Interview: Businesses now have social goals

Michael Perkinson is the chief of staff to the chief investment officer at the asset management firm Guggenheim Partners in the US. On 28 and 29 August he took part in a meeting of the Alpbach-Laxenburg Group, focused on new models for sustainable business development, and on 30 August he spoke at the European Forum Alpbach Political Symposium.

Michael Perkinson speaks at the European Forum Alpbach. ©Matthias Silveri | IIASA

Michael Perkinson speaks at the European Forum Alpbach. ©Matthias Silveri | IIASA

As a business leader with a background in international relations, you have unique experience in both government and the private sector: How do you think that the two could work together towards achieving the sustainable development goals?
Traditionally, the two sectors have not mixed well. Governments were skeptical of the private sector’s profit motives and the private sector believed government was an impediment. Both views were, of course, short-sighted. In recent years the United Nations has looked to the private sector to help finance development as the traditional levels of fiscal policy have been removed from the toolkit by increasingly narrowly focused legislatures. Similarly, private investors and private enterprise, who make up over 60% of GDP in the developed world, realize that they can partner with governments to achieve their social goals. Yes, businesses now have social goals.

What do you see as the biggest challenge is in achieving the SDGs?
Money and willpower.

What changes would be needed in business in order to fully embrace the SDG agenda?
I suspect that businesses need to understand how they can contribute. If given the option of a regulation or a tax, businesses will always chose a tax, because it allows them to plan accordingly. So, in this case, I think businesses require an explanation as to how they can contribute and how it won’t interfere with their executing on their business plan.

Business is often seen as “part of the problem” when it comes to issues like climate change and poverty – do you think that sustainable development could also bring opportunity for business, and if so, how?
Having been in the public sector for 25 years before returning to the private sector, I have never seen the private sector as part of the problem. In the United States, the private sector contributes some 80% of GDP. The private sector also provides jobs, which is really the only way that poverty can be eliminated on a generational scale. I think that there is ample opportunity for business to contribute to the SDGs, but the public sector needs to explain clearly how businesses can contribute in a way that doesn’t interfere with their business plan. It doesn’t mean that businesses need an inducement (like a tax break), they just need to understand the strategic logic of the concept.

Meeting of the Alpbach-Laxenburg Group, 29 August 2016. ©Matthias Silveri | IIASA

Meeting of the Alpbach-Laxenburg Group, 29 August 2016. ©Matthias Silveri | IIASA

Interview conducted and edited by Katherine Leitzell, IIASA science writer and press officer

Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.


Interview: An occasion for innovation

Pascal Lamy was the director general of the World Trade Organization from 2005 to 2013, and currently serves as a president emeritus of the Notre Europe – Jacques Delors Institute. On 28 and 29 August he is taking part in a meeting of the Alpbach-Laxenburg Group, focused on new models for sustainable business development.

Pascal Lamy ©The Jacques Delors Institute

Pascal Lamy ©The Jacques Delors Institute

As the former director general of the WTO, you have extensive experience in global trade and economic development. How does this background inform your perspective on the issues of the sustainable development?
To put it very simply, there is a very well-understood interaction between trade and growth, starting in the 18th century until now. The understanding of the relationship between global trade and sustainable development, i.e. including the environment dimension, is much more recent, understandably because environmental issues only came into the picture much more recently than the 18th century.

The reality is today that the communities working on trade and environmental issues are rather poorly connected. You belong either to one or to the other. There are not that many people who have feet on both sides, which does not help because the issue  is complex.

In theory it’s very simple. Take climate change for instance: If you put the carbon price at the proper level, i.e. the one that takes into account the externalities of climate change and CO2 emissions, all you have to do is price CO2 properly, and problem is solved: markets will reallocate production factors accordingly.  That’s what theory tells us. The little problem is actually agreeing on a set price for the entire planet. And this triggers a lot of suboptimal propositions, solutions.

I think that the overall stance now is that that trade is not an end. Trade is a means to improve growth in climate, welfare, sustainability, including environment sustainability. This was in fact part of the WTO charter from 1994. When I was DG of the WTO we did quite a lot of work in collaboration with environmental international organizations such as UNEP for instance. We looked into the big question on this topic: Is the expansion of trade good or bad for the environment? There are arguments on both sides, and it is a vast set of issues. But overall I think there are ways and means to reconcile, to synergize the benefits of trade opening for a more environmentally sustainable world.

