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Decisions for the Earth

The 10th in a series of biennial reports focusing on global environment and development issues, World Resources 2002-2004 `Decisions for the Earth: Balance, Voice and Power' focuses on the importance of good environmental governance. It explores how citizens, government managers and business owners across the globe can foster better environmental decisions that meet the needs of ecosystems as well as people, with equity and balance. Statistics from World Resources 2002-2004 indicate an overwhelming human dependence on rapidly deteriorating ecosystems, the systems that support all life on earth. One out of every six humans depends on fish for protein needs, yet 75% of the world's fisheries are over-fished or fished at their biological limit. Nearly 41 of every 100 people live in water-stressed river basins. Some 350 million people are directly dependent on forests for their survival, with global forest cover declining by 46% since pre-agricultural times. Nearly half of the world's population lives on less than $2 a day.

The report asserts that improving the processes and institutions we use to make important environmental decisions will bring better results, with less environmental impact and a fairer distribution of costs and benefits. It stresses the need for such changes to arrest the accelerating deterioration of the world's environment, and to address the crisis of global poverty. It notes that global environmental threats disproportionately harm the poor, and the poorest countries, as they undermine the natural resource base on which many poor people directly rely for their food and livelihoods.

Poverty reduction is, therefore, closely linked to sound environmental management at the local, national, regional and global levels.

The report has three goals. First, to define in simple terms what environmental governance means and how it relates to today's environmental trends and social conditions. Secondly, to assess how close countries are to employing good governance practices. And, thirdly, most importantly, to advance the thesis that emphasis on better environmental governance is one of the most direct routes to reversing the world's environmental decline.

Measuring governance performance is difficult. Until now, no systematic study of environmental governance indicators has been undertaken. The report highlights findings from the first attempt to do this -- the Access Initiative. This groundbreaking effort, undertaken by an international consortium of public interest groups, assesses the openness and accessibility of environmental decision-making in nine nations. The results of the Access Initiative offer a detailed picture of how well the public in the surveyed nations can participate in local and national decisions about the natural environment they inhabit (see case study on SEWA, India).

Institutions must clearly integrate environmental concerns into their everyday activities and economic decisions. Natural resource management agencies like forestry, agriculture, mining and environment ministries need to reshape their mission and structure around maintaining the health of ecosystems. The report stresses that environmental governance is only effective if it leads to the fair and sustainable management of ecosystems.

The report analyses five broad trends that affect environmental governance: economic globalisation; the democratisation of political systems, the emergence of good governance norms and their increasing acceptance; the rapid growth of non-governmental organisations and the proliferation of new information and communication technologies. It also looks at the connection between corruption and environmental mismanagement.

The ability of citizens to participate in environmental management is one of the hallmarks of good environmental governance. However, there are three aspects -- as enumerated in principle 10 of the 1992 Rio Declaration -- that render this participation effective: access to environmental information, access to decision-making affecting the environment, and access to justice and remedy.

Better access calls for investments to increase the supply of information and opportunities to participate. It also requires greater demand for access rights from citizens, community organisations and advocacy groups. Improved access is impossible without efforts by financial institutions to help nations apply the principles of good governance.

The report documents and analyses the growing influence of civil society -- voluntary citizen-based groups. It was civil society groups that put environmental issues on the global agenda in the 1970s. Today, this sector is larger and more influential than ever before. By 1990, there were more than 100,000 groups working on environmental protection worldwide, most of them founded in the 1980s.

There is an increasing diversity in civic activism on environmental issues. Though their objectives may not be strictly `environmental', groups that focus on poverty alleviation, human rights, rural development, women's rights and world peace are, increasingly, collaborating with environmental groups to influence environmental decisions.

In general, governments have shed their outright hostility towards environmental activism and civic organisations. However, in the developing world, many countries lack an adequate framework of laws and regulations that enable, rather than restrict, the operation of NGOs. Many routinely use coercive tactics to control civil society groups. India, for example, restricts the amount of funds NGOs may receive from foreign donors. China requires NGOs to have a sponsoring institution, fewer than 50 members, and a minimum level of financial resources. In Rwanda, an NGO cannot exist for more than three years.

World Resources 2002-2004 looks into the issue of decentralisation -- the devolution of powers from a centralised authority to local institutions. This goes directly to the question of who gets to make decisions about natural resources. The report describes the process of decentralisation underway in many countries, and analyses the conditions under which it is likely to lead to improved social and environmental outcomes. A 1999 World Bank study reveals that some 95% of democracies now have elected regional and local governments, and countries everywhere are devolving administrative, fiscal and political powers to tiers of government below the national level.

The report emphasises that the goal of decentralisation should be to achieve an appropriate level of local input within a solid national environmental policy. The challenge lies in finding the right mix of local and national powers and responsibilities to achieve sustainability.

Under the right conditions, decentralisation creates ways for local people to negotiate common environmental goals with state authorities. However, it does not eliminate the role of the central government in taking resource management decisions. It enhances political stability by satisfying citizens' demands for greater participation.

