In June 2013, the OSLO Consortium initiated the public-private dialogue “New Opportunities from Natural Wealth Management” in the Greater Mekong Subregion (GMS). Out of the dialogue, five practical lessons were identified to scale up green growth in the region. Christina Wollesen, Siv Øystese and Simone Quatrini from the Global Mechanism outline why these are a good place to start for any economy that’s putting green growth on the agenda.
Integrated Approaches
Building the green economy of the future will require truly integrated efforts across governments and industries: The green growth agenda concerns all sectors of the economy and society. Developments in one system (for example energy or food production) can have direct and indirect knock-on effects on other systems (for example water). Triple bottom line approaches and integrated reporting can help actors see these impacts but they will require strong linking up, sharing of information and a unified voice.
A shared vision and agenda should be reflected in the actions of all government departments. Clear and reliable policies and regulations are needed in all natural resource-intensive sectors to establish a level playing field and a conducive business and investment climate.
At Rio+20, governments agreed that the green economy has the potential to ensure that natural capital is used in such a way that continues to provide the ecosystem services that sustain economic growth and prosperity today and in the future.
More and more countries in the GMS are setting out on just such a path, as illustrated by the Green Growth Roadmap of Cambodia, the recently established Green Growth Strategy of Vietnam, as well as the Green Economy Green Growth initiative in Myanmar. Furthermore, all six nations have committed to the development of a green, inclusive, and balanced economy through the GMS Strategic Framework 2012-2022.
Public-Private Engagement
Scaling up green economic development must be done both from the top down and the bottom up. This requires strong partnerships between the public and private sector that recognize the important complementary relationship between green investments on the ground, and the policy and legislation to support and incentivize them.
At their most basic level, public-private partnerships can address the lack of financial resources that often prevent the scaling up of innovative solutions. The financing need is enormous and far surpasses available public funds. However, there are sufficient funds available in the private sector to fill the gap. The challenge is to identify ways to incentivise private sector investment, be it through institutional investors (e.g. pension funds) who are looking for returns on their investment or through impact investors who are looking to create positive social and environmental impacts in addition to financial returns.
As public-private partnerships gain momentum, it will be important for the public sector to ensure that the economic development is not only investment driven, but guided by the ideal of the triple bottom line that provides social, environmental, and economic returns.
Beyond creating enabling conditions for responsible private sector investment, public sector can make large impacts by introducing sustainability criteria in their own procurement processes.
Finding Champions
Champions are essential to making the green growth case. A number of companies have taken early action, determining the ecological footprint of their operations and looking at the sustainability of their supply chains. Putting a monetary value on environmental impacts and requiring suppliers to adhere to stringent standards are steps in making the case for green development in the private sector. In addition, companies that have pursued sustainable practices and invested in environment, social and corporate governance tend to have a better capital market performance than their peers. The challenge now is to extend this behaviour to businesses and industries across the economy.
Linking Research to Decision-making
Scientists and ecological economists agree that there is a need for more research and data on the economic values of natural capital and ecosystem services in order to determine their true market values and better inform national strategies, policies and land use planning. Ecosystem undervaluation poses a barrier to achieving both conservation and sustainable development goals. If decisions are made based on incomplete and flawed information they may result in further environmental losses and missed social and economic opportunities. However, the numbers being generated are meaningless if they don’t translate into practical support for sustainable development. Greater progress could be made by mainstreaming the integration of natural capital considerations in loans, bonds, equities and insurance products, accounting and reporting frameworks, as well as advocacy platforms.
When a value is given to an ecosystem service, it should be used as a tool to price and compensate efforts made by those conserving and protecting this service. Values of ecosystem services can be used to establish mechanisms that can encourage private sector actors to adopt SLM practices. Incentives and market-based mechanisms can facilitate payments from beneficiaries to stakeholders.
Policymakers and the wider public are not always aware what green growth and green development mean and how they may provide benefits across economic, social and environmental dimensions. Demonstrating and communicating returns on responsible investments is an important part of making the business case for action and decision-making.
Starting Small, and Scaling Up
Small-scale pilot projects show effectiveness and competitive returns on investment, and pave the road for larger-scale initiatives. One challenge to greening the economy is that it's hard to get financing from the commercial financial institutions for innovative projects whose business models haven't yet been proven. The success of a small-scale pilot can pave the way for large-scale funding, and the mainstreaming of a project.
Encouraging trends are emerging in the capital markets, which reward responsible business operations. This includes impact investments, as well as lower cost of capital for certified products and processes (e.g. FSC labels).
For lasting change, we need to institute measures beyond election terms; we need lasting legislations, institutions, and champions.
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This event was an initiative of the OSLO Consortium, jointly organized by the Asian Development Bank (ADB), the Food and Agriculture Organization of the United Nations (FAO), the Poverty Environment Initiative of UNDP and UNEP (PEI), the WWF-Greater Mekong programme, and the Global Mechanism of the UNCCD, with support from by the Government of Norway and MacArthur Foundation.
The full report from the dialogue can be downloaded at www.capacitybuildingoslo.com/events/natural-wealth-gms/