Sustainable Development and Economic Development: Partners for the Future

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Sustainable Development and Economic
Development Partners for the Future

• Dr. Cynthia P. Schneider
• Lelystad
• October 26, 2001

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Post September 11th

• How to discuss subjects such as sustainable
  development?
• Are there not other more pressing needs?
• What is the relevance of todays topic, the
  symbiotic relationship between sustainable
  development and economic development, to the
  horrendous events of September 11th?

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What is sustainable?

• Americas patriotism and spirit
• Americas faith in democracy, freedom and human
  rights
• Americas alliance with Europe, our essential
  partner
• Americas broad-based, global alliance against
  terrorism

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What Is Not Sustainable

• Terrorist networks with the capacity to commit
  horrendous acts such as the attacks of September
  11th
• The repression of regimes such as the Taliban
  and
• The widening gulf between rich and poor, educated
  and UN-educated

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Widening Gap Between Rich and Poor

• 500 companies control 42 of the worlds wealth
• Turnover of the 10 largest companies exceeds the
  combined GOP of the 100 smallest countries

• Out of the worlds 6 billion people, 4 billion
  live on less than 1500 per year
• 1 billion live on 1.00 per day or less

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Widening Gap Between Rich and Poor

• Shell Oil alone controls 160m hectares of land
  --146 countries in the world cover a smaller area
• Ten companies effectively control worlds food
  chain

• Over two billion children go to bed hungry every
  night
• Over 14 million children suffer eye damage as a
  result of vitamin A deficiency

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Critical Factors for Economic and Societal Growth

• YES
• Education for all
• Democratic systems
• Good governance
• Open markets
• openness to and investment in innovation and new
  technologies

• NO
• Abundant natural resources
• Distinguished history
• Wealthy upper class
• Keeping the trains running on time --totalitarian
  governments

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Examples

• YES
• Singapore
• Taiwan
• South Korea
• Japan
• Silicon Valley

• NO
• Iraq
• Cambodia
• Russia
• Brunei
• Mexico

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Growth in Todays World

• TRUE
• Knowledge creation is the single most important
  factor
• Good, widespread education system is the best raw
  material
• open, democratic system the best environment

• FALSE
• Creating material products, not knowledge,
  succeeds
• Cheap, unlimited supplies of hydrocarbons and
  other non-renewable resources will always be
  available
• Unlimited capacity for earths ecosystems to
  absorb waste and emissions

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Example of Knowledge, not Resource, Created
Economic Growth

• The tulip industry in the Netherlands
• High standards, horticultural knowledge, good
  infrastructure, efficient production and
  transportation, reliability all outweigh factors
  such as land, cheap labor, sun, and warmth that
  other countries have in abundance

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How to Achieve Growth for All?

• Do we not want to share the benefits of
  globalization, and to increase opportunities for
  those who have not partaken of the digital/life
  science/high tech pie?
• For all 6 billion people on earth to live at same
  levels of consumption as Americans would require
  3 planet earths for source material, energy
  creation, and waste disposal.

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Old Growth/New Growth

• Growth and development at all costs
• use of natural resources through exploration,
  colonialism and industrialization

• Growth and development through knowledge building
• triple bottom line
• shareholder value but also corporate
  responsibility

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The Challenge of Sustainable Development

• Chad Halliday, Chairman and CEO of DuPont and
  Chair of the World Business Council for
  Sustainable Development, How do we provide a
  strong return for our shareholders, grow our
  businesses, and meet the human needs of societies
  around the world, while at the same time reducing
  our environmental footprint?

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Old Paradigm/New Paradigm

• The best development is no development
• To protect the environment must stop or slow
  development and consumption
• Protecting the environment is not cost-effective
  for business

• Responsible development linked to knowledge
  building
• And capacity building
• Requires good governance

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New Technologies

• Can preserve environment and re-vitalize economy
• Can empower, sustain, and liberate, rather than
  exclude, erode, and restrain (Carly Fiorina,
  CEO, Hewlett Packard, September 26, 2001)
• Can and should be sensitive and responsive to
  local needs and market conditions
• Can be transferred to the developing world

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Examples Plant Biotechnology

• helps to resolve critical need to reduce land and
  water use by increasing plant productivity
• insect resistant cotton - in US increased 260
  million pounds per year, with 2.7 million pounds
  less of pesticide
• development of new strain of virus resistant
  papaya saved papaya industry in Hawaii
• virus resistant raspberry (Oregon/Washington)
  could save up to 10 million pounds per year, add
  11 million of production value and reduce
  fumigant use by 50

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Biotechnology and Developing World

• Can increase plant tolerance of pests and
  stressful conditions (40 of plant production in
  Asia and Africa lost to pests and pathogens)
• Can reinforce staple food with essential vitamins
• Can eliminate parasites that afflict domestic
  animals, enabling families to achieve sustenance
  (TIGR/ILRI research)

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Biotechnology Issues

• Transfer of knowledge, intellectual property
• Who will pay?
• Who will sacrifice?
• Responsibility of public sector/private sector?
• Who will take responsibility for ensuring
  sustainable development in third world?

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Kofi Annan and the UN Global Compact

• ..lets choose to unite the powers of markets
  with the authority of universal ideals. Let us
  choose to reconcile the creative forces of
  private entrepreneurship with the needs of the
  disadvantaged and the requirements of the next
  generations.. Kofi Annan, UN Secretary General

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But isnt business in the business of business..

• Sustainability NOT a zero sum game in which
  developed world must lower its standard of living
  so that developing world may rise
• Market forces can be used to achieve
  sustainability, not the opposite
• Requires new, creative models, tailored to needs
  of local population

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Yes, but...

• In the long run bringing market forces to bear on
  problems of developing world will create a larger
  customer base
• Will also create knowledge and opportunity
• opportunity to share benefits of our knowledge of
  clean energy, i.e. wind and solar powered energy

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Renewable Energy Sources

• Wind and solar - Siemens Solar GmbH and Shell
  Renewables to cooperate
• Shell Renewables also has RD in hydrogen and
  fuel cells
• AES -- electricity produced through clean coal
  and natural gas. Has brought affordable energy
  to many remote areas of Pakistan, India, and
  China, and changed lives in process.

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Renewable Energy

• Solar Energy --model project Taquile Island, Peru
• Dutch supported
• Island villagers bought 72 solar systems and then
  bought more with their earnings.
• Solar energy systems enabled them to sell more
  goods and to expand tourism because the hotel was
  lit. This, in turn, provided opportunities and
  incentive for the youth to stay on island.

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Sustainability and Corporate Responsibility

• Europe, in general, and the Netherlands, in
  particular, ahead of the US in integrating
  sustainability into corporate vales
• Examples -- Ahold Earth and Values program,
  sustainable coffee, GAP (good agricultural
  practices).
• Novartis Eco-efficiency -- producing more with
  less, benefits shareholders and environment.

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But the U.S. is Catching On

• Companies such as Dupont, Hewlett Packard, AES,
  Chevron, Nike, Sara Lee, and many others
  recognize the imperative as well as long term
  value of sustainability
• Governmental programs such as Energy Star have
  encouraged sustainability in many sectors
• Initial signals from administration were
  misleading

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Climate Change

• In US private sector set higher goals than
  government.
• Shell goal to reduce greenhouse gases from 1990
  by more than 10 in 2002 (Kyoto target 5.2 by
  2008-12).
• Dupont 1)reduce emissions of greenhouse gas by
  45 from 1990-2000
• 2) source 10 total global energy needs from
  renewables 25 from non-depletables.

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Climate Change

• Additional ways attack the problem
• AES -- reduces methane emissions by improving
  livestock feeding and digestion for small scale
  farmers, using technologies readily available in
  US
• Technology transfer of this feed substance to
  developing world
• Methane reduction is critical piece of puzzle
  (has global warming potential of 21 times carbon
  dioxide).

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Can Corporations Effectively Preach Sustainable
Development

• They have the power and influence
• Of the 100 largest economies in the world, 51 are
  corporations
• The Top 200 Corporations combined sales are
  bigger than the combined economies of all
  countries minus the biggest 10
• General Motors, the worlds biggest corporation,
  ranks 23rd in the world economy, ahead of
  Denmark, Poland and Saudi Arabia.

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But Who Has Credibility ?

• NGOs trusted nearly two to one to do what is
  right as compared to governments, media or
  corporations.
• NGOs such as Amnesty International, Greenpeace
  and World Wildlife Fund have more credibility
  than Ford, Microsoft or Nike.
• Of US respondents to November 1999 survey
• 80 view Greenpeace and 78 view Amnesty
  International as highly effective
• only 11 saw governments or companies as making
  the world a better place

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Growing Strength of NGOs

• A 1 trillion big nonprofit sector
• If viewed as a nation, NGOs would rank 8th in
  economic power
• NGOs distribute more aid than the World Bank
• Employ over 7 of U.S. workforce
• Distribute 30 of U.S. aid

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New Paradigm

• of the environmentally responsible and
  technologically advanced, knowledge based
  corporation.
• of making the markets work for sustainability.
• of creating new markets and building capacity in
  the developing world, in partnership with public
  sector.

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Leadership in Flevoland

• Opportunity for model development together with
  sustainability
• Flevoland already exploring innovative means to
  preserve fishing industry in sustainable way
• Center for biotechnology research
• From Urk to Lelystad, potential for economic and
  sustainable growth

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Leadership

• After September 11, we all are Americans
• I Love New York More than Ever T-shirt
• Corporate leaders, now more than ever before,
  have a responsibility to redefine the role of the
  corporation on a world stage and to leverage our
  ability to impact individuals, companies,
  communities, nations-- for the better. (Carly
  Fiorina, CEO HP, September 26, 2001).

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The Sustainable Future

• Dr. Martin Luther King spoke of the need for
  America, the richest and the most powerful
  nation in the world, to lead the way in this
  revolution of values..to shift from a
  thing-oriented society to a person-oriented
  society.
• In the knowledge-based economy, it is our
  obligation to redeem the dream of our Founding
  Fathers and extend it throughout the globe.
• Only when there is opportunity for each person to
  live up to his or her potential will we have a
  global sustainable future.