J. William Futrell
President and Chief Executive Officer
Environmental Law Institute
Washington, U.S.A.
Thank you Ambassador Hussain and friends of the Rajiv Gandhi Foundation for your invitation and warm welcome. My wife and I have enjoyed this return visit to India and been greatly impressed by the energy and vision of the judges and lawyers we have worked with during the last weeks. India is forging a pioneering path on the way to sustainable development. I believe there is important work for citizens of our two countries to do together, and I hope this meeting today is the beginning of a productive dialogue.
Ambassador Hussain s remarks on environmental economics, the role of NGOs, and the work of the courts in India were illuminating. He is certainly correct that both our countries have much to do in dealing with current market failures in our pollution control programmes. Until we get the price of environmental goods and services right, the law will be only a stopgap tool for cleanup. I would like to address my remarks to the interaction of NGOs and lawyers in the United States in working together to strengthen both the U.S. economy and the environment.
Environmentalists and business leaders in the United States are engaged in discussions to find areas in which they can cooperate on a common agenda to improve both the United States economy and the environment. Environmental lawyers in the United States began lobbying Congress to improve pollution control laws and then turned to the courts to see that these laws were enforced. Twenty-five years ago, in the early days of environmental law in the United States, corporations were seen as adversaries of environmental groups. While a great deal of effort is still needed to monitor and challenge some mistaken industry practices, environmentalists now are learning to work with business and present the case for sustainable development principles for private sector decision making.
One of four major areas of discussion concerns environmental management systems in the global marketplace. Environmental leaders ask the following questions: How can a sustainable development ethic be established internationally ? How can industry - both United States industry investing overseas and local small companies in third world countries - be encouraged to take the long range approach needed to protect environmental health and encourage sustainability ? As overseas investment decisions are weighed, how does management factor in consideration of sustainable development ?
In this talk, I will discuss: 1) the context of the new global marketplace, 2) the challenge of designing a sustainable corporation in a sustainable society, and 3) cooperation between business and environmental citizen organisations to work for sustainable development. I will be interested in learning your views on the possibility of a joint agenda between environmentalists and industry leaders, and your views on what the next steps should be.
Local economies and individual lives are being transformed by the continuing trend to a global market place. This movement will impact the jobs, workplace safety, and environment of people as far distant as Boston and Bangalore. American business is already being radically reorganised as many companies downsize and outplace work once done inside. In the new arrangement, suppliers are as likely to come from Mexico and Thailand as from Minnesota or Texas.
The emergence of global markets is leading to the creation of global environmental management strategies for multinational corporations. We should play close attention to the role of the multinational corporation in assisting the transition to sustainable development.
Three interrelated contemporary developments are essentially important.
i). The United Nations Conference on Environment and Development has advanced stronger Environmental Law in countries around the world.
ii). The movement for free trade, both at the regional level in agreements, such as North America Free Trade Agreement (NAFTA), and globally in the World Trade Organisation (WTO), encourages the closure integration and harmonisation of health and environmental practices in different countries.
iii). Private sector efforts to harmonise environmental standards are key to achieving better environmental management overseas, especially in countries with developing and still weak environmental law system.
1. The United Nations Conference on Environment and Development (UNCED)
Five years ago, more than one hundred heads of State met at the Earth Summit at Rio to discuss how to create a programme that leads to both economic development and increase environmental protection. At the United Nations Conference on Habitat in 1974, Indira Gandhi challenged western thinking with the then startling proposition that poverty is the greatest cause of pollution. Many countries reinforced her claim and people came to recognise poverty as the greatest cause of pollution. For instance, forests are being stripped away for firewood and irreplaceable soil is eroding because these countries lack a cheap energy supply. The Rio Earth Summit was validation of Prime Minister Gandhi s view. The nations of the North - the United States and Europe - now have joined in affirming a new paradigm - sustainable development that embraces her vision.
UNCED closed with substantial achievements: delegates signed treaties in global warming and biodiversity; passed Agenda 21, and ambitious outline of the international environmental law of the future; created new institutions; and established major new funding sources.
UNCED is important because the two years of preparatory meeting gave content to the term sustainable development to Europeans and North Americans, UNCED was a conference about environmental protection; to people from lesser developing countries, it was a conference on speeding up development. The term implies an acknowledgement of the idea that more development is needed to achieve more environmental protection.
The United Nations Conference on Environment and Development marked the transition from an older economic order to a new international law that meshes environmental policy and industrial policy. Since the Earth Summit in Rio in 1992, there has been a dramatic increase in national commitment to improve environmental performance and strengthen environmental enforcement. Long range planning for business now has to take into account a changed sensitivity in nation all around the globe. Expectations have changed.
