Is the credit crunch a threat or opportunity for sustainable development?

The first part of 2008 underlined the importance of sustainable development. The price of oil sky-rocketed to $140 per barrel and the cost of primary materials such as steel, aluminum, copper, silver, gold rose, along with basic foodstuffs like wheat, milk and rice. Pollution was in the headlines in the lead up to the Beijing Olympics and by the end of the summer the Artic Sea was open to navigation, with permanent ice at the North Pole expected to vanish by around 2025.

 

There was a growing consciousness of the challenges caused by climate change and pollution of the planet. Consumers began to change their habits, governments started to be serious about sustainable development, and corporations moved the Corporate Social Responsibility department head to the Executive Committee level. We saw virtuous industrial companies selling carbon credits worth hundreds millions dollars on the carbon trading stock exchange. We all had the feeling that something was changing.

 

But then the gathering storm of the financial crisis exploded, pulling down with it leading financial institutions such as Lehman Brothers, AIG, Dexia and Fortis. Stock markets dropped by a third and credit completely dried up. The worldwide focus moved away from climate change and sustainable development towards the growing uncertainties in the financial world and fears of a long global recession.

 

With the credit engine of the global economy about to collapse, governments worldwide started to work together at a pace that was totally unknown in the corridors of all diplomacies. In just a few days, the 27 states of Europe agreed to raise funds to avoid any bank bankruptcy and to restore the flow of credits between banks. Similarly in the US Democrats and Republicans supported the Paulson Plan and approved it in both chambers on Capitol Hill. At Camp David last week, European Union President Nicolas Sarkozy, EU Commission President Jose Manuel Barroso and US President George W. Bush agreed to organize a G20 meeting in the US in November to refound the global financial system – a sort of second 'Bretton Woods'.

 

And now, what's next? On one hand, it has taken decades to make our political or economic leaders and the man in the street, conscious of the danger that we are facing regarding the future of our planet, and the beginning of some signals that we are tackling the problem. On the other, it took no more than one month to create some kind of 'Government of the Earth' to fix the financial crisis.

 

Let's speak to the optimist in each of us: 2008 might be the turning point for the sustainable development crusade, with it becoming a worldwide project in 2009. We are already seeing car manufacturers striving to launch electric cars, billionaires investing in wind farms for ROI reasons, and prominent Asian countries reducing their greenhouse gas emissions. We know natural resources are scarce and therefore outrageously expensive, so we need to be savvy about using them and avoiding waste or spoilage. We also know that the economy is fragile and that financial flows need to be managed with ethics and responsibility.

 

Governments have shown us that they are able to forget their differences and agree on measures that will save the financial world. Surely they can use this new skill to meet again and decide the best way to engage in sustainable development. Sustainable development has entered the public consciousness and political and economic leaders realize that they have to find a solution together. The Chinese ideogram for crisis is the combination of risk and opportunity - let's vote for opportunity.

 

And what about information communications technology (ICT) in this discussion? A recent report from The Climate Group says that ICT represents 2% of global greenhouse gas emissions and that it could save up to five times its greenhouse gas emissions in 2020 thanks to its effect on motors, logistics, buildings and grids. Let's just do it!

 

We saw consumers changing their habits, governments starting to be serious about sustainable development, corporations moving the Corporate Social Responsibility department head at the Executive Committee level. We saw virtuous industrial companies selling carbon credits up to hundreds millions dollars on the carbon trading stock exchange. Really, at the end of this summer - which saw also the two northern seas on top of Siberia and Canada open to navigation, predicting the end of permanent ice on the North Pole around 2025 - we had the feeling that something was changing.

 

And then suddenly, the financial crisis came to a paroxysm with the very dangerous situations of leading financial institutions such as Lehman Brothers, AIG, Dexia, Fortis, the slip of 30% minimum of all the Stock Exchanges of the world, and the credit crisis that followed. Of course, suddenly the focus moved from climate change and sustainable development to growing uncertainties in the financial world, leading part of the world economy to what could be a long phase of recession.

 

Very interestingly, when the credit engine of the global economy was about to collapse, suddenly all the Governments of our planet started to work together at a pace that was totally unknown in the corridors of all diplomacies. The 27 states of Europe agreed in a few days to raise funds to avoid any bank bankruptcy and to restore the flow of credits between banks by guaranteeing the transactions. Symmetrically in the US Democrats and Republicans, George W.Bush, Barack Obama and John McCain jointly supported the Paulson Plan and had it voted by the two chambers of the Capitol Hill. At Camp David last week, European Union President Nicolas Sarkozy, EU Commission President Jose Manuel Barroso and US President George W. Bush agree to organize a “G20” in the US in November to refound the global financial system, sort of second “Bretton Woods”.

 

And now, what’s next ? On one hand, it had taken decades to make our political or economic leaders, plus the ‘man-in-the-street’, conscious of the danger that we are facing regarding the future of our planet, and we start to see some shy signals that we are maybe tackling the problem. On the other hand, it took no more than one month to create some kind of ‘Government of the Earth’ to fix the financial crisis. Is this good or bad ?

 

Let’s speak to the optimist in each of us. 2008 might well be the turning point of this sustainable development crusade and 2009 might well be the year when it becomes a worldwide project. We see car manufacturers striving to launch quickly electric cars, billionaires investing in windfarms for ROI reasons, prominent Asiatic countries starting to focus on  reducing the emissions of Green House Gases (GHG).

 

Let’s look at it. Natural Resources have proven to be scarce, therefore outrageously expensive, making each of us conscious of the need to be savvy about their usage, and to avoid to waste or spoil them. People also know that the economy is fragile and that financial flows need to be managed with ethics and responsibility. On top of this the proof is made that the Governments of the top countries of the world are able to forget all their divergences to agree on and implement measures that will save the financial planet. No doubt they will use this new skill to meet again and decide together of the best way to engage into the narrow path of sustainable development.

 

The consciousness of everyone, the reduction of the arrogance of political and economic leaders, and the absolute need to find together a solution might the extreme good news of the two crises of this memorable year 2008. As the Chinese ideogram for ‘crisis’ is the combination of ‘risk’ and ‘opportunity’. Let’s vote for the opportunity.

 

And ICT in this discussion ? A recent report from The Climate Group says that ICT –today 2% of Global GHG emissions – could save up to 5 times its GHG emissions in 2020 thanks to its effect on motors, logistics, buildings and grids. Let’s just do it !