take decisions via multistakeholder dialogues on
issues that require difficult political tradeoffs? There is a need
to define who the stakeholders are in the first place. Poverty eradication Sustainable production and consumption Sustainable consumption is a much more difficult issue for business to tackle. Business is not necessarily good at reducing consumption, and changing consumption patterns is a slow and long-term process. A key question is: who should decide what you and I can consume? And what measures are governments prepared and willing to use to change consumption patterns? Taxes? Bans on products? Health of ecosystems Energy and climate change How will we meet future energy demand? All forms of energy, existing and emerging, must be mobilised to meet the projected growth in demand throughout the coming century. However, it is unclear how far and how fast some of these can play a significant role. Hydro-electric energy can probably only add a small part as new developments are often met with opposition due to environmental and social concerns. Nuclear energy, for the time being, also lacks acceptance from the public. On the fossil fuel side, natural gas can be a bridge from the present domination of oil and coal to a more differentiated energy infrastructure. Other forms of energy with a low climate impact are solar, wind, geothermal, tidal, wave and biofuel. Some of these have good potential for the long term, but it is difficult to envision that they will be adding significant new generation capacity in the medium term of the next 20–25 years. There is one fact in the climate debate that all seem to agree upon: namely, the carbon concentration in the atmosphere is increasing, and that at some stage, this will lead to climate consequences. As someone said: 'What cannot go on forever will eventually come to an end'. We have entered a new era, a carbon-constrained world. This means that emission of carbon into the atmosphere will no longer be free but will carry a cost. And this will happen irrespective of the Kyoto Protocol. We from business will need to minimise this cost, as we do with all the other costs we incur. Another key question concerns the political framework needed to address climate change. There is much present uncertainty which will inevitably slow down business actions to mitigate greenhouse gas emissions. Egil Myklebust, Chairman of Norsk Hydro, put it well when he addressed a Ministerial luncheon at one of the Conferences of the Parties: 'You are not waiting for us—we are waiting for you'. The Kyoto Protocol is another case in point. Ratification of the Protocol depends on Russia; but, it now seems, they will not take a decision before the last quarter of 2003. Depending on Russia’s decision, it could lead to a divided world: a Kyoto part and a non-Kyoto part. Or we could end up with a non-Kyoto world after six years of global negotiations. What will be the consequences of this for global corporations? Society wants energy in a way that is encapsulated in the three As: Access to energy, at Affordable prices, with an Acceptable impact. Business, in addition, wants a fourth A: Adequate returns on its investments. How do we balance these demands? To solve this, the debate needs to be based more on facts and less on emotions. The role of innovation and technology An important aspect of Innovation and Technology is Intellectual Property Rights (IPRs). These are crucial for risk-taking investments in new technologies and products. Inventors must know they have a legal right to income streams from their inventions if they are going to invest. At the same time, how do we make technologies available to developing countries at a cost they can afford? As a main agent of innovation and a user of technologies, business must remain active in this debate and respond in ways that gain the support of society. We have had a tendency to argue our case too much in scientific and technical terms—and not explaining sufficiently the benefits to society. Besides, there is the question of who is trusted when deciding on the risks and benefits of new technologies. There has been a growing distrust of science. So you cannot take for granted that using your scientists to bring forward your messages will be successful. It’s time to say, ‘Exit men in white coats.' Accountability and reporting These growing demands are creating a number of dilemmas for corporations. How do we strike a balance between what stakeholders find interesting to know, what they have the right to know, and what can be put to meaningful use in companies? This also needs to be weighted against the cost of reporting, which can be quite significant. Let me point out some other dilemmas. We, ourselves in business, have created the first by talking about 'The Triple Bottom Line' and giving the impression that there are three equal bottom lines. This is, of course, not correct. A financial loss can never be offset by a top score on social performance. The concept of stakeholders presents another dilemma. All stakeholders are not equal. Some of the more direct shareholders—like employees, suppliers and local communities around business facilities—all have a right to information and a strong voice in the company. Then there are a number of more indirect stakeholders, whose influence on a company has much less justification. A further dilemma concerns integrating management and reporting processes. Information, in itself, will not lead to change. It needs to be connected to a management system. Risk Business assets Physical assets, like land and manufacturing facilities, only make up a part of the market capitalisation of a corporation. The value of a corporation is highly influenced by intangible assets, like reputation, brand, and the ability to interact and work in partnership with stakeholders. The value of these intangible assets is dependent on your ability to address the Public Policy Agenda that I have just reviewed. The business agenda
for sustainable development Eco-efficiency Eco-efficiency and resource efficiency A similar message comes from Professor Michael Porter at Harvard University. He states that the competitiveness of a country comes from the productivity by which it utilises its resources in the form of natural resources, capital and labour. According to Porter, a key driver for resource productivity is stringent environmental standards: 'Any developing country with low environmental standards is doomed to poverty'. Eco-efficiency has also become a policy concept. Both the OECD and the European Union have started to use eco-efficiency. Together with the EU Commission, we have led a project, the ‘European Eco- Efficiency Initiative’, aimed at increasing the use of this concept, both in Western Europe and in the accession countries in Central and Eastern Europe. The business case for
sustainable development Too big to handle on
your own These projects made a key contribution to the World Summit. This is because they demonstrated that business understands the sustainable development challenges and is committed to changing and working in an open, objective and action-oriented way. Mining, Minerals and
Sustainable Development (MMSD) The analytical research work was carried out by the IIED (International Institute for Environment and Development) in London. It was advised by an assurance group of 24 stakeholder representatives. Tricia Caswell from Australia was one of them. I would like to stress that although the study was funded primarily by members of the industry, we also had substantial funding from other sources. In particular, we received important support, both financially and otherwise, from the Australian Government. This blend of funding is key for the credibility of the project’s conclusions. Also, the project’s stakeholder outreach has been extraordinary, with some 5000 stakeholders being consulted, primarily in different regional outreach activities, some of which are producing special regional reports. A final report, entitled Breaking New Ground, was released in May 2002. The findings of this research were also extensively featured at the subsequent global mining conference in Toronto. A unique aspect of this project is that, before being released, the final draft report was posted online for public comments. One of the four regional reports released is an Australian report called Facing the Future. It draws on the outcomes of the MMSD Australia research program, discussion at MMSD Australia stakeholder conferences in 2001, and some of the broader themes emerging from the MMSD’s global activities. The challenge, in the next phase, for the mining and minerals industry is to implement actions that address the conclusions from the analytical work. Going forward However, the key challenge for business in contributing to a sustainable future will, I believe, not be how we manage our own corporations. Instead, the key challenge will be the expectations on us to play a larger role in society. Business cannot and should not replace governments. But how do we perform our role as providers of goods and services in non-functioning societies? As we expressed it in our report Sustainability through the Market: 'Business cannot succeed in a society that fails.' |
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