The Green Race is on

In the beginning of November I was at the World Business Council for Sustainable Development (WBCSD) Council Meeting together with respACT Vice-president Heinz Felsner.

As always (read more about past meetings here and here), it was an encouraging meeting showing that (some) businesses are really taking sustainable development seriously. As you see on the slide, the transition to sustainability – how to achieve and manage it – was the core issue of the week. The current situation of the world is obviously one of the factors slowing down this transition.

One of the assessments of WBCSD President Bjorn Stigson focuses around the tensions caused by the worldwide economic situation:

The difference in the economic situations between the majority of the OECD countries and the emerging economies, with China as a prime example, is causing a growing level of tension. Weak governments in OECD countries are under a lot of pressure to demonstrate decisive actions to create economic growth and jobs. This could easily lead to protectionist measures and currency wars.

Existing global institutions, such as the UN and the WTO, are in their current form not strong enough to manage this. There are also differences of opinion on how to reflect the new world order on the boards of the IMF and the World Bank. It seems likely that the EU will have to reduce its representation on these boards in favor of the emerging economies. In a short period of time, the G20 has become the focal point of global governance while the G8 is losing relative power. However, the G20 is so far an ad hoc group of countries with no permanent structure or secretariat.

How global governance will evolve is uncertain. At the intergovernmental level there is a lot of “political spin”. I am struck by the number of commissions and panels being set up to discuss the challenges of the new world. They are often made up of former politicians and complemented by “goodwill ambassadors” and UN Secretary General special representatives. However, I see limited practical output coming from these initiatives.

This assessment was shared by many of the participants, ranging from CEOs (the Council Members) to CSR and SD operatives (so called Liaison Delegates to the WBCSD). But as always with this kind of gathering, a great emphasis was put on the opportunities that arise for companies, out of these global challenges. The slogan of the meeting was “The Green Race is on”, meaning that countries are starting to compete to transform to low carbon economies and to become the leading supplier of resource efficient technologies & solutions. If companies want to be in the game (and maybe win), they need to transform their home market to build domestic demand, competences and scale for exports.

Some interesting country facts with regard to this:

• China is about to become the leader in the race as it is a  key component of next 5-Year Plan (2011-2015). Chinese companies are also taking the lead on solar & wind.
• The EU is still market leader today on green technology exports (40% market share) and has seen a 300% increase in R&D for green technologies in 2009. Nevertheless Europe is lacking in transformation of its home market.
• The US have so far not been able to mobilize their innovation capability and as in Europe transformation of the home market is not happening at the moment.
• India is becoming a mayor supplier of low cost solutions based on domestic demand from a large, poor population.

If you want to read more on this issue look here: Related to the G20 Summit in November with the Motto “Shared Growth Beyond Crisis” Björn Stigson published an article “The Green Race Is On: Who Will Win and Why”. It demonstrates that there is an opportunity to develop and accelerate low-carbon and resource-efficient growth options that create a more sustainable future even during economic turmoil.

Roman H. Mesicek is Managing Director of  respACT – austrian business council for sustainable development. He tries to frequently update hier Blog and you can find him on Twitter and Xing.