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Some of the world's biggest corporations are starting to think beyond short-term profit
By Laurie Goering
It was perhaps predictable that a U.N.-led effort to find solutions to the world’s most pressing problems - climate change, water scarcity, deforestation, looming food shortages, growing inequality - wasn’t going to produce results, particularly when negotiators tried to take them all on at once.
But that hasn’t soothed the frustration here in the halls at Rio+20.
“People in the negotiations cannot think of anything else but, ‘What the hell are we doing here?’” said Maja Gopel, a political economist with the World Future Council, an international organisation that tries to insert the concerns of future generations into policy making.
“This is very different from 20 years ago,” added Atiq Rahman, executive director of the Bangladesh Centre for Advanced Studies. “The visionaries of that time have become the bosses in institutions, but those institutions cannot deliver. And a new generation of visionaries has not come.”
Trying to solve the world’s biggest challenges in an integrated way makes sense, he said. “But if everything is connected to everything, where do you start?”
Still, while the negotiations are expected to produce nothing more on Friday than a vague roadmap toward a sustainable future - a document studded with aspirations rather than much-needed goals and targets - progress is evident outside the negotiations, in the form of some fairly revolutionary new ideas.
More than 50 countries and more than 80 private companies, for instance, have now agreed to start incorporating “natural capital accounting” into their budgets and bookkeeping.
Essentially, they will begin taking into account their use and destruction of natural resources and their emissions of pollutants - a change that sets the groundwork for standing forests, clean water, rainfall cycles and other natural services to have a measurable value.
Not everyone thinks that putting a price on nature is a good idea. But not having one is today allowing companies to keep $4 trillion a year in environmental destruction off their balance sheets, says Pavan Sukhdev, an Indian economist who wants to see gross domestic product (GDP) restructured to include what are now “external” costs.
“Some say putting a price on nature leads to it becoming a commodity that can be bought and sold,” said Camilla Toulmin, who directs the London-based International Institute for Environment and Development (IIED). But “without a price it faces being undervalued, grabbed and trashed,” she said.
PEOPLE AS WELL AS PROFIT
In a world where huge multi-national corporations in many cases have more power than governments, changing the way they do business could have huge impacts, Sukhdev and others said.
Rosemary Bisset, head of sustainability, governance and risk for National Australia Bank, the country’s largest business bank and one of the biggest banks to commit to using the new accounting rules, said companies are beginning to see that a fresh approach make sense.
As water becomes scarcer in Australia as a result of climate pressures, for example, “we may find in the long and short term we have unrecognised risks in our portfolio,” she said.
Paul Polman, CEO of Unilever, was even more frank.
Last year, his company lost 250 million euros ($316.5 million) as a result of droughts and flooding in China, Thailand, Bangladesh and other countries where it operates, he said. By 2050, climate impacts could wipe out a hefty share of profits for his industry and others, he warned.
That’s something that “ought to concern us and many more CEOs”, he said.
Fundamental reform of the world’s economy needs to take place, in particular a shift in focus away from short-term profits and accumulation of personal wealth at any cost, he argued. His company is one of a growing number that has done away with quarterly financial reports, which encourage narrow thinking, he said.
“We have to justify what we are doing not just to shareholders but to our families, our children,” he said.
To bring about change, voters need to begin holding elected officials to account, and consumers must take responsibility for their choices, said Achim Steiner, executive director of the U.N. Environment Programme.
“We elect politicians, we buy products (and) we let governments get away with policies we lament,” he said.
Restoring responsibility and ethics – to business strategy, to governance and to the whole spectrum of decision making – may be the real way forward to a more sustainable future, Rahman and others said.
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