Welcome Address by Achim
Steiner, UN Under-Secretary General and
UNEP Executive Director, at the Opening
Plenary of the B4E
Singapore, 19 April 2007 - I welcome you
to this Global Business Summit for the Environment,
a first business summit of this nature co-presented
by UNEP and the UN Global Compact in Asia.
Let me also thank the Government of Singapore
for hosting us and Sound Initiatives for
its role in the organization.
It is our hope that you as senior business
executives will be able to use the debates
of the next two days to find new inspiration
in advancing corporate environmental and
social responsibility (CESR) though your
operations in Asia and beyond.
UNEP has been active through its own networks
and the UN Global Compact in advancing new
ways of doing business--doing business in
a manner that displays better and more intelligent
ways of managing the environment and society
and building the business case for sustainable
development.
This is a business model based on performance
goals such as resource productivity and
driven by life cycle management approaches
that move beyond re-active, end-of-pipe
technologies.
It is a model seeking to add value by addressing
environmental challenges as an opportunity--
using a triple bottom line approach-- as
opposed to those who continue to operate
on risk averse approaches that consider
only short term financial results.
It is a model that reflects the challenges
of our times where many of the wealth creating
and poverty-alleviating nature-based resources
- known as ecosystem services and ranging
from forests to wetlands, soils and the
atmosphere -are under pressure as never
before.
Where - to cite just one example - scientists
estimate that without action a once plentiful,
renewable and economically significant resource
like the world's commercial fisheries may
have disappeared in less than five decades
as a result of poor management including
simplistic one-dimensional subsidies.
What in UNEP's view is the environmentally
responsible company? It is the company that
takes steps such as the following:
- Re-define company vision, policies and
strategies to include the 'triple bottom
line' of sustainable development.
- Develop sustainability targets and indicators
(economic, environmental, social).
- Establish a sustainable production and
consumption programme with clear performance
objectives to take the organisation beyond
compliance in the long-term.
- Work with suppliers to improve environmental
performance, extending responsibility up
the product chain and down the supply chain.
- Adopt voluntary charters, codes of conduct
or practice internally as well as through
sectoral and international initiatives to
confirm acceptable behaviour and performance.
- Measure, track and communicate progress
in incorporating sustainability principles
into business practices, including reporting
against indicators as found in the Global
Reporting Initiative (GRI) Guidelines.
- Ensure transparency and unbiased dialogue
with stakeholders.
Our world today is an interconnected, Wikipedia
world of activist consumers and one that
is - in the words of Thomas Friedman - "flat".
As competitive playing fields between industrial
and emerging market countries are leveling,
new questions are being asked about the
standards of performance enforced through
global supply chains.
Take the current hot topic of biofuels.
Hailed by some as a way of reducing fossil
fuel emissions from petrol and diesel cars
while also offering an opportunity to diversify
rural livehoods and incomes.
Yet voices of concern are now also being
raised amid worries that biofuels may lead
to wide-scale destruction of tropical forests
as companies clear woodlands for sugar cane
and palm or other oil bearing crops.
Consumers, currently wooed by the environmental
benefits may soon turn against biofuels
as a result of the damage to ecosystems-damage
in reality or pecieved damage, it makes
little difference.
Norms and standards are needed and perhaps
market instruments and certification that
ensure biofuels meet sustainability criteria
that satisfy the demands of consumers -
the group that in a very real sense gives
companies their "license to operate".
UNEP has been approached by concerned energy
companies seeking a sustainability solution
to the dilema of biofuels. They fear that
a backlash could undermine multi billion
dollar investments in this field.
We are working through the G8 and other
fora to try and devise a fair, equitable
and sustainable biofuels industry.
It encapsulates a debate that increasingly
focuses on "applied" corporate
social responsibility. Like with the fledgling
biofuels industry, UNEP is ready to work
with companies willing to partner and build
the capacities of their suppliers and manufacturers
in global supply chains.
