Stephen O'Brien: Making green growth a priority

Speech by Stephen O'Brien at the UN Global Compact event, looking at the role of the private sector in driving sustainable development.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Sir Stephen O’Brien

Ladies and Gentlemen, I am delighted to be here with you this afternoon to discuss the UK Government’s priorities for the forthcoming Earth Summit in June next year. Ideally, of course, I would have been joined by Secretary of State Caroline Spelman - as she is leading the Government’s strategy for Rio+20.

However, she is currently in Durban for the climate negotiations, so she cannot be here. But she and I are both of the same mind on this area - so what you would have heard from two people you can now hear from one.

In any case, today’s event is a personal priority for me. Having been a Director of a FTSE 100 company myself prior to my parliamentary career, I am convinced that the private sector is crucial to all of the major global issues we face, and in particular sustainable development.

Today I will set out why I believe that is the case, and three ways in which we - governments and the private sector - can use Rio+20 as a launch-pad for action. But before I get into the detail of that, let me first outline why the UK Government’s believes the Rio+20 Earth Summit is an important global event, and give you a sense of our priorities for it.

Just under 20 years ago, at the first-ever Earth Summit, a young girl called Suzuki Severin, aged just 13, delivered a powerful speech. In that speech, she urged governments around the world to take action, and declared “Losing my future is not like losing a few points on the stock-market”.

The people in this room know the importance of the stock-market, and what it means to gain and lose points on the market. It actually means a great deal. It can determine the whether a business will fail or thrive, and the employment prospects for hundreds of people.

The stock-market, and the global economy more generally, is already facing significant global threats. We need to address them head on. The actions the UK Government is currently taking domestically - such as supporting new business and infrastructure development - are about doing just that. Taking difficult decisions.

Yet, twenty years on from Ms Suzuki’s speech, we are seeing that the stock-market is already being driven by trends in our natural environment. The report just a few days ago by the Intergovernmental Panel on Climate Change stated that the estimates of annual losses from weather and climate-related disasters since 1980 have ranged from a few billion to above 200 billion US dollars in the case of Hurricane Katrina in 2005.

There have been other estimates that 40% of the world’s economy relies on biological resources. Natural resources are deeply intertwined with our economy. Their sustainable use is integral to growth over the long term. And it is often the poorest people that rely on natural resources for their livelihoods.

Ms Suzuki’s speech reminds us that as we take steps to generate a lasting recovery, we must at the same time address the even more significant future threats from the effects of climate change and the unsustainable use of natural resources.

This Earth Summit, twenty years after Ms Suzuki made her speech, offers a one-time opportunity to do so, in a stronger and more innovative way than ever, through green growth -growth that recognises that sustainable businesses and environmental sustainability are two sides of the same coin.

In Rio+20, the UK’s focus will therefore be on the green growth - also known as the “green economy” - agenda item.

But why is green growth a priority? And why do we believe it is important for development?

Growth is crucial for development, and I am of the belief that green growth could provide an opportunity to help meet poverty reduction goals, for instance by delivering higher productivity in agricultural and industrial sectors, and expanding innovation and entrepreneurship through new green business models. A new study from Mckinsey Global Institute suggests that over 70 percent of the world’s resource productivity opportunities are in developing countries. Taking such opportunities could also help countries build resilience to climate and other supply-side shocks, by increasing economic diversification and reducing their reliance on natural resources.

But the big question is, how? There are many ideas circulating at the moment on what outcomes at Rio+20 could help deliver green growth. From big new ideas such as Sustainable Development Goals, and the provision of universal energy access, to more specific ideas focused on key natural resources such as water, forests and land. We have been studying the recent submissions to the UN and are examining which ones we think will have the most impact and deliver the most results.

But I can tell you now that I and Caroline Spelman both agree that one of the most important outcomes at Rio+20 could and should be around the private sector - because the private sector is the engine of growth.

But before I say what this might look like, let me be clear about one thing. The private sector is not one entity. The private sector ranges from entrepreneurs, small and medium enterprises, to large multinational corporations and investors. We have this kind of wide range of actors in this room today - insurers, banks, industrial firms, and more.

At Rio+20, we will need to recognise this wide range of actors, and bring them in. By doing so, we can maximise the potential to fire up the engines of innovation, entrepreneurialism and job creation at the same time as protecting natural resources and avoiding climate change.

So what might private sector-focused outcomes look like in Rio+20? Today I’m here to hear your views, but let me provide a three-pronged framework for those outcomes - with some initial ideas - which I hope will stimulate your ideas.

First, we need outcomes whereby Governments undertake to support the private sector in delivering green growth.

This means providing policy certainty, simpler regulation, new policy instruments; incentives for R&D and innovation. Here in the UK, the Green Deal, our Climate Change Agreements and the EU Emissions Trading Schemes are all key examples of our efforts to provide this kind of framework. Globally, I know that ideas around fossil-fuel subsidy reform, sustainable public procurement, vehicle standards, and more are on the table. We need to know from you which are your priorities and which ones can make the greatest impact on sustainable development.

Second, we need new public-private partnerships. These could include instruments such as challenge funds, risk guarantees, advance market commitments - instruments that we commonly use to address other development challenges. PUSS added the example of pharmaceuticals and importance role of government in making advance market commitments. The UK is already looking to support the development of a number of these in the climate change area, particularly to incentivise the uptake of renewable energy. Agriculture, forestry, water, waste and land may be other areas ripe for this joined-up kind of approach. Again, we need to hear your ideas, and work out which can have the greatest impact.

And last but not least, we need bold, independent action from you. I know a huge number of companies and investors are already reporting and measuring their environmental impacts and risks. I have heard about the Aviva-led proposal for how to further improve corporate sustainability reporting. I welcome this kind of voluntary action strongly and the activities of organisations like the UN Global Compact in stimulating it through the principles they advocate. It can lead to higher profitability - through its Plan A initiative Marks and Spencers saved over 70 million pounds last year, and 50 million pounds the year before.

But I am also aware that a growing number of companies are realising that their own success is directly linked to sustainable, green growth. Others are using eco-standards and labelling - such as water and carbon footprinting, zero-waste commitments - to attract new markets. They are providing new sustainable products and services.

For instance, in India, the company SELCO has developed a business model to provide cheap solar electrification to slums in Bangalore, meaning the people living in those slums have light to study and run their businesses. That’s a direct impact on development. DFID’s Business Innovation Facility is supporting a microfinance business in Nigeria to enable 2 million low income households to replace existing polluting solid fuel stoves with clean burning gas cylinder stoves in an affordable way. That’s supporting livelihoods, safeguarding health by improving air quality, while reducing deforestation and greenhouse gas emissions. Again, a direct impact on development.

We need the private sector across the world to be inspired - at and beyond Rio+20 - to seek out these kinds of new opportunities, new products and innovations, new investment and markets.

Caroline Spelman has already begun to receive substantive proposals from UK and other businesses worldwide on how the private and public sector can work together to seek new pathways to growth and wealth creation that do not involve the twin threats of climate change and resource scarcity. I hope this three-pronged framework that I have set out today will help you in putting forward even more proposals.

Credible, high-impact ideas will need to be brought to the table if we are to protect the future of young Ms Suzuki, who made that powerful speech in 1992. We need to generate a lasting recovery; and ensure sustained progress for all people in the broadest sense. I hope we will use Rio+20 as a means to articulate those credible, high-impact ideas together, and, more importantly, implement lasting solutions.

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Published 6 December 2011