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Resilience: A New Buzzword or a New Understanding
Karl Wagner, Director of External Relations at the International Center of the Club of Rome
The term 'resilience' has popped up increasingly over the last year or so. Its modern use originates from the climate debate, where it characterises the ability of a system to adapt to the changes brought about by global warming.
In a more general sense, resilience is the ability of a system to remain within certain boundaries despite fluctuations caused by external forces. It is a synonym for the capacity to buffer against outside attack, and a necessary characteristic of any kind of system. Carbonate-buffered lakes, for example, could in the 1980s withstand the acidification caused by acid rain, while the soft-water lakes of Southern Sweden turned acidic and devoid of higher life forms.
Our world consists of many different interconnected systems: natural systems, social systems, financial systems, economic systems, industrial systems and others.
When the financial system nearly collapsed a few years ago, we witnessed what it means when a global system does not have an inbuilt resilience to act as a buffer against fluctuations. The financial system had to be rescued at the expense of the resilience of the economic system, of the individuals concerned (losing savings means losing resilience against sickness and injury) and of (mostly small) companies.
The effect of the crash of the financial system sent a tidal wave through the entire world, which also affected larger companies: in 2008, the CEOs of two of the three big US carmakers General Motors and Chrysler, went to Washington to ask for financial help as their companies nearly went bankrupt. And, oh wonder, the CEO of Ford, the third large US carmaker accompanied them and pleaded with the President on behalf of a bail-out of his competitors, nicely documented in Barry C. Lynn's wonderful book Cornered: The New Monopoly Capitalism and the Economics of Destruction.
Lynn was baffled: he had been brought up believing that Ford would be delighted when its competitors went broke. But what had happened was that the car industry had become horizontally integrated, so all car makers are buying their parts from the same suppliers, and if two large carmakers go out of business, so will the supply industry and with it, the third carmaker.
Lynn searched further and found that this "monopolisation" has taken place in most of industry over the last 10-15 years, mainly through mergers and acquisitions, and largely unnoticed by those not familiar with a specific industrial sector. This has resulted in industrial playing fields dominated at each level by a very small group of companies. This trend, which industry and the financial sector are so proud of, has reduced diversity on all levels of production and trade, and with it the resilience of the affected industrial systems. This has created a situation whereby all increasingly stand and fall as one, as we have seen in the world of finance.
The same probably takes place in social systems. Once community life has been hollowed out through an onslaught of essentially egoistic values, it is prone to crash and when it crashes, crime rates, distrust and human misery grow. Monopolisation and centralisation have the same effect: If we all heat using Russian gas, then what happens in Russia can lead to cold homes in Europe. On the other hand, a decentralised energy system would act as a buffer against any kind of event. It would make our energy system resilient.
We are probably looking at a potentially very dangerous, and up to now, largely unrecognised phenomenon: humanity's "modern" way of dealing with systems in general results in a continuous reduction in the ability to buffer against even odd and unusual combinations of events, raising the probability of global crashes, which affect entire systems worldwide.
Earth was a wonderfully complex world before humans became the master species. It seems that this master species is in the process of shooting itself in the foot by replacing complexity, which guarantees stability, with simplicity and complication, which result in instability.
Rio+20: Measurement of Externalities and Pricing Ecosystem Services goes Mainstream
Robert Horn, Fellow, World Academy of Art and Science; Visiting Scholar at Stanford University's Human Science and Technology Advanced Research Institute (H-STAR)
Measuring externalities and valuing ecosystem services emerged as one consistent theme at Rio+20. Over a seven-day period during the conference, I walked from business events to government events. Time and again, all these meetings and panels agreed that our current measurements of the economy don't match global civilization's need to know how well we are doing.
There were calls and even commitments from businesses to measure ecosystem services. There were announcements from other business leaders that showed they were already putting out annual pricing of ecological services. Jochen Zeitz of Puma announced his was the first Environmental Profit and Loss statement and was willing to help other companies do the same. And, when asked, he predicted that many if not most other companies will have internalized the pricing of ecosystem services by around 2020. Sam DiPiazza, a Vice Chairman of Citi Group and former CEO of PriceWaterhouse, agreed it was possible, maybe even likely, by then.
What happens when you report these measures regularly? Companies start to construct different incentives around them. Marcelo Cardoso, CER of Natural, the largest cosmetic company in Brazil, has already tied annual bonuses to the achievement of not only his managers' financial goals, but to their achieving at least 50% of their social and ecological targets.
UBS Arbor Group Senior VP, John Adams, suggested from the floor at one meeting that this natural capital accounting could influence investors, analysts, and economists to make quite different assessments about their priorities for investing in companies.
We heard a dozen times a day that "business can only manage what it can measure." So, there were calls for more indicators, indexes, and dashboards, and what appeared to be a considerable move to accomplish them, both at the national, regional, city and enterprise levels.
There were meetings that focused on the GDP as the wrong measure for sustainable development in the 21st century. The UNDP had a big meeting on that with the World Bank and major statistics bureaus from around the world agreeing. In many ways this simply is the result of critiques of GDP going back to the 1970s. These critiques reached prime time when President Sarkozy of France commissioned two Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, and the prominent French Economist Jean-Paul Fitoussi to head a group that was called the Commission on the Measurement of Economic Performance and Social Progress. The Commission confirmed the assessment that GDP was an extremely limited way of measuring the welfare of human communities. In part, it said, "We are also facing a looming environmental crisis, especially associated with global warming. Market prices are distorted by the fact that there is no charge imposed on carbon emissions; and no account is made of the cost of these emissions in standard national income accounts. Clearly, measures of economic performance that reflected these environmental costs might look markedly different from standard measures."
They basically agreed with Robert F. Kennedy's classic 1968 critique of GDP: "Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product... if we should judge America by that counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. "
"Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans. "
Pavan Sukdev, the Indian economist who led the team that produced the recent TEEB report (The Economics of Ecosystems and Biodiversity), told an audience that present economic theory is a one-legged stool. You can sit on it but if you absent-mindedly cross your legs as it happened in the 2008 financial crisis your theory lands you on the floor.
Ecosystems services are invisible to the disciplines of economics (and to most of us). We must make them visible, Sukdev said. These services provide clean water and air and regeneration of soil and processing of sewage and toxics. Yet, for the most part, they are not represented in the markets nor in the accounts of enterprises. For more than 20 years ecologists and some economists have been arguing that the only way to save capitalism from destroying these services (and thus destroying itself) is to put a dollar (pound, euro) price on them. It will take a close collaboration of accountants, ecologists and business people to do this. He called it one of the top five priorities for this decade. If we don't do it, we won't have the basis for a sustainable world to live in.
A "Natural Capital Declaration" put together by the Global Canopy Programme and the UN Environment Programme engaged 57 countries, banks, companies and investors to pledge to measure wealth in terms of natural capital. This puts a "green accounting system" into national and company accounts. The World Bank and 86 private companies signed on to ecosystem services (the value that air, water, forests, and ecosystems provide to the human economy). Signatories included China Merchants Bank, Puma, Dow Chemical, Unilever, and Mars.
Indeed, last year, the World Bank had announced it was funding a project to incorporate the pricing of ecosystem services into national accounts in ten countries, starting with Columbia and India.
The World Business Council for Sustainable Development's WBCSD-Vision 2050 project also made pricing ecosystem services and incorporating externalities into corporate accounts two of their 40 "must haves" that they said were "required to be on track by 2020." Thus, to be very specific, the global economy has to incorporate the value of ecosystem services into the national accounts of (my estimate) at least 50 countries and into the accounts of 10,000 companies by around 2020, if we are to be "on track."
