The term Sustainable Development was coined 15 years ago in
a 1987 report entitled Our Common Future by the World Commission
on Environment and Development of the United Nations. This
report has been referred to as "the Brundtland Report"
in honor of its Chairperson, Dr. Gro Harlem Brundtland, the
then Prime Minister of Norway.
The Commission defined sustainable development
as: "...development that meets the needs of the present
without compromising the ability of future generations to
meet their own needs." For most of us, development means
progress or change for the better. Development involves maximizing
the efficiency of resource allocation to meet needs - which
is the dominant paradigm of economics at the present time.
Thus, essentially, sustainable development is an economic
concept.
Sustainable development holds humans responsible
for the current state of environment and challenges them to
accept responsibility for initiating the changes necessary
to attain sustainability. This challenge was reinforced at
the United Nations Conference on Environment and Development
(UNCED) held in Rio de Janeiro in 1992. The conference's principal
product, endorsed by more than 100 heads of state and close
to 10,000 delegates, was an agenda for change, called Agenda
21, a description of perceived needs and proposed actions
to bring humankind into harmony with the finite resources
of the earth by the middle of the twenty-first century. There
has been little progress since then on the ground that the
resources required by the developing countries to implement
Agenda 21, estimated at $ 600 billion, have not been forthcoming.
Indeed the gap between rich and poor has only widened. According
to Mahbub-ul-Haq of Pakistan based Human Development Centre
"during the globalization phase about half-a-billion
people in South Asia have experienced a decline in their incomes".
According to UNDP's Human Development Report 1998, the income
ratio between 20% of the world's poorest and 20% richest was
1:30 in 1960. It increased to 1:61 in 1990. In 1997 it was
1:74. As for the environment damage there could not be a more
convincing evidence of global warming than the recent shattering
of a huge ice shelf, Larsen B, weighing 500 million billion
tonnes covering an area of 3250 kilometers and within 13 days
another 5500 kms of Thwaites glacier in Antarctica.
In the ten intervening years since Rio there
have been several statements on sustainable development at
various international fora. In October 1994 a group of 16
scientists, economists, policy makers and business leaders
met at Carnoules in France and published a declaration, which
is known as the "Carnoules Declaration". The declaration
called for radical increase in resource productivity and expressed
the hope that within our generation, nations can achieve a
ten fold increase in the efficiency with which they use energy,
natural resources and other materials." While the group
which called itself the "Facor Ten Club" had made
only basic commonsensical recommendations for satisfying human
needs without unduly damaging environment, the implementation
has faced monumental resistance. Some of the European countries
such as Netherlands, Norway and Austria have adopted a watered
down version of factor 4 improvements (75% reduction in use
of resources). Most countries are continuing to spend hundreds
of billion of dollars of tax payers money each year on subsidies
for mining, oil, coal, fishing and forest industries that
promote inefficient and unproductive use of resources.
The problem with the implementation of Sustainable
Development agenda as with other issues such as globalization,
poverty and inequality is that they are always dealt with
in isolation and not as a part of a cohesive, integrated approach.
Also there is little effort in involving the mainstream business
and allaying its fears that sustainable development will curtail
its profit potential. Little has been done to educate businesses
that sustainability strategy has vast business potential by
opening untapped markets and serving the unarticulated customers.
For initiatives on sustainable development
to succeed business must be involved as the driver of sustainability
agenda. Business can be made to realize that the pollution
and waste are nothing more than business inefficiencies, process
inadequacies and there is money to be made in their elimination.
Business has a lot to gain from sustainable development. Private
sector is the key to initiate an overarching strategy for
a sustainable future for mankind. With the current rate of
obsolescence, 90% of the products that we use today will disappear
by year 2010. Business has a great opportunity in changing
the production processes and steering the customer demand
towards eco-friendly life styles.
An important prerequisite to sustainable
development is adoption of good governance practices based
on transparency, accountability, equity, integrity and responsibility.
My belief is that there are enough good people in the world
and strong public opinion to generate money to seed sustainable
development strategies in developing countries. The biggest
stumbling block to improving environment is poor governance.
It is estimated that of the $ 33 billion of international
aid for environment and welfare only 18% reaches the right
people. In India itself, the government spends as much as
Rs. 30,000 crore a year on rural development and poverty alleviation
but only a small proportion of the same reaches those who
need it.
Our governance systems are also responsible
for wasteful subsidies, which damage the environment without
helping the economic well being. Subsidies kill competition
and help only the inefficient. A recent study by the International
Institute for Sustainable Development estimates that global
society spends almost $ 1500 billion a year to subsidize activities
that cause significant environmental damage. These subsidies
foster in-efficiency through perpetuation of lock-in of old
technologies and prevent innovation.
