Rio +20: Outcomes and Implications for the Financial Sector
On Wednesday, June 20th, the final document outlining the goals of the Rio +20 Earth Summit was presented. This presentation of goals preceded the discussion among the World’s leaders from June 20th –June 22nd, yet proceeded to define it. The goals contained the word (s) “reaffirm” 59 times, “support” 99 times, “encourage” 50 times, “we will” five times and “must” three times within a 49 page document. The manuscript, as well as the discussions, was described as weak, vague and a failure in establishing ways to overcome the sustainability issues that the Earth faces today. Nonetheless, while the goals served to highlight the difficulties of multilateral governance in establishing a more action oriented text; there were small changes that occurred throughout these discussions that could potentially have large impacts on global companies down the road.
Nick Clegg, head representative of Great Britain at the summit, announced that starting next April, companies listed on the London Stock Exchange will be required to disclose their use of natural resources. This will initially apply to 1,800 companies, with the hope of implementing this level of disclosure on a more widespread level in the future. This will make England the first country to force large companies to measure and disclose their carbon footprint. This is perhaps a glimpse into what may become a standard practice in countries around the world – at least there is hope that this will set a precedent.
There was also a large presence of global companies at this summit who were not seen at the monumental 1992 summit. This is possibly an indication that companies around the world are starting to recognize that environmental sustainability is likely to become more important in the coming years. On the other hand, companies may simply be aware that in light of the recent economic crisis, gaining back the trust and faith of consumers is essential for business – which might be helped by awareness of their global impact on the Earth. Either way, this can be seen as a positive step towards self-awareness in the private sector. More specifically, the U.S. agreed to partner with over 400 companies (including Wal-Mart, Coca Cola, and Unilever) in an effort to eliminate forest deforestation from their supply chains by 2020. Aviva, a large British health insurer, pushed to make reporting of environmental and social performance mandatory for companies worldwide (as it will be for companies listed on the London Stock Exchange). They succeeded only in receiving a watered down bullet point in the final document: “We acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information into their reporting cycle.” While this was only 30 % of what Aviva wanted, according to head of Aviva Investors Paul Abberley, this was still better than the 0% that he expected.
Noticeably, there was no call for a conclusive end to subsidies for fossil fuels. There was merely a push to “consider rationalising inefficient fossil fuel subsidies…in a manner that protects the poor and the affected communities.”
By many, this summit was considered a failure to capitalise on an opportunity that presents itself once in a generation – the opportunity to change the direction of the planet’s consumption of natural resources through the planet’s leaders. It is likely that many of those present had economic growth on their minds (as measured by GDP not by a low carbon footprint) rather than sustainability. Regardless, one should not underestimate the potential domino effect of minor changes. Only time will tell whether small adjustments that came out of this summit, such as England’s decision to become the first country to make carbon footprint measuring mandatory for companies on the London Stack Exchange, will prove essential or inconsequential in the private and financial sector as well as for the sustainability of the Earth as a whole.
Related Linkshttp://www.guardian.co.uk/sustainable-business/rio-20-earth-summit-diary-20-june?newsfeed=true http://www.namibian.com.na/news/world/full-story/archive/2012/june/article/rio-20-the-unhappy-environmental-summit/ http://www.economist.com/node/21557314 http://www.dailymail.co.uk/news/article-2163243/Rio-20-Earth-Summit--475k-300-tonnes-CO2-send-5-Eurocrats-Rio.html?ito=feeds-newsxml