The EU Environment - Situation and Prospects under an EU Strategy for Sustainable Development

Towards Global Responsibility…
Corporate Accountability through Transparency

The Global Responsibility Founding Forum
16-18 November 2000
Monaco

Statement 2

Domingo Jiménez-Beltrán
Executive Director

16 November 2000

Note: The opinions expressed by the speaker are of a personal nature and do not necessarily reflect the views of the EEA, the European Commission or any other Community Institute.

The American presidency is in the news and one of the choices is maybe better than the other on the environment, but it was an illustrious predecessor, Thomas Jefferson, who said, that if the first generation could charge the second generation with debt then the earth would belong to the dead and not to the living generation. He concluded that "no generation could contract debts greater than may be paid during the course of its own existence."

We have not lived up to Jefferson's criterion for sustainable economic activity. The "carbon debt" of climate change that we are loading onto the next generation is not something they will thank us for - but this meeting is about reducing the ecological debts that we as consumers and you as corporate producers are stacking up for the future.

Jefferson wrote in 1789, but it was not until 1989 that Norsk Hydro produced the first corporate environmental report and 1999 before Dow Chemical produced the first European "triple bottom line" report that addressed social as well as environmental costs.

However, the duty of each generation to pay its way, by using market prices that capture full costs of production, consumption and disposal — something the economists call the "internalisation of external costs" and which was described by Pigou in the 1920s - is a long way from being achieved, as the updated report from the EEA, on trends and development on green taxation illustrates. And we are also a long way to achieve business transparency and accountability in this concern, as shown by the coming EEA report on developments in corporate reporting and ranking based on the IIIEE Lund Institute work presented at this occasion.

And this is despite the clear commitment to this made by big business, in the Rio Declaration and in its book, "Changing Course: a business perspective on development and environment", in 1992.

Interface Europe is one of the very few corporations that has tried to show an ecologically honest profit figure that excludes the subsidies from the pollution damage that society, not individual companies, pay for.

The annual environmental and health costs of fossil fuels is estimated to be about 2% of Europe's GDP, curiously enough ten times higher than the cost estimated by OECD for OECD countries to reach the Kyoto targets. This means that renewable energies generally face and will continue to face unfair competition from fossil fuels whose market prices do not include most of their environmental costs.

However, the EEA latest report on taxes shows some progress with carbon taxes: a majority of EU countries now have carbon taxes compared to only four at the time of our first report in 1996 — and nine Member States have taxes on wastes compared to only 2 in the early 90s. And the "five Es" business group (e5 - European Business Council for a Sustainable Energy Future) is just one of a growing number of business organisations that are calling for a reduction in the carbon debt that companies using fossil fuels are loading onto society. They too want to see "true, fair and efficient market prices" that reflect full costs.

My perception is that unfair fiscality will be a major (not the only) impediment for sustainability. This is also an equity issue. A report issued just two days ago by the UK based Tyndale Centre shows that the 1/5 of the world who belong to what the climate change convention calls annex one countries, i.e. OECD and Central and East European Countries, are, through their consumption, six times more responsible for climate change than the rest of the world, yet are five times less vulnerable to the impacts of climate change, as measured by GDP per head per degree of global warming estimated for this century.

"Getting the prices right" is just one of the framework conditions needed if businesses are to really "change course", a framework that encourages rather than discourages more sustainable economic activities. A new policy framework is gradually taking shape at the EU level under the so-called Cardiff (June '98 summit) initiative, including the EU sustainable development strategy, the 6th Environmental Action Programme, and the integration of environmental (and social) objectives into the strategies of economic sectors, such as transport, energy and agriculture.

Monitoring and benchmarking progress towards more environmentally sustainable activity will require new indicators at global, European, sector, local and corporate levels. Considerable progress is being made at the first four levels and this conference is about making progress at corporate level. We need to be able to "name and shame" but also to help other, more environmental companies to be "named and famed", so that those companies who are "doing well by doing good" or "doing good by doing well", are rewarded.

The EEA corporate environment report — which, incidentally can be said to have led to the creation of "Global Responsibility" and to this conference — shows that the tools for environmental democracy for monitoring and benchmarking corporate environmental and sustainability performance are at an early stage of development, despite recent innovations from the Davos economic group and from Dow Jones, with its Sustainability Index. Much more remains to be done to produce a tool that is credible and good enough for the financial sector to use. The first organisation to produce such a tool will be amply rewarded by the market itself: maybe Global Responsibility will be that group.

This would then allow the EEA and partners not only to use and to expose the results on its EnviroWindows site to show the way and "name and fame" the pioneers including the promotion of public recognition and awards to the companies that make the best improvements in their environmental performance via the PA Awards for Sustainability promoted initially by the EEA. Awards for the best company environmental reports have played an important role in rewarding the environmental performance pioneers, rather than just the reporting pioneers.

Of course we will need as much more and new policies (also at Community level) as we need perfectioned markets, but we also need new perceptions or moving slogans as perceptions to help us all to "change course", so I'll end with two: "Matter matters as much as Money"…. And, "Don't stick with the stocks, of fossil fuels, but go with the flow, of renewables".

Other innovative and creative ways of achieving and monitoring sustainability will probably emerge from conferences such as this, so: I wish you every success.