Subsidies also rob poor countries of markets.
Worst subsidies are to rich European farmers which amount
to $ 350 billion a year and are 10 times the total amount
of foreign aid received by the entire developing world comprising
some 5 billion people. These subsidies constitute a heavy
burden even for the citizens of these countries.
Corruption is another serious impediment
for Sustainable Development. Tens of billions of dollars exchange
hands in graft and kickbacks worldwide. This results in production
of wrong goods and services and increasing the existing burden
of the poor who are at the receiving end in all such cases.
Good governance practices can ensure better market framework
conditions by encouraging freedom of competition. The public
policy should focus on the targets, the desired end results
rather than specifying the means of achieving the result.
This cripples creativity and inhibits businesses to use their
innovative ability to reach the target in a most cost-effective
manner. Governance structures should be such that they support
the entrepreneurial action, and risk-taking or innovation.
It is an irony that the grueling and mind-numbing
poverty that we face in this world exists alongside extreme
affluence and abundance. Indeed when we look at the amount
of money we waste it would seem that the world has no shortage
of financial resources. United States, which prides itself
as the richest country in the world itself, is a classic example
of waste. It has been estimated that of the $9 trillion spent
every year in the United States, at least $ 2 trillion annually
is wasted. What is meant by waste in this context? Simply
stated, it represents money spent where the buyer gets no
value. An example of waste familiar to everyone is sitting
in a traffic jam on a congested freeway. Nearly $200 billion
a year in energy costs is wasted because we do not employ
the same efficiency practices as Japan in businesses, homes,
and transportation. In health care, $65 billion is spent annually
on nonessential or even fraudulent tests and procedures, $250
billion of inflated and unnecessary medical overhead is generated
by the current insurance system. We spend $50 billion a year
in health costs because of our dietary choices, and as much
as $100 billion on obesity, $274 billion on heart disease
and stokes, and $52 billion on substance abuse. Paul Hawken,
author of National Capitalism - the Next industrial Revolution
estimates that as much as one-half of the entire US GDP may
be attributable to some form of waste.
Responsible governance can find several ways
to bring down the world poverty and inequality than giving
handouts. Dramatic results can be achieved if the governments
decide they will no longer be taxing income but environmental
impact or provide incentives for increasing the productivity
of resources. Fostering innovation is another area which can
be a great equalizer. It is a tragedy that even after a century
of fossil fuel based automobile centered, wasteful economy,
we have little of substance to boast about our record for
change to renewable. Think how the whole world's economy can
change once we are able to use photo voltaic cells on a massive
scale for heating our homes and powering our cars. While the
fossil fuel may not last beyond the current century, the solar
power is synchronous with human life and therefore infinite.
Think how the world economic balance will change once solar
power becomes the dominant energy paradigm. It will finish,
western hegemony and put Asian and African economies with
the abundance of solar energy in the forefront.
In essence there is only one way to transform
this world and ensure sustainable development. This is through
innovation. But unless you have participatory, transparent,
equitable and responsible governance systems, innovation is
unlikely to foster. There are so many vested interests who
use all kind of tactics to frustrate the innovator. In this
connection one only has to read Jim Utterback's book "Mastering
the Dynamics of Innovation". He describes how time after
time business's response to change is by polishing yesterday's
apple. When electric entrepreneurs arrived on the scene in
1880s with the technology so much superior than gas, the gas
lighting monopolies strove to make gas lighting more efficient.
The resulted in the surge of productivity and for a while
it took the old technology to unheard of heights. But in the
end the inevitable happened. These improvements simply delayed
the impending death of the old technology.
Human ingenuity has no limit. This is our
only hope for better environment, a better world, a sustainable
world. But to let this ingenuity flourish in a productive
way, we must break the current moulds and transcend self-inflicted
field barriers. We must educate our children to be more courageous
and transparent than we have been ourselves. We must celebrate
failure and not fear it. We must value diversity as we value
capital. We must build trust, sense of sharing and equity.
The upside is that the world is on our side. In a millennium
survey of 23000 people in 25 countries and 6 continents last
year 34% said that the brand equity of the company depended
on management practices, 40% said it was because of quality
and an overwhelming, 56% said it depended on the way the company
addressed the social and environmental issues. Sustainable
development is the language of business. The downside is that
we need to take immediate action because while the public
opinion may be on our side the time is not on our side.