The report lays down four criteria to ensure that decentralisation works. It must result in the transfer of meaningful powers, including fiscal power, to a local institution. The institution to which power is transferred must be representative of the local public in its diversity, not just elite interests, and have a broad knowledge of local resources and people's dependencies on them. The local public must be able to hold the institution accountable through elections, hearings, or other democratic means. Fiscal and regulatory incentives must be in place to promote the sustainable and long-term management of natural resources.

The report notes that to date, the results of decentralisation have been mixed.

According to the report, decentralisation is often an impetus for privatisation, but the two should not be confused. A lot of privatisation in the natural resources sector takes place incorrectly in the name of decentralisation. If executed well, decentralisation can increase public input into local governance, but privatisation often leads to greater public exclusion from resource decisions since it shifts ownership -- and therefore control -- to corporations and other actors that do not have to answer to the general public.

An important section of the report is the chapter that focuses on the changing role of business in environmental governance. It describes the corporate community's response to calls for greater openness and accountability, including voluntary `sustainability reporting' and codes of conduct. It analyses the potential of investors and consumers to drive improved corporate performance, and asserts the continuing importance of government regulation.

Multinational corporations are considered both global and local citizens. In theory, they are accountable for numerous constituencies but are often perceived as having little accountability except to their shareholders -- though they undeniably bring benefits to local communities.

Local communities, however, fear that these global companies will use their powers to evade national regulatory requirements, engage in unfair labour practices, or damage the local environment. In addition, they are concerned about growing trends towards the privatisation of natural resources.

The report recommends that greater information disclosure on the part of business could help address some of these problems, empowering civil society and local groups to join in the regulatory processes. Disclosure tools -- like the Toxics Release Inventory and the Global Reporting Initiative -- work because they empower the public to hold businesses accountable for their environmental performance. Just as importantly, disclosure offers potential benefits to business.

Since the 1980s, thousands of companies have voluntarily issued reports on their environmental performance or have commissioned environmental audits of their operations. Globally, 7,000 to 10,000 corporations now publish environmental reports. Forty-five per cent of the 250 largest companies produce such reports (although not exclusively on the environment).

World Resources 2002-2004 highlights the crucial role played by investors and consumers in ensuring corporate responsibility towards the goal of better environmental governance. One of the newest, most progressive approaches to greater corporate environmental accountability is the direct intervention of consumers, investors and civil society groups in business affairs. A prime example is Socially Responsible Investing (SRI). A common approach to SRI is to positively or negatively screen companies. Either they weed out companies whose practices are perceived to be harmful to people or the environment, or seek out companies which offer solid returns yet are leaders in social and environmental performance.

Another approach is to marshal shareholder power to actively press for change at the highest level of corporate decision-making through proxy resolutions during annual meetings. In 2002 alone, a record of 19 shareholder resolutions was filed with major companies on the topic of climate change. SRI was once seen only as a means of doing good. Today, proponents stress that it is also a smart investment.

The report recommends that businesses themselves must begin to more fully embrace the business rationale for information disclosure. Greater attention to quantifying the benefits of transparency to the bottom line will likely be the only way to bring other businesses on board. There must be more dynamic engagement of businesses with their neighbours and other stakeholders -- either though community advisory panels or other business-public partnerships. Also, government regulators and policy-makers must play their part since government regulation is the background against which all disclosure -- mandatory or voluntary -- takes place.

The current global system of environmental governance comes under scrutiny, and also a fair amount of criticism, although it is still a work in progress as most of it has come into being only in the last 30 years. It has demonstrated that it can mobilise scientific and legal talent to expand our understanding of environmental issues and build impressive regimes as the Montreal Protocol, the Convention on Biological Diversity, and the Convention to Combat Desertification. Convening governments and setting guidelines or standards are special strengths of the current system.

Among its recommendations aimed at bolstering the system of global environmental governance, the report suggests that the UN Environmental Programme, which holds the UN mandate as the leading global environmental authority, must be strengthened. One suggestion has been to bring all UN organisations with substantial environmental responsibilities under the aegis of the UNEP. Another is to upgrade the UNEP from a UN programme to a full-fledged specialised agency complete with a redefined mandate and funded from assessed contributions from UN members.

The report also focuses on the challenge of integrating environmental concerns with international trade and finance. One source of inherent conflict between modern trade practices and environmental laws is the concept of `discrimination'. Free trade practices rely on the idea that countries should not discriminate against the products of other countries on the basis of where or how the product was produced. This, however, runs counter to the basic premise of many international environmental policies: that countries should discriminate against products and processes that harm the environment and favour those that minimise harm.

Another source of conflict involves the ambiguous relationship between trade rules and environmental treaties. Over 30 environmental treaties place some form of restriction on international trade, most as enforcement mechanisms. No dispute over an environmental treaty has ever been brought before the WTO. As with the global system of trade rules, international investment rules have developed without reference to their environmental consequences. This could undermine environmental management regimes at both global and international levels.

(InfoChange News & Features, July 2003)