Investing in a sustainable future

Investment strategies almost never consider external costs to the environment when calculating potential returns. But incorporating environmental risk and sustainability into investor mindsets is possible– and urgent.

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©OECD Yearbook 2013

Time for an energy [r]evolution

We can’t use terms like “inclusive” and “green” as window dressing for the pursuit of economic growth as an end in itself. According to Greenpeace International’s chief, Kumi Naidoo, a real and profound change in how we think about growth is needed–one that doesn’t let special interests get in the way of creating a just, fair and sustainable economy with clean energy for all.

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The EU’s ban on discarding caught fish in February 2013 has received widespread applause. Why?

©DR

Climate change won't wait

The European Union may be facing some difficult economic challenges, but that's no excuse for not acting now to create an economy based on resource efficiency and low-carbon development. The benefits are potentially enormous, including lower greenhouse gas emissions, more efficient use of energy and resources, and rising growth and innovation.

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If you are reading this in a big city, the air you are breathing may be doing you harm. Though over 50% of the world’s population now live in urban areas, only 2% of the global urban population lives with acceptable concentrations of particulate matter, or PM, which can cause breathing and respiratory diseases, cancer and premature death. 

The Earth is a unique, interconnected system that mankind has always tried to understand. Although there have been great discoveries made in science, there are many aspects of our planet that are beyond our understanding or control. However, there is one fact we know: we need to live in harmony with nature.

The Fukushima tragedy in Japan in March 2011 has unsettled the nuclear energy outlook. Nuclear power started out almost 60 years ago with the Obninsk plant near Moscow in 1954, but after strong growth in the 1960s and 1970s, the industry declined sharply in the 1980s due to costs, delays and safety concerns after the Three Mile Island accident in the US in 1979, and the Chernobyl accident in Ukraine in 1986.

©Reuters/Mainichi Shimbun

Managing risk could absorb more policy time around the world in the 21st century. How can policymakers be prepared?

E. Ostrom ©C. Meyer/Indiana University

Nobel laureate for Economics, Elinor Ostrom, spoke at the OECD in June. At a time when new models are needed, could her ideas on common resources and governance offer guidance?

Starting a factory? While “quick and dirty” may be the easiest business model to follow, the OECD is encouraging start-ups to start smart, with sustainability in mind. The OECD Sustainable Manufacturing Toolkit is a seven-step checklist to help businesses integrate good environmental practice, and stay on the side of investors, regulators, customers and local communities.

“[…] On behalf of the OECD, I express our profound sorrow at the enormous loss of life and extend our condolences to all those who have been affected by this terrible tragedy. At the same time, we admire the courage and resolve of the Japanese people in face of adversity, and we are confident that Japan will emerge from this disaster stronger and better.

When it comes to the environment, the OECD does not just tell a good green story to its members; as an institution, we are investing time and resources into practising what we preach. Achieving green growth and moving towards a low-carbon economy requires everyone in society to play their part. The OECD secretariat is no exception.

The OECD, a pioneer in the quest to measure the progress and well-being of societies, is launching an exciting new initiative, incorporating Your Better Life Index. The initiative is not only a major step forward in assessing people’s true welfare, but involves people in the process too.

One area where governments have been looking to raise revenues is green taxes. And with good reason. Taxes can provide a clear incentive to reduce environmental damage. But while the number of environmentally-related taxes has actually been increasing in recent years, revenues from these taxes have been on a slight downward trend in relation to GDP. The decline in revenue partly reflects the drop in demand for fuel in response to recent high oil prices and other factors, which in turn has led to a reduction in total revenues from taxes on energy products.

WWF’s 2010 Living Planet Report demonstrates that we are currently using 50% more resources than the earth can provide. If we allow current trends to continue, by 2030 we will need two planets to support us. It’s clear that “business-as-usual” is not the pathway to a prosperous future.

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Despite the repeated warnings about its effects on climate change, as well as resource depletion, the most recent projections from the World Energy Outlook 2009 show that coal will still remain the principal powergenerating fuel for decades to come.

Climate change is very much on the development agenda, but according to this guide, Integrating Climate Change Adaptation into Development Co-operation: Policy Guidance, while developing countries account for over half of total carbon emissions, they are also the most vulnerable to climate change.

European businesses were disappointed with the climate change agreement hammered out in Copenhagen. Here’s one way forward.

At Copenhagen world leaders moved forward in step on climate change. More progress is needed in the year ahead.

European businesses were disappointed with the climate change agreement hammered out in Copenhagen. Here’s one way forward.

At Copenhagen world leaders moved forward in step on climate change. More progress is needed in the year ahead.

The UK government has prepared a map of the world showing how the effects of climate change would differ by region. The map, presented to OECD Secretary-General Angel Gurría by the British ambassador to the OECD, Dominic Martin, shows the likely impact on the planet of a 4 °C rise in the global average temperature.

After a year of pain and pessimism, we are starting to see signs of an economic recovery. Green shoots are sprouting. Governments' bold economic and financial actions of over the past year are beginning to take effect.

©Aladin Abdel Naby/Reuters

Environmentally-friendly investments form part of many recently launched recovery programmes. With the right policies, they could achieve growth and a cleaner planet as well.

In the current financial crisis, risk-weary investors worry more about keeping their own boats afloat than in pumping money into a sector noted for high upfront costs, long pay back periods and low rates of return.

©Oswaldo Rivas/Reuters

Water, is as essential to human activity as air. When cities or societies neglect water, they face collapse. The discussions and analyses emerging from the current economic crisis focus on what went wrong, how to stop the downward spiral, and how to create a better society in the future. But one thing is missing in all the talk of short-term stimulus packages and developing “green growth” economies and that is water.

A Check-list for Public Action has been developed by the OECD and its partners to assist governments considering engaging with the private sector in the water sector. It is organised around the OECD Principles for Private Sector Participation in Infrastructures–some 24 principles grouped under five points that highlight sector-specific features, government considerations and available tools and practices:

The UN Climate Change conference in Poznán, Poland in December ended with a mixed scorecard. There was agreement to move to the next level of negotiations, and some clarification on outstanding issues, but little substantial forward movement.

Concerns for the world economy were already building when OECD governments met for the annual Ministerial Council Meeting (MCM) last June.

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