The World Business Council for Sustainable Development’s Vision 2050 says the corporate world must play a leadership role in solving mankind’s mounting problems. It outlines a new agenda for business: to work with government and society to transform global markets and competition to achieve a sustainable future. But here is a thought. Is Vision 2050 anything more than a PR survival plan for today’s big companies seeking a long-term and popular license to operate?
Vision 2050 identifies 350 milestones, of which 40 are described as “must haves”, that will allow the world to produce enough food, clean water, sanitation, shelter, mobility, education and health to provide for 9 billion humans (two more billion than today).
The report (by 29 leading global companies from 14 industries in dialogue with 200 companies and stakeholders) says that to create this sustainable world we must first negotiate some tough hurdles:
“These include incorporating the costs of externalities, starting with carbon, ecosystem services and water, into the structure of the marketplace; doubling agricultural output without increasing the amount of land or water used; halting deforestation and increasing yields from planted forests: halving carbon emissions worldwide (based on 2005 levels) by 2050 through a shift to low-carbon energy systems and improved demand-side energy efficiency, and providing universal access to low-carbon mobility.”
Vision 2050 calls on governments and business to write new rules for markets that reframe environmental challenges as economic challenges, driving innovation and competition toward sustainability and away from resource- and energy-intensive production. It adds its collective multi-corporate voice to the campaign that wants market prices rationalized to take account of externalities such as climate and biodiversity impacts.
In other words, WBCSD’s Vision 2050 promotes the viewpoint that over the next forty years, corporate environmental efficiency must become a competitive advantage across all industries and regions of the world.
How to interrogate this stuff from an independent PR perspective? Sceptically, I suggest.
Externalities, state subsidies and political horizons
Big business likes this stuff because it sounds and even is, sometimes, virtuous. It has the merit of turning all kinds of uncertainties into market opportunities.
I warm to Vision 2050’s commitment to raising productivity (worker output per hour) by improving land usage and making better use of genetically modified organisms. I can also see the logic of big business wanting to be seen to capitalize on political realities by trying to persuade governments to turn costly externalities into profit-centres. However there have always been substantive reasons to object to WBCSD’s demand for regulation to sort out the issues it addresses.
It is worth noting, Vision 2050 advocates that externalities and social desirables become goods and services which have a state-subsidy or state guaranteed price.
The problem is that state planning risks making the world dependent on the short-term political thinking today’s politicians favour, which is the very opposite of what Vision 2050 seeks to achieve. Certainly, WBCSD hopes that governments will map the paths to achieve pre-advertised and pre-announced priced services (the ex-externalities), which is something that may or, as countless useless UN summits suggest, may not happen. For a moment, let’s assume WBCSD campaign had been more successful.
It knows that when the state is required to map out the big things it wants to happen, big firms will be able to gear up to deliver it quicker and better than small firms. It rightly assumes that government would find itself talking with the big firms which deliver big stuff.
For instance, BP may have cocked-up in the Gulf of Mexico, but a small firm couldn’t have even begun to get the deal. If you electrify cars, the trains, build new track, put in huge windfarms or solar arrays, deliver new low-pollution chemical plants etc, etc, almost all the sustainability deliverables, which are capital intensive, get delivered quicker by giant firms. So the big problem-makers become the big problem-solvers. Yummy. Trebles all round. And a PR victory to boot, you would think. Perhaps, but it is a short term, costly and counterproductive one.
Given that governments are unlikely to produce the market-fixing consensus WBCSD proposes: big business will have to lead from the front in a more forceful manner than Vision 2050 imagines. It is in that spirit that I find myself a critic of Vision 2050.
Questioning Vision 2050’s energy policy assumptions
What Vision 2050 gets wrong about energy efficiency is this: if we make energy cheaper to use through engineering efficiencies, demand for it will inevitably rise; regardless of how energy efficient individual machines or industrial processes become. That trend has been apparent – like a law of progress – since the dawn of the industrial revolution (think of batteries, cars, washing machines and dishwashers etc). Hence, the tendency is for improvements in productivity to push society in the opposite direction to the path mapped by Vision 2050 (See ‘The Efficiency Dilemma: If our machines use less energy, will we just use them more?’ by David Owen in The New Yorker).
