Sustainable Development and Economic Development: Partners for the Future

1. Sustainable Development and Economic Development: Partners for the Future Dr. Cynthia P. Schneider Lelystad October 26, 2001

2. Post September 11th • How to discuss subjects such as sustainable development? • Are there not other more pressing needs? • What is the relevance of today’s topic, the symbiotic relationship between sustainable development and economic development, to the horrendous events of September 11th? Dr. Cynthia P. Schneider

3. What is sustainable? • America’s patriotism and spirit • America’s faith in democracy, freedom and human rights • America’s alliance with Europe, our ‘essential partner’ • America’s broad-based, global alliance against terrorism Dr. Cynthia P. Schneider

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6. What Is Not Sustainable • Terrorist networks with the capacity to commit horrendous acts such as the attacks of September 11th • The repression of regimes such as the Taliban and • The widening gulf between rich and poor, educated and UN-educated Dr. Cynthia P. Schneider

7. 500 companies control 42% of the world’s wealth Turnover of the 10 largest companies exceeds the combined GOP of the 100 smallest countries Out of the world’s 6 billion people, 4 billion live on less than $1500 per year 1 billion live on $1.00 per day or less Widening Gap Between Rich and Poor Dr. Cynthia P. Schneider

8. Shell Oil alone controls 160m hectares of land --146 countries in the world cover a smaller area Ten companies effectively control world’s food chain Over two billion children go to bed hungry every night Over 14 million children suffer eye damage as a result of vitamin A deficiency Widening Gap Between Rich and Poor Dr. Cynthia P. Schneider

9. YES Education for all Democratic systems Good governance Open markets openness to and investment in innovation and new technologies NO Abundant naturalresources Distinguished history Wealthy upper class Keeping the trains running on time --totalitarian governments Critical Factors for Economic and Societal Growth Dr. Cynthia P. Schneider

10. YES Singapore Taiwan South Korea Japan Silicon Valley NO Iraq Cambodia Russia Brunei Mexico Examples Dr. Cynthia P. Schneider

11. TRUE Knowledge creation is the single most important factor Good, widespread education system is the best raw material open, democratic system the best environment FALSE Creating material products, not knowledge, succeeds Cheap, unlimited supplies of hydrocarbons and other non-renewable resources will always be available Unlimited capacity for earth’s ecosystems to absorb waste and emissions Growth in Today’s World Dr. Cynthia P. Schneider

12. Example of Knowledge, not Resource, Created Economic Growth • The tulip industry in the Netherlands • High standards, horticultural knowledge, good infrastructure, efficient production and transportation, reliability all outweigh factors such as land, cheap labor, sun, and warmth that other countries have in abundance Dr. Cynthia P. Schneider

13. How to Achieve Growth for All? • Do we not want to share the benefits of globalization, and to increase opportunities for those who have not partaken of the digital/life science/high tech pie? • For all 6 billion people on earth to live at same levels of consumption as Americans would require 3 planet earths for source material, energy creation, and waste disposal. Dr. Cynthia P. Schneider

14. Growth and development at all costs use of natural resources through exploration, colonialism and industrialization Growth and development through knowledge building triple bottom line shareholder value but also corporate responsibility Old Growth/New Growth Dr. Cynthia P. Schneider

15. The Challenge of Sustainable Development • Chad Halliday, Chairman and CEO of DuPont and Chair of the World Business Council for Sustainable Development, “How do we provide a strong return for our shareholders, grow our businesses, and meet the human needs of societies around the world, while at the same time reducing our environmental footprint?” Dr. Cynthia P. Schneider

16. The best development is no development To protect the environment must stop or slow development and consumption Protecting the environment is not cost-effective for business Responsible development linked to knowledge building And capacity building Requires good governance Old Paradigm/New Paradigm Dr. Cynthia P. Schneider

17. New Technologies • Can preserve environment and re-vitalize economy • Can “empower, sustain, and liberate, rather than exclude, erode, and restrain” (Carly Fiorina, CEO, Hewlett Packard, September 26, 2001) • Can and should be sensitive and responsive to local needs and market conditions • Can be transferred to the developing world Dr. Cynthia P. Schneider

18. Examples: Plant Biotechnology • helps to resolve critical need to reduce land and water use by increasing plant productivity • insect resistant cotton - in US increased 260 million pounds per year, with 2.7 million pounds less of pesticide • development of new strain of virus resistant papaya saved papaya industry in Hawaii • virus resistant raspberry (Oregon/Washington) could save up to 10 million pounds per year, add $11 million of production value and reduce fumigant use by 50% Dr. Cynthia P. Schneider

19. Biotechnology and Developing World • Can increase plant tolerance of pests and stressful conditions (40% of plant production in Asia and Africa lost to pests and pathogens) • Can reinforce staple food with essential vitamins • Can eliminate parasites that afflict domestic animals, enabling families to achieve sustenance (TIGR/ILRI research) Dr. Cynthia P. Schneider

20. Biotechnology Issues • Transfer of knowledge, intellectual property • Who will pay? • Who will sacrifice? • Responsibility of public sector/private sector? • Who will take responsibility for ensuring sustainable development in third world? Dr. Cynthia P. Schneider

