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Janez Potočnik

European Commissioner for Environment

Rio+20 – Building on the pillars of life, development and poverty eradication

Meeting of the Committee of Infrastructure and Environment of the Dutch Parliament

The Hague, 11 April 2012

Challenges and opportunities

Ladies and Gentlemen, dear friends,

It is both an honour and a pleasure for me to be in such distinguished company today.

The current crisis, which has already wiped away large parts of wealth, growth and jobs generated over many years of hard work, urges us to reconsider our model of growth and – this time around – to get it right!

What we need today, is a growth model that looks ahead - one that offers predictability, stability and that is, most of all, sustainable.

For me - for Europe – the answer lies in a growth model based on sustainability and resource efficiency. Why?

It is estimated that 9 billion people in 2050 will need three times more material resources – 140 billion tons annually. The demand for food, feed and fibre is projected to increase by 70%, but 60% of our ecosystems underpinning these resources are already degraded.

The OECD 2050 outlook points to the fact that without new policies we will need 80% more energy - coming mainly from fossil fuels - and 55% more water. In other words, we will put even more pressure on the environment and we will not deliver on our climate change targets which will place our economy at a great risk and will cost up to 14% of average world consumption per capita.

So, to come back to my question. Why? Because sustainable growth and resource efficiency respond to global tendencies of population and middle class growth, depletion of natural capital, increasing prices of key resources and greater price volatility coupled with substantial import dependency of the EU economy.

In the past five years, 75% of European businesses have experienced an increase in material costs. 87% of companies said they expected the costs of their material inputs to increase in the medium term.

Sustainable growth and resource efficiency are key to ensuring the competitiveness and resilience of Europe in today's world economy. Europe can be more competitive only if it becomes greener.

The transformation will not be simple. The scale of the challenge is daunting:

  • Lock in into current technology, but also consumption and production patterns along global supply chains present numerous tangible and intangible barriers..

  • Short-term horizons and profit maximization dominate decision making and prevent working towards long-term benefits.

  • Major innovation breakthroughs will be needed in some sectors…

And I could continue. The list is maybe long, but the advantages in the short and longer term are invaluable.

McKinsey - in their latest report - argue that benefits of resource productivity could amount up to $ 3.5 trillion by 2030 and resource productivity would also have climate benefits, taking us half way to achieving our climate goals.

The report also underlines the need for doubling investments in key resource systems currently amounting to $ 2 trillion a year, as well as its potential benefits - annual returns of above 10%. UNEP also estimates that investments equal to 2% of global GDP per year will be needed until 2050 to support the transition to a green economy. These investments will need to be unlocked.

Therefore, I would argue that green economy makes business sense. Increasing resource productivity, reducing waste and energy consumption appeal to every company, implying reduced costs and higher profits.

Sustainable resource use has also broader and longer term implications for the resilience of the economy, security of supply, stability and reduced resource price volatility, preventing resource bottlenecks and risks from systemic collapse of certain natural systems. It can also open new markets and benefits from launching innovative technologies or business models.

The opportunities are endless. It is only a matter of learning to do more with less. This is the principle of resource efficiency, that lies at the core of the new partnership between the environment and the economy, that the Commission proposes with the resource efficiency agenda, and in particular with the Roadmap to a resource efficient Europe adopted last September.

Resource efficiency is an integral part of the Europe 2020 strategy and economic governance. It is mainstreamed in major Commission proposals for energy, transport, agricultural, fisheries, cohesion, research and development policy. We see these efforts as part of a worldwide transition towards green growth.

It is clear that the challenges and the opportunities are not limited to Europe; they are shared around the world. We need a positive sum game across continents, countries and economic sectors, stability and better quality of life, a safe operating space, resilience and sustainable long-term growth of the world economy.

What we are aiming at for Rio+20

This conveniently brings me the Rio+20 Conference that will take place on 20- 22 June. A global green and inclusive economy is the key topic there.

Time is now precious in the build up to the Conference and we should all be clear about what we want to achieve.

One of the key actions that the EU is proposing for Rio is a "roadmap for an inclusive green economy", with specific goals, targets and actions at international level. We see this as a framework that can help drive the overall process and transformation.

The roadmap would allow national governments to agree on what is needed at international level and give them freedom to use the policy toolboxes to design their national and regional approaches.

It is a vehicle to deliver sustainable development, not a gimmick to replace it.

That is why it needs to address in practical terms, how the Green Economy can cover all three dimensions of sustainable development: social, economic and environmental.

It needs strategic vision and the commitment of governments – that is first precondition. This commitment should be clear and comprehensive enough to stimulate and steer what is the absolute precondition for a successful transition: the engagement of business and of civil society in general. Only this will guarantee its implementation on the ground.

We also need to be practical as there is not much time left and abstract discussions will not be sufficient.

Based on the recent request of EU Member States - we are developing the key elements of such a roadmap focussing on five fundamental key areas of the green economy, or "pillars of life" if you wish:

  • sustainable energy,

  • water,

  • oceans,

  • land and ecosystems, and

  • resource efficiency including waste.

I like to call these areas 'pillars of life', but they are also pillars of development and poverty eradication. There is an increasingly obvious link between the natural resource base and lifting people out of poverty. Addressing poverty is also about access to fresh drinking water, to healthy food and a health environment, and to sustainable energy.

An essential part of a credible road map is a set of goals, aspirational targets, and concrete actions for each area.

This is underpinned by our efforts to secure concrete outcomes also in underlying horizontal conditions. Personally, I think it would be a huge missed opportunity if we don't agree globally on a "report or explain" obligation for companies to report on their environmental, social and governance performance.

The essential role of business

Businesses are by definition the engines of the green economy. Engines that are efficient and robust in the long run, I and your shareholders should hope

I have heard many business leaders whose strategies are fine examples of what we are looking for. But, to achieve the necessary transformation, we have to move beyond the "best-practice" level and scale up to much greater business engagement.

One specific example is advancing sustainability management along the supply chain and corporate accounting and reporting practices. We already have promising examples of this as part of the global Sustainable Agriculture and Sustainable Trade Initiative in the Netherlands. We should see how such initiatives can be scaled up for tangible proposals for Rio.

My question to you is – how can we accelerate this transition? What kind of conditions should be in place that will allow you to go back to your shareholders and convince them that you need to move faster on this path?

Businesses can also play a key role in the "means of implementation" debate – which, in simple language, is largely but not exclusively about money and investment. Developing countries need to have the means and capacity to implement actions on the ground. Here, development co‑operation and assistance can play an important role in catalysing investment and strengthening capacities, in particular in least developed countries.

However, the bulk of resources for this transition need to be mobilised from other public and private sources, nationally and also internationally. And all our international institutions, existing or new, should be equipped for ensuring this promise of sustainable development can be delivered.

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