By Anna da Costa
NEW DELHI (AlertNet) – When it comes to fighting climate change and dealing with other environmental issues, incremental change is no longer enough. Instead, deeper, more disruptive transitions are needed, experts at a business and environmental summit in New Delhi said this week.
“Tweaking is not the answer. It is perpetuating the problem even more,” said Amitabh Kant, CEO of the Delhi Mumbai Industrial Corridor Development Corporation and a speaker at the Business for Environment Summit in India’s capital.
The problem, noted a number of speakers, is that businesses remain focused on “doing less harm,” rather than propagating ultimate good. While efficiency is important in an increasingly resource-constrained world, they said, it is no longer enough.
“Green growth in both developed and emerging markets is still looked on as an incremental phenomenon, not as a transformational imperative,” said Ravi Chaudry, chairman of the Indian company CeNext.
LOOKING TO NATURAL CAPITAL
One of the key areas under discussion for its potential to support a deeper transition towards corporate sustainability was putting a value on natural capital.
This was highlighted in new report, Natural Capital at Risk, launched on the first day of the summit.
“The whole resource efficiency agenda is now reaching an end. While it’s valuable, it’s also like putting a Band-Aid on the problem. There are broader issues at stake, and translating these issues into economics allows us to go beyond that,” said Dorothy Maxwell, executive director of the TEEB for Business Coalition, an international organisation that commissioned the study.
The study found that primary processing and production sectors such as agriculture, forestry, mining and petrochemicals have a collective impact on natural ecosystems amounting to an annual cost of $7.3 trillion, which represented 13 percent of global economic output in 2009.
Although these costs are currently external to economic markets, they will not remain so for long, and it would be better to start accounting for them now, said Pavan Sukhdev of TEEB (The Economics of Ecosystems and Biodiversity).
According to Sukhdev, coal-fired power in the United States is a $247 billion market, but external costs such as carbon emissions and health costs amount to $316 billion. “Bankers today are only looking at half the cost,” Sukhdev said.
Highlighting why such risk assessments are increasingly important for business today, David Steuerman, business and biodiversity officer at the Secretariat of the U.N. Convention on Biological Diversity, said: “Valuing natural capital is not just about being sustainable, it’s about being viable.”
Steuerman offered the example of Canada’s Newfoundland cod fisheries. “They used to be an infinite resource, but in the ‘90s they crashed and are now gone,” he said. “This destroyed a local economy.”
Speakers also noted that measuring natural capital can stimulate sustainable innovation within businesses.
“Many of the businesses I work with are concerned with resource constraints,” said Maxwell, “but as they begin to work with these they very quickly shift to looking at material and resource innovation.”
However, not all participants at the conference were convinced that putting a price on nature could lead to a more sustainable and equitable operating model, and concerns were expressed about unintended consequences.
“I’m worried that such approaches could have the potential to vastly under- or overvalue particular natural resources or entities, causing greater harm than good in the end,” said Jai Kumar Gaurav, senior manager at International Development Enterprises India. “At what point will somebody’s life become less valuable than somebody’s electricity or business?”
CHANGING THINKING ON RESOURCES
Other speakers at the conference emphasised the need to encourage “closed loop thinking” in business to deal more effectively with the conservation and management of resources such as water, waste and energy.
“The word ‘waste’ should be removed from the English language,” said Arun Kumar, president of business initiatives at Development Alternatives, an Indian nongovernmental organisation. “It drives a very negative mindset and in 90 percent of cases (waste) is in fact a material resource. It’s of no use to the generator, but it’s of phenomenal use to someone else. One can build solutions and business around it.”
Development Alternatives estimates that the profitable use of these resources could add 50 billion Indian rupees ($922 million) to the country’s economy every year.
The importance of better connecting different environmental and social challenges was highlighted by conference speakers, as well as working to change attitudes towards consumption, in order to drive more sustainable behaviour within and beyond the business environment.
“When you examine the challenge of water scarcity, it quickly becomes apparent how connected this is to agricultural practices and energy consumption. These issues can’t be looked at in isolation by business, and nor should be the solutions”, saidMahesh Rao, India country director at Ecolab.
“Attitudes to consumption have to change. The rich will have to set examples of sustainable lifestyles for the poor to emulate,” said Hem Pande, additional secretary at India’s Ministry of Environment and Forests.
Whether such shifts in consumer thinking and behaviour should come from within or beyond the business world, however, remained a question within the discussions.
CREATING AN ENABLING ENVIRONMENT
Speakers pointed to the great number of challenges for businesses to make deep transitions towards sustainability, especially in the context of economic and political systems that are not supportive of the direction in which business needs to move.
Poorly structured subsidies, in particular, were targeted as a chief inhibitor to many such transitions, including the growth of renewable energy in India and many other parts of the world.
“The problem is skewed fossil fuel subsidies. If you removed the subsidies on oil and coal, you wouldn’t even need a subsidy for renewable energy,” said Ramesh Kyamal, head of Gamesa Wind Turbines.
According to Kyamal, India is in a very good position to leapfrog to distributed renewable energy generation across large areas that are currently not electrified, but this would require discontinuing subsidies for fossil fuels.
“We have public financing going in the opposite direction to the way in which we want to go,” said TEEB’s Sukhdev. “We need to change the operating environment so that business can respond to the right costs and benefits.”
Anna da Costa is a New Delhi-based journalist with an interest in climate change issues.