THE UN GLOBAL COMPACT

1. THE UN GLOBAL COMPACT MODULE 2 - THE BUSINESS CASE Session 1: Setting the Scene The State of the Global Environment

2. The State of the Planet: Cause for Concern?

3. The State of the Planet Issues of concern: An overview • Climate change • Freshwater scarcity • Biodiversity loss • Collapsing fisheries • Soil erosion • Cropland and forests loss • Increasing population • Growing waste • Growing consumption

4. The State of the Planet Climate Change (1) Diagram from IPCC

5. The State of the Planet Climate Change (2) Diagram from IPCC

6. The State of the Planet Resource Depletion - Freshwater • Access to water is arguably the world’s most urgent resource issue • Every year about 5 million people die due to lack of access to water & sanitation • Almost 30% of people live in countries suffering moderate-to-high water stress • By 2025 more than 4 billion people will be living in water stressed countries • Between 1900-1995 global freshwater consumption rose six-fold, more than double the population growth rate • More than 20% of the world's freshwater fish species have become extinct, threatened, or endangered in recent decades • In 60% of the European cities with more than 100,000 people, groundwater is being used faster than it can be replenished

7. The State of the Planet Population Growth

8. The State of the Planet Population Growth, Consumption and Production • Population is not the main problem of environmental degradation, but rather consumption and production patterns • There is a need to find an appropriate balance between: • The basic needs of the current population (food, shelter, health, clothing) • The needs of future generation • This requires balancing inter- and intra-generation equity

9. The State of the Planet Unsustainable Consumption 1000 people harm the environment annually by the following factor In Germany Developing Country Energy consumption (TJ) 22 158 Greenhouse gases (t) 1300 13700 CFCs (Kg) 16 450 Waste (t) 120 400 Toxic waste (T) 2 187 Passenger cars 6 443 Steel consumption 5 655

10. The State of the Planet Inequalities in Consumption • 1.3 billion people live on less than 1 US dollar a day      • The overall consumption of the richest fifth of the world’s population is 16 times that of the poorest fifth • Nearly 160 million children are malnourished • More than 880 million people lack access to health services • 1.5 billion lack access to sanitation and clean water

12. The State of the Planet Unsustainable ConsumptionGlobal Consumer Class: Selected Nations (2002) Consumers Share of National Country (millions) Population (%) United States 243 84 Japan 121 95 Germany 76 92 Russian Federation 61 43 Brazil 58 33 China 240 19 India 122 12

13. Year Private cars 1980  0 2000 5 million 2002 10 million 2003 14 million 2015 150 million (estimated) The State of the Planet Car Growth in China

14. The State of the Planet Ecological Footprints

15. The State of the Planet Consequences: Four Earths needed in 2100 2003 2100 1900 2050

16. Mixed messages from consumers… I’d like to end poverty, stop violence and racism, and get rid of pollution. Everyone should be equal. I want to dress in the nicest clothes, drive a great car, talk on the latest mobile phone, and watch my brand new DVD

17. The State of the Planet The need for increased resource efficiency “20% of the world’s population consumes 80% of its resources. If everyone consumed at this level, it would take four extra planets to provide the necessary resources. Global marketing of this consumer lifestyle is headed for natural disaster.” The Ecological Footprint “Resource use and pollutant discharge will need to decrease to less than 10% of current OECD levels to reach sustainable equilibrium by 2040.” Netherlands Council for Environment & Nature

18. The State of the Planet The implementation gap “Fundamental changes in the way societies produce and consume are indispensable for achieving global sustainable development. All countries should promote sustainable consumption and production patterns... Governments, relevant international organizations, the private sector and all major groups should play an active role in changing unsustainable consumption and production patterns.” WSSD Johannesburg Plan of Implementation, Sept. 2002

19. Business shifts for natural capitalism Dramatically increase resource productivity Eliminate the concept of waste: build on biologically inspired production models Re-investing in natural capital Re-invest in people and social systems The State of the Planet Factor Four improvements

20. The State of the Planet The need for change “We cannot continue to do what we have always done, only incrementally better, and expect to achieve sustainability. If sustainability is to be achieved, we will have to rethink virtually all of our industrial processes.” Edgar S Woolard - Former CEO of Du Pont

21. The State of the Planet Sustainable consumption Understanding the interrelation between eco-efficiency and sustainable consumption - the “rebound effect” • In terms of the “rebound effect”, the productivity/efficiency gains achieved through cleaner production and eco-efficiency measures are being overtaken by the overall increases in production associated with growing consumption patterns • While problems of production process are understood, there is generally an important gap of understanding in terms of the consumption (use) and disposal of products • Environmental concerns are not sufficiently integrated into economic and social programmes and vice versa

22. The State of the Planet The Challenge Promoting sustainable consumption and production • New product-oriented strategies (life cycle perspective, design and manufacture) • Understanding consumption • Integrated approach of sustainable consumption and production • De-linking environmental damage from economic growth

23. The State of the Planet There is no Sustainable Consumption without Sustainable Production and vice versa

24. So what has been the response of the corporate sector to the global environmental challenges?

25. Improvement in environmental quality Rethink Redesign Incremental change “Low hanging fruit” Time Long investment time in R&D From Arthur D Little - Sustainable Industrial Development 1996

26. A Brief History of Corporate Environmentalism Broad Phases of Corporate Environmentalism • Before the 1960s: Blissful Ignorance • 1960s and 1970s: Confrontation / Reluctant Compliance • 1980s: Beyond Compliance • 1990s: Changing Course • Beyond 2000: Sharing Responsibility?

