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February 28, 2008 - Alice in Wonderland

Paul Ekins is an old mate of mine – indeed, a co-founder of Forum for the Future. He is now Professor of Energy and Environment at Kings College London.

Paul is a seriously rigorous academic, very focussed on whatever task is in hand, with very high expectations of himself and everyone he deals with. Despite all that, he is normally pretty mild-mannered and pragmatically recognises that we are in for a long haul when dealing with policy makers. So for Paul to fire off the following broadside for The Guardian a couple of weeks ago is really quite something:

“This is Alice-in-Wonderland economics. One can just imagine the White Queen, who taught herself to believe six impossible things before breakfast, saying: ‘we are on a low-carbon emissions trajectory because I say we are, and that means I can omit as much carbon as I like!’. When future generations, struggling with the multiple ills that climate change will bring about, look back on this sort of policy sophistry, they will realise just how comprehensively, and knowingly, this generation has sold them down the river”.

What’s got Paul so worked up is a new initiative from Defra that I would actually much prefer to be singing the praises of – namely, its decision to introduce a “shadow price for carbon” in the shape of a mandate for all public sector bodies (theoretically!) to include in any Cost Benefit Analysis they may be doing, a shadow charge for every tonne on CO2 that is emitted.

So far so good. But obviously it all depends on where you set the price: at £1 a tonne, who cares? At £100, that’s serious. Defra has gone for £26, claiming that this is what Sir Nick Stern recommends in his landmark report on the economics of climate change back in December 2006.

In fact, the Stern Report offers a range of prices, this one being the lowest, estimated on the assumption that the world will have succeeded in stabilising emissions of CO2 at around 550ppm by 2050 – thus reducing the risk of massive climate-related economic damage.

And that is why Paul is spitting tacks. Given where we are today, in policy terms, the chances of stabilising at 550ppm are literally zero. So, following the good old adage of “garbage-in, garbage-out”, that wholly unrealistic assumption results in a wholly unrealistic shadow price, which (surprise, surprise) promptly resulted in a wholly unrealistic (and indeed appallingly irresponsible) Cost Benefit Analysis which has concluded that a third runway at Heathrow will be “sustainable” as well as economically viable! Oh please!!

If Defra’s economists can’t do better than that, who is going to constrain DfT’s runway-building mania? Something of an own goal I would say.

Posted on February 28, 2008 1:05 PM | | Comments (2) | TrackBacks (0)

July 28, 2008 - How bad is the economic downturn?

There must be millions of people sitting around in the beautiful weekend sunshine pondering one simple question: just how bad is this “downturn” going to get? Will it turn into a “technical recession” (two quarters of continuous negative growth) from which we recover relatively quickly? Or are we in for a full-blown, thirties-style Depression? Or are we already over the worst?

One group of campaigners (authors of The Green New Deal report, published last week by the new economics foundation) are in no doubt: "we expect that the sub-prime debt crisis (in the US) will soon come to be seen as just the first domino to fall in a line of adjacent dominoes, threatening a systemic crisis. This will lead to a massive wave of corporate defaults. Because their profitability is too low to repay costly debts, these companies will likely default, tipping their lenders-banks and institutions such as Hedge Funds – into crisis."

Right or wrong, their analysis of how we’ve got into this mess is devastating: irresponsible deregulation of the financial services sector, leading to unethical, greedy and even fraudulent behaviour; a deliberately induced credit crunch, with financiers borrowing and lending almost without limit, leading to totally unsustainable asset inflation – particularly in housing markets; and a total failure to crack down on tax havens and dodgy accounting systems that allow corporates and the ultra-rich to prosper at the expense of the vast majority of citizens today. As Nicholas Sarkozy has said: "we have to put a stop to this financial system which is out of its mind and which has lost sight of its purpose."

The credit crunch is the first of three "crunches" that "The New Green Deal" brings together, the others comprising much more familiar territory around climate change and soaring energy prices driven primarily by an encroaching peak in oil production. Each of these crises could of course be addressed separately, but it is precisely their "perfect storm" convergence that renders contemporary capitalist economies so unprecedentedly vulnerable.