21. Kofi Annan and the UN Global Compact • …..”let’s choose to unite the powers of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of the next generations..” Kofi Annan, UN Secretary General Dr. Cynthia P. Schneider

22. But isn’t business in the business of business….. • Sustainability NOT a zero sum game in which developed world must lower its standard of living so that developing world may rise • Market forces can be used to achieve sustainability, not the opposite • Requires new, creative models, tailored to needs of local population Dr. Cynthia P. Schneider

23. Yes, but... • In the long run bringing market forces to bear on problems of developing world will create a larger customer base • Will also create knowledge and opportunity • opportunity to share benefits of our knowledge of clean energy, i.e. wind and solar powered energy Dr. Cynthia P. Schneider

24. Renewable Energy Sources • Wind and solar - Siemens Solar GmbH and Shell Renewables to cooperate • Shell Renewables also has R&D in hydrogen and fuel cells • AES -- electricity produced through clean coal and natural gas. Has brought affordable energy to many remote areas of Pakistan, India, and China, and changed lives in process. Dr. Cynthia P. Schneider

25. Renewable Energy • Solar Energy --model project Taquile Island, Peru • Dutch supported • Island villagers bought 72 solar systems and then bought more with their earnings. • Solar energy systems enabled them to sell more goods and to expand tourism because the hotel was lit. This, in turn, provided opportunities and incentive for the youth to stay on island. Dr. Cynthia P. Schneider

26. Sustainability and Corporate Responsibility • Europe, in general, and the Netherlands, in particular, ahead of the US in integrating sustainability into corporate vales • Examples -- Ahold “Earth and Values program”, sustainable coffee, GAP (good agricultural practices). • Novartis “Eco-efficiency” -- producing more with less, benefits shareholders and environment. Dr. Cynthia P. Schneider

27. But the U.S. is Catching On • Companies such as Dupont, Hewlett Packard, AES, Chevron, Nike, Sara Lee, and many others recognize the imperative as well as long term value of sustainability • Governmental programs such as Energy Star have encouraged sustainability in many sectors • Initial signals from administration were misleading Dr. Cynthia P. Schneider

28. Climate Change • In US private sector set higher goals than government. • Shell goal to reduce greenhouse gases from 1990 by more than 10% in 2002 (Kyoto target %5.2 by 2008-12). • Dupont: 1)reduce emissions of greenhouse gas by 45% from 1990-2000 • 2)source %10 total global energy needs from renewables; 25% from non-depletables. Dr. Cynthia P. Schneider

29. Climate Change • Additional ways attack the problem: • AES -- reduces methane emissions by improving livestock feeding and digestion for small scale farmers, using technologies readily available in US • Technology transfer of this feed substance to developing world • Methane reduction is critical piece of puzzle (has global warming potential of 21 times carbon dioxide). Dr. Cynthia P. Schneider

30. Can Corporations Effectively Preach Sustainable Development • They have the power and influence… • Of the 100 largest economies in the world, 51 are corporations • The Top 200 Corporations’ combined sales are bigger than the combined economies of all countries minus the biggest 10 • General Motors, the world’s biggest corporation, ranks 23rd in the world economy, ahead of Denmark, Poland and Saudi Arabia. Dr. Cynthia P. Schneider

31. But Who Has Credibility ? • NGOs trusted nearly two to one to “do what is right” as compared to governments, media or corporations. • NGOs such as Amnesty International, Greenpeace and World Wildlife Fund have more credibility than Ford, Microsoft or Nike. • Of US respondents to November 1999 survey: • 80% view Greenpeace and 78% view Amnesty International as highly effective • only 11% saw governments or companies as “making the world a better place” Dr. Cynthia P. Schneider

32. Growing Strength of NGOs • A $1 trillion big nonprofit sector • If viewed as a nation, NGOs would rank 8th in economic power • NGOs distribute more aid than the World Bank • Employ over 7% of U.S. workforce • Distribute 30% of U.S. aid Dr. Cynthia P. Schneider

33. New Paradigm • of the environmentally responsible and technologically advanced, knowledge based corporation. • of making the markets work for sustainability. • of creating new markets and building capacity in the developing world, in partnership with public sector. Dr. Cynthia P. Schneider

34. Leadership in Flevoland • Opportunity for model development together with sustainability • Flevoland already exploring innovative means to preserve fishing industry in sustainable way • Center for biotechnology research • From Urk to Lelystad, potential for economic and sustainable growth Dr. Cynthia P. Schneider

35. Leadership • After September 11, we all are ‘Americans’ • “I Love New York More than Ever” T-shirt • Corporate leaders, “now more than ever before, have a responsibility to redefine the role of the corporation on a world stage and to leverage our ability to impact individuals, companies, communities, nations-- for the better”. (Carly Fiorina, CEO HP, September 26, 2001). Dr. Cynthia P. Schneider

36. The Sustainable Future • Dr. Martin Luther King spoke of the need for “America, the richest and the most powerful nation in the world,” [to] “lead the way in this revolution of values..to shift from a “thing-oriented society to a person-oriented society”. • In the knowledge-based economy, it is our obligation to redeem the dream of our Founding Fathers and extend it throughout the globe. • Only when there is opportunity for each person to live up to his or her potential will we have a global sustainable future. Dr. Cynthia P. Schneider