The publication of two reports in September has reminded us just how unsustainable global economic growth remains. But, despite the gloom, both reports pre-empt a mood, especially among business, that the challenges of resource depletion and climate change can only be met by renewed cooperation between state and market in ways that go beyond just taxation and redistribution. The first report was the Intergovernmental Panel on Climate Change’s latest assessment – which put the likelihood of human activity having affected the climate at 95 per cent certain. The second was the triennial study of the views of 1000 global CEOs towards sustainable development, compiled by the UN Global Compact and Accenture. Its findings in particular invite a response from social democrats.
Earlier in the year, Michael Jacobs, an academic and former special adviser to Gordon Brown, set out a vision for a green social democracy. Jacobs argues that social democracy thrives when it focuses on ‘saving capitalism from itself’. Faced now with a decade of commodity price inflation that has wiped out a century of gradual price decreases, Jacobs argues – quoting the investor Jeremy Grantham – that businesses know that they face a ‘great paradigm shift’ and need to join forces with governments to adapt to it, exactly as many did in the three post-war decades in Western Europe. Importantly, though, businesses don’t want government to hamper their ability to innovate; they think they are well placed to offer the innovation crises demand but, crucially, in concordance with clear, socially determined goals.
What is striking about the UNGC study is that CEOs appear to agree wholeheartedly with Jacobs. A huge 83 per cent of them agree that ‘an increase in efforts by governments and policymakers to provide an enabling environment for the private sector [is] integral to advancing sustainable development’. That’s up from the 60 per cent of CEOs in 2010 (still a large majority) who said they would ‘welcome increased government intervention to drive sustainability’. In 2013, 84 per cent of CEOs agree that ‘binding global agreements and international regulations on climate change would help them to accelerate their efforts’. That’s significant. But, of course, it’s not wholly simple. When it comes to outright support for taxation to ‘price in externalities’ only 31 per cent agree that governments should extend their reach and, somewhat inscrutably given their support for a binding global deal, only 15 per cent of CEOs back ‘trading schemes and markets’ as effective policy tools – the lowest of any option presented.
So, what does this add to the Jacobs thesis?
I think an answer could lie in a recent Policy Network paper, Making Markets Work by Thomas Aubrey, he argues that social democrats go wrong when they see taxation and redistribution as the only answers to market failures, rather than correcting the particular features of individual markets that are causing the failures. Aubrey doesn’t address sustainable development (sadly) but the CEOs could provide a few clues. They cite a lack of investor pressure as one of the major barriers to progress. Is this the crux of the issue? Work on ‘the carbon bubble’ suggests that (most) investors simply don’t take seriously the prospect of a binding global deal on carbon emissions. But they do recognise that even if burning carbon had no effect on the climate, there would still be a huge ‘market failure’ in the depletion of raw materials and an opportunity in adjusting to higher prices.
Raising investment is where the opportunity lies. The £60bn of low-carbon projects listed in the Treasury’s infrastructure pipeline for the next two years could add 0.7 per cent to GDP alone by 2015, if investors backed them, according to the thinktank Green Alliance. The UK’s low-carbon sector is growing at four per cent. The Climate Change Act, carbon budgets and the idea for a Green Investment Bank are all Labour policies that we must deepen nationally and widen internationally. While the world still works towards a global emissions deal, investors and policy-makers want a model of truly sustainable growth – Britain could be just that.
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Edward Robinson is an environment and communications consultant. He provides communications consultancy for Accenture Sustainability Services and was part of the team that launched the UNGC CEO study at the UN Leaders Summit in New York
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