It’s also this convergence that makes the proposed solutions so compelling. Drawing deeply on the analogy with President Roosevelt’s New Deal in the early 1930s, when he dragged America out of the worst impacts of the Great Depression, the Green New Deal depends on two essential thrusts: re-regulation of financial services (including the reasserting of government control over credit and interest rates), and the re-flation of the economy through a £50 billion a year crash programme, over 10 years to reduce – dramatically reduce! – both emissions of CO2 and other greenhouse gases and our chronic dependency on fossil fuels. A new "carbon army" will create hundreds of thousands of jobs, "make every building a power station", eliminate forever the scourge of fuel poverty and severely curtail the worst activities of profiteering energy companies.

Crazy stuff? Possibly. But its worth bearing in mind that’s exactly what all the usual vested interests kept telling President Roosevelt as his New Deal set about rescuing the United States from one of the worst periods in its history.

Posted by Jonathon Porritt on July 28, 2008 4:31 PM | | Comments (4) | TrackBacks (0)

September 16, 2008 - Scary Times

Living through the death throes of capitalism as we have known it over the last 20 years or so is proving to be quite an emotional experience!

One thing I’ve discovered is that there are only so many noughts I can cope with. As the downturn accelerates (if that’s what downturns do), millions, billions, trillions and gazillions all begin to merge into a fuzzy blur. Graspability is daily defied.

On Monday, for instance, an obscure European body called The Financial Stability Forum blithely announced that global banks would need to raise new capital to recoup their loses to the tune of $350 billion – that’s $350,000,000,000. And that’s on top of the $350 billion (that’s another $350,000,000,000) that has already been raised by the banks over the last 18 months or so. $700 billion in all.

Very hard to grasp that kind of scale, let alone the depth of the pockets which will need to be dug into to find such sums. But I guess all things are relative. The title of Joseph Stiglitz’s latest book about the Iraq war is “The $3 Trillion War”. That’s $3,000,000,000,000, just in case you are wondering, or, to put it differently $106,303 for each and every citizen of Iraq.

This makes the prospective damage of around $18 billion done by Hurricane Ike to communities across Texas and Louisiana look like a raindrop in a downpour.

I divert. Back to those capital-craving banks (now minus Lehman Brothers, of course) in pursuit of all those billions. It’s not so long ago that these very banks were being held up as the miracle-workers of an economic boom that some really did feel would just go on and on. Our politicians (particularly Labour politicians) basked in their reflected glory. Yet all the while, with their toxic mix of derivatives, off balance sheet arrangements, hedge funds, and the manifestly unsustainable mis-selling of credit, they were sowing the seeds of their own – and the entire financial house of cards – destruction.

From a sustainability perspective, it’s difficult to exaggerate the significance of this moment. Depth-driven consumerism, underpinned by a corrupt, self-serving and unaccountable financial system, has been at the heart of 20 years of environmental devastation. It’s over. If we chose, we could now do things very differently once we’ve negotiated our way through the recession.

Posted by Jonathon Porritt on September 16, 2008 7:25 PM | | Comments (13) | TrackBacks (0)

October 2, 2008 - A very warm welcome to Thomas L. Friedman

At long last, after years of flirtatiously standing on the sidelines of the sustainability debate, he has now got properly stuck in with his new book Hot, Flat & Crowded. Great title: seriously good read.

Friedman has always been a seriously good author. Both "The Lexus and the Olive Tree," and "The World is Flat" became best-sellers all around the world. But they drove me absolutely bonkers. Full of references to some of the problems associated with globalisation, including climate change, but zero understanding that this particular model of globalisation, in praise of which he has spilled millions of words, couldn’t possibly be sustained over time. Such persuasive advocacy so frustratingly missing the mark.

But "Hot, Flat & Crowded" is bang on the mark. Totally authoritative analysis as to why business-as-usual capitalism is dead in the water, coupled with a very upbeat account of the kind of "green industrial revolution" that is now available to us (Gordon Brown should love it!) and there is nothing like a guru-come-lately to go way over the top in terms of born-again enthusiasm.