What do you see as the biggest challenge in achieving the Sustainable Development Goals?
It’s a very long and vast set of issues. So it’s not a single thing—what you have to address issues on inequality, on education,  on oceans, on poverty—it’s a lot of different things.

But overall, I think the biggest challenge—and this is why a number of us are working on that—is to properly organize the accountability of these SDGs. That means providing proper metrics, proper review, proper debate, and proper public accountability. Now that the goals have been agreed by the UN, the issue is whether or not they can be achieved, and whether we can properly organize public pressure on sovereign nation states, through civil society, involvement of businesses. So in my view the main issue is building and agreeing on a proper follow up transparency system.

Pascal Lamy talks with other members of the Alpbach-Laxenburg Group at a retreat on 29 August. ©Matthias Silveri | IIASA

How do you think that the private sector could help in achieving the SDGs?
In doing what private businesses have been doing increasingly, which is integrating this sustainable development focus into their global strategies. Most big businesses now have a set of principles, a set of values that include sustainability.

What’s happening for instance around the push towards green finance, notably since the COP21 in Paris, is a good example of how some businesses can be on the front line of a larger coalition. We need coalitions like this to bind public authorities at the national, regional, and city levels, to civil society organizations focused on sustainability, climate, environment, biodiversity, and development, and businesses, whether big or small.

So from your perspective it sounds like business is already on the right track. What further changes would be needed in the private sector in order to fully embrace the SDG agenda?
It will happen if and when businesses realize that it matters to their consumers, to their staff, and to their shareholders, or their finance providers more generally. This is the frame within which they have to optimize what they do—clients, consumers, their people, and where they get their financial resources from. And if these various sides of the triangle push in that direction, inevitably businesses will push in this direction. They’ll have to.

The Alpbach-Laxenburg Group brings together leaders from business, and young entrepreneurs, along with government leaders and science experts. What do you think can be gained from a meeting of this type?
What’s unusual is that it links you with people whom you may not meet every day, so it’s an occasion of diversity connecting on a topic. Plus, there is something which tends to come out of this sort of environment, which is innovation. People exchanging ideas, not just theoretically, “What should we do?” “Where are we?” “Where are we going?” but, “This is what I suggest to do,” “This is what I tried and it worked,” and “This is what I tried and it didn’t work.” It’s  more about experiences on the ground, which may then inspire more general conclusions.

Further reading
Pascal Lamy (2016). “Négociations climatiques et négociations commerciales : antinomie évidente ?“. Speech delivered at the 24th Meeting about Risk Management, AMRAE, at Lille, France, February 5th 2016. Download speech (PDF)

Pascal Lamy (2013). The Geneva Consensus: Making trade work for all. Cambridge University Press

Interview conducted and edited by Katherine Leitzell, IIASA science writer and press officer

Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Water security for sustainable development

By Edward Byers, Postdoctoral Research Scholar, IIASA Water, Energy, and Transitions to New Technologies programs

Scenario analysis, a process for comparing alternative futures, has been a fundamental tool in sustainability and systems research, but less prominent in the water field. Recently, researchers at IIASA have been applying scenario analysis to their modelling capabilities to tackle global water issues.

Last week, a high level group of water experts met at IIASA for the Water Futures and Solutions (WFaS) Stakeholder Focus Group. WFaS is a flagship initiative from IIASA challenged with understanding future water resource issues, and identifying solutions to problems like water scarcity and water access. However, when a recent fast track assessment found that even its most sustainable scenario, would still result in water scarcity  in some river basins due to growing demands, researchers realized that fresh thinking was required. So in last week’s meeting, IIASA water researchers were on the search for more sustainable and transformational solutions. The efficacy of these new sustainability scenarios will be tested in IIASA’s new ensemble of global hydrological models and presented in time for the next  World Water Forum 2018.

