Fortune’s Brainstorm GREEN conference, held last week at a sunny beach resort in Southern California, could not have been better timed. It is exactly two months until Rio+20, the United Nations (U.N.) Conference on Sustainable Development.
So much intellectual energy was present here — so many great ideas — that one question begs to be asked: Will those 193 government delegations gathering in June at Rio+20 in Brazil to discuss green economy and global environmental governance deliver even a fraction of this energy, this thinking?
We all know planetary boundaries are being approached or breached across several critical axes — including excessive greenhouse gas (GHG) emissions, nitrogen cycle disruption and biodiversity loss. Significant changes are urgently needed in the way we deal with the Earth’s resources.
Intergovernmental efforts so far have failed miserably. Founded at the first Rio summit, the U.N. Framework Convention on Climate Change (UNFCCC) has failed to get governments to arrest GHG emissions. Its unequal twin, the U.N. Convention on Biological Diversity (CBD) has been unable to get governments to slow down the rate of biodiversity loss.
These failures point to the need to recognize the vital role of the private sector in determining economic direction and hence resource use globally. The corporate world has to be brought to the table as responsible stewards of shared planetary resources and not as value-neutral, self-interested exploiters of common wealth.
The private sector today produces almost everything we consume, generating 60 percent of global GDP and employment. Their advertising drives all consumer demand. Their production feeds this demand, and drives economic growth. Their growing profits and assets are the main magnets for global investment. We have become a corporate world in more ways than one.
Yet these are the good sides of today’s corporation — there are also the bad. Corporate externalities, the unaccounted costs to society of “business as usual,” are an estimated US$4 trillion, or 7 percent of global GDP, every year.
Corporate lobbying often influences national policies to the detriment of the public good. Advertising often converts human insecurities into consumer demand. And excessive demand has already made our ecological footprint exceed the planet’s biocapacity by 35 percent. We are now consuming nature’s capital, not its interest.
There is leadership for change: We saw great examples from CEOs at Brainstorm GREEN. But it is too little, too late. I believe the rules of the game must be changed so that corporations are able to compete on the basis of innovation, resource conservation and satisfaction of stakeholder demands — not on the basis of who can best influence government regulations, avoid taxes and obtain subsidies.
Corporate social responsibility will never suffice to lead us to tomorrow’s green economy: We need a new corporate model. Corporations that discover, measure and manage down their negative externalities, such as water usage and air pollution. Corporations that work in a business environment free of perverse subsidies and work for stakeholders, not just shareholders.
However, that new model will not just happen — it needs to be fed by investment; it needs a level playing field; and it needs new regulation in place. That means eliminating a trillion dollars per year of perverse subsidies for fossil fuels, unsustainable agriculture and fisheries. It means investing in a green economy. And it means making it mandatory to disclose corporate externalities.
But who is to eliminate subsidies, seed investments and change corporate reporting? Why, it is those same 193 governments who will meet at Rio+20 in two months! So, I do hope these two conferences will have more in common than just beautiful, sunny beaches.
Pavan Sukhdev, an ex-banker, led the United Nations Environment Programme’s Green Economy Initiative and its study entitled, “The Economics of Ecosystems and Biodiversity (TEEB).” He is now a McCluskey Fellow at Yale University, where he is writing his book “Corporation 2020.” Pavan is also a board member of Conservation International.