I even managed to overcome my irritation at his constant references to "green" no longer being a "niche", as if it is all suddenly mainstream because he is now attending to it. Actually, dear Thomas, Teddy Goldsmith’s "Blueprint for Survival" in 1968 was saying exactly what "Hot, Flat & Crowded" is saying now, just as seriously, just as penetratingly. Nothing "niche" about it. It was simply that an awful lot of apparently very intelligent people just didn’t get it forty years ago.

Friedman’s other, rather enduring blindspot is that he believes the United States will now step up to the plate and lead the rest of the world into an ultra-low-carbon, totally sustainable future. Really! No sign of that I’m afraid, in the campaign speeches of either John McCain or Barack Obama.

This splendid chauvinism leads him off in some strange directions. One of the best sections in the book is about China, and the way China is starting to address very seriously many of its environmental challenges, particularly in terms of massive new investments in environmental technologies. But even when he looks at that, Friedman still believes it won’t really come to anything unless the United States blinks first, and takes the lead. "If America decisively embarked on building a Clean Energy System and the technologies to drive it, China would have no choice but to move decisively in the same direction."

I think that’s rubbish. In my opinion, it is far more likely that China will just get on and do it, regardless of what’s happening in the US – simply because the risks to China from climate change are far more serious. There’s an interesting thought: sustainability as another nail in the coffin of US ascendency!

Posted by Jonathon Porritt on October 2, 2008 10:30 AM | | Comments (1) | TrackBacks (0)

October 10, 2008 - The Death of CSR?

I wonder if the whole concept of corporate social responsibility (CSR) will become another victim of the banking crash? With great respect to those whose lives currently revolve around CSR one way or another, I sincerely hope so. For me, its become an increasingly empty and illusory notion anyway.

I rather thought CSR would demise a few years ago when Enron went down in flames. The CSR community in the United States took quite a hit at the time, given that Enron had been lauded and garlanded as a leader on corporate social responsibility for several years before the crash. Off-balance sheet CSR was obviously a stretch too far.

But what value should we now attach to the concept of CSR in the UK banking sector? Every single one of these once-revered financial institutions have very impressive CSR programmes. Northern Rock was an outstanding exemplar of community-based engagement, as was the Halifax bit of HBOS; Lloyds TSB runs one of the most innovative CSR programmes in the whole world; HSBC has pioneered some of the most important climate change initiatives in the corporate world today. And so on.

Yet the truth of it is that every one of these institutions has been simultaneously engaged in some of most egregiously irresponsible business behaviour in the history of capitalism. Risk has been systematically mis-priced; credit has been systematically mis-sold; incentive schemes were geared to promote value-destroying personal greed; Audit Committees failed, quarter in, quarter out, to exercise any kind of proper scrutiny; non-executive Directors were suborned by utterly corrupt models of permanently rising property values, bundles of bad debt were packaged up and sold on as so many toxic time-bombs; and literally everything involved in this global scam was made more complex, more opaque, more impenetrable, less subject to scrutiny and audit of any kind – presumably for a purpose.

You can pretty much guarantee that not one of the Directors of CSR in any one of these institutions would have been consulted about any of these strategic decisions. After all, what has CSR got to do with investment strategies? With executive remuneration? With company policy on "collateralised debt obligations?" Or hedge funds? And even if they had been consulted, you can absolutely guarantee they would have been ignored – the seductive pull of big money will always trump the platitudes of corporate responsibility.

Please don’t get me wrong. I’m in no way seeking to disparage the incredible work of CSR teams in the banking sector. To a man and woman, they're great. But they (and the rest of us) have been very ill-served by their bosses and their boards.

Posted by Jonathon Porritt on October 10, 2008 10:48 AM | | Comments (13) | TrackBacks (0)

October 16, 2008 - What next for the economy?

Assuming that governments around the world have done just enough to rescue the global banking system (and it really did have to be done, however much it might stick in our gullets having to leave in place most of the Executives who drove us into this disaster in the first place), that’s just the start of what’s going to be a protracted and extremely painful process as we try to avoid the worst of an economic recession/depression. And that’s where the debate now has to go.

I suspect I'll be banging on about this quite a bit over the next few months, based on the following high-level thoughts:

1. Very large sums of taxpayers' money will need to be found to keep unemployment in check, to overcome continuing liquidity problems, and to keep driving innovation at a time of economic meltdown.

