Rio+20: It’s the green economy, stupid

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Negotiators have started the final talks before the full UN Conference on Sustainable Development in Rio de Janeiro (20-22 June). As we highlighted at the beginning of the year, the event could provide a useful underpinning for shifting capital in favour of green growth. But to do this, governments will need to deliver a set of robust ‘investment-grade’ outcomes that make sustainability pay (see Delivering an investment-grade outcome at Rio+20, 19 January 2012). What began as a mixed bag of proposals has, however, ballooned into a baggy and fractious document that mostly ‘reaffirms’ past commitments and ‘acknowledges’ problems, but marks precious little forward movement. The age-old splits between industrialised and developing countries are well-rehearsed – with some of the more promising ideas risking getting watered down or omitted entirely.

Many factors might explain this uninspiring prospect (see Table 1). First, UN summits rarely produce breakthroughs – so expecting a transformational outcome is perhaps unwise. Second, the economic backdrop does not encourage long-term thinking. But the 1992 Summit also took place in a downturn – with a global GDP growth rate of 2.1%, the same as our HSBC economists forecast for 2012. Third, we’re in a US election year, which could militate against financial or regulatory commitments by the world’s largest economy. But 1992 was an election year also – and that did not stop the Bush Administration signing the new climate and biodiversity conventions. Fourth, and more revealingly, there is a distinct slackening of public pressure (see Chart 1). And finally, this year’s event lacks a focus on hard outcomes. Paradoxically, this may be a sign that sustainability is becoming a routine issue. But, as we show in Charts 2-13, what progress has been made over the past 20 years has generally been overwhelmed by growing pressure on global ecosystems. Rio+20 can still make a mark – and we highlight four priorities: SDGs, perverse subsidies, natural capital and corporate reporting (Table 2).

Taking stock of (the lack of) progress since 1992

Charts 2 – 13 indicate progress in key areas since 1992. Improvements have been achieved in access to water and sanitation, but with 20 per cent of the rural population without access to clean water needs qualification, there is more to do. Similarly, while sanitation levels have improved, universal access is a way off. As well as the humanitarian angle, a recent study by Frontier Economics demonstrated that the economic benefit of sanitation investment was in the region of USD5 for every dollar spent, because of improvements in health resulting in higher levels of education and productivity. In addition, poverty alleviation has been a relative success story, with the Millennium Development Goal of halving the people living in extreme poverty (<USD 1/day) reached in 2008 (Chart 5). However, there is still more to do.

The rate of deforestation has slowed as shown in charts 6 and 7. Globally, deforestation slowed from a -0.2% reduction in forest area from 1990-2008 to an annual rate of -0.13% from 2000-2010. Despite the improvements however, 52mn hectares of forest area were deforested from 2000 to 2010, an area almost

There is lack of progress on pollution control and ecosystem depletion. Chart 9 shows that while renewables deployment has increased, fossil fuel as a share of energy has been stable at around 80% of use in the past 20 years, which means that emissions continue to rise (Chart 10). Global emissions increased by 3.2% in 2011 compared with global economic growth of 2.5%.

Non-fossil-fuel emissions are also increasing, some paradoxically as a result of the effectiveness of the Montreal Protocol on eliminating ozone depleting gases. Reduction in the primary ozone-depleting substances has led to a substitution to the use of other gases such as HFC’s. While some HCFCs are covered by the Montreal protocol, other HFC’s are non-ozone depleting but have higher global warming potential than other greenhouse gases, and their global concentrations have increased.

Nick Robins is a senior climate change analyst at HSBC. This report is HSBC’s latest Global Research report on Climate Change. Reproduced with permission.


  • I doubt very much that we shall ever get a ‘green’ economy due to the adopted economic systems that mankind has adopted. For over the last 300 years we have built a false and unsustainable world for humanity. Indeed we now live in an artificial world order that can never survive and eventually humankind will cease to live as an intelligent species. Since the term MAD (Mutual Assured Destruction) was expressed, our world has been living on borrowed time. Indeed the world is now more than ever dividing itself on the altar of nationalism and self-interest. I give no more than five years for the EC to break up and nations in the West to go their own way. But I also see on the other side of the coin, as Europe and the West disintegrate, that the East and nations like Russia will come ever closer together. This will create a formidable economic block and where a weakened western civilization will be more prone in the future to lead to conflict. This is not based upon unsound expectations, but the sheer fact that the world’s economic power is transferring eastward and that we shall have around 10 billion humans by 2050, all struggling for natural resources to preserve their way of life. History shows that global wars are economic and this will not change in the future. Increasingly what is deteriorating constantly between western nations is communication, cooperation and collaboration but where due to these facts, we should be coming closer together to preserve our planet. Indeed the latest Rio+ 20 Conference decisions by the world’s nations (decisions predominantly made by the richest nations as they own the UN to all intents and purposes) will simply be another nail in the coffin of human sustainability and existence, as nations dilute what was already agreed in 1992.

    Pointers to why Rio+20 will fail is because big business will not want to deviate from a global strategy that puts great wealth into the hands of the few (shareholders and main board directors) and poverty into the hands of over 60% of the world’s population.

    For no longer can we sustain ourselves with the prophesy of wealth for all through globalization and capitalist economics. How this has now been shown to be a sham for over 90% of the seven billion human inhabitants living on planet Earth. Therefore considering where we are heading and the dire consequences for humanity we simply have to start working as one planet as Einstein and others determined, but where our political masters took no heed before. It is also becoming very clear that the price of our present economic systems will eventually be the extinction of the human experience. Are we therefore really as intelligent as we think?

    Dr David Hill
    Chief Executive
    World Innovation Foundation