Sustainability: a vital agenda for 21st century good governance Part I.

* How marginal concepts of sustainability became mainstream over the last forty years

* Global, local and company-based initiatives

* The transformation of knowledge in sustainable development

By 1995, the concepts of sustainability and sustainable development were

moving from the margins to the mainstream. By 2002, the 'strange' partnership between Greenpeace and the World Business Council for Sustainable Development calling on nations to support Kyoto at the World Summit for Sustainable Development in Johannesburg was no longer so strange. This was a long way from the first Earth Summit in Rio de Janeiro ten years before. At that time, sustainable development may have been the core concept yet, despite the fact that world leaders, presidents and prime ministers attended, it was still environmentalists meeting about the environment. Business was absent. By 2004, business leaders know they have to grapple with sustainability.

Non-government organisations (NGOs), part of the social and cultural movements since World War II, initiated much of this. Environmental and human rights activists joined forces with scientists and policy makers. However, understanding and action remained at the margins.

It took disasters, natural and human-made, new pandemics, scandals, information and communication revolutions and globalisation before governments and corporations would hear and take those messages from the margins to the mainstream. And we are still at the very beginning.

It's an interesting tale.

The Silent Spring

In 1962, Rachel Carson's Silent Spring (1) was published. It took our breath away. It linked the toxicity of pesticides and their concentration in the earth's atmosphere to the health of humans and other species. It raised questions about the capacity of the natural cycles to absorb huge amounts of human-made chemicals. It challenged assumptions about economic and industrial progress and our wellbeing.

In 1970, the US Congress established the world's first Environmental Protection Agency (2) (EPA). Richard Nixon was president.

In 1972, the United Nations held its first environment conference in Stockholm (3). The concept of sustainable development was first debated and the Club of Rome (4) published Limits to Growth (5), questioning the sustainability of the industrial growth model with its accelerating and destructive impacts on natural systems.

In 1978, Love Canal in New York State had more than 15 minutes of fame. It was discovered that a residential estate was built on a toxic dump. Residents became ill, some died. This led to the single most significant piece of environmental legislation so far. In 1980, US Congress passed the Comprehensive Environmental Response, Compensation and Liability Act (6) (CERLA), making companies liable for environment hazards. Jimmy Carter was president. It's the time AIDS was discovered, the first 'modern' pandemic.

In 1984, the Union Carbide chemical plant in Bhopal India exploded. Five thousand people died and 200 000 others were affected. Subsequent litigation is still alive. (7) In 1986, Chernobyl imploded. (8) In 1989, the Exxon Valdez supertanker ruptured, spilling 41.6 million litres of crude oil into Alaska's Prince William Sound. Thirty thousand Alaskans were affected. The case is still in the courts. In 1995, Shell's share price was affected by environmentalists protesting against the deep-water disposal of the North Sea oil rig, Brent Spar.

In the same year, environmentalist and anti-Shell campaigner, Ken Saro-Wiwa, was hanged in Nigeria, sparking widespread protests questioning Shell's responsibilities to the Ogoni people. Shell's corporate reputation was threatened.

At the same time, Australia had its own environmental issues and campaigns. Lake Pedder was flooded for hydro electrical capacity in 1972, after a campaign by naturalists failed to save it. By 1983, the Hawke Labor Party won national government on the back of green votes and the campaign to stop the damming of the Franklin River in the wilds of Tasmania and one of the first Green Parties in the world emerged.

The Brundtland Report

In 1987, Our Common Future (9) (Brundtland Report) was published. It wove together consideration of social, economic, cultural and environmental issues and proposed some global solutions. It also popularised the term sustainable development, defining it as 'development that meets the needs of the present without compromising the ability of future generations to meet their own needs'. The report went on to say that 'Sustainable development is not a fixed state of harmony, but rather a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are made consistent with future as well as present needs'.