2. Trade and the Environment
Simultaneously with, and independently, of the United Nations process, regional trade agreements are pushing us towards a new environmental law. Trade and environmental concerns have combined to create a new priority item on the public policy agenda. Speaking from personal experience, we have observed this in the western hemisphere. The North American Free Trade Agreement (NAFTA), which seeks to create a North American common market, has significant environmental implications. Indeed, the primary opposition to NAFTA came from environmental critics who feared that the new common market would create pollution havens in Mexico and from labour leaders who feared loss of American jobs. These fears have not come true. NAFTA has very important environmental coordinations principles that should serve as a model for future trade agreements.
The recent experience of the United States in its negotiations with Mexico suggests that trade is perhaps an even more effective tool than aid in moving a country towards implementation of the environmental goals expressed in Agenda 21. Mexico spends only 0.1 percent of its GNP on environmental regulation as opposed to 1.5 percent by the U.S. What will lead Mexico to raise its environmental standard? Events of the last two years suggest that raised environmental standards are linked to raised economic standards.
Mexican leaders believe that internationalisation - free trade - will strengthen Mexican environmental protection efforts. This situation presents foreign investors and decision-makers with a historic opportunity to promote implementation of Agenda 21 goals. They can advance or delay progress toward sustainable development. Under current conditions, they can avoid strict environmental controls; however, the better course will be to voluntarily raise environmental performance standards in Mexico to U.S. goals.
The decision facing investors and business managers in the United States/Mexico context are similar to those in other countries. Managers in the global market place are forging new codes of practice that will determine how fast or how slow the pace of sustainable development will occur. They are vital decision-makers on matters involving transfer of technology as well as training and capacity building.
3. Voluntary Standards
Business lawyers should press for private sector leadership in achieving Agenda 21 goals at the local level. They should help craft protective environmental law. Companies looking at foreign investment need an environmental legal structure in place that offers clear expectations. The absence of environmental law is a barrier to investment. Companies want certainty, clarity, accessibility and predictable enforcement.
Many U.S. multinationals have extended their environmentalmanagement programme in the U.S. to overseas operations in the belief that it does not pay to make a significant distinction between standards for factories at home and those overseas. In fact, some European countries demand more in reductions than some U.S. states. In South America and Asia, laws and regulations are rapidly changing, tracking environmental practices in Europe, Japan, and the U.S.
A variety of forces will cause companies to harmonise domestic and overseas environmental management programmes. The reaction to the Bhopal disaster is often mentioned, but there are other pressing factors. Managers perceive a post-Earth Day sensibility which will demand green marketing from companies. There is a groundswell of support for environmental equivalency policies worldwide both from shareholders and from employees.
Another factor for harmonisation is anticipation of a huge environmental service industry. If environmental services can be standardised they should be much cheaper. These factors converge to demand greater harmonisation. The corporation that seeks to compete in this new global climate will devise international corporate strategies. Environmental planning will be part of the company s strategic plans. A recurring theme is the desire to get ahead of the curve of regulation. After the fact compliance inevitably seems to be linked with the greater expense involved in retrofitting plants.
The international standard setting process is a key element in this evolution. Since 1951, the International Organisation for Standardisation (ISO) a federation of national standard setting organisations has organised industry committees to draft technical and safety standards on millions of products, ranging from film speed and paper thickness to computer protocols. The aim is to insure that suppliers in one part of the world can meet the quality control standards in other countries. Companies routinely rely on the ISO standards which govern quality performance, and not conformance to government regulations. In developing countries, access to international markets is an incentive for voluntary compliance with international standards. We see this from our experience in working in Latin America.
The ISO has now launched ISO 14000, which seeks harmonisation in the areas of environmental management, auditing performance evaluation, labelling, and life cycle analysis. This effort is of keen interest to companies operating overseas because the future standards may substitute for emerging national and regional differences in environmental laws. ISO is expected to set the international standard.
In the long run, the harmonisation movement can offer business leaders and environmentalists a win/win situation. In the near term, however, both groups must consider basic questions: how to achieve harmonisation without (i) lowering standards in more developed countries and (ii) forcing developing countries to comply with standards that don t reflect their economic, ecological, or political reality? What will be the bench marks to monitor whether harmonisation is bringing trade and environmental advantages ? Specifically, will common environmental requirements ease market access for businesses, thereby facilitating competition and lowering prices for consumers ? How can common standards result in environmental benefits ? Can common standards facilitate enforcement of environmental requirements by simplifying the administration of the rules and facilitating enforcement of the laws and regulations ?