Vision 2050 assumes that in the future the world will have to (and shall in practice, which is not the same) cutback on carbon dioxide emissions to combat global warming. But surely it makes sense to achieve this through innovations that improve how we use fossil fuels?
What if we could either suck the carbon from the atmosphere or clean it up effectively as we go using carbon capture and storage technologies? Even commercially viable clean coal looks possible in the near future. As the IEA makes plain, clean gas and cleaner oil is within our grasp. With the former solution we could turn-reverse global warming and keep using fossil fuels. With the latter we could make use of all the fossil fuel resources we desire for as long as they are available without making AGW any worse than it already is. After all, according to the IEA, the world has hundreds of years’ worth of supply of coal, gas and oil in conventional and unconventional payloads.
Certainly, China provides a contemporary case study that challenges many of Vision 2050’s assumptions.
China’s development contradicts Vision 2050
The Chinese lead the world in installed wind power and in most other renewable energy technologies. Yet it is using them to centralize (not decentralize) its power generation and distribution systems. China’s ambition is first to energize its prosperous coastal regions using energy generated in its northern territories thousands of miles away. Then it envisages using this expertise and experience to connect its coal-fired power stations in northern China, vast windfarms in Inner Mongolia and gigantic hydroelectric plant in and near Tibet, directly to Europe via an integrated high voltage grid. To its credit, the intercontinental electricity grid is precisely the type of project Vision 2050 advocates.
Of course, subsidies might help encourage the decentralized solutions WBCSD prefers as much as the centralized and energy intensive ones China is implementing. Then again, they might not, because special pleading might not be attractive to Western taxpayers in support of either outcome (the Chinese people don’t have choice). The main issue is not for or against subsidies; it is that decentralized solutions lack the punch to deliver the goods in vast quantities over vast distances.
It is the scale and focus of China’s vision that dwarfs WBCSD’s. It wants to use hydro, wind, solar, nuclear and every fossil fuel resource in ever greater quantities. It is not prepared to develop one at the expense of the other. It wants to lead the world in all of them. It aims to supply its land and Europe’s (and perhaps most of Asia too) with a plentiful supply of cheap electricity.
Theirs is completely the opposite approach to Vision 2050′s decentralized zeal for “lower demand-side energy efficiency”, which implies lowering overall demand. Explained bluntly, the Chinese prize energy efficiency but only in the sense that it helps them produce more of everything, including energy. Industrialists in Europe used to think similarly. They too were obsessed with increasing productivity until campaigners and inept politicians began promoting falling GDP (in other words austerity and recession) as something to celebrate. Unfortunately, many firms in self-abnegation mode, fearing campaigners, indulged this “happiness” agenda, just as Vision 2050 does.
The Chinese mantra might be summed up as “think global, act global” by taking the lead on many fronts. It is investing in real solutions (including low carbon ones on an unmatched scale) while resisting being hamstrung by regulation at a national and global level. In the short to medium term its carbon emissions might well rise, but they intend to reinvest their profits back into finding cleaner solutions.
Another good example of this difference of opinion and direction is China and Russia’s determination to think big about the transformative potential of pipelines.
Grids, pipelines, gas and water
There’s a rush on today to construct gas pipelines on a global scale, by connecting China to central Asia and both to Europe. Russia’s Gazprom’s has multiple projects in motion, including Nordstream and Southstream, connecting its gas fields to Europe, and maybe in the next couple of years to the UK. Then there is the existing Maghreb–Europe Gas Pipeline from Algeria, which connects Africa to Europe, and a number of other projects designed to challenge Russia’s grip on gas supply. But pipelines have more applications than gas.