2. Taxes will inevitably need to rise in the not too distant future, and to rise disproportionately for the rich. The recent Lib Dem decisions on tax-cutting measures are therefore bonkers.

3. Oil consumption (and energy prices) may well fall even further because of the recession, but that will be only temporary. The long term trend is clear, the days of cheap oil are over.

4. Even two or three years of near-zero economic growth would do little to slow the build-up of CO2 and other greenhouse gases in the atmosphere. We're still heading towards climate-induced catastrophe as the interim report from the Committee on Climate Change has mapped out, that means a cut of at least 80% in our emissions by 2050.

5. Put all those things together, and an OVERARCHING PRIORITY emerges: to start rebuilding the UK economy via massive ongoing investments in our low-carbon future.

6. The list of things to be done under this heading (already described by many as a "Green New Deal") is all but limitless – in the UK as in every other nation.

7. The Prime Minister has already expressed apparent enthusiasm for the idea of a jobs-generating "green industrial revolution." It’s been referred to in a number of speeches. He now needs to get the Treasury to put as much effort into working out what this looks like as it has into rescuing the banks.

8. This is much, much more than a silver lining in a very black cloud. As Nick Stern has said, it is the ONLY way of achieving the kind of low-carbon society we need whilst simultaneously securing increased prosperity.

And it will be interesting to see just how quickly we get some kind of consensus around that strategic approach.

Posted by Jonathon Porritt on October 16, 2008 12:19 PM | | Comments (5) | TrackBacks (0)

October 31, 2008 - Better ways of banking

In all the finger-pointing about the moral turpitude and defective judgement of the mainstream banks, we've heard mighty little about the banks that aren’t being bailed out or (as with Barclays) are desperately seeking new capital from China or the Middle East. So let's just celebrate for a moment the inspiring success of the Co-op Bank (and indeed the whole Co-op Group). To be sure, the credit crunch is also having an impact on them, but nothing like in the same business-threatening way as for the big banks.

At the very least, the relative resilience of this business model should prompt both Treasury and the sector's regulators to think again about alternative ownership and governance structures in the financial services sector. Astonishingly, the default response from government ministers at the moment is simply to patch things up as fast as possible and re-regulate if necessary – although I think it’s fair to say that if Adair Turner – the new boss of the FSA – gets his way, then we might see a rather heavier hand than the light touch that has been preferred up until now.

But if ever there was a time to re-think the governance structures of the industry as a whole, and to promote the self-evident benefits of mutuals (the Nationwide must surely be feeling just a little bit pleased with themselves at the moment!), co-operatives and smaller ethical banks like Triodos, this has to be it.

So it's a great time for the Co-op as the leading advocate of this kind of ethical approach to come out fighting. Although I had heard that the Bank had a TV ad in preparation, it was just brilliant to see it out there last week, playing into people's deep anger at the cataclysm that the erstwhile "Masters of the Universe" have inflicted on the world, and into their understandable concern about their own financial situations.

For completely different reasons, I was equally delighted to see the Co-op's latest adverts in the papers telling people about their forest offset scheme – an area of replanted rainforest the size of 324 football pitches. Right from the start, the Co-op has always argued that offsetting is a critically important part of any integrated carbon management strategy – do the efficiency bit, flat out, then do the renewables bit, flat out, and then do the offset bit flat out as well.

Whatever you may think about forest-based offsets, it's really important to hear more of that kind of voice. Whether or not they've thought it through, the direct consequence of some of the NGOs drip-dripping their corrosive cynicism over any and every mention of offsets is that most people are either deeply confused or deeply suspicious of offset schemes in the private sector – even the best of them. This is so damaging. It’s impossible to promote best practice (as in "Gold Standard", properly verified and audited offsets) by trashing the very idea of offsets in principle.

The Co-op's message to the NGOs is a simple one: wise up, guys. If you're more concerned about maintaining your purist image than you are about getting some really good stuff going on the ground (that does, in however small a way, contribute to a lower-carbon world), then you’re doing nobody any favours.

That's the kind of eye-poking stuff you can get away with when you're the UK's most trusted bank!

