Rio revisited

Much has been achieved since the 1992 Earth Summit, but as world leaders gather again to address sustainable development, the task before them looks just as onerous.

It is 20 years since the Earth Summit in Rio de Janeiro introduced the concept of  sustainable development to a wider audience. The definitive description of sustainable development is widely attributed to Our Common Future, a report published by the World Commission on Environment and Development five years earlier, which said: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

The original Earth Summit built on this philosophy and set an agenda for the last two decades in a way that is not often recognised. The meeting was attended by 108 world leaders and produced the United Nations Framework Convention on Climate Change, (UNFCCC) which led to the Kyoto Protocol and was followed by Europe’s Emissions Trading Scheme, the world’s first carbon market. In the 20 years since, great leaps have been achieved in the shift to sustainable development, but notable failures have at times threatened to derail the momentum.

The United Nations (UN) stressed that sustainable development is a fluid concept but said that “a few common principles tend to be emphasised”. The first is a commitment to equity and fairness, so that priority is given to improving the conditions of the world’s poorest and decisions should account for the rights of future generations. The second is a long-term view that emphasises the precautionary principle, i.e. “where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”. Third, sustainable development embodies integration, and understanding and acting on the complex interconnections between the environment, economy and society.

The “failures” of the sustainability agenda – rows at international climate conferences between developed and developing countries, disputes over feed-in tariffs for renewable energy and the threat of a trade war over European plans to include aviation in its carbon market, for example – are high profile and threaten to overshadow many of the achievements that have been made since 1992. The trillionth dollar of investment in clean energy was invested in 2011, according to Bloomberg New Energy Finance, and renewable energy companies such as Vestas, the Danish wind turbine manufacturer, and Suntech, China’s solar power behemoth, said at this year’s World Economic Forum that these technologies will be competitive with fossil fuels without subsidies as early as 2015.

Meanwhile, China is establishing pilot carbon trading schemes as a prelude to a national scheme and Brazil has managed to drastically slow the rate of deforestation in the Amazon rainforest – all of these things owe a debt to events in Rio two decades ago.

“The progress that has been achieved has been quite dispersed but sustainability is on the agenda worldwide for business and government,” said Dr Richard Tipper, managing director of Ecometrica, a climate change consultancy, and lead author of two reports on land use for the UN’s Intergovernmental Panel on Climate Change (IPCC). “It is part of so many things now – almost every new initiative now has a green spin on it, from fuel tax to waste collection.”

Nonetheless, many problems remain – science suggests that at current rates of emission of greenhouse gases, we are on course for a 3.5°C average temperature rise rather than the 2°C we are aiming for, the world’s population has just passed 7bn and is en route to 9bn and resource constraints are becoming increasingly evident.

There is unfinished business and that is why, in June, business and (hopefully) political leaders will convene once more in Rio for the Rio+20 summit. According to the UN, the conference will focus on two themes: a green economy – in the context of sustainable development and poverty eradication, and the institutional framework.

Connie Hedegaard, the European Union’s climate chief, said that the summit needed to change the current model of economic growth. “The 21st century must have a more intelligent growth model, or else it’s really difficult to see how we feed 7bn people now and 9bn people [by 2050],” she said in an interview with the UK’s Guardian newspaper.

“The world’s leaders must use the Rio+20 summit in June to bring sustainable development to the heart of the global economic agenda,” she added. “This is where it belongs rather than in the environment silo isolated from the key economic decisions. Only then can we bring the actions to the scale we need with the speed we need.”

One way forward has been suggested by the UK, which says it will urge businesses and governments at the summit to incorporate natural capital into their measures of economic activity, an idea it calls GDP+. Environment secretary Caroline Spelman said: “We are committed to achieving growth, but this should not come at the cost of the natural resources we take for granted, or at the cost of wellbeing. We want to see countries acknowledging the true value of nature to our economy, by reflecting its worth in their accounts. The UK is a world leader in this field, and I will be making the case for all nations to match our progress.”

The key challenge remains disconnecting economic growth – essential for lifting millions out of poverty – from fossil fuel use, said Damian Ryan, head of policy at the Climate Group. “We need to ask questions about how to double the rate of energy efficiency each year, double the rate of renewables deployment and increase the output of existing energy generation technologies.”

