Publications on the internet
Environmental Audit Committee - Minutes of EvidenceHC 200
Taken before the Environmental Audit Committee
on Wednesday 5 September 2012
Joan Walley (Chair)
Dr Alan Whitehead
Examination of Witnesses
Witnesses: Derek Osborn, President, Stakeholder Forum for a Sustainable Future, Tom Bigg, Head of Partnerships, International Institute for Environment and Development, Adam Matthews, Secretary General, Globe International, Owen Gibbons, Executive Adviser to the Chief Executive, WWF-UK, Mark Edwards, Hard Rain Project, Dr Steve Waygood, Chief Responsible Investment Officer, Aviva Investors, and Jessica Fries, Director, International Integrated Reporting Council.
Q42Chair: I appreciate that it is a little bit of a tight squeeze and that we have perhaps more witnesses than we usually have at a Select Committee hearing but, just by way of introduction, what this Committee wanted to do, having held various sessions before the Rio+20 Earth Summit, was to make sure that we are accountable in Parliament for what goes on beyond Rio. We felt that, in the spirit of collaboration, partnership and dialogue, it would be quite useful to bring together different participants and stakeholders with an interest. For that reason, we have invited each of you, representing a different area of interest, round the table with us. It is in that spirit of collaboration that we want to hold this hearing this afternoon.
We do not expect to have each and every single one of you giving your own interpretation of each and every answer that we ask of you, because that just would not work. We want a dialogue. As there are so many distinguished people around our witness table, but particularly Mr Osborn-given your long-standing involvement with the whole UN process over many years, and I understand that you have had an opportunity to give some thought to this-rather than you make a statement for everybody, perhaps you could give us some idea and start off by saying how you rated Rio+20 and how it compared to the original Rio. Was it a success or a failure? Just give us some idea of the lessons that this Committee should be looking at.
Derek Osborn: Thank you very much. As you say, we have a wide range of representatives here this afternoon. Some of us have had a preliminary discussion, so what I am going to say is not just a stakeholder forum view but reflects some of the general points on which we all agree, although other people will have different emphases to make when they come in.
On the question, what impact has Rio had, the basic test must be: has it had or could it still have a significant worldwide impact in reanimating the drive towards a more sustainable global and national economy and pattern of development? I think that is a goal that we share very much with your Committee, and we have all admired your successive reports on how to drive sustainable development forward. The task is more urgent than it was 20 years ago at the first Rio Earth Summit. The scientific consensus is that many of the sustainability problems of the world are getting worse, resources are getting scarcer and there is more pressure of pollution. There is more feeling that the total footprint that we are making on the globe is unmanageable going forward so there really needs to be a sustainability transition.
It is a supreme challenge and it is a task not just for Governments but for the whole of society, for parliamentarians, for regional and local government, for businesses, for trade bodies, for NGOs of all kinds and so on. Our impression was that Rio was not just one summit but it was many summits. All of those major groups I mentioned had their own parallel processes, their own summit meetings from around the world, in Rio, reaching their own conclusions and deciding actions for themselves to advance the sustainability cause. They were not just lobbyists. I might mention particular parliamentarians-I know some of your colleagues are involved, as are other parliamentarians of the world; we will hear more about that later. Local and regional government were very strongly pushing their sustainability agenda. Business groupings were very strong too on pushing their agenda. The scientific community of the world launched some important new initiatives. Unfortunately, Governments in some ways did less well in negotiating their own outcome document because there is less worldwide consensus about the best way forward and what the priorities should be in the sustainability agenda.
The south is still mainly preoccupied with development issues, eradication of poverty and the need for help from the north. The developed countries were much less clear about what they really wanted, and about what changes their own economies need to make them greener and establish more sustainable patterns of production and consumption, so the conclusions there were rather vague and disappointing. Nevertheless, some key points have emerged. One of the most important-and perhaps we can talk more about it later on-is the agreement to have universal sustainable development goals defined and promulgated in the next three or four years for all countries of the world, not just the developing countries. There is agreement to have a new high-level forum at the UN to chase progress, which should not be like the CSD-it consisted largely of environmentalists making wish lists of things that other people ought to do-but should be more dominated by the economic interests of the world, taking real decisions about how to move forward the sustainability agenda. That could be exciting. There is to be further action on corporate sustainability and perhaps we will come back to that later. There ought to be better measures of progress, not just GDP, and what it actually means to move forward in the world.
The challenge is how to follow this through vigorously, not just on these points that are for further international discussion but to use the Rio momentum to reanimate the worldwide drive for sustainable development, and action needs to begin at home. May I just say a little about what we think the UK should do or do you want to stop there?
Q43Chair: We will stop there for the time being because we have a lot of ground to get through. Can I just ask, given the reference that you made to different groupings who were at Rio and who have come back perhaps re-energised to get on with that individual agenda, how you see all this interlocking and coming together within the overall UN framework and how that relates to business, NGOs and parliamentarians, as well as the wider public within the UN framework?
Derek Osborn: That is a difficult, broad question. Some people have come back feeling-and it has been expressed in the media-that UN activities have lost their way and perhaps we ought to be trying to do things in a different way. I think most of us feel that you cannot write off the UN like that, but you do need to approach a UN process with more going on in the world to bring to it. The summit was perhaps created without a sufficient agenda for action and movement, and I think next time-perhaps in three or four years, when the Millennium Development Goals and the Millennium Summit review comes up-we need to be able to demonstrate more specific concrete action on the ground in various places, on the business agenda for sustainability, on the scientific agenda, on the NGO agenda, that can then be generalised in the UN context, so bottom up meeting top down. I think that is what we would hope for.
Adam Matthews: The challenge Rio had is that it is in a completely different place from 20 years ago. You had a much smaller group of major economies 20 years ago, which were able to determine between themselves the agenda, and there was a broad basis of support and a very long process leading into it. I think this time you had power diffused between more economies. You have major economies coming out of the developing world that are increasingly flexing their diplomatic muscles, so you had a very different political scene. On the back of that, you had the failure of Copenhagen, politically. While there were some successes from Copenhagen, most political officers of key G20 leaders would have been seriously cautioning against their leaders going to Rio, on the basis of the potential for them to have further egg on their face at another environmental collapse of a summit.
I think there were very different circumstances and, at the end of the day, one of the clearest messages from Rio is that opportunity to drive change and to influence this agenda is going to come from actors outside the formal process: the formal process is really something that will have to catch up to that, and then cap off where the general consensus has moved to. You are going to need to see coalitions of countries, of groupings of organisations, of business, of cities, mayors, and I would say of Parliaments. That is where you will see real change in taking this agenda forward more effectively and rapidly. A UN process will need to catch up on that change when it can get broad consensus on those areas, so I think you have a very different political dynamic. You could not possibly repeat Rio again. I just do not see that you can, and the opportunities for driving change through that kind of mechanism have to be tackled in a different way.
Q44Chair: Interesting. Doctor Waygood, I think you wanted to come in?
Dr Waygood: You asked a specific question about what we thought the UN mechanisms could come together to deliver. My specific interest in Rio was the corporate sustainability reporting agenda, which was furthered there, although not as far as we wished. . In relation to how that could be taken forward within the UN system, the UN Environment Programme has worked with others to set up a thing called the Friends of Paragraph 47, which is a welcome development. It is a country-led initiative where countries have come together to say they will work together. The UN Conference on Trade and Development, through ISAR-its International Standards and Auditing and Reporting group-announced that it will bring together a group of guidance producers for companies so that stock exchanges will have guidance. The UN Global Compact and the UN-backed Principles for Responsible Investment have been working with us on the Sustainable Stock Exchanges initiative, which is trying to encourage the top 30 stock exchanges around the world to make sustainability reporting a listing requirement. In fact, to me, one of the biggest outcomes from Rio was not in the document, The Future We Want, but was at a side event where five stock exchanges committed to take action on this agenda.
Q45Peter Aldous: My question leads on from what you have said. The outcome of Rio+20 was an outcome document of 283 paragraphs. Were you generally happy that this document summarised the commitments, were the right commitments in that and did it include a roadmap for how we achieve those commitments?
Derek Osborn: I think somebody else should have a go at this one.