Vision 2050 cites how a shortage of water in various parts of the world is a major problem today and (perhaps) set to get worse:
Presuming that freshwater for hygienic and sanitation purposes is prioritized, the implications of an overall supply gap are that regions will have to compromise on how active they can be and the type of water they use in other water-intensive areas such as agriculture, industry and primary resource extraction. [Vision 2050: The new agenda for business, page 40]
There is, though, nothing inevitable about such an outcome. In a world two thirds covered by astronomical oceans it is surely not right to allow economic and social development to be limited by a shortage of an abundant resource. Mass-scale desalination, a technology Vision 2050 admires, has the potential to evaporate worries about water shortages and redefine how we calibrate the sustainability of its usage. It is quite possible to build a global water-pipe grid just as we are doing for gas (a project states might legislate for but might not pay for; while the market might be able to sustain the entire costs because it is profitable to do so).
Of course, desalination is an energy intensive process. It requires lots of cheap energy to be economically viable (the poor will want cheap water and lots of it). Even when the process becomes more energy efficient, as it will, building lots of desalination plant would still require vastly more cheap electricity than we generate today. Then again, if we want to drive around in electric cars we run into the same problem that requires the same solution.
Yet in China, in contrast to the West where every technology, including wind, tidal, hydro and especially nuclear, has its vocal antis, there is a determination not to be constrained by “natural” or self-imposed limits. There is a will to find solutions. That is how it used to be with us in Europe and the US until relatively recently.
Big business would say that, wouldn’t they?
WBCSD’s Vision 2050 is in the business of envisioning a future that is difficult to predict. There can be little doubt, however, that WBCSD has identified all sorts of problems which are up ahead. Vision 2050 correctly says (yes, I said correctly) that government has a role in fixing them, helped by big business and vice versa.There’s no denying that China’s progress is mostly state-driven, or that, shamefully, Western governments have been almost inert in comparison.
My concern is only that we should be careful when big business signs up for a green sustainability agenda, but only because it is neat and now it suits them. Regardless of such instrumentalist intentions, they may still be right. But I suspect they’d be quick to argue, whatever the reality was, for legislation, controls etc, which makes their life more mappable. That doesn’t make them wrong, but it takes away some of their virtue, which they so boldly lay claim to. In any case, they may – as I fear – wrap us in all sorts of expensive taxpayer action which turns out misguided and which leads to its own backlash that undermines their credibility and reputations.
Risk-takers and innovators versus WBCSD’s 2050 Vision
My point is that innovation creates new industries, new possibilities and paradigms. Small and medium-sized companies have to be given the space to challenge and slay big firms. They have to have the room to become the new solution providers and new corporate giants.
There is also a glaring contradiction at the heart of big business’s support for innovation. While they laud innovation in glossy documents they are mostly cutting back on their R&D; and calling instead for more taxation and regulation of externalities (US tech R&D spending as a percentage of GDP is below where it was for much of the 1960s, according to Kleiner Perkins partner Mary Meeker’s analysis of USA Inc.).
If big business is really serious about driving forward innovation, they could demonstrate it by increasing their R&D budgets by, to make a tough demand, a factor of ten.
We can argue about how much to spend, but the case for investing more in innovation, taking more risks and encouraging more risk-takers to emerge should be taken as read. Many of these risk takers are as likely as not to be competitors of today’s major firms (and in China’s case countries). They will make best use of scientific and technological breakthroughs to challenge the existing order.
The inspiration for innovation rarely emerges from the partnership relationships (cosy clubs) WBCSD favours. They arise much more often from the work of the Academy, disruptive entrepreneurs or from within focused industrial-sized in-house R&D departments of major firms (IP/ patents and knowledge are their lifeblood), as, in varying degrees, the railways, automobile, IT, internet and bio-pharmaceutical industries did.
What grates on me, though, is the self-interested emphasis Vision 2050 places on the regulation of externalities. This is really about big business searching for a regulatory safe haven. It is an attempt, consciously or not, to shirk their responsibility to lead through innovation.
However well intentioned Vision 2050 is, it does not provide a sustainable plan for the next 40 years given the nature of the unknown unknowns – such as politics, serendipity and competition – that are as likely as not to tear the plan’s assumptions to shreds.
Note: this essay first appeared here as a sketch in much shorter blog post more than two years ago.