27. Evolving Business Behaviour on Sustainability Issues

28. Evolving Business Behaviour on Sustainability Issues

29. A Brief History of Corporate Environmentalism 1960s and 1970s - Reluctant Compliance • Growing public consciousness about the natural environment • Publication in 1964 of Rachel Carson’s ‘Silent Spring’ • 1970 Earth Day demonstrations • Publication in 1972 of the Club of Rome’s ‘Limits to Growth’ and The Ecologist’s ‘A Blueprint for Survival’ • 1972 Stockholm Conference on the Human Environment • Businesses began: • Building internal technical capacity on environmental issues • Installing pollution control measures and initial networking • But largely a defensive role • Social activities focus mainly on philanthropy

30. A Brief History of Corporate Environmentalism 1980s – “Beyond Compliance” • Increasing pressure to improve performance: • Major industrial incidents: Bhopal accident (India, 1984) and Sandoz chemical spill (Switzerland, 1986) • Brundtland Report in 1987 put the concept of sustainable development squarely into the international policy arena • Business began to: • Develop environmental policies with specific performance commitments • Appoint dedicated staff functions, and increase line management integration of environmental and social responsibilities • Implement pollution prevention and cleaner production techniques • Undertake greater networking with other companies on environmental and social issues (eg chemical industry’s Responsible Care initiative)  • Develop tools such as environmental audits

31. A Brief History of Corporate Environmentalism 1990s – “Changing Course” • Increasing international policy action on environmental and sustainable development issues • Rio Earth Summit in 1992 • Growing number of Multilateral Environmental Agreements (eg the UN Framework Convention on Climate Change) • Business response signified by institutionalisation and innovation • Launch of the ICC Business Charter in 1991 • Formation of World Business Council on Sustainable Development • Development of ISO 14000 environmental standards • Increase in environmental and social reporting practices • Development of innovative technological solutions, as well as tools such as life cycle assessment, design for environment & product stewardship

32. A Brief History of Corporate Environmentalism Beyond 2000 – “Walking the Talk”? • Key strategic trends impacting global companies • Growing NGO and community pressure for greater corporate transparency and accountability • Increasing activism of institutional investors and the financial community, compounded by post-Enron disenchantment with traditional analysis • Tightening global and domestic regulatory pressures (eg the Kyoto protocol, European pension fund requirements) • Increasing appreciation of the business case for sustainability and a gradually growing acceptance of the need to address sustainability concerns

33. Corporate Environmentalism: Strategic Trends Growing NGO and consumer pressure for accountability

34. Corporate Environmentalism: Strategic Trends Increasing investor action

35. Corporate Environmentalism: Strategic Trends Changing regulatory pressures Key developments globally • Growing number of Multilateral Environmental Agreements • International corporate accountability / MNC liability regimes • EU Chemicals policy (REACH) • EU Integrated Product Policy - LCA implications • Regulatory pressure for reporting • Environmental tax reform requirements • Personal / class action claims

36. Climate Change Litigation "What we're seeing is an emerging area of climate litigation. As the impacts of climate change worsen, the number of potential plaintiffs, and the range of legal actions available to those plaintiffs will undoubtedly increase." Australian Product Liability Lawyer International • July 14 launch of Climate Justice Program, alliance of 70 NGOs, lawyers, academics and individuals in 29 countries that seeks enforcement of existing laws to hold the perpetrators of climate damage accountable and liable. Australia • Climate Action Network Australia notified directors of the top 200 listed companies of financial risks and legal obligations of climate change. Targeted major GHG emitters, as well as property financiers. Companies expected to respond by undertaking risk assessment of climate change exposure. USA • Eight US States and New York City launched a public nuisance lawsuit against five of the US’s largest power companies – 21 July 2004.

37. Corporate Environmentalism: Strategic Trends Indicators of the next wave of corporate responsibility • Sustainability reports • Strategic partnerships • Participation of financial markets • Academia and education • Media

38. Corporate Environmentalism: Strategic Trends Corporations in the next society? • “In the next society, the biggest challenge for the large company - especially for the multinational - may be its social legitimacy: its values, its missions, its vision.” Peter Drucker

39. Corporate Sustainability: An ideal company? Corporate Sustainability: Features of an ideal company? • Integrates environmental and social issues into its core strategy • Quantifies the social and environmental costs of its activities • Displays innovation throughout the full life cycle of its products and services • Implements sound corporate governance practices • Is committed to transparency and accountability • Promotes meaningful change amongst its peers, within its neighbouring communities, and throughout its supply chain

40. Corporate Sustainability Further resources: Catalysing Change (UNEP): www.uneptie.org/outreach/business/best_practice.htm The Natural Step: www.naturalstep.org/ World Business Council for Sustainable Development: www.wbcsd.ch World Resources Institute : www.wri.org/ Wuppertal Institute: www.wupperinst.org