BUSINESS AND ENVIRONMENT:

PROBLEMS AND OPPORTUNITIES

Professor Norman Myers

AGENDA

Environmental trends and costs

Sustainable businesses

Eco-technologies; techno-breakthroughs

Businesses and the "triple bottom line

Roadblocks: "perverse" subsidies

Decline of materialism?

Wealth = wellbeing?

Needed: a new business vision

NATURAL CAPITAL

AND ITS ENVIRONMENTAL SERVICES

Natural capital supplies a host of environmental services such as watershed functions, dilution of pollution,

soil conservation, and regulation of weather and climate, among many others.

These services are worth $42 trillion per year, by contrast with the global economy's $46 trillion.

GROWTH OF THE HUMAN ENTERPRISE

In just the past 20 years: Energy use has increased 40% Global population 35% Meat consumption 75% Paper use 75% Automobile fleet 75% World economic output 85%

OUR ENVIRONMENTAL IMPACTS

We consume over half of available freshwater and of net plant growth. We have degraded 20 million sq. km. of land (= 2 x U.S.)We are even dislocating our climate. In 1960 we exploited 70% of our planet's resources, in 2000 120%.

During 1992-2002: People lacking safe drinking water: 1.1 billion to 1.2 billionPeople in deep poverty rose from 1.1 billion to 1.3 billion.Carbon dioxide emissions increased by 11%. Annual increase in human numbers fell from 90 million to 77 million.

ECOLOGICAL FOOTPRINTS

World average 2.3 Global Hectares (GH) per person, World’s biocapacity 1.9 GH, deficit 0.4 GH

Japan 4.6 and 0.8, deficit 3.8 GHUnited States 9.6 and 5.8, deficit 3.8 GH

Russia 4.2 and 5.1, surplus 0.9 GH

CHEAP/COSTLY FOOD

A typical meal item in the United States travels at least 1500 km before it reaches a dinner plate.

If the full cost of all fossil fuels for transportationis added onto the price, a California lettuce on a New Yorker's table needs tens of times as much fossil fuel energy as its food energy.

During the last forty years while population has doubled, the value of international trade in food has tripled, and the weight of food shipped between countries

has quadrupled.

HIDDEN COSTS OF CONSUMPTION

Over 90% of materials and resources harvested or displaced in nature are wasted while producing food, machines, vehicles, etc.

In the United States, a mere 1% of raw materials end up in productsthat are still used six months later, the rest being junked.

The global community needs to cut its use of natural resources by 50%, while allowing for more people with more demands.

Developing countries lack the technologies for 50%, so developed countries should aim for a 90% cutback.

SUCCESS STORIES 1: BUSINESSES CUTTING GHGs

During the 1990s, L'Oreal, the world's largest cosmetics manufacturer,

increased production by 60% but decreased GHG emissions by 44%,largely through energy conservation.

Johnson & Johnson will cut GHGs by 7% during 2000-2010, Kodak by 20% during 2000-2004, Alcoa by 25% during 1990-2010,

DuPont by 65% during 1990-2010 (45% already).

But the United States as a whole has increased its GHGs by 16%, faster than virtually any other advanced country.

SUCCESS STORIES 2: BUSINESSES CUTTING CO2

In 1993 a U.S. business lobby set up the Global Climate Coalition

to stop action on climate change. In 2000 it closed its doors because of declining support.

Toyota, BP Amoco, Shell, DuPont, Enron and 15 other corporations have formed a

Business Environmental Leadership Council to tackle global warming.

They plan to reduce GHGs by 15% during 1990-2010.

SUCCESS STORIES 3: SUSTAINABLE PRODUCTION

Unilever, the world's largest processor of fish, sells fish products only from certified sustainable sources.

Share of the top 100 corporations producing sustainability reports: Japan 72%, UK 49%, USA 36%,

Germany 32%, France 21%.

MICROCHIPS

In that archetypal product of the Industrial Age, the car, materials form 40% of volume.

In that strategic product of the information age, the microchip, they make up 0.03%.

All today's microchips would fit inside a jumbo jet, and by e.g. enabling people to work at home,

can eliminate the need to go from here to there in the first place.

The microchip can form the basis of much future consumption since it is a key ingredient in low-volume and high-value products

such as computers, videos, etc.

