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Transcript of Sustainability & Global Politics A Primer for MBAs Presentation at the HHL - Leipzig Graduate School...
Sustainability & Global Politics A Primer for MBAs
Presentation at the HHL - Leipzig Graduate School of Management, 17 March 2004
Detlef SprinzPIK - Potsdam Institute for Climate Impact Research &University of Potsdamhttp://www.sprinz.org
Overview
Relevance of Sustainability for BusinessWhat is Sustainability & Global Politics?Measuring SustainabilityPolitics & Institutions for SustainabilityResearch Agenda
Relevance of Sustainability for Business
Part of Good Corporate CitizenshipBecomes Part of Regular Reporting for Leading Companies Vulnerability in Case of Gross Violation
NikeBrent Spar
DJ Sustainability IndexNuts & Bolts of Sustainability for an MBA
Sustainable DevelopmentWorld Commission on Environment and Development/Brundtland Commission (1987)
“Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
• Needs, esp. of the poor, to be met• Intra- and intergenerational equity
Sustainable Development as the historic compromise between developing and developed countries at the 1992 Rio UN Conference on Environment and Development
Sustainability
Environmental Economics (Turner 1993)Very weak sustainability
• Km, Kh, Kn: completely substitutable• Kc: non-existent• Sustainability achieved if K ≥ 0
Weak sustainability• Km, Kh, Kn: partially substitutable• Kc: exists and should be preserved unless
opportunity costs are too high• Sustainability achieved if K ≥ 0 and Kc ≥ 0 unless
opportunity costs are too high
Sustainability
Strong sustainability• Km, Kh, Kn: partially substitutable
• Kc: exists and should be preserved
• Sustainability achieved if K ≥ 0 and Kc ≥ 0
Very strong sustainability• Km, Kh, Kn: perfectly complementary
• Sustainability = stationary-state economy, moral/ethical capital ≥ 0
AGENDA 21 TopicsAgriculture International law Atmosphere International cooperation for an enabling
environment Biodiversity Institutional arrangements Biotechnology Land management Capacity-building Major groups Consumption and production patterns Mountains Demographics National sustainable development strategies Desertification and drought Oceans and seas Education and awareness Poverty Energy Science Finance Small islands Forests Sustainable tourism Freshwater Technology Health Toxic chemicals Human settlements Trade and environment Indicators Transport Industry Waste (hazardous) Information for decision-making & participation
Waste (radioactive)
Integrated decision-making Waste (solid)
Sustainability – Broadly DefinedLong-Term Societal Issues
Management of Public DebtsManagement of Public Entitlements Across Generations
• Prior commitments of the social welfare state– $ 44 trillion (quoted in Heller, IMF, 2003)
– = ca. four times 2004 forecasted GDP for USA (Economist)
– Health insurance– Publicly mandated retirement plans– Catastrophic health care
Stability of the Global Trading and Financial Systems
Global Politics
Authority Patterns That Transcend the Individual Nation-State
No need for governments: Bluetooth, Linux OS, etc.Governments Often Involved:
• Creation of the market for GSM communication
Public-private partnerships• Germany has a long tradition:
welfare organizations since 19th century, TÜV, etc.