Owen Gibbons: I will try to answer that question. What we need to recognise is that all the indicators that we see in the world around us are heading in the wrong direction, so on the question of whether or not Rio delivered to turn that around I think the answer has to be, no, really. We have suggested that it’s maybe what was politically achievable but not what was scientifically necessary. It lacked the milestones, the targets, the specificity, the finance that we saw at the first Rio Summit. I completely agree with Adam that we were never going to repeat the first Rio Summit, but it really did not measure up to the scale of the challenges required. The outcome document very much lacks reference to the threat and the urgency that we face, which is regrettable. So, yes, in that sense it was disappointing.
Q46Peter Aldous: Can anything be done to address that shortcoming?
Owen Gibbons: Of course. What we would emphasise is that action needs to be taken forward at home. We should recognise that there were things in the outcome document that can be taken forward, which I am sure we will come on to later. That is where action needs to be taken at home, and we would suggest it does require the mainstreaming of the Rio agenda, the sustainable development agenda across Government as well, and perhaps that is a role that this Committee can play in challenging Government.
Chair: Can I just bring Zac in on that point?
Q47Zac Goldsmith: Yes, just on that point. It might be that Adam is the right person to answer. Are you saying that if you can call it a failure of Rio to match the hopes and expectations, that is the result of the difficulties involved in herding such a large and varied group of people, or is it simply that what was reached was an accurate reflection of how far the individual countries are willing to go? In other words, was it organisational or was it political? Some of the documents that were produced by individual countries were ambitious, and some of the noises being made by this Government, some of the EU scoping documents, there were some good things being said and promised but it just seems to be that the result was miles off from that.
Adam Matthews: To be fair, it was a reflection of where the countries were at the time of the event, and partly the process leading into it. Clearly progressive positions were advanced by some countries. Unquestionably, some of the UK objectives in relation to natural capital, from Germany as well and from Europe, were positive. However, taking a step back, you had a process meeting at a time where you had a US presidential election, so the US was not going to properly engage. You had a change in Chinese leadership coming. You had an economic crisis that was diverting attention completely, and in many instances people sent the B team. So I think you have very much a reflection of what you could get in that context, and where you are looking to progress might not come from within that process because it is challenged by its very nature. That is not to say that it is not important, and I think it is critical that you have such international processes. However, what you do outside them, in the run-up to them in coalitions of countries and bodies, including business, mayors, cities and Parliaments, over a period of years will determine their success. I do not think there was that in the run-up to Rio specifically, but what the chap said about the stock exchange initiative is relevant: I think there were some real positives in the margins but that was not the central part of the summit. There is a big job of work to be done for three years’ time, and that is going to require alliances very different from those that were put together before Rio.
Q48Chair: I do not think the doctor would want to come in on the stock exchanges, but I think Tom Bigg wanted to come in.
Tom Bigg: I completely agree with the way in which Adam framed that, but I have a couple of additional points that might be relevant for this Committee. First, the agenda was framed primarily to focus on the concept of the green economy and on the institutional framework for sustainable development. Both aroused a huge amount of suspicion among countries. One reason was that there was no authoritative baseline assessment on which discussion could then build, so it became intensely political, precisely because we were arguing over basic concepts. Inevitably, in a negotiation between diplomats, that becomes politicised and there are hidden agendas being sought even when they are not there. That was a key factor.
Secondly-this is perhaps more positive-the Summit really saw the emergence of strong, articulate voices on this agenda from a diversity of southern countries. It comes back to Adam’s point on the contrast with 20 years ago. Although in some instances that entailed saying "no" to the agenda, which was particularly the case from Latin American countries on the green economy and the commodification of nature, I think in the long run that is positive because there was an engagement that went beyond a knee-jerk pushback. It was saying, "We are interested in this agenda, but not in the terms in which we understand it is being presented to us". Those are two additional factors that I think contributed to the failure.
Q49Chair: Okay. Doctor Waygood, I think you want to come in?
Dr Waygood: Perhaps I can answer the question about whether it was a lack of political ambition or practical reality. My experience, in going out to New York for various prep conferences before Rio itself, was that a number of countries were making very strong proposals in a number of places, particularly around the area I was focusing on: corporate sustainability reporting. A high-level panel report earlier in the year made over a dozen recommendations that related to the economy and sustainability. That topic-the green economy-was supposed to be the main topic of Rio+20. So there was not a lack of ideas; there was not a lack of ambition by some countries.
There were, though-and I know specifically in the case of the corporate sustainability report-a number of countries that worked together to stop it becoming a treaty. The UK was not among them but I know who the countries were. I also know that trade bodies, particularly the US Chamber of Commerce, mobilised to prevent what we were proposing from happening. I am disappointed that the ideas in the high-level panel report, which were supposed to set an agenda for Rio and for many years to come, were apparently overlooked in the outcome document.
One further point, if I may. The other thing that I experienced with the negotiators in New York is that they are expected to know a huge amount about a broad range of issues. They are not experts, yet they shape the text enormously. I was quite surprised by the lack of understanding of basic things such as: what is company law or what is a stock exchange and how does it work? We had to build a lot of understanding in the UN negotiator space-the people representing the capitals-before we could have a substantive discussion about the topic.
Q50Chair: Jessica, do you want to contribute?
Jessica Fries: I would agree with a lot of the points that were made and I think that there were some good, positive coalitions that have come out of Rio that were built up during the process going in. One of things that was very notable for me was the strength of the business voice and participation. There was a shift in the UN system in enabling that voice to participate, and certainly in the process going forward, with the sustainable development goals and other mechanisms to look at how you can build a different kind of collaboration in that area. I think that it was inevitably going to be challenging, partly on negotiating time. As Steve says, a lot more time was definitely needed, across a range of different areas, to provide for the briefing and the discussion to understand what was being discussed, and to allay some of the concerns that different countries had. The breadth of topics was also an issue. Inevitably, the challenge with sustainable development is that you need that breadth to bring together the economic, environmental and social agendas, but doing that in a single conference is a huge challenge.
Q51Peter Aldous: Tom Bigg, Steve Waygood and Jessica have touched on some of the reasons that the green economy theme took such a battering. What I would be interested to know is: what are the implications of that? In the UK and the EU, quite a lot of emphasis has been placed on the green economy and its potential for the continent, and if you look beneath the surface, on a regional and local level, a lot of local government and a lot of local businesses have set a lot of store by the green economy and are making a lot of investment in it. What are the implications for them of the fact that the green economy, as I said, took such a battering?
Tom Bigg: I will have first crack at that one. For me what really took a battering was the concept that you could reach consensus among all the countries of the world on what the concept means and how it should be applied. I think there is an analogy to draw between the discussion on green economy in Rio and the focus on climate change post-Copenhagen, when a lot of the work that my organisation does in low-income countries suggests a huge rise in understanding and engagement around climate change; a shift towards strong national legislative frameworks, as well as incentive structures at national level; and very wide public understanding and engagement, which can be significantly attributed to Copenhagen.
I think we are in a similar position on the green economy, where the raising of the challenge for economies to make better use of natural resources, to plan for the longer term, in terms of scarce resources and their best use in order to support development, is a critical challenge. For me, the fact that it is addressed at a global level stimulates that debate where it should really happen, which is at national level. I think that is the critical challenge going forward.
Certainly, behind the set-piece negotiations, we found a real diversity of views, from the suspicion-as I was saying before-about a concept being foisted from outside that was not understood, to an interest, particularly from LDCs in Africa, in saying, "We recognise that our natural resources are proportionately the greatest part of our national wealth, in comparison with any other block of countries, and making best use of them is a critical challenge for us going forward, but we do not have strong models that we can base our plans on across a range of sectors and key factors. We do not have a means to learn from experience elsewhere that could help us make that transition".
One of the positive things that emerged was the interest from countries like Costa Rica who said, "Well, we saw ourselves in a similar position 20, 30 years ago to the one that forest-rich countries in Africa are in now". There is a huge amount of experience we can share in the way that we have legislated, the way that we have developed practice, that is highly relevant, and the mechanism for sharing that experience needs to be developed at international level. Those are some more positive reflections.
Derek Osborn: I would just like to add two specific things that bear on that. One is what your Committee has been interested in in the past: there was really significant movement on indicators, measurement and natural capital accounting, and a strong instruction to the UN Secretary-General to advance that and standardise it around the world. What has been a rather techie, academic subject is beginning to move into the mainstream and, even though it is only a measurement, will be absolutely crucial in determining what people are trying to do when they do the green accounting properly.
Building on what Tom has just said, there were a number of interesting discussions going on in the margins and elsewhere about investment programmes and moving them towards renewable energy on a massive scale, and a certain amount on resource efficiency in other topics. One did have the feeling that, for all the talk being stuck in the diplomatic circles, there were all sorts of interesting discussions and deals being done in the margins that were moving in the sustainability direction. I think capturing that and making sure that we go on giving that a real boost in the real world is significant, and Rio has helped that.
Q52Paul Uppal: We have touched on-all of you have-aspects of Government input. I know you did so particularly at the beginning, Derek, and subsequently in responses. I want to focus on the UK’s role. Adam, you raised the point that, in terms of the Germany and UK contribution, natural wealth and natural capital was quite positive. A quote I have seen from Christian Aid stated that "the UK delegation played a low-key role in the intersessional negotiations in the run up to the Rio+20 Summit". Another quote I have seen states that the "UK Government had an unusually low profile through the Summit preparations and during the event". I just want a general feel of the UK’s involvement. How influential do you think it was in securing a positive final deal?
Derek Osborn: Comparing Rio 20 years ago and Rio this time, one fact that you have to take into account is that the UK has got smaller in the world and Europe has got smaller in the world, and other people are bigger players. What the UK does and does not do is not quite as decisive as it used to be. It is sad, but that is the fact. Likewise, the ambitions that we all have for the UK to play a leading role in pushing sustainable development have to be moderated by what is possible nowadays, and we cannot do it on our own. We have to work with others. Europe is less of a progressive force in this for various reasons-sadly, it has lost its nerve a little bit at the moment in all the crises. However, all of us here, and perhaps all of you too, think that doing the sustainable economy is part of recovering from the present terrible situation. There are an awful lot of people around unfortunately who are still saying, "Oh well, we have to get out of the crisis first before we can turn back to this green economy stuff".
How much would it be realistic to expect? I think the UK limited its objectives too narrowly, too early. It could have been more ambitious in trying to tackle the whole sustainable economy agenda in the international scene, and trying to demonstrate more about how it is pushing that agenda forward. We have rather lost our own sustainable development strategy. We have bits and pieces here in this country. Europe has rather lost its sustainable development strategy. It has bits and pieces on resource efficiency. We did not really have a powerful enough argument about what the UK and Europe are doing in practice, and across the board on sustainable development, to take it to the international agenda. That is what I think was the pity of it. That is the challenge now, to see if sufficient momentum has been generated in Rio to enable us to have another go and say, "Well, let us revive our own sustainable development strategy and make it cut across all Departments and be properly integrated".
Q53Chair: Owen Gibbons wants to come in there.
Owen Gibbons: I was just going to add something. One of the challenges that may be explained-if it is true that the UK Government did not engage as well in preparatory meetings, and I cannot speak to that because I did not attend them, just to be clear-is that we felt that the Government did not have a strategy for Rio that was a cross-governmental strategy, and that is one thing we tried to emphasise. Defra did a very good job of leading on behalf of the UK Government. They co-ordinated with DFID and I am sure they co-ordinated with other Departments. For example, one thing we were aware of is that there was supposed to be a directors-level group that met to look across the different Departments to look at the different objectives of Rio, and we are not certain that that group met very effectively. We were not able to engage them other than at Defra level, and then very late in the day at Cabinet Office level and DFID joined that as well.
It was good to have the involvement of the Deputy Prime Minister and the Cabinet Office having more of that overview. But we would maybe challenge that, one of the reasons we were not as effective is because we did not have a cross-departmental strategy, which would involve the likes of the FCO, DECC, and DFID, but also crucially the Treasury and BIS. If we really want to build green economies we need those Departments to be involved. And that’s, I think, how we would develop a sustainable development strategy across Government, which Derek mentioned, is by involving all of them, and having a champion at the highest level of Government possible.
Q54Paul Uppal: Anybody on the too narrow, too early argument; a general view?
Adam Matthews: I think it is very difficult when you do not send the Prime Minister, and that is not to discredit-
Paul Uppal: That was going to be the next question I was going to ask.
Adam Matthews: I think Nick Clegg did as best as he could do in the circumstances. When it was eventually decided, I think it was very hard for him, given the time before Rio, to stamp a clear direction that he may have wished to take. The advantage of a Prime Minister leading-and that is no disrespect at all to the Deputy Prime Minister-is that they are the head of the Government, and that just puts into train a whole series of activities across Government that emanate out of No. 10 in a clearer way. By not having the Prime Minister go, that meant that the preparatory phase was not as clear as it could be. On top of that, if he had gone, how satisfied would he have been in going and turning up and finding that the deal had been done by a civil servant in Brazil and various other civil servants, that all the leaders basically turned up to a deal that had been put to them three days before? "Take it or leave it" was the Brazil official, and the Europeans did not want to sign up to it. They were not happy but, at risk of annoying others, they agreed to it. I know when the Deputy Prime Minister was there he was unhappy with it, but they did not have much choice.
When they turned up, what did the leaders do? I can completely understand the caution in the Prime Minister’s office and in other leaders’ offices that did not go-in Merkel’s office, for example. Nonetheless, that underlines the fact that there was not the required lead-in process, and there was not a forming of alliances between different groupings with those progressive Governments-those groupings of Governments-that wanted to move forward on these areas. That effort was not put in, and leaders were not championing this. If you look at the Gleneagles, yes, that is a smaller grouping of countries-it was the G8+5 at that point with the climate-but a lot of individual or personal effort was put in at the top of Government by the host. I think this summit lacked that, so it was very much a reflection of the inevitability of not having that build-up process and not enough leaders coming. I think Clegg and the team did as good as they could have-they could have done more but not much more. I just think it was somewhat inevitable.
Paul Uppal: That was my second question. That is fine.
Q55Chair: Sorry, Paul, just before your second question, I think Dr Waygood wants to come in.
Dr Waygood: As I said at the beginning, I am commenting specifically on the corporate sustainability reporting agenda. I cannot comment on whether they were too narrow, too early, but I would like to give credit to Defra and give credit where it is due. They engaged with us in September. There was a sequence of meetings focusing on corporate sustainability in the run-up to Rio. We met DFID, and we talked to other Departments. There were a number of times-not least in the Environmental Audit Committee-where the work that we had been doing as the Corporate Sustainability Reporting Coalition was pushed forwards by the Secretary of State. She continued to do that at Rio. As we said at Rio, we welcomed her leadership on the international stage in relation to that specific. I would like to do that justice here and say thank you to the UK Government for its support for our work. That does not mean that the breadth of the agenda was pushed, so I am not commenting on that. It is a specific point in relation to corporate sustainability reporting that I am making. We definitely felt the support while we were there.
Chair: I am going to leave Paul Uppal to decide who else comes in on this.
Paul Uppal: I think Tom-
Tom Bigg: Just one point that is specifically relevant for the Committee on this issue. In the process of preparation for this summit, Government organisations and NGOs were given the chance to put their own perspectives in at the beginning to the Zero Draft. That is the point at which some of the most progressive, innovative thought-provoking inputs came from the Brazilian Government and others, including some individual European Governments, so it was not the EU consensus issue that constrained that input. The UK input was quite unambitious and it was a bit narrow at that point. As far as I understand, it was essentially a re-presentation of the results of the EAC inquiry on the green economy, which, interestingly, had primarily a domestic focus. You ran a parallel inquiry on Rio+20 that was not addressed at all in the submission. It was striking that, while other Governments took the opportunity to put down their ambitions not constrained by the negotiations, and not limited by what they thought might come out of the summit at the end, the UK did not do that, which was disappointing.
Q56Paul Uppal: Just a final point, delegation of stakeholders. I know Aviva and WWF were involved in the delegation. Did you feel there was a genuine involvement of stakeholders, that there was input, that your views were listened to? I want both points of view.