Rio: the first Earth Summit

In 1992, the UN Conference on Environment and Development (UNCED) (10) was held in Rio de Janeiro. It resulted in the publication of Agenda 21 (11), the Convention on Biological Diversity (12), the Rio Declaration (13) and a statement of non-binding Forest Principles. But the main achievement of the Earth Summit was the Framework Convention on Climate Change (14), a treaty to reduce emissions of greenhouse gases. The year 1990 was adopted as the benchmark year for emissions' reduction targets. This was the beginning of the Kyoto Protocol (15), which at this time remains unratified. However, there is progress, with new national policies, targets and technologies being implemented around the planet to reduce emissions. Market-based mechanisms like emissions trading are already happening. Chicago now has an emissions exchange. (16)

It is no wonder that, by 1997, John Elkington could publish Cannibals with Forks (17), which became a bestseller among business executives. In his book, he took the fundamental links between environmental, economic and social concerns that had been identified by Brundtland and her team and coined the concept of the Triple Bottom Line. Elkington made transforming business into a business. He has analysed and advised leading corporations, such as Shell, BP, Dupont and the Body Shop. He has convinced many companies to lead and embrace sustainability using his Triple Bottom Line theory.

Also in 1997, the Coalition for Environmentally Responsible Economies (18) (CERES) launched the Global Reporting Initiative (19) (GRI). This is a voluntary set of guidelines for reporting on the economic, environmental and social dimensions of organisational activities. In the same year the World Business Council for Sustainable Development did some scenario planning for the next 50 years. They came up with three possibilities:

1) The boiled frog, or death by denial, business as usual scenario: we just keep on doing what we are doing even if the water is getting hotter until we're skinless and lifeless like the boiled frog.

2) Geopolity: new global organisations for crisis management, which is in effect what we are doing now, especially since September 11.

3) Jazz: this is the cutting-edge approach, improvising like jazz players, making new alliances, listening and connecting, changing as we need to, and in the end creating new ways of managing after thinking long and hard.

The results of these series of disasters, oil shocks, crises, pandemics and other technological, economic, social and scientific debates confirm that the ecology of the planet and its relation with humans and development are to become key considerations for the twenty-first century in a globalising, radically changing world.

The early twentieth-century experiment with globalisation failed, challenged by the forces that made World War I inevitable, but the contemporary experiment is likely to succeed. Advanced technologies in communication, production and transport make 2004 very different from 1914.

Enemies of the people: we live in times of mistrust

As the issues of sustainability begin to rise, the levels of trust in traditional institutions and authorities are in decline. Many believe capital and politicians are the enemies of the people.

Gallup International undertook an annual survey for the World Economic Forum called The Voice of the People. (20) The 2003 survey was about trust. Those trusted least were national governments (that is, politicians), large corporations (that is, capital) and the media.

The greatest trust was in the armed forces, NGOs and the United Nations. The 2004 survey was based on 43 000 interviews in 51 countries and focused on prosperity and security. Half those interviewed believe the world will be more dangerous for the next generation and feel their country's economy is worse now than a decade ago. This mood of mistrust, coupled with the loss of global security and wellbeing, is omnipresent. Most research confirms it. A longitudinal survey of consumer trust in 1980 found that two-thirds of consumers believed companies were fair; by 2000 only one-third of consumers thought so. (21)

In a globalised, information-rich world where crises, wars, natural and human disasters, corruption, fraud, scandals and company collapses are all exposed, mistrust is to be expected. This is especially true when one to two billion people are too poor to participate in the market, have no share of the increasing wealth and don't have clean water or education for their children.

Crises concerning corporations such as HIH, One.Tel, Ansett, Enron, WorldCom, Andersen and, more recently, Parmalat in Italy, make for more than sensational media.

Disclosure revolution

The results are that governments and their electorates are demanding greater accountability, transparency and greater disclosure from corporations.

In July 2002, the US President GW Bush announced the passage of the Sarbanes-Oxley Bill through Congress. He declared that, 'This new law sends very clear messages that all concerned must heed. This law says to every dishonest corporate leader: you'll be exposed and punished. The era of low standards and false profits is over. No boardroom in America is above or beyond the law'. (22) In the United Kingdom the pressure began with pension funds disclosure. In Japan, the Ministry of International Trade and Industry developed Environmental and Social Reporting Guidelines. A European Union White Paper on Corporate Social Responsibility was published in 2002. In the Netherlands, Denmark, Sweden and Norway, mandatory corporate environmental reporting was introduced between 1995 and 1999, at the same time as the World Bank developed its safeguard policies.

In Australia, we have the ASX Corporate Governance Council guidelines and the pending CLERP 9 legislation. (23) The Opposition has proposed multiple amendments to the CLERP Bill and there is ongoing concern about aspects of its efficacy.

