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Posts Tagged ‘Aldersgate Group’

Limu and Betsy attended the Rio+20 Business Summit organised by the Aldersgate Group which took place last night. Thoughts from both are below:

Limu:

A fantastic Aldersgate Group event was held on Wednesday evening, featuring a ‘dragons den’ of business ideas for Rio+20. The panel included Secretary of State for the Environment Caroline Spelman, who gave creditably informed responses on the ideas proposed by nine business representatives.

Global food security ‘won’ the vote on the best idea, but the most interesting fact of the evening came from hosts PWC. Giving an insight into their ‘pulse survey’ of global CEOs pre-Rio, they said 70% were ready to substantially increase their sustainability commitments if decisions in Rio led the way. The business world is getting ready to act on sustainability, politicians in Rio need to be able to trust them.

Betsy:

The Rio+20 Business Summit was an interesting setup whereby the representatives of 9 companies had 100 seconds each to sell to the audience and a panel of experts (a Dragon’s Den including Caroline Spelman, our Secretary of State for the Environment) their ‘business pitches’ for how businesses will be involved in obtaining goals that will come out of Rio+20 (the United Nations Conference on Sustainable Development taking place June 20-22 in Rio de Janeiro, marking the 20th anniversary of the 1992 United Nations Conference on Environment and Development). At the end of the night the audience had to vote and prioritise each of the pitches.

Rio+20 has two main themes: 1) a green economy in the context of sustainable development poverty eradication; and 2) the institutional framework for sustainable development. The business pitches we heard last night were for ideas that businesses hoped would make their way into the institutional framework for sustainable development.

To anybody interested in the environment these ideas weren’t new, but it was interesting to see which businesses were focusing on which ideas. The ones put forward were:

1) Natural Capital – Value and maintain the Earth’s natural capital with a commitment to no net loss, holistic policy frameworks and national action plans (B&Q, Matthew Sexton)

2) Sustainable Development Goals – Governments must work with business to secure a commitment to Sustainable Development Goals (Unilever, Karen Hamilton)

3) Circular Economy – Programmes on sustainable consumption and production should provide new leadership on circular economy (Siemens, Ian Bowman)

4) Sustainability Reporting – An international convention to require companies, on a ‘comply or explain’ basis, to integrate sustainability issues in their Annual Report and Accounts (Aviva Investors, Steve Waygood)

5) Information Technology – We need to harness the power of ICT to turn data produced across various systems like buildings, transportation, energy grids, water and air quality, ocean health, corp yields, human health implications of pollution – into actionable solutions and results (Microsoft, Josh Henretig)

6) Transport Strategy – A clear strategy for access to sustainable energy solutions which recognises that transport is essential for linking societies and markets, within and between developed and developing countries (Virgin Atlantic, Sian Foster)

7) Food Security – Governments must place the challenge of feeding over 9 billion people on a sustainable, healthy and affordable diet, top of the agenda (ASDA, Paul Kelly)

8) Energy Efficiency – Governments need a longer-term financial view when investing in green technologies and to lead by example – committing to making public sector assets energy efficient. (Philips, Jayson Otke)

9) Water Security – Governments should commit to working in partnership with the private sector and others to respect, protect and fulfil the right to water and sanitation by 2020 in a way that is compatible with climate and food security goals (PepsiCo, Andrew Slight)

As you can see, many of these 9 pitches are in fact interconnected. For example, including natural capital into national and business accounts will help achieve sustainable development goals. Sustainable development goals can also be helped along by the three enabling pitches (4-6). Food and Water security must go hand-in-hand. So it was quite difficult at the end of the evening, to separate these out when it came to the audience voting (by ranking the pitches for which should be the highest priority).

We did anyway and the results were interesting – I unfortunately wasn’t able to get them all but I’m sure we will see some of the results from Aldersgate soon. I did catch the highest and second highest ranking pitches though – and they were Food Security and Natural Capital respectively. It is refreshing to see Natural Capital being given such a high ranking in priorities, particularly once we saw the breakdown. More of the audience from business had voted for Food Security while more of the audience from NGOs had voted for Natural Capital!