Owen Gibbons: Yes, I should perhaps clarify for the Committee that the invitation for WWF to join the committee came from the Deputy Minister in a letter mid-May, so it was really quite close up to the summit. And I accompanied our chief executive, David Nussbaum, in my capacity as his advisor. We felt that that invitation was a good recognition of our engagement in the issues in the run-up. I should also add that WWF had a delegation from our international network attending Rio, but we were attending it under the UK delegation. With the invitation coming so close to the summit, we had good engagement with Defra and with some officials at DFID. We sought clarity on what our role would be, but I do not think we really received that until quite late in the day, and even then it was quite vague. At a pre-Rio meeting with Defra, DFID and the Cabinet Office, I think, and maybe FCO, it was suggested that we would be an additional set of eyes, ears and expertise, and people to whom the official delegation could turn to for advice on certain issues. Because of the way that things transpired in Rio, with the Brazilian chair closing down the text, we will never really know whether we would have had that role in influencing the finer details of the negotiation had they reached that stage in the high-level segment.
The fact that other messages came through-such as that they were trying to work this out as they went along and that it was an unusual circumstance to have NGOs, civil society and business representatives on the delegation-suggests that they had not really thought through exactly what our role would be and what benefits we could bring. Although we very much welcomed it, and were very pleased to have the recognition of being invited on to the delegation, we would suggest that if they were to do that in future, they could think of a better structure for how that engagement can progress, particularly through earlier stages of negotiating processes before the high-level segment. There should also be more clarity on what organisations like WWF or Aviva want to add to a delegation. I do not know whether Steve wants to come in on that as well.
Dr Waygood: I mentioned earlier that we definitely felt the support of Defra while we were out there. That support, and particularly being a member of the Government delegation, came to us in three ways. First, we built a coalition that had $2 trillion of direct investment support and trade associations with over $50 trillion worth of backing. Being able to say that we were part of the UK Government delegation in Rio gave us significant impetus in being able to build a coalition of more than 70 institutions; it gave real credibility to the coalition that we were building, which was very welcome. Secondly, we received advice from a number of people at Defra about how to pitch, how to play and what specifically to focus on while we were in Rio, and the politics about what was going on, so I found that very supportive.
Thirdly, while we were there, there was a very healthy email exchange, but as with Owen-and I should say, I completely agree with everything that Owen has said-we never got to find out what it would have been like being with them within the negotiations, because they never really got to that point. We were expecting it to be Thursday and Friday, as you well know, but we never got to that point. Nevertheless, in the run-up to the Tuesday and Wednesday, we were engaged at a number of points on specific text and what we were proposing and whether alternative versions got near at least to a compromise. That was good.
The key point that I want to make to this Committee is that we want that engagement to continue. We believe that there is a significant need-and we put this in our written evidence-to build on the Kay review and to look at how capital markets support sustainable development and how they can undermine sustainable development. We must look at the market failures around sustainable development that the capital markets are exacerbating or alleviating, then come up with proposals, perhaps in the form of a review, for how policy could be changed. I do not just mean Government policy; I also mean the policy of companies and investors on a voluntary basis. London is better placed than any other city to do that review, given the number of different institutions that work on the responsible investment agenda and the fact that we are the most international financial city in the world.
Q57Chair: It is very important that you have picked up that point about the investment sector, because I think that was one of the things that actually did come out at Rio. I think we can look to follow that up. Owen Gibbons wants to come in as well on that point.
Owen Gibbons: Thank you, Chair. I just want to add a point as well on the engagement in Rio and welcome the fact that the official delegation at civil servant level welcomed stakeholder engagement and had regular-I think daily, pretty much-meetings with stakeholders, which is very constructive. I would encourage Governments again to think about doing that. I have experience of attending UNFCCC climate change negotiations where there is much more of a separation of briefings with NGOs, but less formalised and less structured and less frank, really, if I am honest. That was very welcome and I think other people might share that view.
Q58Chair: On that point, Adam?
Adam Matthews: It is interesting that a lot of other countries formally have a legislator as part of the delegation, so they can scrutinise what their leaders do and what their delegations do. The UK has consistently resisted that on the advice of civil servants. I think that they do it in the climate change negotiations; they do it in biodiversity negotiations. I think other countries embrace the opportunity to have parliamentarians as part of the official delegation, as much to keep them informed of what is going on and to raise the knowledge of Parliament, but equally so there is a genuine scrutiny function to the democratic body in the country. I think that that is one area that could be improved.
I should say that Nick Clegg of his own initiative made an effort to engage legislators in Rio-he should be complimented on that, and GLOBE does so. I think, however, as a UK-specific thing, there has consistently been resistance from the civil service to having legislators as part of delegations. That weakens the opportunity for committees to scrutinise what goes on in the minutiae of decision-making in these processes, although in Rio you would have turned up and clearly had to deal with what had been done. As a point going forward, I think that is worth noting.
Q59Dr Whitehead: You mentioned, first of all, the emphasis on indicators and goals at Rio. That seems to be one of the most significant outcomes of the +20 process, to convert the need if not the exact definition of sustainable development goals. How did you see that differing from the Millennium Development Goals and how was the process of developing those sustainable development goals distinguished from that process? To what extent do you think that some countries were concerned that the goals would displace the anti-poverty focus of the Millennium Development Goals?
Derek Osborn: The agreement on sustainable development goals-to establish sustainable development goals- is widely seen as one of the most significant positive outcomes of Rio, and I think all of us here have views about that. Clearly, the Millennium Development Goals established in 2000 have been very important and significant in the development field in focusing effort, and particularly the effort of development assistance, on some fairly tightly defined and specific goals on which real progress has been made: on hunger, relief of hunger, on poverty reduction, on water and sanitation, on energy. Nobody would wish to have those strong priorities undermined in any way, so clearly keeping that process moving forward, supported by integrated development efforts from the north to relieve the problems in the neediest parts of the world, is a very high priority.
However, what was missed in 2000 was that some of those MDGs are expressed in such a way that they were almost oblivious to the environmental and sustainable development agenda, and might even be pursued in ways that exacerbated some of the problems they were designed to relieve. Water is a very clear example. If you just try to concentrate on extracting water from places that are rather short of water for immediate water needs, you may make it even harder to achieve sustainable water supplies in 10 years’ time and so on. There are other similar examples, and they need to be made more sustainable in the next iteration.
Secondly, and even more importantly, it is clear to everybody in the sustainable development world that the goals in the future need to be goals for the north as well, for the developed world, because it is the way the developed world is living and over-consuming resources that is putting the real burden on the planet at the moment. We need goals, the next time round, that include goals for us in the developed world to operate in a way that has a more benign footprint on the rest of the world, and that makes use of resources more efficiently. To me, the most significant change in the sustainable development goals would be to find some way of describing that objective and getting all the developed world signed up to making progress on that subject, which they have talked about for a long time but, as we all know, it is harder to deliver than to speak about it.
Mark Edwards: The exciting thing about the sustainable development goals is that they recognise that all countries are developing countries, having to develop new ways of generating energy, of moving around and growing food and generally prospering. That erodes this division that has really hindered human development-the division between the majority world and the developed world. It is also important in that it opens the door, as I see it, to re-engage the public in sustainable development. I think that is a question to come on to later, if I may. I am sure other people will want to comment on the sustainable development goals.
Owen Gibbons: Just on Dr Whitehead’s question about how we avoid a conflict between Millennium Development Goals and sustainable development goals, it is quite clear in the outcome document that they should not and, of course, that is to be welcomed. But I think that also emphasises that the process was not very clear from the outcome document from Rio+20. The coherence of the process, the integration of those two processes, is really crucial, ideally so that we end up with one set of goals that really do embed those three pillars of environmental, economic and social dimensions. Without that, we risk duplicating effort and resources, disengaging some under-resourced countries and civil society. That is what we would emphasise and that is a key role for the Prime Minister to play in his role as co-chair of the high-level panel on the post-2015 development framework, which I believe we may come on to later.
Tom Bigg: I think you have put your finger on what is a highly contentious issue, over the next year or two in particular, as these two strands focused on the development framework post 2015 either come together or do not. My organisation, IIED, ran an informal seminar for least developed country ambassadors in New York on the summit agenda in April. Many of the senior representatives who were there expressed real concern about a marginalisation of their agenda and the focus on the eradication of extreme poverty. In the course of that discussion, there was a very interesting interaction. The key factor that increased interest and support or arguments for a sustainable development goal framework was exactly the one that Derek put his finger on: you can only go so far with a focus in isolation on the development prospects of the poorest countries and people. At some point, you have to take into account environmental limits and resource limits, which increasingly will constrain the development trajectory of the poorest countries and people.