Victoria Falls on the Zambezi River. In the Zambezi basin, water is abundant but there are challenges in getting that water to the people who need it, particularly as the population grows in the future. (cc) Pius Mahimbi | Flickr

Victoria Falls on the Zambezi River. In the Zambezi basin, water is abundant but there are challenges in getting that water to the people who need it, particularly as the population grows in the future. (cc) Pius Mahimbi | Flickr

The two-day workshop at IIASA hosted 20 international water experts from around the world and across research, government, and development organisations. Modellers from the IIASA water program, myself included, took part in the focus groups with the experts, discussing how to represent in our models complex interactions that occur in transboundary river basins as well as for key interactions with other sectors such as energy and agriculture.

Our discussions on the Zambezi, the Indus, and the Yellow river basins will contribute to broader understanding of the development challenges in three different parts of the world –not just along the rivers, but throughout the entirety of the river basins and the populations and ecosystems that they support. For example, the Indus basin is extremely water scarce and is expected to be further depleted due to melting of the upstream glaciers. In the Zambezi basin, in contrast, water is abundant, but there are significant political and economic challenges to sustainably providing access to a population of 38 million people that is expected to double within one generation.

Similarly, our sectoral discussions on energy, food, economics, and ecosystems will improve our model representations of sectors that may be substantially different by 2050, such as the energy sector. This is particularly important for demonstrating how the benefits of water security unlock other benefits for development challenges, such as health, food security, gender equality, and education.

Identifying, quantifying and communicating these well-recognized, inter-dependent benefits can be key to unlocking the investment in solutions. Our work with the experts focused primarily on Sustainable Development Goal 6, the Clean Water and Sanitation Access goal, with a view to identifying co-benefits for other goals. Having received much useful information and positive feedback from our stakeholders, the challenge now is to integrate this into our models and scenario narratives, so that we can demonstrate on a global scale the benefits of water security not as a development target to be attained, but as one of the fundamental drivers of sustainable development. With growing populations and intensifying impacts of climate change, challenges for water security will continue long beyond the Sustainable Development Goals for 2030. Meeting these targets is just the first step of the pathway to long-term water security.

Participants in the 2nd Water Futures and Solutions Scenario Focus Group Meeting. ©Phillip Widhalm | IIASA

Participants in the 2nd Water Futures and Solutions Scenario Focus Group Meeting. ©Phillip Widhalm | IIASA

The Water Futures and Solutions Initiative (WFaS) was launched by IIASA, UNESCO/UN-Water, the World Water Council (WWC), the International Water Association (IWA), and the Ministry of Land, Infrastructure and Transport (MOLIT) of the Republic of Korea, and has been supported by the government of Norway, the Asian Development Bank, and the Austrian Development agency. More than 35 organizations contribute to the scientific project team, and an additional 25 organizations are represented in stakeholder groups.

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Interview: Disposable lives, globalization, and the future of sustainability

Shalini Randeria, a sociologist and social anthropologist focused on legal pluralism and global inequalities, is the Rector of the Institute for Human Sciences (IWM) in Vienna and an IIASA Distinguished Visiting Fellow. On 9 March, she gave a keynote lecture in Vienna entitled, “Precarious livelihoods, disposable lives, and struggles for citizenship rights,” as part of the IIASA-Austrian Academy of Sciences public event, Human Capital, Geopolitical Complexities, and our Sustainable Future.

Q. Why do you say that globalization is full of contradictions?
A. We are living in paradoxical times. The global spread of democracy has gone hand in hand with the erosion of its substance. Decisions once made by national parliaments are now made by supranational institutions, reducing the say of citizens in public decision-making. As people feel disenfranchised, trust in our governments fades. Sometimes going to court seems to be the only way to make governments accountable to citizens. This development not only expands the power of the judiciary but also politicizes it.

What role does globalization play in the inequality between Global North and Global South?
Neo-liberal economic restructuring has increased inequalities between countries but also within each society. We are witness today to an unprecedented concentration of income and wealth, which is not an unforeseen consequence of economic globalization but the result of deliberate public policies. The global South, however, is no longer a geographical category. Greece is an example of European country dependent on international finance institutions in much the same way that once so-called developing countries were.

Shalini Randeria © IWM / Dejan Petrovic.

Shalini Randeria © IWM / Dejan Petrovic.