Peter Bakker, the new CEO of WBCSD, called for putting all this together into what he called "integrated reporting." He did this in the context of the Business Day theme of "Scaling Up." He pointed to the considerable amount of preparatory work over the past decade that WBCSD had done on these measures concept building and testing in limited, but real, business situations in many different industries.
It was clear in the 5 days of business meetings at Rio+20 that pricing externalities and ecosystem services was possible and that the most progressive companies - like Puma had already begun to incorporate these measures into their accounts, putting them ahead of their competitors, and it would seem ahead of the governments and NGOs who were calling for action.
For economists and ecologists (and business people), this decade will be an important one in the history of their disciplines.
World Futures: Three Paths Forward
Michael Marien, Fellow, World Academy of Art and Science; Director, Global Foresight Books
It is all well and good to have a single forecast of where humanity is headed in the decades ahead, as bravely offered by Jorgen Randers in 2052: A Global Forecast for the Next Forty Years. Report to the Club of Rome (Chelsea Green, June 2012, 392p, $24.95; www.2052.info; reviewed in CADMUS #5, Part 1; GFB Book of the Month, July 2012). Of special interest are the five central issues of the next 40 years, according to Randers: the end of stable climate as self-reinforcing climate change becomes worry number one, the end of uncontrolled capitalism so as to enable faster response to the climate problem, the end of slow democracy to also enable faster response, the end of economic growth despite technological advance (due to lack of space and cheap resources), and the growth of intergenerational conflict due to a smaller pie to share.
But it is equally important to have normative visions of what should be done to improve the human condition. An early effort to do so was provided by Ervin Laszlo et al. in Goals for Mankind: A Report to the Club of Rome on the New Horizons of Global Community (NAL/Signet, Updated and Revised edition, 1978), a survey of goals for nations and regions, the UN, multinational corporations, religions, global security, food, energy, resources, and development.
Today, with much additional globalization and apparent proliferation of global problems approaching a "Global MegaCrisis," there is also a modest proliferation of visions.
The Report of the UN Secretary-General's High-Level Panel on Global Sustainability, Resilient People, Resilient Planet: A Future Worth Choosing (United Nations, Jan 2012, 94p; www.un.org/gsp; reviewed in CADMUS #5, Part 2; also GFB Book of the Month, June 2012) presents 56 recommendations to advance its vision for a sustainable planet, a just society, and a growing economy. The Organization for Economic Cooperation and Development provides a policy framework for green growth (Towards Green Growth, June 2011, 142p; www.oecd.org/greengrowth; GFB Book of the Month, June 2011), along with a strategy to promote transition to green growth and to monitor progress. Inclusive Green Growth: The Pathway to Sustainable Development (World Bank, May 2012, 192p) argues that greening growth is necessary, efficient, and affordable. The Washington-based Worldwatch Institute, in its latest annual State of the World Report, Moving Toward Sustainable Prosperity (Island Press, April 2012, 241p; GFB Book of the Month, April 2012) features a "Policy Toolbox" for population strategies to stop short of 9 billion, sustainable buildings, sustainable consumption, a sustainable food system, protecting biodiversity, valuing natural capital and ecosystem services, getting local government right, "degrowth" in overdeveloped countries, sustainable transport, reinventing corporations, making the green economy work for everybody, and a new global architecture for sustainability governance.
Adding to this collection are three more reports briefly reviewed below, from the World Business Council for Sustainable Development, Canada's Centre for International Governance Innovation, and the Millennium Project. These reports are all welcome, and each has something to offer. But an analysis beyond what is sketched here is badly needed—one that critically looks at similarities and differences among the current betterment visions, and how the earlier Laszlo report to the Club of Rome may still be of some value. For background, it would also be useful to consult Paths to a Green World by Canadian political scientists Jennifer Clapp and Peter Dauvergne (MIT Press, 2nd edition, May 2011, 354p; GFB Book of the Month, May 2011), which discusses four competing worldviews in great detail: Market Liberals, Institutionalists, Bioenvironmentalists, and Social Greens. Echoing this analysis, and what Robert Horn says (below), we should listen to everyone—and then improve our worldview, and move the evolving vision from the far periphery into the center of public discourse worldwide.