Until those issues are addressed in a coherent framework that recognises the need for greater equity and access to finite resources, we cannot continue to deal with developments as if in a bubble. It is part of that wider picture, and solutions have to be found that are coherent and address problems of wealth and over-consumption as well as problems of under-consumption. In general, while there were still major concerns over marginalisation of that agenda, I think there was an acceptance that if that is integral to the way that sustainable development goals are framed, it is a stronger basis for international collaboration than just a sort of MDG mark II focused exclusively on development.
Q60Dr Whitehead: The Government produced a series of sustainable development indicators, published on 24 July. Interestingly, they said in the release accompanying it: "These measures demonstrate the UK’s leading role in championing the need to move beyond GDP as a sole measure of progress, which received international recognition at Rio 2020". How closely do you think the sustainable development indicators that have been published might start to mirror those sustainable development goals? To what extent might they be developable as the UK’s response to those goals?
Derek Osborn: This is all a bit speculative at the moment, because nobody knows quite how the sustainable development goals are going to work out. There was an attempt at Rio to define some specimen sustainable development goals, but it was decided that that was premature. There must be a new international process, which is just getting under way, to decide what the framework of global sustainable development goals will be. Nobody can tell yet whether they will be like the UK’s sustainable development indicators or more like the Millennium Development Goals or something else altogether. However, the UK has been very active intellectually and in policy making in this area over a number of years. The Beyond GDP debate has been very lively here and lots of people, including your own Committee, have done important analyses in this area. We are full of intellectual contributions to this debate, and I am sure the July sustainable development indicators will be part of the contribution we shall be making. The Prime Minister’s role, as co-chair of the Secretary General’s high-level panel, with our indicators and our goals, gives him a key point of influence. Probably, the most anyone can say at the moment is we hope all that good endeavour in the UK will feed productively into the new process, and I am sure we will be doing our bit to make that happen.
Owen Gibbons: I think this speaks to the point I made earlier about the mainstreaming of this agenda across Government. One thing about the sustainable development indicators was that the previous Secretary of State, Caroline Spelman, championed them and said that she hoped that they would be applied across Government. We very much hope that the incoming Secretary of State will take that forward, but I think success will depend on whether or not there is real buy-in across Government, particularly, as I said earlier, in the Treasury and BIS. They are the ones that really need to deliver the green economy agenda, and to take sustainable development goals into a UK context and deliver them. That will be the test. For example, if there is an economic regeneration plan, will it match up to the aims of sustainable development? That is the question we will be looking to answer.
Jessica Fries: The indicators provide some of the framework, but a key question is what are the goals around that, and how can you frame those goals so that they recognise challenges in environmental limits on economic growth and provide a coherent framework? Certainly, from a lot of the broader stakeholder groups that we have been working with, there is an appetite to see sustainable development goals providing a frame of reference, not only for Governments globally but for some of the major corporates and how they can align their targets, progress and action against that kind of framework, so that you can get greater alignment between the different types of economic activity and the framework within which those economic actors can work to try to deliver those. You saw that with the Millennium Development Goals, but again much more as a tangential activity for a lot of businesses, whereas sustainable development goals are seen as something that can be more of a focus and actually part of the core of what business can contribute to and do.
Dr Waygood: The sustainable development indicators have obviously had a huge amount of effort and work put into them, but they are UK-specific. Of course, the sustainable development goals are intentionally going to be global.
Answering your specific question, I think the sustainable development indicators, as currently proposed, lack specific measures on the corporate sector. In particular, it is now possible to measure stock exchanges on the quantity, the quality and the timeliness of corporate reporting on their own corporate sustainability. We did that with Corporate Knights and I am very happy to circulate that.
Chair: That would be very helpful.
Dr Waygood: As the UK, we are 12th if you rank us against 70 exchanges around the world, so we are doing reasonably well, but we have a long way to go before we are up there with the likes of the Netherlands. I believe a sustainable development indicator, and a sustainable development goal, should be that every midcap company-so every 2 billion market cap company and above-that is listed anywhere in the world is publishing an integrated sustainability report. That is not in the sustainable development indicators, but I do hope it will become so, and I also hope it will be in the sustainable development goals.
Q61Martin Caton: As has been mentioned a couple of times, David Cameron has been made co-chair of the UN Secretary General’s high-level panel on the post-2015 development agenda. Have you any words of advice for the Prime Minister on how he should approach this role?
Derek Osborn: Starting where we are now, and repeating a little bit of our sadness that he has not engaged more up to now, I compare what has happened now with what happened 20 years ago. Twenty years ago, John Major was the first Prime Minister in the world to declare that he was going to Rio, and he played a very active part throughout the creation of that agenda. On the day he came back from Rio he announced in Parliament that the UK would be the first country to have a sustainable development strategy. He wrote on the same day to the G7 and to the EU proposing that they all do the same, and they all fell into line.
Q62Chair: I was hoping you would mention that incident because I think that the ongoing question is, what advice would you give to the current Prime Minister, given that he was not there?
Derek Osborn: Exactly. Our Prime Minister has not moved so fast this time round. He was not there, which is a pity, and it is particularly a pity because it contributed to the impression that he and, to some extent, DfID, I fear, are still more focused on the limited MDG agenda that we were talking about-that carrying that forward without getting too fussed about all those environmental add-ons is the really important task. I think there is some work to be done, by all of us who believe in the sustainable development agenda, to try to broaden his scope and make sure that he tries to run that exercise in a broader way, a sustainable development way, with broader objectives for the developing countries, not just talking about development assistance but also talking about what the developed countries themselves need to do, just as we have been saying. I hope we shall all be encouraging our contacts in Whitehall and in the centre of Government to take that message.
Jessica Fries: Just to add on to that one link: the G8/G20 has been touched on, and taking this agenda to some of those groupings is going to be important. Particularly, one of the things we touched on earlier around the green economy is that there is still that disconnect between the discussions that happen around the environment and sustainable development and those that happen around the economy. That linkage in the institutional discussions is going to be very important to framing the SDGs successfully in a way that does not make them just an add-on.
Tom Bigg: Just a couple of fairly specific points. There is a need at an early stage to invest effort in clarifying the relationship between the SDGs and the post2015 framework for aid. At the moment, they are very muddled. I think the seniority of the Prime Minister and of his fellow heads of Government who are co-chairs of that group gives them the status to knock heads together and basically say, "We are talking about a single coherent process" as opposed to one that muddles along with two parallel tracks and it is never clear quite how they are unified or relate to each other. That is a fairly urgent thing.
A second one is-and we have touched on it before-the necessity that what comes out of this framework has strong resonance in rich countries and for rich actors within communities within middle and low income countries as well. It is not exclusively an aid agenda. We have said that before, but I think it is important to reiterate it in these terms. Part of the focus for this group is consultation, engagement, listening, sharing ideas. There is a key role for this group, and other parliamentary Committees, in generating input to that from a UK perspective. Perhaps some plan from here, to connect with other relevant parliamentary groupings in the first instance, might be a useful input to the deliberations of that group, cementing the fact that there is an expectation that what comes out will be a highly relevant set of goals for steering UK policy and direction as opposed to just development assistance.
Q63Neil Carmichael: Can I just probe you on that in more general terms? Jessica has mentioned the disconnect between economics and the environment, and you are hinting at that, too. We are looking at the BRIC economies. The Coalition Government quite rightly is looking at Latin America as an opportunity for growth and so forth. What kind of influence to this structure and other structures do you think we should be bringing to bear to ensure that these emerging economies are saluting our objectives through the Rio Summit?
Tom Bigg: We have not mentioned it before, but it is really striking that, in terms of the Government positioning around this concept of sustainable development goals, the strongest and most consistent advocates have been Colombia, Peru and Guatemala. This is not an agenda that has developed in the UK or other northern contexts. The reason why-my sense, and it is certainly something that comes out from a number of the advocates of the goals from those countries-is because those countries recognise the need for a strong multilateral framework that safeguards their own development trajectory. They are not big enough to dictate the terms on which they develop trade and economic growth. They need multilateralism, but equally, they need a multilateral framework that looks very different from the one that we have now and which has hobbled on from the 20th century.
