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International Conference on Voluntary Business Initiatives for Mitigating Climate Change

Kyoto, 3 December 1997 - As we approach a new millennium, the world economy is in transition. Globalization is making the notion of comparative advantage obsolete. Following deregulation of markets and the establishment of regional economic alliances such as APEC and NAFTA, there is an increasing competition in vital sectors of the economy such as the chemicals, metals and transportation. Waves of privatization have hit sectors as diverse as health-care, energy, airlines, and telecommunications. There is also the potential of shifts in production base to countries with lower production costs.

There is no prospect for any nation state insulating itself from changes in the economic climate, from global change and major pollution flows.

It is natural then that there should be intense questioning in the industrial sector about adherence to ever-increasing standards of environmental efficiency: Can sustainable development be addressed through business-led market development? What types of government policies and instruments most effectively promote sustainable industrial development? How can the differing agendas of Governments and business be fused to attain sustainable industrial development?

Never before has an environmental issue been so tightly bound up in the political and economic realities of nations as is the issue of climate change. We can no longer pretend that Governments alone hold all the answers. Instead, industrial leaders and private citizens have to play a role and already, through an array of innovative actions, appear to be leading the way.

Just down the road, Governments are sending signals which although shrouded in ambiguity, still indicate a reluctance to honour earlier commitments to reduce emissions of greenhouse gases. The excuses they offer are various but primarily come down to two things, they are either unconvinced by the urgency or immediate seriousness of the issue and as such cannot decide the appropriate level of response. Or they plead economic circumstances. Other issues of national importance require precedence and a first call upon available resources. The bottom line of so many is `we want to help but not now - this isn't the time'.

I take a contrary view. In my opinion, it is inconceivable that the world community would allow Kyoto to be a failure. That Governments would be prepared to say to the world that they are not serious enough about global warming to agree on a protocol of sufficient strength to delay and limit climate change - that they are prepared to sacrifice the environment for jobs and economic growth.

It is excusable that we are not putting in place precautionary no-regrets policies that will ease our confrontation with climate change. It is inexplicable to me that we cannot agree on achievable and low-cost strategies that can limit the extent of climate change and delay its onset.

The fact of the matter is that there is a great deal of evidence to show that real emission reductions are achievable and will not lead to the disastrous economic claims that some make.

In fact, the evidence is mounting that there are win-win opportunities in every sector to reduce greenhouse gas emissions while reducing costs or providing other benefits. The dark stories of economic doom and gloom so often associated with controlling greenhouse gas emissions are refutable. Many opportunities are found in the area of energy-efficiency, where newer technologies often provide better quality service while reduced energy use saves money and protects the environment.

For example, the United Nations estimates that total global energy consumption in the agricultural, buildings, industrial and transportation sectors together could be reduced by 35 per cent by the year 2020 through the adoption of energy-efficient technologies (UNDPSCD 1997).

A recent report by the World Resources Institute (WRI) concludes that under a reasonable set of common assumptions, models indicate that the macroeconomic impacts of stabilizing greenhouse gas emissions are likely to be modest and if the environmental benefits are factored in, are likely to be beneficial.

Many local authorities, as the International Council for Local Environmental Initiatives (ICLEI) announced recently, have outpaced their national counterparts in seeking and applying solutions to transport problems and energy inefficiencies.

There are now hundreds of municipalities applying jointly agreed guidelines for greenhouse gas emission controls: mass-transport development; restrictions on private transport involving the number of passengers carried; zoning restrictions; exhaust and noise limits. Permits and levies have not only got cities moving again but saved or made money for urban development. Similar cost saving efficiencies in energy consumption in the domestic, business and manufacturing sectors are redefining local pride and providing examples which when aggregated nationally contribute significantly and cost effectively to our future.

There are also exciting results in the private sector. Yesterday, in Tokyo, more than 200 chief executives from the insurance sector met with UNEP to discuss a broad range of environmental issues and have developed a hard-hitting position paper on climate change which will be presented at a workshop here on Friday. They understand that environmental risk is business risk.

The success stories are mounting. Companies and, in some cases, entire industrial sectors have made quantifiable commitments to reduce their C02 emissions. Voluntary programmes will clearly be just one of the many policies that governments may support to address the issue of reducing greenhouse gas emissions. And although our failures since Rio speak volumes about the inadequacies of a voluntary agreement alone - they hold great promise.

Today, I am pleased to announce the release of a new joint UNEP and the United States Environmental Protection Agency report entitled Reducing Greenhouse Gas Emissions: The Role of Voluntary Programmes. The report summarizes some of the opportunities in the commercial/institutional, residential, industrial, transportation, agriculture and electricity generation sectors in a geographically diverse set of countries.

Through the case studies, the report also looks at market and institutional barriers. Those discussed in the report include lack of information about the existence, availability or reliability of preferable technologies or practices; lack of financing; lack of access to technologies and technical support; and lack of adequate motivation for decision-makers to change behaviour. We must find ways to share our experiences - good and bad - so that we can tear down the barriers and get technologies into the marketplace.

This growing body of international experience with voluntary programmes should be valuable for all countries and businesses as they begin, or continue, to evaluate the appropriate steps that need to be taken to reduce greenhouse gas emissions. In my mind, the reluctance to fulfilling global obligations speak to major weaknesses not in our technology but in our ability to innovate.

And so, while Governments ponder, people are acting. Awareness at the family level and application of simple solutions result in domestic fuel bill-saving. Enlightened utilities and small businesses are replacing energy costs with profits. Associations of business and service industries have climate awareness high on their agenda. Some like the insurance and tourism industries are working with UNEP on codes of conduct that demonstrate an environmental responsibility.

I leave you with a challenge. Your continued help is needed in bringing about internalization of externalities, adequate pricing of energy, design of transparent, reliable, credible codes of conduct, voluntary commitments and the development of new environmental management tools, such as environmental reporting and design for the environment. One of the business sector's greatest strengths is its capacity to identify opportunities and to implement efficient and effective solutions to environmental and economic challenges.

What I am suggesting is that in a world of sincere, honest partnership between government and industry we can mobilize creativity and energy to design new models that work.

Einstein said that in crisis, imagination is better than knowledge. We need to know more. But we also know enough. Enough to appreciate the risk of climate change and fear its consequences. Enough to make choices; hard choices; perhaps expensive choices; but ultimately affordable and necessary ones.

Kyoto will test our imagination and our will. Kyoto gives us an opportunity to choose a secure future or risk a climate beyond control.

Many thanks to Keidanren, WBCSD and the ICC for their initiative in bringing us together to make a contribution to this challenge.

Monday 22 Dec 1997
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