FACTOR FOUR

Using today's eco-technologies, everybody could enjoy

twice as much material well-being while using only

half as much raw materials and energy and causing only

half as much pollution and other forms of waste.

FACTOR 10

The Factor 10 goal has been adopted by

OECD, the World Bank, seven governments, the World Business Council, and NEC.

Labour productivity has expanded 20-fold

since the start of the Industrial Revolution, largely by substituting fossil-fuel energy for human muscle.

TECHNO-ADVANCES ALREADY HERE

•Fuel-cell cars, with plug-in electric generatorsFuel-cell cars, with plug-in electric generators

•Buildings that “manufacture”solar power, oxygen and waterBuildings that “manufacture”solar power, oxygen and water

•Weeds supplying powerful pharmaceuticalsWeeds supplying powerful pharmaceuticals

•Cellulose-based plastics that are strong, and recyclableCellulose-based plastics that are strong, and recyclable

•Roofs, windows and roads serving as solar-electric collectorsRoofs, windows and roads serving as solar-electric collectors

•Wood: all our wood needs could be grown in an area the size Wood: all our wood needs could be grown in an area the size of Honshuof Honshu

SHORT-SIGHTED THINKING

"X-rays are a hoax." Lord Kelvin, 1900

"The radio craze will die out."

Thomas Edison, 1922

"There is a world market for about five computers." Thomas Watson, Chairman of IBM, 1943

"Space travel is impossible."

Richard Wooley, British Astronomer Royal, 1956

"No individual needs a computer in his own home." Ken Olson, President, Digital Corp., 1977

"640k of memory is enough for anybody."

Bill Gates, CEO of Microsoft, 1981

OUR CONSUMPTION OF MATERIALS

We need to cut materials consumption worldwide by at least 50%

To allow developing countries to develop, advanced economies

need to cut by 90%

INTERNET

The Internet economy replaces warehouses with supply-chain software,

paper with electrons, and trucks with fiber-optic cable.

This makes for large energy savings and a very different type of economic growth.

Every minute of driving to shops uses twenty times the energy

of a minute spent shopping on-line.

NEW DEMANDS ON BUSINESS

* energy shortages * water shortages * changing government policies e.g. tax shifting * global warming * globalization, especially the Internet * major surprises

The biggest surprise ahead will be no surprises. Vision?

THE NEW CONSUMERS

Well over one billion people in 17 developing and 3 transition countries

have sufficient income to rank as decidedly middle class. Their aggregate consumption power,

in purchasing power parity, matches that of the United States.

They represent the biggest consumption outburst ever known

--and hence the biggest new market ever known.The leader, China, may well become

the world's biggest economy well before 2020.

FOCUS ON ASIA

China has 300 million New Consumers, India 130 million. The other 8 Asia countries have almost 250 million,

for a regional total of 680 million.

Thus two thirds of all New Consumers are in developing Asia,

and their numbers are rising faster than in the other 10 countries.

Developing Asia features

the biggest consumer boom in history.

CHINA

Its 300 million New Consumers in 2000 may well rise to 600 million in 2010.

Today's New Consumers have a purchasing power

(in PPP) of $1.3 trillion, on a par with Germany.

By 2010 it could reach $3.5 trillion.

50 million Chinese use the Internet and hence are plugged into the world's latest products.

BUSINESS AND THE TRIPLE BOTTOM LINE

1. Corporate profits: the usual. 2. Environmental safeguards: protecting the natural-resource underpinnings of all economic activity. 3. Social responsibility: from corporation to community.

WHAT SHALL WE DO?

1. Swap GNP for NNP, or an

Index of Net Sustainable Welfare, or a Genuine Progress Indicator.

2. Phase out “perverse” subsidies. 3. Expand eco-technologies.

U.S. GENUINE PROGRESS INDICATOR 1950-2000

“PERVERSE” SUBSIDIES

Perverse subsidies are adverse for the economy

as well as the environment.

$billions per year Agriculture 510 Fossil fuels/nuclear energy 300 Road transportation 780 Water 230 Fisheries 25 Forests 92 Total 1,950 By definition, these funds support unsustainable development.