Sustainable development goals, if you are ambitious enough, are essentially a recasting of what the international system exists to move towards because it is articulated by those countries. In a sense, it comes back a bit to what Derek was saying. We are not driving this agenda; we are responding to one that is being set elsewhere, which I think is hugely challenging. I would turn that round a bit and say that is one of the main reasons why it is being pushed by middle income countries. It is also in recognition of the fact that those countries have not been centrally involved in some of the framing of what the UN exists to pursue up until this point. They have been rather marginal. I think there is a whole swathe of-not outside the BRICs-mid-sized, middle income, emerging economies that have a huge amount to gain from a stronger multilateral system. They are increasingly articulating what they want to see from it.
Neil Carmichael: That is a really interesting point. Thank you.
Jessica Fries: I would agree with that, and certainly a lot of the work that I have done with both the International Integrated Reporting Council and The Prince’s Accounting for Sustainability Project is engaging with some of the BRIC nations. It has been very notable in that integrated reporting space, which brings together the economic actors, systems, measurement and approaches with those in the environmental and sustainability spaces, that people are interested in this agenda and recognise that-back to the point-you cannot get the development without looking at it across the different dimensions and performance. There is almost a desire to take a leadership position, and a sense that there is perhaps a vacuum in some of the developed economies in this area and thus an opportunity to really show some leadership and change the way that these go forward.
Q64Chair: I think we have three more contributions, but they will have to be brief because we still have further ground to cover. Dr Waygood?
Dr Waygood: In considering the question, how can the UK lead in the future, we need to consider what our assets are. What can we draw upon? Where is our intellectual strength? We have the benefit of being the host country to the International Integrated Reporting Council, The Prince’s Accounting for Sustainability Project, the UN-backed Principles for Responsible Investment, the International Corporate Governance Network, the UK Sustainable Investment and Finance Association, all of whom have done fantastic work on capital markets and sustainability, and could be brought together to conduct a review that makes substantive proposals on what the sustainable development goals should say in relation to capital markets and responsible investment.
Of course, we are also the host country to the Corporate Governance Code and the Stewardship Code, both of which I believe set new standards, potentially globally, and both of them have an ambition to speak to global investors and global companies. We need to draw upon the best thinking from those groups and make sure it feeds into future sustainable development goal discussions.
Derek Osborn: I think it is quite important, in thinking about this discussion, not to conduct it all at the high level of general sustainable development goals, which sounds okay and not hard edged. Actually, it comes down to some of the hardest-edged issues in the world today and some of the deepest security issues, as some of the development objectives, of all the countries added together, are impossible to achieve for everybody. We cannot all live at the standard of living we enjoy in this country, because there is not enough of the various resources to enable that to happen. There would be too much pollution.
Sustainable development goals actually have a very strong equity element: how can we have a world in which limited finite resources are more equitably distributed? How can we get smart enough to enjoy good lives and wellbeing without consuming and wasting so much resource, as we do at the moment? That is what they are about. That is what the sustainability agenda is about, and it is a jolly tough one. If we do not manage to do it co-operatively, we shall do it very unpleasantly in the years ahead with fierce battles.
Mark Edwards: Which sort of opens the door, as I mentioned earlier, because SDGs are a way of re-engaging the public. This is absolutely crucial. You are talking about change at the personal level. We have to somehow engage the public in this. We did that with the "Whole Earth" exhibition that this Committee opened at St Martin-in-the-Fields, and the UN headquarters building have expressed strong interest in using that at the launch of the SDG initiative in 2015. We are taking it further and will launch it simultaneously in 30 countries around the world, north and south, and at 100 universities. What we are trying to do is engage the arts world, and to get them to really bring these issues down to people’s individual lives and show the kind of changes, show how we can live better with less, and how we can make the SDG a way for people to adapt their life, and help reinvent the modern world so that it is compatible with nature.
Owen Gibbons: Just returning to Mr Caton’s question, and not being able to resist an invitation to advise the Prime Minister on what he could do, may I add two things? One is as co-chair, he has a unique responsibility in being able to listen to the voices of southern representatives. We would very much encourage him to do that, so that he gets as full a perspective as possible on those who are really impacted by poverty and inequality, and understands the interconnectedness of the nature of the problems that the high-level panel will be addressing. Secondly, we know that the Indonesian and Liberian co-chairs are consulting widely with civil society. Likewise, we would encourage the Prime Minister to do that in the UK.
Q65Martin Caton: Thank you. Globally, we are in very difficult economic times. To what extent does taking forward the Rio+20 commitments require funding from richer countries?
Tom Bigg: That is a large question and one that it is difficult to generalise. But, yes, there is a continuing obligation on richer countries, richer people within poorer countries, to continue to support a transition towards a more sustainable economy and society. That obligation continues irrespective of financial hard times. The key challenge is to make a strong case-and this is maybe a challenge for environmental organisations more than anyone else-that this is not an agenda that declines in importance in times of economic hardship, that actually making better use of environmental resources, and building a stable basis for future wellbeing and prosperity, is absolutely the top response to a time of economic hardship. The fact that we have not integrated or prioritised that set of activities previously can be attributed as one of the major reasons why we are facing economic volatility, why we are facing problems with food prices, with the impacts of climatic change and so on. This may be a rather circuitous answer, but I think, one, the necessity still exists, and two, the argument needs to be strongly made that it is an integral part of responding to economic hardship, as opposed to something that is put on the back burner for better times.
Q66Chair: I am going to bring in Derek Osborn.
Derek Osborn: I think in the international discussions the UK has acquired a lot of credit by the extent to which, even in these economic hard times, it has stood by its objectives of reaching the levels of aid that it has long committed to. That carries a lot of weight and influence and, of course, does a lot of good through the programmes that we support. One of the interesting things that came out in the conclusions was the recognition-which I think was for the first time-by the developing countries, which tend to just think of aid as being what it is all about, that the private sector flows are important, too, and that a new high-level UN panel is to be set up, which is to look at the flow of both ODA and of private sector investment in a sustainable direction and try to influence how those flows develop in the future. It is to be a panel that will be populated by economics and finance ministries and the Treasury. I think that is a really exciting opportunity, in which we hope our Government will play a very important part in shaping. That will complement whatever is done through official assistance and will be-well, should be-equally significant in the world.
Q67Martin Caton: I completely accept the point you made about both the need and the responsibility of rich countries. I guess what I was trying to get at was: what is your prediction of the likelihood of the richer countries stepping up to the plate with any sensible urgency that we need to see?
Derek Osborn: I am sure you know as well as we do, the record at the moment is a bit mixed. Some countries, like us, are sticking with their obligations. Others are finding reasons to make excuses at the moment. The political climate in some of these countries-in the USA, for example-is not as favourable as it was to that kind of endeavour. We can only go on pressing the moral case that Tom has put. It is not just a high-minded moral case; it is a very practical moral case that if collapse happens then it will not be pleasant for anybody in the world. We need to go on doing what we can on the Government front, but we need to make sure that the private sector players, which of course are much larger in total, are more oriented towards sustainable objectives than some of them are at the moment.
Owen Gibbons: If I can just briefly add to that. I completely agree with what Derek said, but for me it is a point of political responsibility, as much as anything, in signposting that move towards a sustainable green economy that will give the private sector confidence to invest. I think that is a clear political responsibility of Government.
Q68Caroline Nokes: Moving on from that a little bit, what I want to ask about was how well the panel-and I am conscious that there are several of you-feel that current Government policies match the commitments that were made in the outcome document. Are there any areas that you can point to where the Government is doing the right thing? Anyone?
Adam Matthews: On the last point, on the work on natural capital, which I know the Committee has taken a lot of interest in, your hearings on helping further understanding more broadly and to tease out the issues were very timely. That was taken up by the Government with the creation of the Natural Capital Committee; while they were not necessarily specifically within the outcome document, I think that part of the work that Government has been doing, which was sanctioned by the Treasury as well, was very positive. As to where it goes from here, I think there is a very important need to look very closely at whether it actually needs legislation to underpin it going forward. I think that there is a real piece of work to be done in monitoring the implementation there.
