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BW Businessworld

"The Private Sector Could Be Doing More"

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Yvo de Boer, former secretary of UN Framework Convention on Climate Change and KPMG Special Global Advisor speaks to BW's Yashodhara Dasgupta about the development and the inclusion of private sector and financial institutions

What is sustainability?
I wouldn't define it as sustaining what we have. It really means transitioning towards a different economy, a different lifestyle, a different concept of welfare based on the fact that the world is changing, and we need to adapt.

It means living within the carrying capacity of the planet in terms of energy prices, energy security, resource scarcity, food scarcity, water scarcity, climate change and population growth. We're not exactly in the right direction. And I think that we can do that while giving people a decent lifestyle but our definition of decent has to change. I think we can have health care for all. We can have mobility for all. But the vehicles will probably be different in that they'll be fuelled by different sources energy. There'll be more public transport. I would expect us to change agricultural production to make it more efficient. Now I think 40 per cent of food is actually lost between the farm and the shop. So there are huge efficiencies that we need to realise.

Why is there scepticism or reluctance to accept the sustainability concept?
Well, in getting ready for the Rio+20 summit where the main focus is on green growth, there's a big fight that has emerged about green growth because developing countries believe it will keep them poor and favour environmentally friendly technology which is in the hands of the industrialised nations. The problem is that while a lot of people talk about green growth, they don't really understand how it can be made to apply in their own country. If you asked the environment minister of most countries if they understand how environment can be greened and grown at the same time, they probably wouldn't have the answer to that question.

The best way to explain what green growth is, is to show people. I think some of the analysis being done by the OECD and others is quite useful. But you can't take it home and cook it. You need a story for your own city, your own neighbourhood, your own country. It's only when the model is made for your country that you can begin to believe it. In addition to the policy side, there are also externalities.

In terms of a solution, you need it at a local level. But at the same time, it doesn't cover everything. For example, in oceans — not all of which are owned by any one country — you have massive depletion of fish stock. There you need an international approach. Similarly on climate change, I think we need an international regime to help countries given the confidence that everyone is working together.

How do you rate financial institutions in embracing this?
I would rate them very differently. I think some banks are beginning to understand there is a business case to be made in investing in sustainability. Some pension funds are beginning to see it. But others are not. I think the fundamental problem that underpins that is the fact that at the moment we're not pricing the solutions. You can pump CO2 into the atmosphere without having to pay for it. To my mind, that's what makes renewable expensive.

Is complete abandonment of fossils fuels the only option?
Fossil fuels are going to be part of the energy mix for decades to come. A number of fossil fuels are a very cheap source of energy especially in developing countries. They will be reluctant to stop using that. It's very much a matter of making a transition. Gas can help in that transition. What worries me is that we can lock in a lot of capital in intermediate technology that makes it difficult to take the next step.

Does the private sector need to wait for a push?
I don't think they are waiting for that moment to come. Many of them are already putting new products and services in the market. Are they doing enough? No. They could be doing more. One of the things that is most critical for the private sector is long term predictability. To be sure that if an election comes up, there won't be a radical shift in direction. And it's that lack of clarity that slows many companies down.

Is it good to mix business with environment?
I think we're at a point where there is no such thing as a non-green business. It takes the meat industry 10,000 litres of water to produce 1 kg of meat. So the meat industry needs to be concerned about water scarcity. In that sense, many companies have to take this into account in their supply chain and method of production. This is why CSR was more of a PR thing about 10-15 years ago. It's now coming to the heart of corporate strategy all over the world gradually. Why are the economies of India and China not doing as good as it was last year? Because demand from Europe has declined due to the economic crisis. In other words, most of the developing countries are selling to international markets, so they have to adopt the standards of these markets. Hopefully, we're past the point where we can produce rubbish of one part of the market and quality stuff for others.

What about resources? Which do we need to be most concerned about?
I would say water because it interacts with so many other things. Most of what we eat, wear or are is virtually water.

What did you think of Durban?
The outcome is a success. There is an agreement that we need to move forward in a uniform way but respecting that different countries have different responsibilities. We're gradually moving away from this black and white world with industrialised countries on one hand and developing on the other. At the same time, the process needs to focus more strongly on incentives, on finance, technology and on capacity building so that countries can make the concept of green growth come true.

Where do you think we are right now?
I think we are in very deep trouble. The preoccupation in America and Europe is 100 per cent with financial crisis and not with sustainability issues. I think that's impacting other parts of the world. We might be moving, I hope not, to a global crisis which will preoccupy people and make them more reluctant to change and innovate. And the clock is ticking on many of these global issues.