Posted by Jonathon Porritt on October 31, 2008 3:42 PM | | Comments (8) | TrackBacks (0)

January 27, 2009 - Agricultural Employment

Nearly two million unemployed. Another 240,000 redundancies already announced over the last couple of months. Heading inexorably towards three million – perhaps even by the middle of the year.

That changes everything. For those at risk, anxiety turns to fear. For those already affected, shock turns to anger. For policy makers, the rules of the game change dramatically. "What contribution will this policy make to protecting existing jobs or creating new jobs?" – that’s the question that now dominates. And that of course is why the Prime Minister organised his Jobs Summit earlier in the month.

Many commentators have already pointed out that there are not many sectors in the UK economy capable of generating many new jobs – and you can guarantee that the one place the Government will not be looking at is Agriculture. Having spent the last few decades fixing the system to reduce the people involved in farming and food production (there’s been an 80% drop in farm workers over the last fifty years, and a 40% decline in the number of farms), I don’t suppose there’s a single person in either Defra or Treasury with any real concern for employment in this critical sector.

So I suspect the Soil Association’s admirable contribution to the Job Summit will have got very short shrift. That’s a shame, as it makes some telling points, based on extensive research carried out by the University of Essex:

• UK Organic farms provide, on average, nearly 2.5 times as many full time equivalent jobs as non-organic farms in the UK.
• Jobs per 100 hectares were 14% higher on organic farms (at 2.49 jobs compared to 2.19 jobs on non-organic farms). Small organic farms with an average size of 36 hectares supported the greatest number of jobs (5.23 jobs per farm).
• Organic farms are 3 times more likely to be involved in direct or local marketing (39%), compared to non-organic farms (13%).
• Organic farming is attracting younger people into farming compared to the farm industry as a whole. On average, organic farmers in the UK are 7 years younger than non-organic farmers (whose average age is 56).
• If all farming in the UK became organic, over 93,000 new jobs directly employed on farms would be created.


Somewhat forlornly, the Report concludes: "Government policy for UK food and farming should explicitly encourage farming systems that provide greater employment in agriculture and in farm-based or local food processing and retailing."

Fat chance. I suspect that the total pool of talent inside government, looking at this or any other sector of the economy, that is capable of advising on "job generation", must be very shallow indeed. It's a very long time since the spectre of very large numbers of people unemployed over very long periods of time was causing Ministers sleepless nights.

Indeed, for the best part of 20 years, it's been ideological heresy to argue that it's legitimate to use taxpayers’ money either to protect existing jobs or create new jobs – except in exceptional circumstances. The ruthless pursuit of increased productivity (in terms of per capita Gross Value Added) at almost any social cost ensured that all the brownie points went to those who helped shed jobs rather than create them.

Now that the Government has been forced into some kind of rolling, cumulative stimulus package, there is at last a new reality dawning.

Posted by Jonathon Porritt on January 27, 2009 10:39 AM | | Comments (4) | TrackBacks (0)

February 20, 2009 - Green New Deals

Green 'New Deals' would appear to be breaking out all over. In response to the global financial crisis, governments have thrown all their remaining ideological scruples to one side in going for great big dollops of public money, over-riding market forces, picking 'winners', and doing it 'big' rather than via the pathetic drip-feed processes we have seen over the last decade.

The race is really on. And one intriguing aspect is all about jockeying for competitive position in the multi-trillion dollar environmental industries that are materialising on the horizon.

Heading up the field is, of course, the Obama ‘big bang’. $888 billion in all, of which around $150 billion could be said be genuinely green or sustainable. Over the longer term, the US President is talking about $150 billion just for clean energy and energy efficiency over 10 years – with the "double dividend" of up to 5 million jobs. And Obama didn’t beat around the bush in getting Congress to accept all this: "We don’t want the US to lose the competitive edge that has served as a foundation for our strength and standing in the world." Not to be outdone here, Yuta Okazaki, Japan’s Environment Minister put it as follows: "If Japan does not start this kind of New Deal, we lose our chance to export our environment-friendly goods to other countries." Japan wants to see its environmental technologies sector grow to more than $1 trillion over the next five years, creating 800,000 new jobs in the process.