You say that economic and political processes render some lives disposable – what do you mean by that?
Take India for instance: since the country’s independence in 1947, every year some 500,000 people—mostly small farmers, agricultural workers, fishing and forest-dwelling communities —have been forcibly displaced to make room for gigantic infrastructure projects. They have become development refugees in their own country. These people are regarded as ‘dispensable’ by the state in the sense that their livelihoods are destroyed, their lives disrupted, and they are denied access to common property resources. These populations are the human waste that is sacrificed at the altar of an unsustainable model of incessant economic growth.

The Sustainable Development Goals (SDGs), adopted last year, include aims to end poverty, ensure access to employment, energy, water, and reduce inequality, at the same time as preserving the environment. What challenges do you see for achieving these goals?
The SDGs will prove to be an important milestone, if they are implemented the world over. Some of these goals are in conflict with one another. Take the protection of biodiversity, for example, which is often constructed as an antagonistic relationship between society and nature In the new global regime of biodiversity consveration, nature is portrayed as self-regulating, as a pristine, uninhabited wilderness that is threatened due to the wasteful resource use by local populations. Thus access and traditional usufruct rights are curtailed, and indigenous knowledge is devalued and marginalized.  The (post)colonial transformation of landscapes into “environment,” “natural resources,” and “biodiversity” has enclosed the commons in most regions of the global South and often commercialized them.

The idea of the Global Commons as spaces and resources that all have access to and also have the responsibility to protect is a useful one in this context. The oceans are but one example of the global commons that include water, forests, or air, which are all being increasingly privatized. The Global Commons also include common resources developed by humans such as virtual data, knowledge, computer software, and medication..

What needs to be done by international institutions to make significant progress in achieving the SDGs?
Eliminating poverty will need an understanding of it that goes beyond a merely economic one. One will need to take into account possibilities of democratic participation, access to public goods and infrastructure, as well as civil rights and a restoration of a plurality of livelihoods. But these institutions also need to be reformed as they have a serious democracy deficit, be it the EU or the Bretton Woods institutions.  Unaccountability of international institutions and powerful corporations along with stark asymmetries of power between these and the nation-states characterizes the new architecture of global governance, which need to be remedied  urgently if we are to realize global justice.

Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

10 steps to removing carbon from the global economy

By Nebojsa Nakicenovic, Deputy Director General, International Institute for Applied Systems Analysis (IIASA), Austria (Originally published on the World Economic Forum Agenda Blog.)

Nebojsa Nakicenovic

Nebojsa Nakicenovic

Goal 7 of the Sustainable Development Goals is ambitious: Ensure access to affordable, reliable, sustainable and modern energy for all. This must be accomplished without compromising Goal 13: climate. This is achievable.

In spite of ups-and-downs and outright shocks in the global economy, some quite recent, the economic success stories of the industrialized countries are role models for the countries that are still developing. This puts the entire global community in the dichotomous position of needing to fire up the engine of growth, without producing the greenhouse gases it has been emitting since the beginning of the Industrial Revolution. What is the answer?

Very few questions in the complex area of energy and climate change can have a simplistic answer, but I am going to attempt one here: decarbonization, namely, drastic reduction of carbon dioxide and other greenhouse gas emissions per unit of economic activity.

Back in 1993, I wrote this:

“The possibility of less carbon-intensive and even carbon-free energy as major sources of energy during the next century is consistent with the long-term dynamic transformation and structural change of the energy system.”

My view in 2015 is the same; however, the scientific community 22 years later has a much better understanding of “the decarbonization challenge” and how it can be addressed. I will sketch out a 10-step approach to the removal of carbon from the global economy, but first I’d like to paint in a bit of the background.

Carbon dioxide is the main greenhouse gas and contributor to climate change. The largest source is our use of fossil fuels to drive development. Carbon dioxide emissions have increased exponentially since 1850 at about 2% per year, while decarbonization of the global economy is only around 0.3% per year.