Of course it is a bit unnatural to be comparing these ideas against each other when many go hand in hand, and they address entirely different ways of how we could be working towards sustainable development. But I still have those days where I have to explain the practicalities of environmental economics to environmentalists who vehemently disagree with the idea (and yes I encountered a couple in networking after!) and we even had that sadly misinformed article from George Monbiot, so it is good to see that the NGOs understand us and are on our side. Natural Capital got a large chunk of the business vote too – just not as much as Food Security did. And again, these two ideas are hardly comparable – they can both be implemented and inform each other. But at the end of the day it is heartening to know that environmental economics is going more mainstream and an increasing amount of people from all spectrums of life are engaged with how environmental economic concepts can help them pave the way to sustainable development.

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The Aldersgate Group convened a discussion on the developing Green Investment Bank (GIB) policy (which we’ve written about before), attracting around 250 attendees to the marble-panelled halls of Bank of America Merrill Lynch. It was good to hear the Department of Business Innovation and Skills official and bankers alike using the language of market failure that is the ethos of cowburps.

There are large market failures that justify the need for the GIB. Stern described climate change as the ‘biggest market failure’. More subtly how will the financial sector provide insurance products (that typically cover 2-3 years) to hedge against green investment risks: which are taking place over 40 year time horizons!

But a check is needed here as to whose markets are failing and why. Governments have addressed the basic market failure for carbon (that there was no market for it). There are now markets, created and driven by regulations, such as through the European Emissions Trading Scheme, creating a price for carbon. A significant problem for low-carbon green investments is the political uncertainty over carbon markets and the long-term price of carbon. These are market failures with the Government-created carbon market. Rather than rely on the GIB policy intervention to fix the failures in the carbon market, the first policy option should be to remove them. This can be done by setting a long-term policy that puts a price on carbon, i.e. a carbon tax with a long-term escalator, and/or a better designed cap on emissions addressed by the Emissions Trading Scheme.

In reality, both a Green Investment Bank and a carbon tax are needed. But it would be perverse for Government to intervene to fix failures in the markets it has created, without also trying to remove those failures by improving the policies that created them.

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The Aldersgate Group launched this report on resource efficiency yesterday afternoon in a fancy room in the House of Commons. Its about the fact that using stuff more carefully might contradict glutoness human instincts, but could be good for our economy. As economists are taught, natural resources are finite, but we humans have seemingly limitless capacity for ingenuity. So if we adopt limits on our use of resources (hence protecting the environment), we will stimulate that ingenuity and might actually be better off.

Environment Minister, the Rt Hon Hilary Benn, spoke nicely at the launch. Arriving late, he had to listened to Prof Paul Ekins talking about resource use – something all environment ministers should do, although preferably shortly after they enter the job rather than shortly before an election. The Minister said the right things about ending ‘waste’, and proudly told us that everywhere that sells batteries now has to accept them for recycling – sound extension of the polluter pays principle.

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I joined a flock that battled through the weather to hear our Minister for Energy and Climate Change, Ed Milliband, talk about Copenhagen, and the continuing global negotiations in 2010. The Minister is confident, intelligent, a good speaker, and has clearly learnt the detail of the climate change debate during his time in the job. That all helps, but doesn’t ensure he will make good decisions. Actually his job is not about big decisions (policy in the UK and EU is already defined), but about influencing the rest of the world. While the agreement in Copenhagen was disappointing, Ed rightly points to significant progress over the year in 2009. Copenhagen broke down barriers (like the developed – developing coutry groupings, and criteria on monitoring) so progress can continue in 2010.

This Aldersgate Group event was aiming to inform business about commercial implications of Copenhagen. ‘Good prospects’ for progress do not help business much, as they are left guessing about future policy. However, the CEOs of two companies, Johnson Matthey and Eurostar, reiterated their commitment to the climate change agenda. They admit this is easy for them at present, as pursuing emissions reductions brings lower energy bills and net cost savings. However, such opportunities will soon run out, and to justify further investments in emissions reductions by the middle of this decade, they need a reliable carbon price. Maybe this should be the economic test of global climate negotiations in 2010: will they provide a basis for a carbon price that means something to business?

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