Elsewhere, South Korea has pledged $38 billion for new transportation and energy networks (creating one million news jobs); France and Germany are weighing in with mega-packages of their own, as are Denmark, Spain and Australia. The EU has its own programme, and the World Bank is creating a new fund of at least $10 billion. And China has ambitions to outspend the lot of them many times over.

So where does that leave the UK? Right now, it leaves us looking somewhat inadequate. In the Pre-Budget Report (when £12.5 billion was given away on VAT), Alistair Darling announced around £3 billion on 'brought-forward' investment, £500 million of which carries some kind of green tag, and about £150 million of which could be seen as new money.

The global sum the Treasury prefers to talk about is the £50 billion of net investment in the low carbon economy that was outlined in the Comprehensive Spending Review – both private and public sector spend on all sorts of things for the period of time between 2008 and 2011. Frankly, this is pretty hard to pin down and includes everything that it already happening anyway on renewable energy, energy efficiency schemes, public transport and so on. So it doesn’t really count as a stimulus package.

So the debate is joined: what should the scale of a UK green recovery package be?
Gordon Brown’s speech in Davos a couple of weeks ago mapped out the territory, but not the scale of involvement:

"So we cannot afford to relegate climate change to the international
pending tray because of our current economic difficulties. Instead, we
must use the imperative of building a low-carbon economy as a route to
creating growth and jobs, the path that will see us through the current
downturn

And already, together, we have begun the long walk down that road. In
the EU's economic recovery plan, in President Obama’s "Green Jobs"
package, in the stimulus packages of China, Japan, Australia, South
Korea, France, Germany, Spain and Denmark, and in my own
Government’s forthcoming Green Industrial Strategy, the contours of a resilient, low-carbon recovery are becoming clear."

As the Environmental Industries Commission has pointed out in its excellent paper, Peter Mandelson at BERR has got to get his head around the new competition going on out there. Our already somewhat fragile and seemingly unloved green industries could find their competitive position totally undermined as governments the world over pile in billions of dollars in good old-fashioned subsidy programmes.

Posted by Jonathon Porritt on February 20, 2009 3:21 PM | | Comments (15) | TrackBacks (0)

March 18, 2009 - Pre Budget Talk

With one month to go before the Budget, the debate is hotting up about the desirability of the Chancellor announcing some kind of “green recovery” initiative.

There are all sorts of signals coming from the Treasury that there’s nothing left in the pot – but all sorts of initiatives urging the Chancellor to seize hold of this opportunity to demonstrate that behind all this talk about a low-carbon Britain there is some real substance.

The eloquence of the talk reaches ever greater heights. Get this lot:

"This transition to low-carbon is an environmental and economic imperative. It is also inevitable. There is no high-carbon future. Low-carbon is not a sector of an economy - it is an economy."
(Lord Mandelson, BERR)

"The science says we need to cut greenhouse gas emissions by 80% to avoid the most catastrophic and irreversible effects of climate change. We’ll have 20% of current emissions, with an economy that we want to be three times bigger. It’s not just a change, it’s a transformation."
(Ed Miliband, DECC)

"We can now build a new green economy. Rise to one of the greatest peace time challenges of all, that will not only help our country prosper, but will build a better, more secure and more sustainable world."
(Prime Minister Gordon Brown)

On that basis, you’d expect something more than another dribble of stuff along the lines that we had in the 2008 Pre-Budget Report. To do that, the Chancellor has first to persuade himself that some further stimulus package is both necessary and desirable. Then he has to determine the overall scale of such a package (the eminent US economist Paul Krugman has urged all OECD countries to commit up to 4% of annual GDP – which for the UK would be around £60 billion) and then to determine what share of the total package should be devoted to "sustainability-specific" investments.

And that’s where it gets really interesting. The NGOs are getting increasingly vocal about green tokenism: if the low-carbon, sustainability elements come in at less than 10%, say, then the 90% is, almost by definition, going to be "high carbon and unsustainable". That would hardly seem to fit with the green words from the Low Carbon Industrial Summit above.

According to the new HSBC report (‘A Climate for Recovery – the colour of stimulus goes green’), the current sustainability percentage here in the UK is less than 7%. Compare that with China or South Korea.

