Rio+20 draft offers ‘bare bones’ of green growth manifesto – HSBC

Rio+20 draft offers ‘bare bones’ of green growth manifesto – HSBC

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This year’s landmark Rio+20 conference could help underpin investor confidence in a shift to a more sustainable global economy – if elements in the recently released ‘draft outcome’ are developed, according to HSBC.


“The text is a mixed bag containing the hopeful, the vague, and the promising. Governments are ‘urged’ and ‘encouraged’ to do things that should have been implemented years ago,” write analysts in the bank’s climate change centre. “But it also contains the bare bones of a package that could promote green growth as a core economic strategy.

“Central to this is whether Rio can convince investors that aligning asset allocation with the green economy will provide superior risk-adjusted returns to ‘business as usual’.”

Rio de Janeiro
Rio+20: the place to frame the Sustainable Development Goals? (Photocredit)

The conference, to take place in Rio de Janeiro in June, does not aim to produce ‘hard law’ agreements, unlike the original Earth Summit in 1992, which spawned among other things the UN Framework Convention on Climate Change.

Instead, the core of the draft outcome is a proposal to agree by 2015 a set of Sustainable Development Goals (SDGs), similar to the Millennium Development Goals.

“The risk is that this could be an unwieldy shopping list; the potential is that it could provide a dashboard of critical changes that governments are committed to make through to 2030 and beyond, giving institutions crucial guiderails for investment,” HSBC says.

The draft outcomes suggest ensuring universal access to energy, double the rate of energy efficiency improvement and double the share of renewable energy. “Experience with climate policy has taught us the hard lesson that targets are only useful if baselines are robust, scope is clear, and loopholes are closed,” the analysts say.

“Beyond energy, the SDGs will need to incorporate real targets for other critical areas of ‘natural capital’ such as food, forests and soils, as well as oceans and freshwater,” HSBC says.

It also suggests that government negotiators should flesh out two other proposals – the development of “green economy roadmaps” by global industry sectors, which “could provide a starting point for long-term investor engagement and benchmarking”, say the analysts. The second is the establishment of a 10-year “framework on sustainable consumption”.

HSBC argues that the draft is “currently weak” in terms of encouraging governments to embrace “positive incentives” such as environmental pricing and taxation. “This could prove a missed opportunity as revenues can be useful in terms of cutting labour taxes and/or fiscal deficits particularly at a time of weak economic growth,” they say, noting California’s recent announcement that it will direct $500 million in carbon allowance revenues next year towards deficit reduction.

Finally, the bank analysts note that the Rio+20 negotiations will discuss upgrading UN bodies to provide some oversight of the policies. “Here, the critical point is to focus on content and competence and not mere name changes,” they say.

They also call for more attention to be paid to ‘keeping score’ – “to provide investors with timely information on the links between sustainability and economic performance at the micro- and macro-levels”.

“The zero draft does recognise the limits to current measures of GDP, but there is a lack of urgency to develop solutions to the current invisibility of natural capital in standard growth models,” they say. “More promising is the inclusion of the need to develop a global policy framework for ‘all listed and large private companies’ to integrate sustainability within the reporting cycle.”

Mark Nicholls 


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