Making the Case for the Green Economy at Rio + 200

Ysabel Yates | Tue Jun 19 2012

The upcoming United Nations Conference on Sustainable Development, or Rio+20, is focused on enabling the transition to the green economy. There are two main challenges: defining the green economy and getting business on board.

“To bring this movement up to a scale necessary to meet sustainability challenges, the power of corporate creativity and responsible capital is quintessential”, said George Kell, UN Global Compact Executive Director, at the Rio+20 Corporate Sustainability Forum, a business forum that preceded the upcoming summit.

It’s clear that corporate sustainability is not only possible, but profitable too. And the large presence of business leaders at this year’s summit suggests the message is getting through. But to move forward, “business as usual” will have to be discarded in favor of different measures of economic progress and profitability.

Here’s a rundown, distilled from the U.N.’s briefing on the key issues, of what we’ll be hearing about during Rio+20 and beyond:

Alternative Valuation Techniques
Our current method of valuing global economies, Gross Domestic Product, or GDP, doesn’t take into account some of the negative effects of economic growth, like pollution or reduction in natural resources. The United Nations Environment Program is proposing an alternative: the Inclusive Wealth Index. The IWI factors in a country’s natural, human, and manufactured capital to its overall value. The first Inclusive Wealth Index will debut at the Rio+20 summit.

A Longer Time Frame for Profit Assessment
Numerous economic reports show that a strong commitment to sustainability is more profitable for businesses in the long run. The key phrase here is long run: since most businesses rely on quarterly profit assessments, many do not take advantage of more sustainable investments because of the time it takes to see a profit, however large it may be. The challenge is for companies and the investment community to recognize the benefits of committing to sustainability and to redefine how, and how soon, profit is measured.

Reconsidering Green Subsidies
In 2010, the U.S. protested to the World Trade Organization that China’s support of green energy sectors were a breach of WTO rules. But, should the WTO rules on domestic support for green technology should be reexamined in light of climate change? Many argue change is necessary to ensure renewable energy receives a needed boost. One suggestion is to use an expired clause in the WTO agreement to allow certain environmental subsidies and encourage clean technologies. For better or worse, changing the rules on environmental subsidies would certainly have an impact on green trade.

Adopting Regulations, Standards, and Targets for Renewable Energy
The Green Economy depends on renewable energy. Many countries have begun to set regulations, standards, and targets for increasing the amount of energy that comes from renewables. China aims to have 15 percent of its energy from renewables by 2020, the European Union, 20 percent by 2020, and the United States is committing to using 35 billion gallons of alternative fuels in 2017. Meeting these goals will depend on an increase in public and private partnerships, something we are likely to see more of as we transition to a green economy.

Top image: The Blue Marble, courtesy NASA.