Green economy offers a bountiful harvest

Posted on October 26, 2011. Filed under: Environmental Economics |

As a Native American saying goes, we do not inherit the earth
from our ancestors, we borrow it from our children.

As a Native American saying goes, we do not inherit the earth from our ancestors, we borrow it from our children.

Protecting our ‘natural’ capital can boost our financial capital, argues ZAKRI ABDUL HAMID

PRIME Minister Datuk Seri Najib Razak’s keynote address at the second International Greentech and Ecoproducts Exhibition and Conference Malaysia (IGEM 2011) on Sept 8, urging the business community to be more involved in green business, recalls two anecdotes related by Daniel Esty and Andrew Winston in their book Green to Gold.

The first was how Sony Corporation faced a nightmare in the weeks before Christmas 2001. The Dutch government was blocking Sony’s entire European shipment of PlayStation game systems. More than 1.3 million boxes were sitting in a warehouse instead of flying off store shelves. Sony was at risk of missing the critical holiday rush.
A small but legally unacceptable amount of the toxic element cadmium was found in the cables of the game controls. Sony rushed in replacements to swap out the tainted wires. It also began an 18-month search to track down the source of the problem, inspecting over 6,000 factories and resulting in a new supplier management system.

The total cost of this “little” environmental problem: over RM390 million. The lesson learnt: even the best companies can be surprised by environmental issues. The environment is not a fringe issue — it can cost businesses real money.

The second is how proactive action by a company can result in extraordinary return on investment.
In the late 1990s, British Petroleum (BP) committed itself to reducing its carbon dioxide emissions, the main culprit of global warming. After three years of relentlessly “looking for carbon”, BP discovered numerous ways to cut emissions, improve efficiency, and save money. A lot of money.

The initial process changes cost BP about RM60 million but saved the company a whopping RM1.95 billion over those first few years. As of 2007, the savings topped RM6 billion.

Esty and Winston summed up an important principle: smart companies seize competitive advantage through strategic management of environmental challenges.
BP and Sony learned what some companies already knew: the business world and the natural world are inextricably linked.

Our economy and society depend on natural resources. Every product came from something mined or grown. This newspaper was once a tree, the ink these words were printed in began as soybeans. The environment provides “ecosystem services” to our economic system — not financial capital, but natural capital.

And yet, as shown by the Millennium Ecosystem Assessment, a mega-study commissioned by the United Nations a few years ago, 60 per cent of the world’s ecosystem services are being degraded and we are “overdrawing” our natural capital to the detriment of future generations.

In his remarks, the prime minister asked: “How could we, as a global population, continue to develop without damaging our environment, fuelling climate change or overexploiting the natural resources of our planet?”

To stop development altogether is never an option. But any future development has to be sustainable — using resources in ways that meet our needs today without compromising the needs of generations to come.

Or as Najib puts it: “Now is the time for us to shift our development to a more ‘eco-centric’ course” — a trajectory predicated on our understanding and appreciation of the finiteness of our natural resources and the imperative to develop sustainable solutions for our current and future lifestyles.

The world needs to embrace the “green economy”, defined by the UN Environment Programme as an economy that improves human well-being and social equity while significantly reducing environmental risks and ecological scarcities. Simply put, a green economy is characterised by low carbon emissions, highly efficient use of resources and social inclusiveness.

Najib also put on notice his wish “to see Malaysia become a major producer of eco-technology products not just in our region but globally … and that this will in turn translate into an increase in the number of green jobs and green business opportunities”.

To help realise this goal, two new initiatives undertaken by the government are the National Eco-labelling Programme and the National Green Procurement Policy.

Eco-labelling will help ensure that businesses make credible claims about their products and raise awareness of environmentally-friendly products and services among consumers and manufacturers alike. By favouring such products in government and private sector purchasing decisions, green procurement will help green industries grow.

To his great credit, the prime minister has staked a claim to being the most environmentally-friendly prime minister of the six this country has had so far. One of his first acts upon assuming office in 2009 was to establish the Energy, Green Technology and Water Ministry, significant with its singular focus on green technologies.

At the 2009 Climate Change Summit in Copenhagen, Najib was one of the few heads of governments who were forthcoming in pledging a 40 per cent reduction in greenhouse gas emission intensity of GDP by 2020 against 2005 levels, conditional upon appropriate technology transfer and adequate financing by the advanced countries.

A National Green Technology Policy was put in place in the same year. Recently, he announced plans to launch a Low Carbon Cities Framework and Assessment System to turn towns and cities across Malaysia into eco-friendly townships.

The government is making efforts on many fronts to encourage the private sector to get involved in the green economy. One good example is the Green Technology Financing Scheme introduced last year to assist companies that are users and producers of green technologies.

A total of 97 projects have been awarded Green Certificates with a combined value of more than RM2 billion, indicating a strong interest among the business community. Unfortunately only 21 have received letters of offer for loans from financial institutions. This doesn’t augur well if this country is to embrace the green economy.

More needs to be done to increase public awareness and appreciation of the green economy and eventually a sustainability-led lifestyle. It is time that we seriously consider integrating into our education system the element of “Education for Sustainable Development” from pre-school to university.

After all, as the Native American proverb goes: We do not inherit the earth from our ancestors, we borrow it from our children.

The writer is science adviser to the prime minister and former chairman of the UN Convention on Biological Diversity’s Subsidiary Body on Scientific, Technical and Technological Advice

Read more: Green economy offers a bountiful harvest http://www.nst.com.my/nst/articles/16zakr23/Article/#ixzz1cRQ03L9X
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