Voluntary codes

Business has been in response mode to this new agenda for some time. In 1977, the original Sullivan Principles (24) provided the basis for a voluntary code for doing business with apartheid South Africa. They derived their name from Reverend Leon Sullivan, the first black member of the board of General Motors. In November 1999, more than 20 years after the adoption of the original principles, Leon Sullivan and UN Secretary-General, Kofi Annan, launched the Global Sullivan Principles of Corporate Social Responsibility. These call for multinational companies to play a much larger role in combating racism, discrimination, and all other social and economic injustices.

In 2003, ten leading banks developed a set of voluntary guidelines, the Equator Principles (25), for managing social and environmental issues related to investment in development projects across all sectors. The banks agreed 'not to provide loans directly to projects where the borrower will not or is unable to comply with our environmental and social policies and processes'. The 10 founding banks were ABN AMRO, Barclays, Citigroup, Credit Lyonnais, Credit Suisse First Boston, HVB Group, Rabobank Group, The Royal Bank of Scotland, West LB and Westpac Banking Corporation. There are now 19 participants. (26)

Citigroup has recently taken this further with environmental initiatives concerning critical habitats, illegal logging and climate change. (27)

Sustainability reporting

Many companies now report on issues other than financial ones. Some reporting is environmental, some community (the social dimension). Many are progressing toward Triple Bottom Line or Sustainability Reports, led by Shell's revolutionary confessions and strategies in Profits and Principles: Does there have to be a choice? in 1998. (28)

The first ever global stakeholder report in 2003, by ECC Kohtes Klewes, studied the attitudes and interests of various groups to corporate social and sustainability reporting. Their Key Results in the Headlines (29) indicated that: companies need to listen more; human rights is the single most important issue; sponsoring charitable projects is not the answer; a systematic management-oriented approach is more important than details of single issues; and accountability and transparency are the most important functions of communications to stakeholders.

Stakeholders want reports to be factual, business-like and regular. Honesty about shortcomings goes a long way and verification should be external.

Mining and minerals for sustainable development

Some industry groups have also taken a lead. In May 2002, the Global Mining Initiative Conference was held in Toronto. (30) It was the culmination of a two-year project involving 30 companies in research, stakeholder engagement and restructure of their own global governance. The goal was to develop a strategy for the contribution of the mining and minerals industry to sustainable development. Australian mining CEOs, such as Hugh Morgan, were instrumental in this initiative. (31)

The final declaration at Toronto put sustainable development at the centre of the industry's strategy.

Driven by a shared desire to enhance the contribution that mining and metals can make to social and economic development, the central themes were:

* serious engagement with and respect for the community and stakeholders

* acknowledgement of fundamental human rights

* acceptance of environmental stewardship responsibilities

* striving for decisive and principled leadership

* reporting involving transparency, accountability and credibility

* integration of mining and minerals for sustainable development.

The industry pledged to lead, engage, develop, promote, assist and respond to issues in the mining and metals industry to ensure progress towards sustainability.

There are numerous other examples of innovative responses from business. They have been part and parcel of leading the sustainable development agenda, globally and in Australia.

Sustainability business indices

There are numbers of new, business-related indices like The Dow Jones Sustainability Index. Launched in 1998, it evaluates the world's top corporations for their commitment to operations in sustainable development, industry by industry. It typically outperforms the Dow Jones Index itself.

Australian companies in the lead

BHP Billiton (32)

BHP Billiton set up the PNG Sustainable Development Program Limited after it exited OK Tedi in PNG. It is a not-for-profit company owning 52 per cent of the OK Tedi mine. Its charter is to invest/commit its share of the income from the mine to sustainable development programs and projects for the people of PNG now and for 40 years after the mine closes. BHP Billiton also has a forum for corporate responsibility where it discusses sustainability with external stakeholders and experts twice a year.

Lend Lease (33)

In 2003, Lend Lease topped the finance industry sector of the Dow Jones Sustainability Index. It is committed to building sustainable, environmentally sensitive places where people feel safe and that they can call home. It has driven technological innovations around property development and has external advisory groups.

Pacific Hydro Limited (34)

Pacific Hydro Limited is Australia's fastest growing renewable energy company, producing electricity from wind and water. It aims to be pro-environment and at the forefront of renewable energy provision, not only in Australia but in South East Asia and the Pacific.

City West Water (35)

City West Water was awarded the top honour for Best Sustainability Report 2002 in the Association of Chartered Certified Accountants (ACCA) Australia and New Zealand Awards for Sustainability Reporting. This reflected its commitment to improved environmental, social and economic outcomes.