Global Politics
Lack of Central Authority at the Global Level
International treaties (mostly) cannot be enforced• Few powerful sanctioning systems• Exception: WTO (yet decentralized
execution)
Even in a unipolar global systemRule-creation and implementation is decentralized
Global Politics
Challenge of Global PoliticsCreate and maintain authority patterns where markets produce clearly sub-optimal outcomesObserve subsidiarity in multi-level governance• Nation-states are often better legitimized• Resources are largely controlled by
nation-states
Measuring Sustainability & Global Governance
Measuring Sustainability
UN Commission on Sustainable Development (CSD)
-> Institutions
Theme Sub-theme Indicator
Strategic Implementation of SD
National Sustainable Development Strategy
Institutional Framework
International Cooperation
Implementation of Ratified Global Agreements
Information Access Number of Internet Subscribers per 1000 Inhabitants
Communication Infrastructure
Main Telephone Lines per 1000 Inhabitants
Science and Technology
Expenditure on Research and Development as a Percent of GDP
Institutional Capacity
Disaster Preparedness and Response
Economic and Human Loss Due to Natural Disasters
Source: http:/ / www.un.org/ esa/ sustdev/ natlinfo/ indicators/ isdms2001/ table_4.htm
Measuring Sustainability & Global Governance
World Economic Forum & CIESIN: Environmental Sustainability Index (2002)
ESI: Components of Environmental Sustainability
Component Logic
Environmental Systems
Reducing Environmental Stresses
Reducing Human Vulnerability
Social and Institutional Capacity
Global Stewardship Source: World Economic Forum (2002, 5)
Measuring Sustainability & Global Governance
World Economic Forum & CIESIN: Environmental Sustainability Index (2002)
2002 ESI rankings by country
Rank Country ESI 1 Finland 73.9
2 Norway 73.0 3 Sweden 72.6
4 Canada 70.6 5 Switzerland 66.5
33 France 55.5 34 Netherlands 55.4
35 Chile 55.1 45 United States 53.2
50 Germany 52.5
91 United Kingdom 46.1 129 China 38.5
136 Ukraine 35.0 137 Haiti 34.8
138 Saudi Arabia 34.2 139 Iraq 33.2
140 North Korea 32.3 141 United Arab Em. 25.7
142 Kuwait 23.9 Source: http:/ / www.ciesin.columbia.edu/ indicators/ ESI/ rank.html
Measuring Sustainability & Global Governance
Measuring Global Regime Effectiveness
NR AP CO
Degree of Instrument Use (e.g., emission reductions in %)
Effectiveness Score EAP NR
CO NR
Sensitivity of Effectiveness Score dAP
dE
NRCOE
NRCO
NRAPS
11
Notes: NR = no-regime counterfactual = LB = lower bound CO = collective optimum= UB = upper bound AP = actual performance Source: Helm and Sprinz 2000, 637 (modified).
Politics & Institutions for Sustainability
National: German Council for Sustainable Development
Founded in 2001Mission:
• Consult government• Facilitate societal dialogue
First National Strategy (2002): “Perspectives for Germany”Current emphasis of national strategy on
• Climate & energy; mobility; environment, food & healthFuture
• Inter alias, increased incorporation of older generationsImpact
• Too recent to judge
Global: UN Commission for Sustainable Development (CSD)
World-wide forum created after 1992 UN Conference on Environment & DevelopmentMeeting-intensiveIndicator development, but national reports have divergent scopeImpact: unclear
Politics & Institutions for Sustainability
Politics & Institutions for Sustainability
Need for Long-Term Strategies, Resources, Implementation and EvaluationWorld Environment Organization
Biermann, WBGU, and othersEnhanced UN governance system
Politics & Institutions for Sustainability
ChallengeInadequate attention to where most long-term decisions are made and where legitimacy predominantly “resides”• Family, local, national, some supranational:
EU
How to organize a decentralized system of governance that improves on the status quo?
Research Agenda
Assessing the Effect of Global Governance
Further develop the “Oslo-Potsdam solution” of effectiveness toolSeparating and aggregating effects across international treaty regimesAssessing regime effectiveness over timeInvestigate non-regime cases, andExplain the variation in regime effectiveness-> assist in regime design.
Research Agenda
Feasibility of Long-Term PolicyCurrent institutions created for short-term governance
• Constitutional provisions not specific enough (and are often ignored, e.g. public debt)
Examples for Research• Long-term climate policy (“prevent dangerous
interference”)• Intergenerational obligations (social security
system)• Sectoral policies (e.g., Airbus)
Conclusions
Sustainability Is a Business IssuePotentially Wide-Ranging ConceptAssessment of Progress Towards Sustainability is Possible (Effectiveness)The Challenge of Credible Long-Term Policy Remains
Additional Sources
Presentationhttp://www.sprinz.org
Links and Additional Information:PolitikON(line) Course “International Environmental Policy”Contact: