If private investment does not become a positive vehicle for sustainable development, the prospects for a sustainable future for the human community will clearly not be realized. But we cannot afford to wait until such measures are mandated by national regulation and international agreements.

Remarks by Maurice Strong, Chairman, Earth Council, at the opening ceremony of the Global Partnership Summit on Environment, held at Tokyo, Japan

It is a high honour indeed for me, as well as a great pleasure, to have this opportunity of speaking in the presence of Their Imperial Highnesses, The Crown Prince and Crown Princess of Japan, the Prime Minister Hashimoto and so many distinguished leaders of Japan and the international community, including my long-time friends and co-workers, Nitin Desai and Birgitta Dahl, on the occasion of the opening of this Global Partnership Summit on Environment. Let me first commend and congratulate the Chairman, Mr. Gaishi Hiraiwa and eminent advisors, the Honourable Noboru Takeshita, the Honourable Toshiki Kaifu and the Honourable Tomiichi Murayama for their initiative in leading and organizing this important and timely conference.

I also want to pay tribute to Messrs. Hiraiwa, Takeshita and Kaifu for their leadership in organizing the "Eminent Persons Meeting on Financing Global Environment and Development" in March, 1992 just prior to the Earth Summit and the "Tokyo Conference on Global Environmental Action" in October 1994 as a follow up of the Earth Summit. This Global Partnership Summit also comes at an extremely important moment on the environmental calendar as it follows the Rio +5 civil society forum held in Rio de Janeiro last week and precedes the meeting of the UN Commission on Sustainable Development to be held in New York in April and then the special session of the UN General Assembly in June 1997 on the fifth anniversary of UNCED.

Maintaining commitment

I commend Japan for maintaining its commitment to the environment even during the recent period in which your economy has been subjected to a difficult period of adjustment.  I am very pleased to recall the participation of Prime Minister Hashimoto at the Earth Summit in June, 1992, and his valuable counsel and support on that occasion. His important statement and the long-standing interest he has demonstrated in the issues we are addressing here are a great source of inspiration and support for all of us.

The Basic Environment Law enacted in November 1993 is one of the most important and progressive pieces of environment legislation adopted since Rio by any country, supplemented in 1996 by the strengthening of the air pollution and water pollution control laws and a number of other measures. Your initiative in convening this Global Partnership Summit, the hosting by Japan of the Third Session of the Conference of the Parties to the UN Framework Convention on Climate Change in Kyoto in December 1997, the establishment of a Japan Council for Sustainable Development, Keidanren's Environmehtal Appeal, its industry-wide Voluntary Environmental Action Plans and the Environment Summit of Designated Cities at Kitakyushu City in January of this year, all evidence the continued commitment and leadership of Japan in the field of environment. I very much hope that this conference will provide the basis for an even stronger and more determined leadership by Japan as one of the world's largest and most progressive industrialized nations to ensure that the world community can effect the transition to an environmentally secure and sustainable way of life on earth as we move into the 21st century.

Japan will have a special opportunity to manifest its leadership in the single-most important environment issue, that of climate change, when it hosts a meeting of the parties to the Convention in Kyoto. This leadership by Japan is necessary -and it is expected.

Change never comes quickly

After five years it would, of course, be too early to pronounce formal judgement on the results of the Earth Summit. For the "change of course" it called for is fundamental in nature and fundamental change never comes quickly or easily. As Rio +5 made clear, while governments have made some progress towards carrying out the commitments they made at Rio, their performance has, on the whole, been disappointing.

Particularly disappointing is the fact that most of the industrialized countries will not meet the initial targets set for reduction of CO2 emissions. And developing countries have reason to be especially disappointed that the "new and additional resources" identified at Rio as essential to enable them to make the transition to sustainable development have not been forthcoming. A welcome exception has been Japan as the leading provider of Official Development Assistance, and the strongest supporter of the Global Environmental Facility, the only new financing mechanism to emerge from the Earth Summit. On the whole, despite significant progress in some areas since Rio, the processes of environmental deterioration continue while its underlying causes persist - continued growth in the human population and in the scale and intensity of human activity.

On the positive side, many developing countries have responded positively to the results of the Earth Summit and some, like China, have enacted their own national versions of Agenda 21 despite the fact that the additional international funding they had expected as a result of Rio has not materialized. Most encouraging is the progress that has been made at the level of business and civil society. Professional societies, notably engineers, architects and educators, have made a commitment to sustainable development. Some 1800 cities and towns are developing their local versions of Agenda 21. Important industrial sectors, including the road transport industry and the tourism and travel industry, have developed their Agenda 21. A reconstituted and expanded World Business Council for Sustainable Development with a growing number of regional and national counterparts, is leading the movement to sustainable development within the business community.

Some 100 National Councils for Sustainable Development, bringing together representatives of both government and civil society, have been established in every region of the world as primary instruments for implementation of the results of Rio in their own countries. I am particularly pleased that Japan has recently taken steps to form its National Council, which participated with some 90 other National Councils Rio +5 civil society forum from which I have just come and produced a valuable National Report to the forum. I also want to acknowledge the material support we received from Japan for Rio +5, particularly from the Nippon Foundation.

From agenda to action

The National Councils for Sustainable Development were at the core of the Rio +5 process in which many hundreds of non-governmental organizations were involved. Some 500 representatives of these organizations brought the results of their deliberations to Rio +5. The theme of the forum was to move "From Agenda to Action", and the process led to the establishment of a series of new alliances and partnerships amongst various civil society actors and between them and governments, all designed to produce concerted and accelerated action in a number of key areas of Rio's Agenda 21.

The forum also called for establishment of a Global Environmental Organization, building on the foundations of the United Nations Environment Program, with a status and strength equivalent to that of the major international trade and economic organizations. The first meeting of the Earth Charter Commission also produced a "benchmark" draft of the Earth Charter, which it presented at Rio +5 and the participating organizations undertook to take a lead in ensuring its wide dissemination and promotion of consultations and dialogue" by people throughout the world, which will be the source of the credibility and authority of The Charter when it is presented to the United Nations in the Year 2000.

In the past five years, the rapidly developing countries of Asia and Latin America have led the resurgence of growth in the world economy. Unfortunately, for the most part, this growth in both consumption and production is following the same patterns established by the more mature industrialized countries. It is a pathway that is clearly not sustainable, either for these countries themselves, or for the world community. Indeed, the battle to achieve a secure and sustainable future for humanity will be won or lost in the developing countries, especially in Asia.

Right to grow

Yet we cannot deny these countries the right to grow. It would be clearly hypocritical and counterproductive - simply to lecture them not to repeat our mistakes, particularly while we continue to resist significant changes in our own patterns of production and consumption. They will be far more influenced by our example and our concrete support than by our exhortations.

Developing countries account for some three-quarters of the world's population and the major portion of its natural resources. Many of these resources are undervalued as their prices do not take account of the environment and social costs of developing and exploiting them or the ecological services they provide to the world community. This is particularly true of the biological resources which are critical to the Earth's life support systems. We simply cannot afford to keep treating these as free goods while doing little to help developing countries ensure that they are protected and developed sustainably.

One of the most promising means of channelling new resources to developing countries for this purpose is the prospect of establishing an emission trading system through which funds available for reducing CO2 emissions can be channelled to the places where they can be used most cost-effectively. In many cases, this will be the developing world in which the funds can be utilized to ensure maintenance of forest areas which would otherwise be destroyed. The provision for joint implementation or "Activities Implemented Jointly" in the Climate Change Convention constitute important first steps in this direction, and I hope that the Kyoto Conference of the Parties will agree on measures which will facilitate the further development of emissions trading.

I should also say that the Earth Council is undertaking two initiatives which we hope will help to provide practical examples that will move the process forward. In cooperation with Costa Rica's National Parks System the Earth Council is issuing bonds based on CO2 credits to finance its Earth Centre in San Jose. And it is taking the lead to establish a Global Environmental Trading System (GETS).
The more mature industrialized countries still account for a disproportionate share of the world's waste and pollution, but the contribution of developing countries is growing rapidly, creating major domestic environmental problems for them and adding ominously to global risks.

Significant progress

The significant progress that has been made in industrialized countries, notably Japan, in recent years in effecting more efficient use of energy and materials as well as in pollution prevention and control demonstrates the potential for reducing and controlling environmental impacts. But these solutions require capital, technology, skills and training, all of which are in scarce supply in developing countries. International corporations, as the principal source of direct investment, technology and know-how, have therefore a particularly important role in facilitating the transition to sustainability in developing countries.