Globally companies are responding

All these initiatives confirm the survey results of business, undertaken globally, after the World Summit on Sustainable Development in Johannesburg in 2002. (36) Eight hundred business delegates were questioned. The key messages were that the expectations and responsibilities of business are now greater than ever before. In a globalised world, businesses and their associations are expected to find solutions. Business is expected to deliver sustainable development.

So how can business deliver? First, it must engage systematically with this emerging new field.

New knowledge

With six billion members of our human species and our commensurate demands, the dynamics between industrial and natural systems are of greater interest to us than ever before. We know much more about what we do not know and we are more interested to find out. Our research institutions are more engaged. There is an emerging field of scholarship and practice around the sustainable development agenda. We now talk about 'the economy as a wholly-owned subsidiary of the environment'. (37)

We are beginning to accept the idea that the earth is a closed system, one that must be in balance, where there are constant flows of energy and cycling of nutrients, such as carbon, oxygen, nitrogen and hydrogen. With these cycles and the complex interactions between hundreds and thousands of the planet's species there is no waste, no overload. We are now exceeding the speed and quantity of nature's cycles. There is greater and greater agreement that the greenhouse effect is the result of our industrial systems generating too much carbon dioxide (CO2) for the planet to deal with. Natural systems may well be close to or, indeed, already overloaded.

Our natural systems create the raw material essential for our survival. Estimates for the total number of species range from five million to 60 million, though most experts would place the total at about 10 million. Of these, 1.75 million species have been described and 12 259 species are known to be threatened. A fundamental part of evolution is that all species are subject to extinction. But unlike the mass-extinction events of geological history, almost all extinctions that have occurred in recent history are due to the impact of human activities. People now so dominate the earth that very few species, if any, are completely unaffected by our existence. The rapid loss of species occurring today has been estimated by some experts to be between 1000 and 10 000 times higher than the expected natural extinction rate, estimated at one species every four years. (38)

This kind of concern is not new. In 1864, George Perkins Marsh wrote Man and Nature, or Physical Geography as Modified by Human Action (39), the first major tract on nature conservation, ecology, and resource management. He documented deforestation, canal building and water pollution and analysed why the Sahara was advancing.

In 1896, Svent Arrhenius, a Swedish scientist, developed a model of the influence of carbonic acid (CO2) in the air on the temperature of ground air, the basis for predicting the greenhouse effect. (40)

More than 100 years later, what was specialist, indeed marginal until a decade ago, is now mainstream. It includes a whole new language for these discoveries, leading to new research, concepts, measures and methodologies, technologies and systems. There are multidisciplinary approaches: Harvard's Sustainability Science (41), the complex systems theory used by CSIRO (42) and the dynamics of the science of resilience and vulnerability.

Texts like The Ecology of Commerce, 1994 (43), Natural Capitalism (44) and Cradle to Cradle (45) have made it to the bestseller lists and have been published in many languages, proving popular with CEOs and politicians everywhere. They each seek to join the elements of sustainability with the role of capital. They demonstrate how sustainable development has become a key motif for driving policy, strategy and operations. They tease out some of the challenges facing the future of human and planetary relations and possible methodologies to do so. In the Suzuki Dressler publication Good News, For a Change (46), the authors tell us lots of stories of how it is being done. By 2002, we have publications like Walking the Talk: The Business Case for Sustainable Development (47) in which the sustainability stories issue from companies.

New sustainability institutions

Purpose-built organisations, think-tanks, research institutes and NGOs have sprung up to take the lead. The TELLUS Institute (48) (Boston and Stockholm) does scenario and regional sustainability planning. CERES (49), based in Boston, developed the Global Reporting Initiative. The World Business Council for Sustainable Development (50) in Switzerland has 170 global corporations as members working on scenario planning and industry-based projects. The World Resources Institute (51) in Washington does resource mapping. The Wuppertal Institute for Climate, Environment and Energy (52) in Germany measures global material flows. Governments are reconfiguring their departments, policies and operations. The United Nations has many agencies involved, including the Commission for Sustainable Development (CSD) (53) and the United Nations Environment Program (UNEP). (54) Universities and schools are grappling with the concepts in their teaching, learning, research and operations, especially the multi-disciplinary nature of the issues.

What was environmentalism is transforming into sustainability, or sustainable development. John Elkington gave voice to this transformation. In Part II we will look at his Triple Bottom Line work and its extension to governance.

