UN calls for sustainable measure of GDP

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UN calls on governments and business to factor environment into measures of growth, and to end fossil fuel subsidies

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A new report released by the United Nations calls on world governments to change the way they do business, end fossil fuel subsidies and factor in social and environmental costs into the measurement of economic activity. It notes that the standard method of calculating economic growth through measures such as GDP ignores the impacts on the planet and food and water resources.

The report – Resilient People, Resilient Planet: a Future Worth Choosing – was produced by a groups comprising 22 global leaders, including Foreign Affairs Minister Kevin Rudd, and is one of the key documents leading towards the Rio +20 summit to be held in June. “We need to chart a new, more sustainable course for the future, one that strengthens equality and economic growth while protecting our planet,” UN secretary general Ban Ki-moon said. He added that sustainability would be one of his highest priorities for his second term of office.

“We undertook this report during a period of global volatility and uncertainty,” the report says.”Economies are teetering. Inequality is growing. And global temperatures continue to rise. We are testing the capacity of the planet to sustain us. We need to change dramatically, beginning with how we think about our relationship to each other, to future generations, and to the ecosystems that support us”.

The report includes 56 recommendations that could have profound implications for governments, business and societies. These include a call for governments to build the true environmental costs of products into the prices that people pay to purchase them, which in turn would lead to an economic system that protects natural resources. “Based on the science, we need to reach consensus, over time, on methodologies to price them properly. Costing environmental externalities could open new opportunities for green growth and green jobs,” the report says.

Goods would be labelled with information on their environmental impact, enabling consumers to make more informed purchasing decisions. Governments would adopt indicators of economic performance that go beyond simple GDP, and would change the regulation of financial markets to promote longer-term, more stable and sustainable investment.

The report also calls for subsidies that damage environmental integrity would be phased out by 2020, including “perverse or trade distorting” subsidies on fossil fuels. The UN has estimated that governments spend more than $400 billion each year subsidising fossil fuels, nearly 8 times the subsidies for renewable energy, and OECD countries alone spend nearly the same amount on agricultural subsidies. The UN is also pushing for new targets to ensure universal access to affordable sustainable energy by 2030, and says  universal telecommunications and broadband access should arrive by 2025. These and other targets should be incorporated into a new set of Sustainable Development Goals (SDGs), to be drawn up in the next few years, the panel says.

The report applauds the example of Norway, whose ministry of finance is responsible for co-ordinating work on a national strategy covering the economic, environmental and social dimensions of sustainable development, and has integrated sustainable development into the annual budget. It said Norway has developed 18 indicators that have become increasingly important in monitoring the extent to which the country’s activities are consistent with sustainable development targets.

However, some NGO’s dismissed the recommendations as weak and vague. “There is nothing in the report on how to finance the recommendations,” Oxfam’s Sarah Best told the BBC. “For instance, through a levy on international shipping and aviation, or a financial transaction tax – which has been backed by the UN panel on climate finance.”

The panel’s findings come 25 years after Gro Harlem Brundtland, the former prime minister of Norway, produced a landmark eponymous report that defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. “Since then, the world has gained a deeper understanding of the interconnected challenges we face and the fact that sustainable development provides the best opportunity for people to choose their future,” says the report. “This makes ours a propitious moment in history to make the right choices and move towards sustainable development in earnest.”

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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1 Comment
  1. D. John Hunwick 7 years ago

    Reshaping the GDP so that it includes “sustainability” is perhaps the greatest and most necesssary reform of the moment. Without a proper, environmental and social measure of the ipact we have on our surroundings we are actually living ‘blind’ – we have no authentic feedback on what our actions are really doing. Exhortation, education and laws will have only minor impact on our daily choices, but when the “cost” of our purchases more nearly reflect the true cost, then and only then will ijmmediate, measurable and significant change for the better take place.

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