Sustainable Business in Sustainable Development

Sustainable Development How do you solve an oxymoron?

A Global Development Dilemma: Two Vicious Circles PovertyAffluence Environmental degradation Resource imports, pollution exports

How does poverty cause environmental damage? l Agriculture: need to survive causes overuse of land (grazing, intensive agriculture, fertilizer, fuel wood, logging) leading to deforestation, topsoil erosion, water contamination Worsened by: l population pressures; l lack of control over local resources and poor governance; l Inability to invest in environment l Industry: inefficient, dirty industry locates where wages and influence over environment are low, causing pollution of air, land, and water l Cost-based competition l Labour intensive l Low capacity to invest in environment

How does affluence cause environmental damage? l High productivity levels cause greater throughput of materials and energy per person l Higher income levels enable greater consumption of energy and materials l Greater throughput of energy and materials means more land used for agriculture (more pesticides, fertilizers, erosion), more wood and mineral resources used, more energy extracted and used, etc. l Urbanization has disconnected producers and consumers relieving them of the influence of environmental degradation on their lives.

Connections l Trade in resources, pollution and waste l Exploitation of global commons for resources and waste disposal l Impact of local actions on global health

Two Paths to Sustainable Development Poverty Affluence Environmental degradation Resource imports, pollution exports Welfare Improvement: Basic needs (food, shelter, edu.) Productive employment Control over resources Population control Energy Environmental Remediation: Production Consumption Fulfilling employment/leisure Responsibility and participation Energy LivelihoodLifestyle Cooperation on Global Governance

From Ad Hoc Responses to the Environmental Crisis… Social Demands Disasters, Cumulative Poisoning, Habitat Destruction etc. Scientists, Environmentalists, and Community Protesters Political Responses Government Regulations, Penalties, and Administration International Conferences and Agreements

…to an (Ambiguous) Consensus on Sustainable Development "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. ” (WCED)

The short definition was qualified by its originators in the following manner: “It (sustainable development) contains within it two key concepts: l the concepts of needs, in particular the essential needs off the world's poor, to which overriding priority should be given; and l the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs.” (WECD, 1987, 43)

History of Sustainable Development l Stockholm 1972: UN Conference on the Human Environment l Report of the World Commission on the Environment and Development: “Our Common Future” l Rio 1992: UN Conference on Environment and Development: Agenda 21 l Johannesburg 2002: 2nd World Summit on Sustainable Development

Far-Reaching Ethical, Political and Economic Implications l Raised the environmental issue to a high level; l Recognizing the issue of intra-generation and inter-generation equity; l While, still allowing for growth and development; l And bound all countries to a global effort.

National Strategies  revive growth, but change the quality of growth;  meet essential needs for jobs, food, energy, water, and sanitation;  ensure a sustainable level of population;  conserve and enhance the resource base;  reorient technology and manage risk;  merge environment and economics in decision making; Global Strategies  enhance the flow of capital to developing countries;  link trade, environment, and development by improving the terms of trade;  increase the diffusion of environmentally sound technologies and their funding to developing countries.

Controversy and Acceptance Weak vs. Strong sustainability Human-centered (anthropocentric) vs. Nature- centered (ecocentric) perspective Laissez-faire vs. Distributive Justice Social vs. Scientific Definition Private vs. public vs. common property views

Who does sustainable development? l The UN and its agencies l Dozens of environmental conventions and programs(UNDP) l National, state, local governments, communities l 110 national, over 6000 local Agenda 21s l Non-governmental organizations l Thousands involved l Companies l Corporate social responsibility/sustainability programs; ethical investing l Consumers l Green consumer movements, fair trade

HK’s Sustainable Development Sustainable development in Hong Kong balances social, economic and environmental needs, both for present and future generations, simultaneously achieving a vibrant economy, social progress and better environmental quality, locally, nationally and internationally, through the efforts of the community and the Government.

Sustainable Development: as a balance Environment EconomySociety

Sustainable Development as Integration Industrial Ecology Technology Politics Society Environment Industrial Ecology Industrial Ecology Economy  Business  Environmental Management

Accepted Principles public trust doctrine precautionary principle inter-generational equity intra-generational equity subsidiarity principle polluter pays principle (PPP) user pays principle (UPP)

The public trust doctrine means that governments must act to prevent environmental damage whenever a threat exists, whether it is covered by a specific law or not.

The precautionary principle holds that 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.

The principle of inter-generational equity is at the heart of the definition of sustainable development. It requires that the needs of the present are met without compromising the ability of future generations to meet their own needs.

The principle of intra-generational equity requires that people within the present generation have the right to benefit equally from the exploitation of resources and that they have an equal right to a clean and healthy environment.

The subsidiarity principle requires that decisions should be made by the communities affected or on their behalf, by the authorities closest to them.

The user pays principle (UPP) applies the PPP more broadly so that the cost of a resource to a user includes all the environmental costs associated with its extraction, transformation and use (including the costs of alternative or future uses foregone).

The polluter pays principle (PPP) suggests that the polluter should internalize all the environmental costs of their activities so that these are fully reflected in the costs of the goods and services they provide.

Polluter-pays is key to a clean environment, says Liao l She hopes people will accept the approach as the backbone for environmental protection. l Dr Liao said the construction-waste charging scheme was a "golden test" of the principle and she would do everything necessary to lobby support for it. She said the scheme was fair because it held waste-producers, not the transporter, liable for failing to pay. l Dr Liao also called for an expanded producer responsibility programme, such as packaging laws for electrical manufacturers - it is currently free to dump a television set in a landfill - with costs passed on to consumers in the form of higher product costs.

What does sustainable development mean to business? Continued regulatory pressure and a shifting of the ‘business environment’ l Governance l Growth l Economic role l Technology l Local interaction l Consumption

Sustainable Business

How has business reacted to environmental demands? l Denial and Cover-up l Environmental Management l Strategy

Denial and Cover-up  Costs  Priorities  Liability Exposure  Ignorance

Environmental Management  ‘End-of-pipe’ technologies  ‘Reaping low-hanging fruit’  Establishment of Environment, health and safety departments (EHS)  Environmental Management Systems

Strategy Pollution Prevention Product Stewardship Clean Technologies Sustainability Vision

International Chamber of Commerce (ICC) Business Charter for Sustainable Development 1. Corporate Priority 2. Integrated Management 3. Process of Improvement 4. Employee Education 5. Prior Assessment 6. Products or services 7. Customer Advice 8. Facilities and Operations 9. Research 10. Precautionary Approach 11. Contractors and Suppliers 12. Emergency Preparedness 13. Transfer of Technology 14. Contributing to the Common Effect 15. Openness to Concerns 16. Compliance and Reporting

Four Perspectives on Environmental Ethics and Strategy The Triple Bottom Line Beyond Greening Ending the Stalemate between Environmental Performance and Competitiveness Natural Capitalism

Corporate Governance and Sustainability: New Voices Government Trading Partners Community Employees Investors Insurers Media Pressure Groups Customers

What’s so special about Society’s environmental expectations of Business??? l Taxes l Health and workers’ compensation l Unemployment insurance l Product liability l Pensions

Values Created through a Sustainable Business Strategy How can you make money from: Improved product quality? Healthy working environment and staff commitment? Improved community relations? Positive pressure group relations? Improved media coverage? Green Products and byproducts? Cheaper finance? Lower insurance and legal costs? Assured present and future compliance? Improved materials and energy efficiency? Reduced cleanup and decommissioning costs? Reduced supplier and customer costs?