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?

DECOUPLING SUCCESS AND HAPPINESS

(published at http://www.chinadialogue.net/article/show/single/en/1229)

“What kind of scissors are we going to need for decoupling? Maybe they’ll have to be silver scissors, or golden!” A colleague was joking about a serious issue: How to fulfill the basic needs of people, and at the same time decouple economic growth from environmental and social destruction? How to secure human well-being without wasting natural and human resources? How to break the assumed link between success and happiness?

Water and energy create the physical foundations of sustainable development. For billions of people worldwide they are still a daily question of availability. Thousands of cities are faced with the same question: how to secure the citizen access to safe drinking water and energy. Once there is water, it has to be kept clean, and sanitation and waste water treatment are needed. Once there is energy, it must also be clean so that it does not pollute the air and become a health or fire hazard. The production process of energy must be safe, otherwise it creates dangerous jobs and new environmental problems. A vicious circle!

The step from poverty, from no freshwater and no energy, to having basic human needs fulfilled is huge, but millions of people take it every year. Waves of industrialization and economic growth bring people from rural areas to cities and to urban lifestyles that focus on consumption: cars, fashion, entertainment, industrial food and drink – and more economic growth.

“Sustainable Consumption and Production”

In two years, China will host the 4^th International Expert Meeting on the 10 Year Framework of Programmes on Sustainable Consumption and Production. The 3^rd meeting was recently held in Sweden. The name of the conference is too complicated, the United Nations –led process is called the Marrakech Process for short. Its origins are in Johannesburg 2002, in the UN World Summit on Sustainable Development, where governments agreed that consumption and production patterns are inextricably interlinked. If we want cleaner products, someone will have to ask and pay for them.

One of the conclusions is that public procurement is an important mechanism in promoting sustainability. Local and national governments can become model clients and create markets for better products. This is also true for services and buildings: private companies and citizen will hardly construct better buildings if they don’t see that the public sector does it, first.

It is easy to agree that we need more sustainable products and services – but what does it mean in real life? There is no globally agreed list of criteria telling which product is sustainable, yet. Some characteristics are obvious: efficient use of resources, no pollution, no health risks, decent work, social and gender equity, transparent governance. Not only the product or service as such matter, but the production process and use of the product, the whole life cycle have to be analyzed. Did people become happier and healthier by making, using and recycling the product – or did they get ill and abused?

“Environmentally friendly” – or just a little less dangerous?

Some clever advertisers and urban developers have noticed that the “brand” and sales of a product can be improved by promoting it as “environmentally friendly” or as “eco-city” without showing hard facts. To oppose this trend the Norwegian government has forbidden the advertisement of any car as “environmentally friendly”, because no car is ever going to be environmentally friendly in the first place. Cars and their manufacture will always burn energy, pollute, injure and kill thousands of people, force cities to invest in highways that destroy urban fabric, and so on.

Imagine this: A company informs its shareholders and stockbrokers that it is going to make only products that don’t have to be thrown away, because they will not become unfashionable or technologically obsolete in a couple of months or years. Instead, they’ll be beautiful and easy to use for hundred years - just like your grandmother’s scissors, a bicycle or a kitchen knife. Their manufacture will cause no harmful waste, require no non-renewable resources, the employees will get a decent salary, and instead of bribes, the company will pay taxes to local and national government.

Earthland and global equity

A justified question is posed by developing countries to industrialized nations: Are you trying to tell our millions of people that they should not reach the same standard of living as your citizen? You have been polluting the Planet for centuries, and now you are teaching us that we should learn from your mistakes! How dare you suggest that we should not buy cars but create more innovative mobility systems, as an example!

Many people say that countries have to develop first, and worry about the environment only after they can afford it. Unfortunately the world does not work that way: Contemporary, industrial urban poverty means dirty water, poor sanitation, polluting energy, no public transport, no decent work, no housing, no sense of community, no education, no equal opportunities, more global competition. We are back at decoupling: How to secure access to basic services for all without an economic growth that is based on exploitation of human and natural resources, and that only brings success to a few?

In a relatively short period of time we’ve been through industrial and information technology revolutions. What is the quantum leap that we have to take today? Eco-efficiency will not be enough. Can there be a “business case” for multinational industries in producing less for more people with fewer resources? Who will be the first politician to win elections without promising growth, only more happiness?

Tariq Banuri, also a World Future Councillor, gave a speech at the conference. “Think of the world as one country, Earthland, where people will have to think and act collectively. Stop talking about the earth as a forgiving mother. The Earth does not forgive,” he said.