Notes

(1) Carson, R, Silent Spring, Mariner, New York, 1962

(2) <http://www.epa.gov/epahome/aboutepa.htm#history>

(3) <http://www.johannesburgsummit.org/html/ basic_info/unced.html>

(4) <http://www.clubofrome.org/>

(5) Meadows DH, Meadows DL, Randers J and Behrens III WW, The Limits to Growth: A Report for the Club of Rome's Project on the Predicament of Mankind, Universe Books, New York, 1972

(6) <http://tis.eh.doe.gov/oepa/laws/cercla.html>

(7) Frankel, C, In Earth's Company: Business, Environment and The Challenge of Sustainability, New Society Publishers, Gabriola Island, 1978

(8) International Institute for Sustainable Development, Sustainable Development Timeline, <http://www.belarusguide.com/chernobyl1/ chernobyl.htm>

(9) World Commission on Environment and Development, Our Common Future, Oxford University Press, Geneva, 1987

(10) <http://www.johannesburgsummit.org/html/ basic_info/unced.html>

(11) <http://www.un.org/esa/sustdev/documents/ agenda21/index.htm>

(12) <http://www.biodiv.org/default.aspx>

(13) <http://habitat.igc.org/agenda21/rio-dec.html>

(14) <http://unfccc.int/>

(15) <http://unfccc.int/resource/convkp.html>

(16) <http://www.planetark.org/index.cfm>

(17) Elkington, J, Cannibals With Forks: The Triple Bottom Line of 21st Century Business, Capstone Publishing, 1997

(18) <http://www.ceres.org/>

(19) <http://www.globalreporting.org/>

(20) <http://www.voice-of-the-people.net/>

(21) <http://www.voice-of-the-people.net/>

(22) <http://www.whitehouse.gov/news/releases/ 2002/07/20020730.html>

(23) <http://www.treasury.gov.au/content/business_law.asp? ContentID=321&titl=Business%20Law%20%26%20 Regulation>

(24) <www.globalsullivanprinciples.org>

(25) <http://www.equator-principles.com/>

(26) <http://www.equator-principles.com/>

(27) <http://www.citigroup.com/citigroup/environment/ initiatives.htm>

(28) Shell, People, Planet and Profits: The Shell Report 2000, <www.shell.com>

(29) <www.ecc-kohtes-klewe.com>

(30) <http://www.globalmining.com/home/gm_frame.asp>

(31) <http://www.icmm.com/html/index.php>

(32) <www.bhpbilliton.com/>

(33) <www.lendlease.com.au/>

(34) < www.pacifichydro.com.au/>

(35) <www.citywestwater.com.au/>

(36) <http://www.johannesburgsummit.org/html/ basic_info/unced.html>

(37) Nelson G, 'The Bankruptcy Files', Wilderness, Summer, 1994

(38) <http://www.peopleandplanet.net/doc.php?id=914> http://www.kindplanet.org/bio.html>

(39) Marsh, GP, The Earth as Modified by Human Action: A New Edition of Man and Nature, 1878

(40) Encyclopaedia Brittanica, Electronic Standard Edition, 1999

(41) <http://sust.harvard.edu/>

(42) <http://www.dar.csiro.au/css/centre.shtm>

(43) Hawken, P, The Ecology of Commerce: A Declaration of Sustainability, HarperCollins, New York, 1993

(44) Hawken, P, Lovins, A and Lovins, H, Natural Capitalism: The Next Industrial Revolution, Earthscan, London, 1999

(45) McDonough, W and Braungart, M, Cradle To Cradle: Remaking the Way We Make Things, North Point Press, New York, 2002

(46) Suzuki, D and Dressel, H, Good News For A Change: Hope For A Troubled Planet, Allen & Unwin, Sydney, 2002

(47) Holliday, CO, Schmidheiny, S and Watts, P, Walking The Talk: The Business Case for Sustainable Development, Greenleaf Publishing Limited, Sheffield, 2002

(48) <http://www.tellus.org/>

(49) <http://www.ceres.org/>

(50) <www.wbcsd.ch/>

(51) <http://www.wri.org/>

(52) <http://www.wupperinst.org/>

(53) <http://www.un.org/esa/sustdev/csd/about_csd.htm>

(54) <http://www.unep.org/>

Tricia Caswell, Executive Director, Global Sustainability, RMIT University