I think the UK can rightly stand up here, and I think Nick Clegg did at the wealth accounting initiative side-event in Rio that he co-chaired with the World Bank; they got a whole host of other countries and bodies involved in that. That kind of work was very positive, and it connects directly to UK domestic policy, where I think you are doing groundbreaking work. The key now will be to take that forward. I think there is an opportunity there for the UK. It should underpin the SDGs as well, because I think it is a fundamental reshaping of how we operate our economies. It really is quite a significant step, and any decisions, going forward, have to incorporate natural capital.
Derek Osborn: I would like to relate this back to my point about the need for a revival of the sustainable development strategy and-even before you get to that-the need to revive a process that leads to it. The Rio agenda is very broad and wide, and it is difficult to hold all of it in your mind at one time. For the same reason, it is difficult to say off the cuff whether the UK is doing all right on the whole agenda. I am sure it is doing quite well on some aspects, and I am sure there are other aspects that it needs to do more on; resource efficiency is one that springs to mind.
I think what is needed at the moment is the opportunity to say, "Okay, we have had an across-the-board review internationally; now let’s have one domestically to see again how far our whole sustainable development effort is measuring up to the challenge that Rio represents." We ought to do that in our own country and produce a revised strategy in a year’s time for consultation with everybody about all aspects of it, so the thing is partly to refresh policies where they need refreshing and partly to mobilise all parts of society into doing all their parts, too.
We ought to be trying to do the same in Europe as well; the European sustainable development strategy is languishing at the moment. Barroso in Rio said that we did not need a new strategy, that the 2020 strategy was all that was needed. I think most of us feel now that that is not sufficient, even if it was being delivered, which it is not. Another European effort to revive its own sustainable development strategy would be the appropriate integrated way of bringing all parts of society-all the main groups-together on what we need to do to make this happen. That is what I would recommend.
Q69Caroline Nokes: If you were to pick a main priority area that the Government should take forward as a result of the summit, would that be it?
Derek Osborn: That is the framework. Within that, I pick out the themes of the green economy. Resource efficiency is one very main one covering all the issues-not just energy resources but materials, waste, recycling and so on. We are not doing enough there. We are still profligate in our use of materials. The issue of greening the fiscal structure has been much talked about over the years-you have gone on about it in this Committee-and we have not got all that far over all that time. On elimination of the inappropriate subsidies, again there is more to be done. I think it is about ticking off primarily the big green economy themes: how are we doing? What more could be done?
Owen Gibbons: I just want to emphasise that we should not lose sight of the importance of the Climate Change Act in this context. Climate change, though not conspicuously absent from the document-it is there in the Rio outcome document-was really underplayed in the negotiations and in the outcome document, in my view. We should remember that that was born of the cross-party consensus, so therefore it is disturbing to see it challenged sometimes by different parties in Parliament. We would emphasise as well that the Committee on Climate Change has signalled twice now, in its reports to Parliament, that there needs to be a step change in the rate of emissions reductions in this country, which we have not so far seen.
Jessica Fries: To pick on one specific element, the corporate reporting space was highlighted as one of the areas where the Government was taking a strong negotiating-
Chair: We will be coming on to that in a minute.
Jessica Fries: Okay.
Dr Waygood: In which case I will wait for that point.
Derek Osborn: Can I just add one little rider to my bit, very briefly? The people who shone best from the UK in Rio were the Welsh. I think there is much to learn from how the Welsh are following this subject.
Q70Caroline Nokes: Picking up on one particular policy area, do any of you consider that the UK’s overseas aid programme should change in any way to reflect the outcome document?
Chair: Please do not feel you have to respond.
Tom Bigg: No. I think there is an opportunity, going back to the earlier discussion around the green economy, to have a stronger focus in our aid programme on supporting a transition towards greener economic models in recipient countries. Obviously, there are sensitivities around this, and it is very important to avoid the notion of conditionality in that aid, but perhaps a precursor to those kinds of efforts is to invest in credible, thorough assessments of what is in the comparative interests of specific countries and then, on the basis of those, explore with the countries the scope for aid to be a stimulant for a shift in that direction. I think there is real potential there. There is interest from a number of low-income countries in those kinds of issues, because currently there is a knowledge gap. There is an assessment gap, in terms of a concrete basis for taking decisions and a concrete assessment of choices to be made, and also in terms of the support, assistance, and twinning with other countries that I talked about earlier with regard to Costa Rica, which could underpin and make that feasible. I think there is an area to explore there that could have major implications for the aid policy that directly derives from Rio.
Q71Caroline Nokes: Thanks. May I move on? I think this one is probably for Adam. What I want to find out is whether there are sufficient practical hooks in the outcome document to enable respective Governments to be held to account.
Adam Matthews: It is a huge document with huge repetition of previous commitments and some new ones. Yes, but I think parliamentarians need to approach it very differently, with regard to looking at what they can take away themselves, first and foremost, in terms of the legislation that potentially could be advanced at the national level, and in terms of looking for alliances with legislators in other countries so that they could potentially collaborate and move forward. Equally, following from that, it is a question of really having a process that comes together to share best practice among Parliaments, and looking at Governments’ delivery in that context. There is clearly a job of work to be done if Parliaments are to follow up on Rio and maintain the focus on this process, however it develops over the years.
One of the things that legislators committed to in the World Summit of Legislators, which was held for the first time in Rio, was that there should be an annual debate in all Parliaments to actually review progress by Governments on the delivery of Rio, and also to track the development as you build up to the SDGs but also beyond that. That would be a very good principle for the UK to consider following through on. Also, that would give an opportunity to reflect on how specific legislation could be taken forward. I would underline the role of Parliaments. The scrutiny part is absolutely critical, but there is a real opportunity for Parliaments to work a lot more collaboratively in actually advancing legislation. As for the interest from legislators who participated in the world summit, there is real energy there, particularly from developing countries, which were very keen to learn of the legislative experiences of other countries and to replicate that.
One of the things that we are taking forward is baseline legislative experiences on climate change, forestry and natural capital, so that those experiences can be taken forward and adapted within those other countries. I think that there is an opportunity for the UK to continue to play a role there, and to do a lot more to reach out to other Parliaments that want to take forward some of those aspects that completely underpin the whole Rio agenda.
Derek Osborn: There are two specific things that were mentioned in the outcome document but not actively debated. First, there was the idea of having an ombudsman for the future, who would be established as a United Nations champion of future generations, which is what sustainable development is all about-trying to challenge the system to take the longer view. That was a proposal brought forward very strongly from the UK by the World Future Council. It got somewhere and it is to be investigated further by the UN. It could well be reflected and complemented by some similar establishment in member states, if a Government was committed. The Climate Change Committee already mentioned that there is a sort of effort at looking from the point of view of the future at what we are doing now-is it enough? The late, lamented Sustainable Development Commission was an effort to do that in this country. Some means of engaging civil society in taking a forward view of where we are going to, in order to bring challenges and accountability to bear, could be a very useful complement to what Parliament does.
Q72Simon Wright: Dr Waygood, what were the barriers to agreements on the more ambitious aims for corporate sustainability reporting? You mentioned that some countries were working together to block progress. Which countries did you have in mind, and what was their motivation?
Dr Waygood: The countries I can mention, because the debate is a matter of public record. Kazakhstan is at one extreme; Australia, the US, New Zealand and Canada all worked, either unilaterally or together, to obviate one of the original proposals that was made in the zero draft, which was getting very close to our first proposal of a treaty. Those are the countries. There were counterpoint countries, which I have mentioned in my written evidence, so I will not take the time here to reiterate which ones they were, pushing positively forwards.
There was the barrier of understanding when it came to exactly what we were trying to achieve and how. Even though we came up with the legislative proposal ourselves, I think people misunderstood; we were still after boards’ best thinking; we were not dictating a list of indicators that we wanted every company to disclose. We wanted the boards to think about their long-term sustainability, publish their measures, do their job of running the firm for the long term and give us measures of their performance in that space. There was a lack of understanding.