The 2012 Global Energy Assessment, in which IIASA played a leading role, puts the current decarbonization rate at approximately six times too low to offset the increase in global energy use of about 2% per year. To meet the goal of the 2009 climate agreement (the Copenhagen Accord), namely, “the scientific view that the increase in global temperature should be below 2 degrees Celsius” to prevent dangerous anthropogenic interference with the climate system, global net emissions of carbon dioxide and other greenhouse gases will need to approach zero by the second half of this century, implying deep, deep decarbonization rates.

working oil pumps © Kokhanchikov | Dollar Photo Club

“Carbon dioxide is the main greenhouse gas and contributor to climate change. The largest source is our use of fossil fuels to drive development.” © Kokhanchikov | Dollar Photo Club

But we need deep decarbonization while energy needs are increasing to meet the demand of the developing world, including the three billion without access today to sustainable energy. All scenarios in the academic literature that lead to further economic development in the world, universal access to sustainable energy, and the stabilization of climate change to less than 2 degrees Celsius, anticipate deep and urgent decarbonization. Here’s my 10-point plan for doing that.

  1. Change attitudes
    Attitudes to energy use are based on many factors, from cultural norms to overall infrastructure design. We need much greater political will to affect a change in attitudes: it is critical that policy interventions should communicate to citizens the ethical notion of improved well-being and health now and for future generations of a zero-carbon economy. .
  1. Transform governance
    The transformation needed this century is more fundamental than previous transformations, like the replacement of coal by oil, because of the significantly shorter time needed to achieve it. Thus, government policies are essential, and are needed particularly in changing buildings codes, fuel efficiency standards for transportation, mandates for the introduction of renewables, and carbon pricing.
  1. Improve energy efficiency
    More efficient provision of energy services, or doing more with less, and radical improvements in energy efficiency, especially in end use, will reduce the amount of primary energy required and represents a cost-effective, near-term option for reducing carbon dioxide emissions, as well as having multiple benefits in different areas of life.
  1. Ramp up renewable use
    We can show that the share of renewable non-fossil energy from solar, wind, rain, tides, waves, and geothermal sources in global primary energy could increase from the current 17% to between 30% and 75%. In some regions it could exceed 90% by 2050, provided that public attitudes change and efficiency increases.
  1. Reduce global energy intensity
    The energy intensity in the industrial sector in different countries is steadily declining due to improvements in energy efficiency and a change in the structure of the industrial output. Far greater reductions are feasible by combining these improvements with adoption of the best-achievable technology.
  1. Use known technologies
    Carbon dioxide capture and storage (CCS), now being piloted, is a pathway that leads to decarbonization with continued use of fossil energy. It requires: reducing costs, supporting scale-up, assuring carbon storage integrity and environmental capability, and securing approval of storage sites. Nuclear energy could make a significant contribution in some parts of the world, or it could be phased out as, for instance, in Germany.
  1. Improve buildings
    Retrofitting buildings can reduce heating and cooling energy requirements by 50–90%; new buildings can be designed and built using close to zero energy for heating and cooling. Passive energy houses and those that produce energy onsite are another great opportunity to achieve vigorous decarbonization. In conjunction with compatible lifestyles oriented toward rational energy use, efficient buildings are an important decarbonization option.
  1. Cut transport carbon
    A major transformation of transportation is possible over the next 30–40 years and will require improving vehicle designs, infrastructure, fuels and behavior. Electrically powered transportation reduces final energy use by more than a factor of three over gasoline-powered vehicles. A shift toward collective mobility is an essential option. This also implies behavioral changes and new business models like car-sharing, and self-driving cars to replace individual mobility.
  1. Clean industrial processes
    Overall, global industry efficiency is only 30%. Improved energy efficiency in industry results in significant energy productivity gains and, in turn, improved productivity boosts employment and corporate competitiveness. A shift toward low to zero emission energy sources in industry is another important and much-needed change. For example, with an aggressive renewables strategy, near-zero growth in GHG emissions in the industrial sector would be possible. Finally, decarbonization would also involve changes of industrial processes, for example, from high to low temperatures.
  1. Stranded assets and ‘derisking’ renewables.
    The flow of investment needs to be changed away from fossil fuels and toward efficiency, renewables, decarbonization of fossil energy sources, and especially efficient end-use in buildings, transport, and industry. Sustainable energy futures require relatively high up-front investments with the benefit of low long-term costs. They are attractive in the long run, but the up-front investments need derisking and other forms of support, such as feed-in tariffs.

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.