Green foundations - a healthy environment for growth and jobs

by Adrian Wilkes, Chair, The Aldersgate Group

Has the farsighted, and potentially revolutionary, analysis of The Stern Report on Climate Change, radically refocused the “Environment v Competitiveness” debate that has been raging for years in Whitehall and Brussels so that now politicians and business finally recognise that environmental protection is fundamentally in our economic interest?

For decades most of British industry has lobbied politicians with scare stories about the high costs of UK and EU environmental policies forcing companies to relocate abroad.

To rebalance the debate, The Environmental Industries Commission (EIC) has led the creation of a new coalition, The Aldersgate Group, which has been launched to prove that high environmental standards are a fundamental part of long-term economic competitiveness in the 21st Century as well as to a high quality of life.

« high environmental standards are a fundamental part of long-term economic competitiveness in the 21st Century »

The Group, which brings together a broad range of players, including industry, environmental agencies, NGOs, and think tanks, believes that the world has now entered an era where continued economic growth depends more and more on the efficient use of increasingly scarce resources, and on the continued ability of the biosphere to deal with the pollution we create.

Increasing globalisation has led to demands that the burdens imposed on business by government regulations need to be reduced to ensure a level playing field with rising competitors in Asia and the Far East. Environmental regulations set at both UK and EU levels have been a particular target.

Nobody would argue against striving for ‘better regulation’ if this means regulation that is well-designed, uses appropriate policy instruments, and meets its essential objectives at least cost to industry and the public purse. But, and it’s a BIG but, demands for better regulation are often actually aimed at reducing environmental standards themselves, on the spurious grounds that they are the enemy of competitiveness.

Yet no economic policy which sacrifices environmental quality can succeed in the long term. “Smarter regulation” must be employed instead to help manage the transition to a more eco-efficient economy in the UK and beyond.

The Aldersgate Group’s first initiative was to publish an independent examination of our five main arguments. “Green Foundations: Better regulation and a healthy environment for growth and jobs”.

« a healthy environment and the sustainable use of natural resources are at the very core of long-term economic sustainability »

First, the report showed how a healthy environment and the sustainable use of natural resources are at the very core of long-term economic sustainability. Rapid economic growth has brought the world’s economy up against global ecological constraints, such as energy shortages, climate impacts and threats to biodiversity.

According to WWF, in 2001 the resources we currently use in the UK for the production of goods and services – our ‘ecological footprint’ – were far in excess of our own physical capacity to provide them. If this level of consumption were matched worldwide, we would need the resources of two planets to meet our demands – and three at the rate of US consumption. We are spending nature’s capital faster than it is being regenerated. Selling the family silver in this way cannot continue indefinitely.

To reduce this to plain self-interest, in a world of rising energy costs and increasingly scarce raw materials, our international economic standing will, in future, depend on maximising resource efficiency just as much as on boosting labour productivity. Increasingly, improved environmental performance will need to go hand in hand with improved economic performance.

Second, the report highlighted, yet again, that at the company level, good environmental performance and efficient resource use make good business sense. Research has, for example, identified that in the UK £4-5 billion savings could be made in annual operating costs through waste minimisation and energy efficiency.

Third, the report showed how environmental regulation presents business and employment opportunities, not just in the high-growth environment sector, but in other sectors too. A point that EIC has been making to policymakers for years.

The UK’s environmental sector had a turnover of £25 billion in 2004 and employed about 400,000 people. Worldwide, it is already a US$515 billion market and could be worth almost US$700 billion by 2010 – as big as the successful aerospace or pharmaceuticals sectors.

As Gordon Brown recently told the United Nations, “The environment can itself become a driver of future economic growth…Perhaps the most promising development is that new jobs, new industries and new exports come”.

« Government policy appraisals ... often fail to be balanced and objective »

Fourth, the Aldersgate Group’s report shows how Government policy appraisals and regulatory impact assessments often fail to be balanced and objective. Intelligent, evidence-based policy needs neither to undervalue the benefits nor overplay the costs of regulations.

Yet, as EIC has pointed out repeatedly, impact assessments have tended to focus on a limited range of economic impacts – mainly short-term costs to industry – while ignoring the economic benefits that can be derived from setting high environmental standards: the boost to the UK’s environmental industry; savings to the NHS; and reduced damage to economically important ecosystems, agriculture, forestry and buildings.

Fifth, and finally, the Group argues that better regulation means having a regulatory environment which is proportionate, accountable, consistent, transparent, targeted, efficient and effective. It should aim to deliver high environmental standards providing the maximum stimulus to innovation and the creation of business opportunities, while minimising the administrative burdens of complying with them.

At the EU level, Environment Commissioner Stavros Dimas argues that, "Growth that ignores environmental considerations will clearly not be sustainable". The Aldersgate Group’s mission is to ensure that this fundamental fact is firmly reflected in the policy decisions taken by all government departments in the UK and in the EU.

And perhaps it is a message that British industry is waking up to. The CBI’s Climate Change Task Force has just produced a revolutionary report calling on the Government to act urgently on climate change. A similar call went out from the CEOs of the world’s largest 150 companies. These new calls from business present policymakers with an historic opportunity to act ... and act swiftly.

For further information please visit www.aldersgategroup.org.uk or www.eic-uk.co.uk

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