*Vision 2050: The New Agenda for Business. World Business Council for Sustainable Development. WBCSD, Dec 2010, 80p, $15 (download in 11 languages at www.wbcsd.org/vision2050.aspx ) lays out a pathway leading to a global population of some 9 billion people living well, within the resources of the planet, by 2050. This report results from an 18-month effort by CEOs and experts with > 200 companies, and external stakeholders in some 20 countries. It produced 70 measures of success and 350 milestones for the next four decades using 10 tracks: energy, buildings, mobility, materials, economy, governance, people, agriculture, forests and ecosystems/biodiversity. It also lists 40 "must haves": things that must happen over the coming decade to make a sustainable planetary society possible. This includes: 1) incorporating the costs of externalities - starting with carbon, water, and ecosystem services — into the structure of the marketplace; 2) doubling agricultural output without increasing the amount of land or water used; 3) halting deforestation and doubling yields from planted forests; 4) halving 2005-level carbon emissions worldwide by 2050, by shifting to low-carbon energy systems, improved energy efficiency, and universal access to low-carbon mobility; 5) increasing re-use of materials in manufacturing by a factor of 4 to 10. This will require great cooperation between governments, NGOs, and the private sector to deal with the "wicked problem" of sustainability. The report is a best-case scenario, a tool for thought leadership, and a platform to begin the dialogue that must take place. If successful, "a shift to sustainability will trigger trillions of dollars in new investments in infrastructure, technology, and human services."
ALSO SEE "To Save the Planet, Listen to Everyone" by WAAS Fellow Robert E. Horn of Stanford U (New Scientist, 17 Dec 2011, 28-31), who participated in the WBCSD project by preparing an accompanying "info-mural" - a supersized laminated wall chart translating these ideas into visual language (available at Foresight Canada from WAAS Fellow Ruben Nelson RubenNelson@shaw.ca). Horn goes on to acknowledge weaknesses of Vision 2050: failure to adequately deal with poverty and population (also human rights and failed states), no mention of oceans and displaced people, and use of the IPCC proposed limit of 450ppm of CO2 which may require reduction to 350ppm to keep climate within tolerable limits.
*Post-2015 Development Agenda: Goals, Targets and Indicators. Barry Carin (Senior Fellow, CIGI) et al. Waterloo, Canada: Centre for International Governance Innovation, Oct 2012, 63p (www.cigionline.org/publications). The UN's Millennium Development Goals for a more peaceful, prosperous and just world, launched in 2000, set specific targets to be met by 2015, with indicators to measure progress. By 2015, the world will have met some of the MDG's key targets, such as halving the poverty rate, and will be close to achieving primary education for all children. But health goals are difficult, and Africa lags behind, despite substantial progress since 2000. "Overall, the MDGs have been remarkably successful in focusing attention and mobilizing resources to address the major gaps in human development. Building on the MDGs, the global community should move beyond meeting basic human needs and promote dynamic, inclusive, and sustainable development. Future goals must reach beyond traditional development thinking to become sustainable one-world goals." Based on discussions at a 2011 meeting in Italy, 11 potential "Bellagio Goals" are proposed: 1) inclusive growth for dignified livelihoods and adequate standards of living; 2) sufficient food and water; 3) appropriate education and skills for productive participation in society; 4) good health for the best possible physical and mental well-being; 5) security for ensuring freedom from violence; 6) gender equality, enabling women and men to participate and benefit equally in society; 7) building resilient communities and nations for reduced disaster risk; 8) improving infrastructure for access to essential information, services, and opportunities; 9) empowering people to realize their civil and political rights; 10) sustainable management of the biosphere, enabling people and planet to thrive together; 11) global governance and equitable rules for realizing human potential. Much of this report (pp30-58) reviews a menu of indicators and data sources for these goals, so as to measure progress and galvanize public support. [NOTE: An important step forward, nicely complementing — albeit complexifying - the WBCSD vision (above) and the MP challenges (below).]