I am pleased to say that Japan's two principal electric power companies, Tokyo Electric Power and Kansai Electric Power, have joined with other members of E7, the organization of the world's largest electric utilities, in practical programs designed to promote sustainable development of energy in developing countries.

If private investment does not become a positive vehicle for sustainable development, the prospects for a sustainable future for the human community will clearly not be realized. But we cannot afford to wait until such measures are mandated by national regulation and international agreements. Accordingly, the World Bank has decided to take a lead in convening representatives of industry, other international organizations, enviromnental and professional interest groups in developing voluntary criteria and guidelines for private investment in each major sector. It is also, particularly through the International Finance Corporation and the Multi-Lateral Investment Guarantee Agency, accelerating the development of a new generation of partnerships with the private sector to leverage and support private investment in sustainable development.

Widespread misuse of existing funds

No conceivable amount of new financing could compensate for the widespread misuse of existing funds. Over the years, all governments of both developed and developing countries have developed a series of direct and indirect subsidies to various sectors of the economy - from energy, agriculture, transport and resource development - to name but a few. While these were designed to serve purposes unrelated to their environmental impacts, it is now clear that many of them, costing literally hundreds of billions of dollars, provide de facto incentives to practices that are environmentally destructive and unsustainable. They also distort the effective functioning of the market economy, undermine economic efficiency and impose immense costs on consumers and taxpayers. The amounts involved go far beyond the costs estimated at the Earth Summit for effecting a transition to sustainable development and belie the popular notion that at a time of economic and budgetary stringency we cannot afford this transition. It is indeed these perverse or inefficient subsidies that can no longer be afforded and their revision or redeployment to provide positive incentives for sustainable practices, would provide all the funding required to meet sustainability objectives.

This is why the Earth Council, with the support of the Netherlands Government, has launched a major effort to focus the attention of governments and the public on the need for major changes in current policies and practices which are to such a great extent subsidizing unsustainable development - literally undermining the Earth with public funds. A summary version of its report "Subsidizing Unsustainable Development" is available here.

Energy and transport are at the centre of many of our most pressing environmental as well as economic challenges. Meeting the exploding energy needs of developing countries, if they emulate the traditional models, will place burdens on their capital resources as well as on the environment which would neither be tolerable nor sustainable. Energy efficiency is clearly the best investment in both economic and environmental terms.

Reduce dependence on fossil fuels

The more mature industrialized countries have a major incentive to ensure that developing countries have access to the resources and technologies they will require to meet their energy needs on an efficient, sustainable basis. Yet as environmental imperatives require us to reduce our dependence on fossil fuels, the energy economies of developing countries are entrenching and deepening their dependence on oil and low cost coal. There is still little being done to provide developing countries with incentives to adopt the best of currently available state-of-the-art technologies and all too little to make a concerted effort to develop alternative fuel sources. Some encouraging technological solutions are in prospect but their development require much greater governmental and industry support than it is now receiving.

The evidence produced at the Earth Summit, and confirmed by experience since then, makes it clear that economic efficiency is the key to environmental protection -efficiency in the use of energy and materials as well as in the prevention, recycling and disposal of wastes. No country has demonstrated this more effectively than Japan which is in the best position to lead the World in the transition to this new eco-economic model - to become the benchmark society of the 21st century.

The fifth anniversary of the Earth Summit which we mark this year is also the twenty-fifth anniversary of the first global environment conference, the UN Conference on the Human Environment held in Stockholm, Sweden, in June 1972, which first put the environment issue on the international agenda. Our awareness of the importance of the environment issue and the need to integrate measures to protect and improve the environment into every aspect of our economic life have increased immensely since Stockholm. And the development of sophisticated technologies has given us new tools with which to manage these issues. But the political will to affect the fundamental changes in our economic behaviour that the transition to sustainable development requires is clearly lagging. While adopting the rhetoric of change, we are caught in the grips of a powerful inertia which continues to propel us along on an unsustainabie pathway to the future with deepening risks to our economic as well as environmental future. This Global Partnership Summit on the Environment provides a unique opportunity to give new impetus, vitality and direction to the prospect of a more secure and sustainable way of life on our planet for which Stockholm and Rio laid the basic foundations.