The pace of change in this area is rapid and dynamic. Business leaders who are not paying attention to the rapidly escalating demands for improved environmental performance are risking their business.
When we talk with business leaders about priorities for their company, corporate survival leads the list and is not taken for granted. Since, I graduated from college in 1957, half of the Fortune 500 companies (the 500 largest industrial companies in the U.S.) listed in the 1957 Fortune Magazine have gone out of business. More will do so in the years to come because many American business will not be able to adapt. The roll call of the deceased is sobering: Gulf Oil, Eastern Airlines as well as many lesser known companies.
We ask students in the business schools : Will the companies that you deal with now be suitable companies ? Will your schools and companies have the staying power in the next 20 years that they have had during our lifetime ? The determining factor may well be whether it is a company that contributes to the sustainability of the society it serves - whether it will be a sustainable corporation in a sustainable society, a corporation that realizes that the long-range health of the ecosystem is critical to the long-range health of the company.
The challenge for environmental performance will be a continuing, unchanging challenge for the private sector. The institutions that do not rise to this challenge will not be here 25 years hence, Environmental planning will be part of the company s strategic plan.
But this is more than just improving the balance sheet and showing a greater profit or staying out of trouble with regulatory agencies. Sustainable businesses, businesses that set the record for environmental performance, such as the Coca-Cola Company, are organisations staffed by men and women who take pride in their company. They want that company to be a good citizen and perceived as a leader.
The environmental movement is a wake-up call for business. Instead of seeing environmental advocates as a threat, business leaders should recognise them as messengers who seek help to join in the effort to create a sustainable environment.
Business leaders should be interested in the activities of environmental organisations in developing economies because environmental NGOs are lively conduit of ideas and can be strong advocates of a more open society that offers transparency and access to government that both business leaders and environmentalists desire. They can be allies in the push for meaningful free trade agreements. The environmental movement is a world-wide force, and the company that aims to be a sustainable business will work in tandem with it.
Business leaders and environmental groups should work to create a common agenda to assist sustainable development. This will call for a greater degree of outreach on the part of both communities. Attitudes in the United States have changed dramatically over the last 25 years of environmental law. In the 1970s, industry/environment cooperation was not seen as a possibility. During the 1970s, I served as President of the Sierra Club, which was engaged in an active programme of litigation. These were years of necessary confrontation when environmental law was an infant. Environmentalists used the courts to halt highway construction, stop timber sales, and begin criminal proceedings that resulted in jail terms. These confrontational tactics are still needed with some companies who scoff at the law. However, a significant portion of the business community seeks to be environmental leaders. This change came about because of enlightened business leaders who realised that environmental leadership is the right thing to do, and because the public now demands it. On the environmentalists side, the bridge-building consensus seeking work of William Reilly, later Administrator of EPA from 1989 to 1993, changed the Conservation Foundation from a think tank to an active builder of consensus. Slowly, one by one, U.S. environmental organisations began to find instances in which they found common cause withbusiness. By the early 1990s, there was wide interest in both communities in seeking ways to meet together and to avoid wasteful confrontation and, where possible, to establish a common agenda.
The Environmental Law Institute (ELI) is dedicated to advancing environmental protection by improving law, management, and policy. The Institute furthers that purpose through an interdisciplinary programme of research, advice on strategic planning, publishing, and training. More than 50,000 attorneys and managers have attended our courses. Currently, approximately half our training work is outside the United States, and we are deeply involved in devising environmental strategies in Latin America and Eastern Europe. Close to a third of our work focuses on comparative management systems outside the United States.
When I came to ELI in 1980 and started our Corporate Associate Program, our initial efforts were met with suspicion. But a number of open-minded companies helped make our environmental management programme a reality. As Bud Scott, Vice President of Union Oil once told me, no one is better at discovering the problem than an environmentalists. Industry needs to put its engineers and resources into solving the problem.
ELI has vital Associates Program that enrolls more than 100 corporations and another 100 smaller firms in a unique cooperative efforts between NGOs and businesses that are seeking to improve the their environmental performance. Corporate managers know just how difficult it is to get good information in the highly charged environmental field. These corporate managers participate in the Institutes work, not because of sentimentality, but because they value the information they can find from ELI.
The most valued asset an environmental NGO has is credibility. ELI publications are thorough and utterly reliable. The environmental NGO which places a premium on accuracy and is true to its membership will find its influence magnified beyond early expectations as government officials and industry leaders turn to it for solid reporting on the views of its constituents. The NGO often possesses the crucial resource in a society: morale. The scarcest resource is the vital human spirit. The NGO that dares speak truth to power is often the voice of the best people in a society - people that are necessary for the transition to a sustainable society.