However, as Yvo de Boer, the former executive secretary of the UNFCCC and now KPMG’s special global advisor on climate change and sustainability, explained, it is far more complicated than that. A KPMG report, Business Perspective on Sustainable Growth: Preparing for Rio+20, suggests that it is very much in business’s interests to do so – it identifies 10 interlinked “megaforces” that could significantly affect companies in the future: climate change, energy supply volatility, material resource scarcity, ecosystem decline, deforestation, food security, water scarcity, growing populations, wage inflation and urbanisation.

“Today’s leaders are struggling with complexity,” he said. “Until now, we found global trends on energy, water security and food scarcity complex enough. The convergence of other forces such as population growth, deforestation and a surging middle class is impacting business and the world around us. Leaders are overwhelmed by the sheer scale of these problems and struggling to act.”

One of the key themes of June’s gathering is likely to be the importance of business in building a more sustainable world. “There are ways to solve these problems, and that includes harnessing the capacity of business,” de Boer said. “Business affects the state of the world, and the state of the world is now affecting business,” de Boer said at a pre-Rio+20 summit. Many businesses are already leading the way, but “even active leaders with sustainable business practices will run into problems if the policy framework does not create the right investment conditions”.

The summit called on policymakers to:

• Provide long-term, stable and transparent policy frameworks and incentives to scale up investment in sustainable development.

• Provide strong price signals on resource scarcity and environmental impact in order to drive investment in sustainable growth.

• Deliver new platforms for publicprivate collaboration at the international and national levels.

However, at the same meeting, Georg Kell, executive director of the UN Global Compact, pointed out that “most companies are not doing enough, and many are not doing anything to address pressing challenges”. The meeting also called on companies to reduce their focus on short-term performance in favour of longer-term sustainable growth and to adopt stretching sustainability targets – for example to reduce water, energy and material use – in order to drive innovation.

For business to do this, investors will have to play a key role, argued Nick Robins, head of the Climate Change Centre of Excellence at HSBC. Central to the success of the summit is “whether Rio can convince investors that aligning asset allocation with the green economy will provide superior risk-adjusted returns to ‘business as usual’,” he wrote in a report for the bank. “Investors need clear short, medium and long-term sustainable development targets, which have political clout and are embedded in core macroeconomic and sector policies.”

HSBC calls for “green economy roadmaps by global industry sectors, which if done seriously could provide a starting point for long-term investor engagement and benchmarking” and also the establishment of a 10-year framework on sustainable consumption.

Another tool to help align the interests of companies, investors and society has been proposed by the Corporate Sustainability Reporting Coalition, which wants a mandatory framework to make companies incorporate information about environmental, social and governance issues into their annual reports. “Integrated reporting improves the dynamic within businesses because it encourages different departments to talk to each other. We hope member states will realise there are market inefficiencies that can be corrected by disclosure of these issues,” said Steve Waygood, head of sustainability research and engagement at UK investor Aviva. “We hope they will agree to develop a convention that requires companies to produce integrated reports.”

One participant at the original Earth Summit, who will be heading back to Rio in June, is James Cameron, now vice-chairman of investment bank Climate Change Capital but at the time a lawyer who helped to draft many of the original documents. He is cautious about the prospects for success of Rio+20. “Progress since 1992 has not lived up to expectations,” he said. However, he says that the greater availability of information will make it easier for people to know what is going on and to hold governments and businesses to account.

As Ryan of the Climate Group said, by 2050 the world needs to have cut emissions by two thirds. This is a huge economic opportunity for businesses and governments willing to invest in energy and resource efficiency and new low-carbon technologies. Such investment will protect livelihoods, create jobs and support global economic growth.”

Yet Ecometrica’s Tippett suggests that “it is difficult to see Rio+20 being a watershed moment. It is difficult to say what it will achieve. The big issues are already known but, apart from climate change, the targets we are trying to meet to deal with them are very undefined.” World leaders have their minds on dealing with economic and political problems so the summit is unlikely to bring new impetus to the idea of sustainable development, he adds. “It is only when something big happens that the political focus will return to it.” This could be another natural disaster or perhaps the publication of the next IPCC report in 2014, which is likely to firm up the science of climate change and make even clearer the scale of the challenge the world faces.