 Country/Region Fund $b   Period Green Fund $b  % Green 
 Asia Pacific        
 Australia  26.7  2009-12  2.5  9.3%
 China  586.1  2009-10  221.3  37.8%
 India  13.7  2009    0%
 Japan  485.9  2009 -  12.4  2.6%
 South Korea  38.1  2009-12  30.7  80.5%
 Thailand  3.3  2009    0%
 Subtotal Asia Pacific  1,153.8    266.9  23.1%
 Europe        
 EU  38.8  2009-10  22.8  58.7%
 Germany  104.8  2009-10  13.8  13.2%
 France  33.7  2009-10  7.1  21.2%
 Italy  103.5  2009 -  1.3  1.3%
 Spain  14.2  2009  0.8  5.8%
 UK  30.4  2009-12  2.1  6.9%
 Other EU States  308.7  2009  6.2  2.0%
 Subtotal Europe  634.2    54.2  16.7%
Americas        
 Canada  31.8  2009-13  2.6  8.3%
 Chile  4.0  2009    0%
US EESA  185.0  10 years  18.2  9.8%
US ARRA  787.0  10 years  94.1  12.0%
Subtotal Americas  1.007.8    114.9  11.4%
 TOTAL  2,796    436  15.6%

Source: ‘A Climate for Recovery – the colour of stimulus goes green’ (HSBC, Feb09)

So if the Chancellor is going to do something in the Budget, it needs to be big. And that’s what the Sustainable Development Commission is going to be recommending in our forthcoming “Sustainable New Deal” paper.

This really is the moment. If not now (with only a year or so before the next General Election), then one really has to ask when. I’d hate to think of all those fine words just left hanging in the wind.

Posted by Jonathon Porritt on March 18, 2009 11:24 AM | | Comments (7) | TrackBacks (0)

March 31, 2009 - Prosperity Without Growth?

At last, the Sustainable Development Commission’s magnum opus has landed. Prosperity Without Growth? was launched on Monday, representing the culmination of five year’s work. Tim Jackson, our Economics Commissioner has produced an absolute ‘tour de force’. And there’s a lot riding on this for the Commission.

Way back in the mists of time, through the 70s and into the early 80s, there was an extremely lively debate about the compatibility between economic growth and big-picture resource and sustainability issues. Heavyweight economists batted academic papers back and forth; party political conferences formally debated the pros and cons of economic growth. All this was nicely stoked up by the two Opec-induced oil shocks, and even the media were all over it. Then oil prices came plunging back down, Jimmy Carter got stuffed by Ronald Reagan, and free-market fundamentalists began their long march through the knackered ranks of superannuated Keynesians.

The consequence of which has been hardly any serious discussion about economic growth and sustainability since then. Unbelievable, in retrospect, as even a fool could tell you that if you continue to grow both the number of human beings and the volume of goods and services consumed by each of those human beings, on a planet with limited resources and stressed-out life support systems, then you are heading inevitably for a bust. Sooner or later.

Politicians of all persuasions have hugely enjoyed their 20-year leave of absence. But it’s an inexcusable dereliction of duty to go on avoiding this crunch point in the light of what’s been happening over the last few years – with oil going to $147 a barrel, food reserves at their lowest level for decades, chronic water shortages the world over, accelerating climate change and so on. Paradoxically, the collapse in the global economy gives us some breathing space – but not much. If it’s back to business-as-usual, growth-at-all-costs as the sole route to progress, then biophysical reality will not long be delayed.

Politicians have got used to using one get-out clause in terms of avoiding any intellectual encounter with that crunch point: decoupling. Just decouple the benefits of economic growth from its costs (or externalities, as economists call them) through technology-driven resource efficiency, and all will be well.

If only. One of the toughest messages in "Prosperity Without Growth?" comes in Tim Jackson’s clinical critique of "the myth of decoupling". The reality is that even progress on relative decoupling (reduced environmental impact per unit of GDP) has been limited, whilst progress on absolute decoupling (reduced environmental impact, full stop - which is what we have to achieve) has been non-existent.

