Resources are all the rage. With the world population headed toward 9 billion people by 2050, from 7 billion today, companies and governments are eager to ensure they have access to strategic and industrial materials, now and for all time. The problem is that resources are becoming more expensive as the global middle class expands and is able to buy more stuff. The Goldman Sachs Commodities Index (now the Standard & Poor's GSCI) has risen by about 3.5 times between early 1991, when it launched, and today (It closed at 670.51 on Friday). Greater competition for fewer resources doesn't mean that everything is at risk of running out next week, or even "peaking." If these trends continue, it does mean that prices are likely to continue their ascent in the long term.
Global companies find themselves increasingly in dialog with civil-society organizations focused on the resource race. The World Resources Institute (WRI), a research organization based in Washington, DC, this year observes its 30th anniversary. And last week, it installed its third president, Andrew Steer, a U.K. economist who joins WRI after serving as Special Envoy for Climate Change at the World Bank. We spoke by phone last week about resource scarcity and climate change.
Q: Most of us were brought up secure in the knowledge that businesses and
nongovernmental organizations are natural enemies in the wild. What’s driving
companies into dialog with NGOs, and vice versa?
A: We are seeing a tightening up -- in a very serious, worrying way -- of the entire resource situation in the world. It’s high food prices, and high and volatile gasoline prices. It's the fact that in the last 10 years we have seen the upsetting of an entire century of declining real resource prices. It's the un-priced resources, such as the atmosphere. Just as we have heard a lot about living beyond our means financially, so too we are living way beyond our means with regard to resources. Any smart business leader needs to be aware of that and needs to factor it into his or her decision-making.
Q: Two or three years after climate policy collapsed, it seems like
everything a carbon price was supposed to help with is happening anyway -- oil
prices are high, solar prices are dropping, low-carbon natural gas is cheap,
coal plants are disappearing in the U.S. And some places, like Australia, which
has a carbon tax, still see substantial resources investment. What am I missing
A: There are very natural technological and market forces that will find solutions. I don't have any doubt about that. The question is, are they going to able to come in fast enough to address the issue? I think the answer is no. We should rejoice in the breakthroughs. The plain fact of the matter is we're dealing with a situation that really requires non-incremental change. Here's a really important point for us at WRI: It is the poor who will be the ones that suffer most.
Q: Change doesn’t seem to be coming from officialdom. Even many
professional environmentalists rolled their eyes at the United Nation’s Rio+20
Earth Summit in June. Aren’t they right to?
A: If it is judged by what the 190 countries agreed on, it clearly was a serious failure. If judged by progress on a new way of doing business, which doesn't require the governments of the world to agree -- but does require a much richer coalition of public- private civil society, then it was remarkable success. We are currently in a period when universal, all-countries agreements aren't going to work. It doesn't matter, as long as coalitions are able to get on with the job. The battleground has shifted.
Q: Wired this month has a cover story headlined,
“Apocalypse Not,” which argues that
“Over the five decades since the success of Rachel Carson’s
Silent Spring in 1962 … prophecies of doom on a
colossal scale have become routine.” Are environmentalists
“apocaholics” as the article and others have
A: There have been false scares in the past. Living in Indonesia, running the World Bank program, I invested hugely in the subject of avian influenza five years ago. That was a scare.
Evidence shows that the world economy actually consumes natural resources at a rate at least as concerning as the size of financial deficits, or as the fragility of the financial sector. The question is not so much, was the Club of Rome right or wrong 40 years ago, but, today, based upon serious objective, dispassionate, authoritative, professional analysis, does it look as if we run serious risks? The evidence is clear that we have some very serious risks, not on the horizon, but actually much closer than that.
Q: On Sept. 12, Bloomberg.com/Sustainability will be broadcasting the
Carbon Disclosure Project’s annual Global Climate Change Forum. What trends do
you expect we’ll see in the next year or so when it comes to corporate efforts
to better manage resources and disclose their impacts to investors, either
through CDP or elsewhere?
A: What’s remarkable is nobody -- no government -- is forcing anybody to disclose their carbon emissions. The entire pressure comes from those who hold large sums of money, and are deciding whether to entrust that money to corporations. Anybody who says the private sector, or the financial sector, doesn't really worry about climate change might ask, then why is it than that two-thirds of the S&P 500 is disclosing their carbon emissions? They're disclosing it because it's good business for them.
Q: What are you reading?
A: I'm reading a wonderful book at the moment called At Home, written by a guy named Bill Bryson. The other book I'm reading is about the Federalist debates, Founding Rivals. For a non-American, it's really important that we understand what is really underlying the politics in this country. I think it’s impossible to understand it, unless one reads where this all came from. For a European in particular, it's rather unintuitive why the political dialogue in this country is the way it is.
Click here to register for the Carbon Disclosure Project's Sept. 12 online Global Climate Change Forum.
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