*2012 State of the Future (Executive Edition). Jerome C. Glenn, Theodore J. Gordon, and Elizabeth Florescu (Millennium Project). Washington: MP, Aug 2012, 107p, $39.95 ( www.StateOfTheFuture.org; www.millennium-project.org ). The 16th annual report providing "a context for global thinking and improved understanding of global issues, opportunities, challenges, and strategies." It is based on a network of 46 MP Nodes of individuals and institutions in every global region. As in earlier editions since 1996, the main part of the report is devoted to an overview of 15 Global Challenges: 1) sustainable development and climate change; 2) sufficient clean water; 3) population growth and food production brought into balance; 4) promoting genuine democracy; 5) promoting global long-term perspectives in policymaking (a Global Future Collective Intelligence System is needed, and heads of government should have a foresight office connected by a CIS to government agencies); 6) global convergence of information technologies to work for everyone; 7) encouraging ethical market economies to help reduce the rich/poor gap (improved free trade, increased economic freedom, a level playing field guaranteed by an honest judicial system, reduced corruption, etc.); 8) reducing the threat of new and re-emerging diseases; 9) improving decision-making ("many of the world's institutions and decision-making processes are inefficient, slow, and ill-informed"; common trans-institutional platforms are needed); 10) new security strategies to reduce conflict and terrorism; 11) empowering women; 12) addressing transnational organized crime networks; 13) meeting growing energy demands safely and efficiently; 14) accelerating sci/tech breakthroughs to improve the human condition (e.g., through synthetic biology, nano-robots and nano-medicine, new physics enabling new forms of energy, a global collective intelligence system); 15) incorporating ethical considerations into global decisions (so as to promote human rights and reduce corruption).
Also includes 1) the annual State of the Future Index of 28 indicators showing where humanity is winning and losing; 2) results of the 2012 RTD (Real-Time Delphi) panel on the probability of key developments by 2021, e.g.: increase of CO2 burden by 20% (52%), economic expansion of > 5% from nanotechnology and other new technology (47%), global economic depression (42%), cost-effective desalination increases safe water 20% worldwide (39%), a pandemic on the scale of HIV/AIDS (33%), etc.; 3) an RTD study with 179 participants on how gender stereotypes are thought to be changing from 50 years ago to 50 years in the future; 4) an RTD study with > 100 experts on "Cooperatives 2030" as "a major generator of employment and development" (in line with the UN's designation of 2012 as the International Year of Cooperation), noting the emergence of the concept of "non-ownership" as distinct from private ownership or state ownership; 5) an RTD survey of 16 hopes and 16 fears in Kuwait involving 193 participants; 6) a chapter on "Future of Ontology" (an emerging science and engineering discipline analogous to computer science some 50 years ago; ontologies form the underpinnings that allow data to "interoperate" or for machines to make useful "inferences").
[NOTE: By far the most ambitious of the three reports reviewed here, integrating a huge amount of material and promoting fresh perspectives on crime and corruption (Challenges #12, 15), ethical markets and global decisions (Challenges #7, 15), and improved decision-making (Challenges 5, 6, 9, 14) - topics that are absent from more conventional agendas such as WBCSD and CIGI. However, the index-less presentation of abundant detail is unwieldy, error-ridden, and probably overwhelming to many, especially in the 10,000 page electronic version which presents the cumulative work of the MP.]
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[Acknowledgement: I wish to thank the Bermingham Fund in Denver, and, especially, the Foundation For the Future in Seattle, for support of the Global Foresight Books website, which enabled this mini-essay.]