That isn’t to deny the critical significance of decoupling. We desperately need far more of it than anything we’ve seen so far. Which means governments have got to do it, rather than just talk about it, even as they come to the inconvenient conclusion that it won’t be enough on its own anyway.

Politicians may not want to hear these messages. But it’s our task to broadcast them much more loudly and much more clearly than we’ve done over the last 20 years. And "Prosperity Without Growth?" is what you need to make that happen.

Posted by Jonathon Porritt on March 31, 2009 1:34 PM | | Comments (30) | TrackBacks (0)

February 12, 2010 - Lesson from Kraft's Cadbury takeover

So the first blow has fallen on Cadbury’s from its new owners, Kraft.

The Keynsham plant near Bristol will close, despite the fact that Kraft promised to keep it open (that was actually a bit weird, as Cadbury itself had announced that Keynsham would be closed at some stage in the future).

And the fear, of course, as much in the mind of Peter Mandelson as in the minds of all Cadbury’s workers, is that this is just the first of many cuts that will be brought forward during the next few years.

I haven’t written about this since the takeover. Apart from the odd sardonic chuckle as the process unfolded (with that arch-globaliser Mandelson shedding a few crocodile tears at another ‘great British company’ being gobbled up by ‘predators’ like Kraft – or Warren Buffet (who owns about 9% of Kraft) complaining that it’s a really bad deal for Kraft shareholders, however good a deal it might be for Cadbury shareholders), it’s been too bloody miserable.

The optimists would have curmudgeons like me cheer up a little. They point to the pledges made by Kraft to stick by Cadbury’s ethical and Fairtrade commitments. Just before the Cadbury’s Board accepted the bid it announced that Green & Black’s would be moving its entire range to Fairtrade by the end of 2011, which elicited the following emollient words from Kraft:

“We strongly support certification as a way to improve sustainability in cocoa farming, so we welcome this step by Green & Black’s. Cadbury and Green & Black’s have proud histories in ethical sourcing, and if our offer is successful, we look forward to maintaining this heritage.”

Just so long as you ignore the unmistakable sound of grinding teeth behind the reassuring words, perhaps that really is something to be optimistic about.

But it is still a wretched outcome. And surely a complete failure on the part of Cadbury’s shareholders to tell the difference between ‘a good price’ and ‘lasting value’.

Roger Carr, who has just stepped down as Chairman from Cadbury, having felt ‘obliged’ to recommend to shareholders the offer of £11.7 billion (up from the opening bid of £9.8 billion in September last year) has now weighed in with some ‘radical ideas’ to ensure that something similar doesn’t happen again. He has suggested raising the ‘victory margin’ from 50% plus one share to 60% plus one share, and that simultaneously there should be a rule that those who bought shares during the course of any takeover battle would not be permitted to vote until the battle was over.

Useful ideas. But the lack of any genuinely radical ideas during the takeover battle was very noticeable. “This is just the way it is with markets”, as one commentator put it. Indeed! Which is why we go through the same nightmarish process with every single takeover proposal.

Why don’t we, for instance, have more John Lewis look-a-likes in the UK? The John Lewis Partnership is hugely admired even by people in the City – even if they don’t really approve of its ‘bizarre’ employee benefit Trust. But this example has been followed by very few companies over the years. As is the case with Scott Bader (a successful chemicals company), and Tullis Russell (a successful paper company in Scotland).

But there is still Royal Mail, which currently has only one shareholder (the Government), which would make it easier to think of some kind of employee ownership basis. Allan Leighton, Royal Mail’s Chairman, has indeed hinted at the possibility of some kind of employee share-ownership.

The interesting thing is that employee-owned companies regularly outperform those in the FTSE All-Share Index. Over the last 17 years, employee-owned companies have outperformed FTSE All-Share companies each year by an average of 10%. In the third quarter of 2009, for instance, employee-owned companies’ share prices were up 27.6% compared to FTSE All-Share companies share prices, which were up 21.3% over the quarter.

But we are still so stuck in our wretchedly unsustainable ways when it comes to ownership structures within the capitalist economy.

Posted by Jonathon Porritt on February 12, 2010 12:44 PM | | Comments (3) | TrackBacks (0)

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