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Can corporate-NGO partnerships save the environment? Part 1

By Glenn Prickett - posted Friday, 7 February 2003


The World Summit on Sustainable Development in September 2002 was an anti-climactic conclusion to three decades of global environmental activism. Delegates agreed few new targets for governmental action, save a welcome pledge to halve the number of people without access to sanitation and safe drinking water by the year 2015.

What did emerge from Johannesburg was a new debate. Many governments and some non-governmental organisations (NGOs) argued that voluntary partnerships between business, governments, and NGOs were the best way to make concrete progress on sustainable development

Ten years earlier the 1992 Earth Summit in Rio de Janeiro generated a long list of official commitments and optimism that governments could protect the environment and reduce poverty. Johannesburg symbolised the extent to which Globalisation has scrambled the interests and capabilities of governments, corporations, and activists. Now former antagonists are drawn to work together in ways that are uncomfortable, controversial, and yet often highly effective. It is an era of strange bedfellows.

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The New Global Context for Environmental Action

Thirty years of effort to restore and protect the environment has left a mixed record. While many local environments are on the mend key global trends are worsening

The Kyoto Protocol, which will likely enter into force after 2002, will not solve the problem of global warming. Leaving aside the intransigence of the U.S. (the largest single source of greenhouse gases) the Protocol does not commit the developing countries (collectively the world's largest source of future greenhouse gasses) to reduce emissions.

There are good reasons for omitting developing countries from the Kyoto mandate. The developed nations are responsible for the current high levels of greenhouse gases in the atmosphere, and they have greater financial and technological capabilities to reduce emissions. Ultimately, however, the solution to climate change and other global environmental problems will depend on the active participation of the developing world.

Globalisation has proved a two-edged sword for business and the environment. As the political will and capabilities of governments to address environmental issues has waned, private capital has become the main source of foreign investment in many developing countries. The multinational companies whose investments have helped to create economic gains and environmental stresses in the developing world now face pressure to improve their environmental performance. Similarly in the United States, a trickle of voluntary initiatives has become a flood.

The contrast between Johannesburg and Rio illustrates the extent to which the institutional context for addressing environmental problems has changed. Broadly speaking, governments came to Johannesburg with less interest and fewer resources than they brought to Rio. Business, on the other hand came ready to do business and enter into partnerships with environmental organisations and governments.

Some NGOs want government to reassume a strong hand in regulating the growing influence of global corporations. Others are trying to surf the new waves; aligning with the corporations who seem more motivated than governments to take action on environmental issues.

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STRANGE BEDFELLOWS

In one sense, partnerships between corporations and environmental organisations are not new. Companies have provided charitable grants for the programs of environmental organisations for decades. The controversy in Johannesburg surrounded a new type of partnership in which the common interest of the company and the NGO has grown beyond philanthropy. Now both organisations seek to solve an environmental problem associated with the company's core business without waiting for a government mandate. These partnerships are a significant departure from the ways in which NGOs and businesses have typically behaved.

The Pioneers: Environmental Defense and McDonald's

Two of the first organisations to break this tradition were Environmental Defense (formerly known as the Environmental Defense Fund or EDF) and McDonald's, who launched a landmark partnership in 1990 to reduce waste in McDonald's restaurants and supply chain. This reduced more than 150,000 tons of packaging, recycled more than two million tons of corrugated cardboard, and purchased more than $4 billion worth of products made from recycled materials. It has been followed by similar initiatives to reduce water and energy consumption and a new partnership with the Center for Environmental Leadership in Business at Conservation International to promote conservation and sustainable agricultural practices among suppliers of commodities, such as fish, beef, potatoes, and oils.

While difficult to prove, it is likely that the McDonald's-Environmental Defense initiative spurred other companies and NGOs to partner on voluntary environmental action. EDF in 1994 launched the Alliance for Environmental Innovation, which has undertaken similar waste-reduction initiatives. The U.S. Environmental Protection Agency has launched more than 30 voluntary programs to encourage the private sector to act above and beyond regulatory requirements (pdf 139Kb). EPA's Project XL grants companies the flexibility to test alternative approaches that achieve better environmental results more efficiently than existing regulatory requirements. Other EPA voluntary programs promote pollution prevention, energy efficiency, water efficiency, waste minimisation, mass transit, watershed conservation, sustainable agriculture, and more.

Addressing the New Global Agenda

In the 1990s NGOs sought to engage leading companies in combatting two key issues: global climate change and biodiversity loss. The EU embraced the 1997 Kyoto Protocol, which called for a five per cent cut in industrialised nations' greenhouse gas emissions, but other developed countries, most notably the US, and some developing countries resisted it, fearing negative impacts on their economies. With governments slow to act, NGOs turned their sights to the private sector, hoping to demonstrate that the costs of reducing emissions and protecting biodiversity were lower than many critics argued.

Global Climate Change

In 1998, as US resistance slowed ratification of the Kyoto Protocol, the Pew Center on Global Climate Change was established to seek innovative policy solutions, creating a Business Environmental Leadership Council to bring the weight of Fortune 500 corporations into the policy debate.