Indeed we have partnerships and initiatives
with many sectors from construction and
mining through to the IT and telecommunications
industries and tourism.
The development of a new international
guidance standard on social responsibility
(SR) under the International Organisation
for Standardisation (ISO) is reminding us
of the
challenges faced in promoting basic norms
among companies of all sizes in all regions
of the world.
Fundamentally still, whether it is a large
national company or a small multinational
-everything is possible in the new economy
today - companies are being asked to support
shared values for the global market.
When he launched the Global Compact over
seven years ago, the UN Secretary-General
spoke of "corporate citizenship"
and reminded us that the corporation, like
any citizen, has both rights and duties.
Consider other challenges business faces
today, for example: Expanding population
in developing regions is creating large
markets dominated by the young. In the next
20 years population will shrink or barely
grow in the high-income countries, and most
of the world's citizens will be born in
low- and mid-income economies.
Some businesses have started to employ
the "fortune at the bottom of the pyramid"
model to adapt their products and services
to local needs and capacities in poor communities.
They are aware that rising consumption creates
environmental risks and business opportunities
for innovation. The world population is
poised to expand 50% by 2050 and with it
will come an extraordinary growth in consumption.
Over the past decades, consumption has
radically evolved in terms of volumes and
quality - partly as a result of demographics
but mainly as a result of dramatic changes
in consumption patterns now sweeping developed
and many developing world markets.
In its 2006 State of the World Report,
the Worldwatch Institute concluded: "China
and India hold world in balance". Some
of the data reported are:
- In 2005, China alone used 26 percent
of the world's steel, 32 percent of the
rice, and 47 percent of the cement. Though
their per-capita resource consumption is
still low, with their huge populations China
and India are joining the United States
and Europe as ecological superpowers with
major demands on the world's ecosystems.
- China has only 8 percent of the world's
fresh water to meet the needs of 22 percent
of the world's people. In India, urban water
demand is expected to double - and industrial
demand to triple - by 2025.
- India's use of oil has doubled since
1992, while China went from near self-sufficiency
in the mid-11000s to the world's second
largest oil importer in 2004.
- China and India have the only large coal-dominated
energy systems in the world today - coal
provides more than two-thirds of China's
energy and half of India's. Both countries
are therefore central to future efforts
to slow global climate change.
The reorganization and globalization of
supply chains has disconnected consumers
from the labour force, creating various
social and economic side effects both in
developed and developing countries.
High impact sectors such as oil and gas
have observed over recent years how emerging
corporate citizenship issues have moved
beyond traditional hot topics such as oil
spills and CO2 emissions to bigger picture
questions such as socio-economic impacts
and revenue sharing.
In the construction sector, transnational
companies have been drawn into local governance
issues when new infrastructure stimulates
economic development and population growth.
Mining companies have dealt with HIV/Aids,
introduced high quality health care for
employees and encountered complicated relationships
with the rest of society and local authorities.
These examples show you that new business
models also require new ways of co-operation
between business and society.
Thinking of B4E, CESR and linking macro
level trends with business action at the
micro level: what is expected of individual
companies? I remind you of the suggested
actions for environmental responsibility
that I listed a few minutes ago. This is
where it starts. Every day we see closer
links between the financial materiality
of sustainability issues such as climate
change, and the fiduciary duties of those
responsible for our companies, capital markets
and critical societal investment vehicles.
Here is a clear message for many business
and industry sectors, particularly energy
intensive ones with a heavy carbon footprint.
Not adopting and adapting to a sustainability
approach will increasingly be judged by
the markets as ignoring issues which are
financially material and -in doing so -
not fulfilling the basic requirements of
responsible management.
This is clear from discussions under the
UN Global Compact, UNEP Finance Initiative
and their jointly launched Principles for
Responsible Investment (PRI) initiative.
The principles make explicit that environmental,
social and governance issues, have an effect
on the long-term performance of companies.