I have mentioned in my written evidence that the UK’s policy position was not entirely aligned with our own. We were after an international treaty. Despite the consistency of the UK in terms of section 417 of the Companies Act, which talks about better narrative disclosure, and despite the very welcome, and I should highlight that it was very welcome, announcement by Nick Clegg that the greenhouse gas disclosure requirement would come into force for the London Stock Exchange-the first such initiative in the world, which should be commended and made international, hopefully through sustainable development goals-the UK’s position was not in favour of the treaty that we were proposing. We were proud and pleased to be part of the delegation, but we did not completely align in our own policy recommendations.
Q73Simon Wright: What was the UK Government argument against your position?
Dr Waygood: I did not hear it directly. I know that there is a very broad concern about further regulation from the current coalition, and I believe that is possibly what the proposal that we were making fell foul of-perhaps the current "one in, one out" requirement. That is purely speculation on my part.
Q74Simon Wright: Do you think there is anything more that the UK Government could have done to address the understanding point?
Dr Waygood: The understanding point that I am making is that the negotiators in New York-I should sympathise with them-are under huge pressure to have an enormous grasp of a range of very different and complicated issues. It was surprising to me; this is a really important point, actually. Often you have the country negotiator, even in Rio, saying, "Our country could not deliver this," but we knew already that that was happening. India, as part of the G77, was one of the countries at one point saying, "We do not want this treaty, or even a much softer version of the text, to go ahead," yet in October last year, India made it a listing requirement for the top 100 market cap companies to produce exactly what we were proposing. It is odd that the representative in Rio was against what we were proposing. I think there is a communications and capacity problem in these negotiations.
Q75Simon Wright: Thank you. What sort of market failures would sustainability reporting address?
Dr Waygood: We are now privileged in having access to the Bloomberg data. For five years, they have been monitoring over 20,000 stocks for their disclosure of non-financial or corporate sustainability information, so we now know that 75% plus of the companies that they cover do not even publish one data point of the 200 or so that Bloomberg is looking for. Of the quarter of companies that are publishing something, on average they are only publishing a quarter of the data points that Bloomberg is looking for. I believe that is the market failure that would be dealt with via the treaty that we are proposing. In other words, market depth of information is what drives market quality and the way that capital flows from us to more sustainable companies. If the data are not there, how can we form investment decisions that are fully factoring in long-term sustainable development issues? It is simply not possible.
Q76Simon Wright: But if it is in the interests of companies to bring such disclosure, as your evidence says, then why is a mandatory code required for that?
Dr Waygood: We were not advocating mandatory disclosure at the nation state level. What we were after was a treaty that encouraged countries or committed countries to doing something. We proposed that that thing could be four different measures, one of which was a change to company law. Another was a change to listing rules, which is actually our preferred approach, because that is more flexible than a regulatory approach. A third is a statute on CSR specifically, and a fourth was greater effort within the member state to propose it on a voluntary basis. While the treaty would be binding on member states, the way that it gets executed at the country level is entirely up to the member state, based on its own jurisdiction. Of course, it is not for us as investors to dictate that.
Q77Simon Wright: Thank you. In your written evidence, you suggested next steps for the CSR coalition. What should be the next steps for the UK Government in supporting progress in this area?
Dr Waygood: We are here partly self-interestedly. We run £250 billion. We are concerned about the relative performance against our peers, but the reason why we are here is that we are concerned about the absolute value of that money, over the long term, if the economy is not put on a more sustainable basis. This is why we have proposed the review of capital markets to build on the work of Kay and the work of Lord Stern, and to say, "How are the markets currently undermining a sustainable future?"
We know of a number of companies in the UK-I am happy to mention Unilever, Marks & Spencer, Kingfisher, Vodafone and BT-who have done great work on their own sustainability and business responsibility plans. I am sure they will say to you that they see very little, if any, benefit to their own cost of capital, which means that the markets are not promoting more responsible, more sustainable business practices. If they worked properly, a company that was more sustainable would experience a cheaper cost of capital because it would be embedded in valuations, and it is not there. That is because of the lack of data. It is also because of a lack of understanding on investors’ parts. I can see that Madam Chairman wishes us to move forwards.
Chair: Only because I think we are expecting a vote fairly shortly. I think that moves us quite smartly on to our final question. In the pre-meetings with the Deputy Prime Minister prior to Rio, the business partners made the point about the need for public engagement on this. I would like to turn now to Mark Lazarowicz.
Q78Mark Lazarowicz: Yes, on that point, I know there are only five minutes left now. We have heard a few times in the discussions today about the need to have continued public engagement in the process after Rio, and we have heard some comments about the process beforehand. Very briefly-I hope you will all be able to answer this question-can someone give an assessment of the process for engagement in the run-up to Rio and, perhaps more importantly, what are the main steps to be taken to have public engagement, both with industry in particular, but also with the wider public and civil society generally, in the next period?
Mark Edwards: I think we have to take part of the blame, the environmental movement. We did fail to get our constituency to put huge pressure on Governments to act in favour of the future. We have to look at our record and really try to engage a very wide public in these issues. I mentioned briefly what we are planning to do, and I think the environmental movement as a whole, while pointing the finger at the failure of Rio or the disappointment of Rio, has to point its finger at itself and reinvent itself and really try to get this wider engagement around the world in what is a very exciting project, after all. Reinventing the modern world so that it is compatible with nature-what is more exciting than that?
Jessica Fries: Very, very quickly, picking up on your point around the corporate sector and engaging there, I think that some of the leading companies, and the companies that we work with, find that taking action across these areas-particularly when it is done more strategically, rather than in the margins of the business-leads to better business and commercial outcomes, as well as better outcomes from a broader environmental or social perspective. I do not think that that message has yet permeated or become a belief within a wide range of companies, so I think there is a role for Government to play in raising awareness and engaging business on the point that this is about commercial outcomes, not just doing good.
Q79Chair: I think Owen wants to come in.
Owen Gibbons: Yes. I certainly do not mean to disagree with what Mark said, but I would just caution-and this maybe is born from my experience of running a global campaign for WWF towards the Copenhagen conference-yes, I agree that we need to question ourselves as NGOs about what role we play in mobilising the public and engaging their interest, but I would not want that to deflect from the imperative for Government to act. Certainly, when we were going towards Copenhagen, we had Ministers in the previous Government challenging us as to what we were going to do to really get people engaged in climate change, whereas the question that needs to be thrown back is that Government really does need to take this agenda forward and does have a role in doing so, and in showing some leadership. For me, it is about making Rio real.
Going back to Ms Nokes’ question about the sorts of things the Government is doing, it is about making real and mainstreaming those indicators that they are developing on, say, moving beyond GDP. It is also about the choices that are made. We have big choices coming up in the next few months on things like reform of the energy market. The Government has responsibility for that. Yes, we can try to engage the public, but let us be honest: we can only engage the public to a limited extent on sustainable development goals before they really start to switch off.
Likewise, infrastructure, roads and airport expansion are the sorts of decisions and choices that Government needs to make to show that it gets the sustainable development agenda and is mainstreaming it across Government.
Dr Waygood: I entirely agree with what Owen was saying. Building on that, it was odd for us that we were the first group of investors to go to any of the UN summits on sustainability with a treaty-a proposal-in 20 years. If you look at the UN and the way it is structured, of course there are mechanisms for engaging with countries, civil society and companies. Investors are silent, oddly, yet we represent very long-term interests-capital that really should understand that there is a problem if the economy is not put on a more sustainable footing. I think investors need to do a much better job of engaging with the process-it is in their own interests-and there may be formal mechanisms that could be developed to support that.
Q80Chair: I probably have two minutes. I will bring in Adam from GLOBE and then finally Derek.
Adam Matthews: Very briefly, I think Parliaments have a huge responsibility in this area.
Q81Chair: Final word to you, Mr Osborn. It has to be very quick.
Derek Osborn: I am so sorry. I am not quite catching-
Chair: I wanted to give you the final word.
Derek Osborn: Very quickly, two things then. There are various specific actions the Government intends to follow through on-the sustainable development goals, more on the business agenda, and the indicators. Please, please, will they do that in a very open-ended way with lots of consultation? Stakeholders have a lot to contribute.
Secondly, there is a broader agenda that they are not necessarily intending to follow through on, though we think they ought to. I think that could be well focused in the idea of a revival of a sustainable development strategy, and having a broad consultation across the board with all stakeholders about how to move that forward in the next year.
Chair: Thank you. There we must leave it. Thank you all very much indeed.