Contrast the Rio budget for sustainable development, $600 billion per year.

WATER PRICES AS SHARE OF COST OF SUPPLY

Israel 60%-+ Egypt 20% India 14% Pakistan, Indonesia, South Korea 13% Philippines 10% Thailand 3% Bangladesh 1% United States 17%

ENERGY WASTE

U.S. power plants waste energyequal to Japan’s total energy use.

Americans save $200 billionworth of energy per year,

but they still waste $300 billion worth.

Better control systems for motors,lighting and temperature couldsave half the world’s electricity.

PERVERSE SUBSIDIES: SIZE

Perverse subsidies of $2 trillion

are larger than all but the three largest national economies in the world.

They are almost three times as large as

global military spending per year, larger than the top twenty corporations' annual sales,

and larger than the global fossil fuels industry.

JAPAN’S PERVERSE SUBSIDIES

Perverse subsidies for agriculture $30 billion per year, $5000 for each of 6 million farmers.

Plus environmental externalities of $30 billion. also $60 billion for extra food costs.

Total $120 billion

Perverse subsidies for road transportation $40 billion per year.

Just the two sectors cited amount to $1250 per citizen.

PERVERSE SUBSIDIES:

THE BETTER NEWS India has slashed fossil fuel subsidies by 37%, Russia by 45%, Mexico by 53%, and China by 56% New Zealand has eliminated virtually all its agricultural subsidies. Singapore has no more subsidies for car travel. South Africa, China, Australia and Mexico are moving towards full-cost pricing of water. Brazil has ended subsidies for cattle ranchers in Amazonia.

ROCKY MOUNTAIN INSTITUTE 

The Institute's house and office at over 2000 meters/6500 feetare heated and lighted only by solar power and energy conservation,

even though winter temperatures often reach -40 degrees C. Inside is warm enough to grow bananas,

and RMI even sells surplus electricity to the national grid. The building saves 99% in space/water heating and 90% in electricity.

The 1983 heat-trapping measures cost less than the boilers and stoves eliminated, with savings repaid within 10

months.

ECO-TECHNOLOGIES

The world market for pollution controls,

waste management, recycling, energy efficiency

and the like topped $400 billion in 1994

and almost $600 billion by 2001, or more than the global aerospace

or chemicals industries.

MARKET GROWTH FOR CLEAN TECHNOLOGIES, 2000-2010

($billions)

Technology 2000 2005 2010 2000-2010

Fuel cells 0.2 2.5 10 50 times

Hybrid/fuel-cell vehicles 2 10 48 24 times

Solar photovoltaics 2.5 7.5 24 10 times

Wind power 4 13 44 11 times

THE BIGGEST CHALLENGE AHEAD?

Is materialism no longer so attractive?In 1960 only one third of Americans were "very happy".

Despite a doubling of per-capita consumption today, The one third has hardly increased.

The Voluntary Simplicity movement has grown in certain areas to include 28% of local people.

More than half of all Americans agree they must accept "inevitable changes in lifestyle"

and even "reduced consumption".

Consider the scope for sudden shifts in consumption patterns: during a recent decade, 55 million Americans gave up smoking.

WEALTH AND WELLBEING

Many people in rich countries increasingly askif greater wealth must necessarily lead to greater wellbeing.

Two thirds would rather see the environment improve than have more economic growth and personal spending money.

Developed-world citizens favoring less consumption: more than 60%.

Highest is Japan with 80%, then North America 67% and Western Europe 62%.Those favoring less consumption of electricity 83%,

of paper 81%, of gasoline and other fuels 73%, of water 71%, and of food 65%.

SUSTAINABLE SOCIETIES AND PUBLIC OPINION

Hopeful signs:

50 million "cultural creatives" in the United States alone.

Socially Responsible Investment from 1% of managed assets to 15% in a single decade.

The Voluntary Simplicity Movement.

Cutting-edge technologies like clean/renewable energy and hybrid cars.

FINAL GOOD NEWS: SUSTAINABLE NETHERLANDS

Aims to cut by 2030: CO2 emissions from 12 tonnes per person per year to 1.7 tonnes domestic freshwater use by 38% timber use by over 60% cropland use from 0.45 ha. per person to 0.25 ha. meat consumption by 70%.