When business leaders and NGOs do consult together, as they have been doing in the United States and Latin America as part of the free trade process initiated in 1990, they find a common agenda in encouraging more government transparency, in building human capacity, and in encouraging technology transfer.
A Common Agenda : Capacity Building and Green Technology Transfer
Even the best-designed statutory or regulatory framework for environmental protection cannot be effective unless it is implemented by dedicated, talented and well-informed people. Ultimately, the achievement of sustainable development will require not just good laws, but an abundance of human capital.
This includes expert, dedicated officials in regulatory agencies, an informed environmental press, a new generation of environmental managers. This need presents market opportunities in which environmental and trade forces act in synergy. The call for sustainable development sounded at Rio includes a call for the spread of green technology. One of the most useful things governments can do is to position themselves to encourage private sector (academic, nonprofit and business) initiatives. If green technology efforts become truly dynamic, most of the action will be in the private sector. The bottleneck to more effective technology transfer is not at the level of international institutions, but at that of national governments. Environmentalists and business leaders should link forces to alleviate these bottlenecks.
In order to promote technology transfer, national governments should :
i. Promote the rule of law guaranteeing intellectual property rights such as patents and copyrights, and provide a stable, reliable climate for technological advancement that encourage technology entrepreneurs;
ii. Sponsor technology aid and technology forcing programmes in their own activities including government contracting; and
iii. Encourage people - to - people exchanges and training without which technology transfer will not work.
In themselves, high Tech laboratories, liberal patent rights, and multiple assistance grants are not enough to foster the collaborative effort necessary to implement effective technology transfer. Available information about technology must be made user friendly for each society. This requires changes in institutions and investment in training and support for people. That requires not only training in new technologies but training for the new social arrangements that make the technological innovations useful.
In Latin America, ELI has an ambitious training programme. In Brazil alone, more than 800 attorneys cooperate in the Brazilian Environmental Law Institute. Our efforts include NGOs as well as enforcement officials and environmental managers because citizen groups are major players in capacity building. ELI always works with partners in a country. This work outside of the United States has strengthened our view that cooperation and dialogue offer productive results in Latin America as well as the United States. I now look forward to hearing your views on whether such an agenda for cooperation is timely in India now.
Making sustainable development work will turn on private sector initiatives. It will require finding practical ways to reach across national boundaries to forge new partnerships between government, industry, and environmentalists. The Environmental Law Institute seeks the cooperation of fellow environmental professionals in achieving better environmental management. A common thread running through ELI s work is an emphasis on the value of direct personnel exchanges. I have learned much during the last weeks as I have travelled across India from Gujarat to Tamil Nadu.
Each of the environmental organisations I visited, worked on basic infrastructure matters and sought, in their environmental projects, to mesh jobs and environmental improvement. They see an interdependence between environment, economics, and equity. These environmental professionals are making a vital contribution to sustainable development in their home cities and are having an impact on the thinking of environmental thinkers in other countries.
Fusing ecology and economics is an important advance on the road to sustainability. But fusing ecology and economics gives us only two legs. For stability, we require the third leg of equity to stabilise the system. Equity is because the sustainable society demands a wide consensus that we are all connected to our land and each other. The work of the Rajiv Gandhi Foundation is exemplary in its emphasis on the importance of acting for peace, equity, and a healthy environment.
The legacy of Mahatma Gandhi informs the Indian search for sustainable development just as it empowered Martin Luther King, Jr. and the U.S. civil rights movement of the 1960s. Just as Gandhi s truth led to new forms of effective social action, our hope is that Indian solutions to Indian problems will again prove blessedly transferable. We in the United States have much to learn from the new legal theories and remedies being shaped by the Indian bench and bar, such as the right to file encompassing a right to clean air and water.
But even the most creative theories and best designed status cannot be effective unless they are implemented by dedicated and well-informed people. The key resource is not funds from the World Bank, but human capital - the vital human spirit willing to make the new social arrangements that make technological innovations useful.
ELI will respond to the Rajiv Gandhi Foundation s invitation to India and seek to assist this work by launching a series of people-to-people exchanges. These visiting scholars will help define the items for a common agenda for a United States - India environmental partnership.
This week in India has been the experience of a lifetime and I am grateful to the Rajiv Gandhi Foundation for bringing us together. This convocation, the act of bringing us together, renews our spirits and confirms our resolve to reach out in the continuing work of creating a better environmental future.
Note : Based on a lecture given by Mr. Futrell, Environmental Lecture Series, No.2, 1997 at Rajiv Gandhi Foundation and reproduced here with the permission of the Organisation (Rajiv Gandhi Institute for Contemporary Studies).