The PRI has as an overall goal the aim
to help integrate consideration of ESG issues
by institutional investors into investment
decision-making and ownership practices,
and thereby improve long-term returns to
beneficiaries.
Companies from emerging markets such as
India are learning quickly, and taking up
the business case approach to CESR as opposed
to the traditional approach of philanthropy
and community development. And the question
today is not only the practices of OECD-based
multinationals in the Asia Pacific. There
is growing interest is the investment and
activities by for example companies from
India and China in other parts of the world.
Corporate takeovers by Indian multinationals
reached new heights in 2006. The high-profile
Tata acquisition of Anglo-Dutch steel giant
Corus was an early sign of things to come.
The challenge for foreign companies entering
new markets would be to show sensitivity
for local needs whilst applying international
norms and standards such as those promoted
under the UN system.
Thinking in terms of drivers for change,
business needs to be driven by not only
risks but also opportunities in taking on
global environmental challenges.
Twenty years ago it was concluded in "Our
Common Future" by the Brundtland Commission:
"Looking to the future, a growing market
for pollution control systems, equipment,
and services is expected in practically
all industrialised countries, including
NICs (Newly Industrialised Countries)- today
we would say "emerging market economies"
and "industrialising countries".
Climate change represents the ultimate
and perhaps over-arching challenge for CSR
and is central in 2007. It is also now a
major driving force towards that technological
vision espoused 20 years ago.
The Intergovernmental Panel on Climate
Change (IPCC) - co-founded in 1987 by UNEP
and the World Meteorological Organization
- is issuing its latest cycle of reports.
In February its Working Group I put a full
stop behind the debate about whether humans
are altering the climate. The 2,000 plus
experts were "unequivocal" in
concluding this.
Working Group II, whose findings were launched
this month, present alarming findings on
the likely impact of unbridled increases
in greenhouse gases.
These findings, plus a new assessment issued
yesterday by US military experts, are largely
driving the debate this week in the UN Security
Council on climate change.
In Bangkok, in May, the IPCC will publish
its third report this year?essentially on
?what the devil do we do? and the opportunities
for mitigation.
Business should have a direct interest
in these issues. Instability and unpredictability
is, unless you are of course a George Soros
(a speculator), factors that are of the
highest concern to companies and markets.
Thus every person in and outside this room
should have a direct interest in insisting
that governments-- meeting in Bali, Indonesia
later in the year for the annual UN climate
convention negotiations?make real and tangible
progress towards a post 2012 emission reductions
agreement.
There are other reasons for business and
industry to be at the table and to take
active engagement.
Climate change also represents one of the
greatest investment, business and job creation
opportunities of this generation as a result
of newly emerging and new kinds of markets
from carbon trading to renewable and cleaner
energy generation and energy efficiency.
The Clean Development Mechanism of the
Kyoto Protocol could soon trigger flows
of finance from the North to the South of
$100 billon into renewables, fuel switching
and forestry projects.
I was struck by a new assessment by Roland
Berger, a leading European consultancy who
only a few days ago estimated that jobs
in the renewable energy sector in Germany
will, by 2020, out strip those in the car
industry.
And it is not just developed countries.
Long Yuan in China is among the top wind
power operators in the world now and Suzlon
in India ranked in the top five - if not
higher -in terms of a wind power manufacturer.
Climate change has other potentially far
reaching implications for business. It may,
if we can move over 190 nations to a fair
and equitable regime, be the trigger for
a new global understanding between nations.
By addressing the mutual concerns of the
North and the South, it can thus build confidence
between the developed, developing and rapidly
developing economies.
Confidence and trust that could spill over
into resolving other tricky and environmentally,
economically and socially-important negotiations
including the question of access and benefit
sharing of genetic resources.
And the stalled Doha round of the World
Trade Organization (WTO).
Once again, thank you for inviting me to
address the opening of B4E.
