SECURING SUSTAINABILITY IS RISK MANAGEMENT

This text has been published in November 2010 on the website of SITRA The Finnish Innovation Fund [www.sitra.fi/en] and also in Finnish and Swedish translations.

The concept of Sustainable Development was not invented yesterday. The Brundtland Report, Our Common Future, was published in 1987 and the intergovernmental UN Conference on Environment and Development signed a roadmap for the 21st century, the Agenda 21, in Rio in 1992. In the past 20 years we’ve learned how to use the web and the mobile phone, but many of us continue to pretend that sustainability is nothing for beefeaters. Was the message wrong, or the messenger?

Today, the writing on the wall couldn’t be clearer: Construction Counts for Climate. No country is going to achieve its targets in greenhouse gas emission reductions unless it tackles the energy challenge of buildings. This message is now gradually getting heard for the simple reason that climate change mitigation translates to energy efficiency, which translates to saved Euros and new business opportunities. Carbon credits can be bought and sold. Money talks louder than any vision of a safer world for our children. However, energy efficiency is not the whole story of sustainable development with its mutually supporting social, societal, economic and environmental dimensions.

Let me suggest another way to interpret the imperative of sustainability in the built environment: risk management. It is no coincidence that big multinational insurance companies were the first private stakeholders to take climate change seriously many years ago. They know how to calculate risks. The giant Munich Re has set the industry benchmark. Some other sustainability risks are more obvious than the seemingly invisible global warming. For example, would it be worth bribing the building inspector in an area prone to earthquakes in order to save money by using less steel for reinforcing? Would a financing institution risk its reputation by funding a developer, which is infamous for poor construction site management and causing pollution? Would investors want to include in their portfolios real estate, where tenants change all the time because of high maintenance costs and lack of public transport? Quite the opposite, a growing number of people want to see an external expert's assessment of the corporate culture of a shareholder company before investing in it.

But how to monitor the implementation of sustainability targets and benchmark them? The trendy go shopping for the cheapest certificate - which is quite expensive. It is also trendy to complain about the strictness of building regulations. However, fulfilling the legal requirements ensures a building permit, which is at least as comprehensive a document! However, no piece of paper is going to ensure a sustainable performance of the building throughout its entire life cycle. Hence, why invest in the ephemeral glory of a logo instead of investing in ambitious performance targets, integrated planning, quality of the processes, and corporate culture of the stakeholders? Why not invest in risk management?

CONSTRUCTION COUNTS FOR CLIMATE

Side Event Friday 7 December at 13-15, Grand Hyatt Bali, Room BIOFUEL

Buildings and construction are responsible for on average 40% of the total energy consumption. During the whole life span of buildings, the energy is mainly used for heating, cooling, lighting, hot water production and powering of appliances. Part is also used for building materials production, construction and demolition. The energy required for logistics and mobility in the built environment is not included in these figures.

The potential of the buildings and construction sector to drastically reduce global emissions of greenhouse gases is technically proven but poorly known, and frequently not supported by existing policies and market signals.

This is the urgent concern that is shared both by governments all over the world, and by construction industry and real estate business. In Bali the particular questions are:

Ø How can CDM and other “Kyoto mechanisms” best promote sustainability of the built environment?

Ø What are the steps needed to substantially reduce the greenhouse gas emissions from buildings and construction?

In joint effort, representatives of the United Nations Environment Programme (UNEP), World Business Council for Sustainable Development (WBCSD) and the Marrakech Task Force on Sustainable Buildings and Construction, led by Finland, will highlight critical issues from the points of view of the public as well as the private sectors. The Director of UNEP Division of Technology, Industry and Economics (DTIE), Ms. Sylvie Lemmet will set the scene and experts of the organizing partners will report on recent findings. There is time for discussion after the comment of Ms. Outi Berghäll, Vice Chair of the Ad Hoc Working Group on Further Commitments.

For more information, please get in touch with

- Kaarin Taipale, Chair of the Marrakech Task Force on Sustainable Buildings and Construction, taipale@hse.fi

- Niclas Svenningsen, Coordinator, UNEP Sustainable Buildings and Construction Initiative, Niclas.Svenningsen@unep.fr

- Christian Kornevall, Project Director, Energy Efficiency in Buildings (EEB), World Business Council for Sustainable Development; kornevall@wbcsd.org

A question to Mona Sahlin

(On the PES@ctivists Manifesto - Yourspace website Mona Sahlin, the leader of the Swedish Social Democrats, answers questions 24 October 2007 - I sent her this rather huge question.)

Dear Mona Sahlin

For us as PES activists it is clear that we’ll have to link and to fulfil the requirements for as well decent work and fair trade, as for the need for energy savings, energy efficiency and radical transition to renewable energy sources. The EU has been quite ambitious in setting targets regarding all of these issues. The Bali climate negotiations are approaching, and already in 2009 we should meet in the climate summit in Copenhagen to agree on a “Kyoto 2”.

Many of the barriers slowing down climate negotiations are well known: The US and Australia don’t want to sign any commitments but advocate “voluntary mechanisms” instead. G77 and China want to “develop first” and clean up only afterwards. For obvious reasons, the oil producing countries do not like to discuss reducing the use of fossil fuels, and note that they won’t invest in cleaner technologies unless there is certainty on growing demand. Some see the climate issue as a great opportunity to promote more nuclear power, and so on. Our own trade unions are sceptical, to say the least. – At the same time, the only ones profiting of our growing thirst for more energy seem to be the oligarchs in emerging economies or oil-producing developing countries, and the military industry providing equipment for those fighting to secure access to oil resources.

Mona Sahlin, in this extremely controversial climate/energy framework, do you see any “windows of hope”? Any new initiatives, new arguments to push our agenda? In particular, can we develop new mechanisms to bring the great emerging economies – Brazil, South Africa, India and China – on board? Such as CDM (Clean Development Mechanism) and carbon trade on a truly large scale and covering more sectors? – And the second difficult question for us European Social Democrats: What does it take to turn our own Trade Unions into drivers of the “fight against CO2” instead of them “joining the enemy”?

With warm regards from Helsinki

Kaarin Taipale