Environmental Defense organised the Partnership for Climate Action in 2000 with Alcan, BP, Dupont, Entergy, Ontario Power Generation, Pechiney, Shell International, and Suncor Energy. If these companies were a country, they would rank 12th in emissions of greenhouse gases. Dupont made the most ambitious pledge: to reduce emissions 65 per cent below 1990 levels by 2010. The company had already achieved a 60 per cent reduction by 2000. BP achieved its goal of reducing emissions 10 per cent below 1990 levels eight years ahead of schedule in 2002.

World Wildlife Fund and the Center for Energy and Climate Solutions established the Climate Savers Program to help corporations develop innovative greenhouse gas reduction strategies and to gain public recognition for their accomplishments.

Chicago's Environmental Financial Products, LLC and the Kellogg Graduate School of Management at Northwestern University are working to establish the Chicago Climate Exchange (CCX), the world's first private trading market for greenhouse gases.

The success of these initial partnerships is spurring other companies to take voluntary action. In the US, the Business Roundtable encourages its members to measure their emissions and to adopt voluntary targets for reducing them.

A national policy of incentives for these types of strategies could result in substantial emissions reductions at minimal economic cost. Such a policy should include incentives for commercialisation of low-emission energy technologies, which will be essential for dramatic emissions reductions in the future.

To reduce costs to the economy, the policy should also provide mechanisms for emissions trading and carbon offset investments, both domestically and internationally, structured to ensure biodiversity conservation. For example, conservation and restoration of threatened forests should be encouraged, while conversion of natural habitat to forest plantations or cropland should be discouraged.

Biodiversity

An even greater number of partnerships have formed to promote conservation of biodiversity, which is a more urgent problem.

The world faces an extinction crisis unparalleled since the age of the dinosaurs, brought on by conversion of natural habitats for human use, pollution of air and water, hunting and fishing of threatened species, and the introduction of non-native species into natural habitats. Particularly at risk are the global biodiversity hotspots, 25 regions that harbour nearly half of the world's plant species and over a third of all vertebrate animal species. A number of key industries both contribute to biodiversity loss and offer the potential to deliver conservation solutions. Among these forestry, agriculture, fisheries, energy development, mining, and tourism are especially important.

Forestry

The world's forests are home to most of its terrestrial biodiversity and logging is the most visible threat, although the impact of agriculture is actually more extensive. As a result of campaigns major retailers such as Home Depot, Ikea, Lowes Home Improvement Warehouse, and Staples have pledged to replace wood products from threatened forests with products from forests certified as sustainably managed.

The first forest certification program, SmartWood, was established by the Rainforest Alliance in 1989 and the Forest Stewardship Council (FSC) was launched in 1993 to provide a credible system for certifying "well managed forests". FSC 's global principles and criteria address environmental, social, and economic aspects of forestry. To date, FSC certification has been awarded to 453 forestry operations in 56 countries with a total area of more than 72 million acres. A Global Forest and Trade Network (GFTN) of more than 700 companies has been established to promote FSC certification among producers, traders, and retailers of forest products.

The major forest and paper companies in the United States did not join the FSC or the GFTN. Instead, the American Forest and Paper Association (AF&PA) in 1994 established the Sustainable Forestry Initiative (SFI). More than 113 million acres are enrolled in the SFI program. In June 2000, the AF&PA organised an independent Sustainable Forestry Board (SFB) to oversee the SFI's standards and certification procedures. The chief executives of Conservation International, The Nature Conservancy, and Resources for the Future sit on the SFB.

Forest certification programs have improved the environmental management of hundreds of millions of acres of forest worldwide.

Agriculture

While logging may be the most visible threat to forests, expansion and destructive farming practices have had an even greater impact on biodiversity. Each year since 1980, some 35 million acres of the world's tropical forests have been converted for crop production and livestock grazing. The doubling of the world's food requirements over the next several decades will place increasing stress on many of the Earth's ecosystems.

In 1991, based on the success of its SmartWood program, the Rainforest Alliance established a Sustainable Agriculture Network with other conservation NGOs in Latin America to develop guidelines for responsible management of key export crops. It has certified over 130,000 acres of farms in Central and South America.

Coffee, the largest legally traded agricultural commodity, has been the conservation community's strongest focus. The world's key coffee-growing regions - Brazil, Central America, the Andes, East Africa, and Southeast Asia - are also some of the world's most threatened hotspots of biodiversity. Millions of acres of rainforest have been converted to coffee plantations. Conservation organisations are encouraging coffee producers to maintain traditional shade coffee farms and to end conversion of natural forests for new coffee plantations.

In the 1990s, a number of specialty coffee roasters such as Thanksgiving and Equal Exchange embraced conservation principles. In 1998, Starbucks signed an agreement with Conservation International to support small farmer coops in Mexico's El Triunfo Biosphere Reserve. Starbucks has since worked with CI's Center for Environmental Leadership in Business to create environmental and social guidelines (pdf, 143 Kb) for its suppliers.

The Starbucks guidelines were among the first applications of a set of Conservation Principles for Coffee Production (pdf, 38Kb) developed by a coalition of environmental organisations, including the Consumers Choice Council, Conservation International, the Rainforest Alliance, and the Smithsonian Migratory Bird Center. These organisations are now seeking to engage other major coffee roasters in similar efforts.

This is part one of a two part series. Part two is available here.

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This is an edited version of a paper given to the New America Foundation on 20 November 2002.



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About the Author

Glenn T. Prickett is a Senior Vice President at Conservation International and Executive Director of the Center for Environmental Leadership in Business.

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