Environmental conventions and the private sector

24/06/2005

OECD Workshop - Multilateral Environment Agreements and Private Investment, Encouraging business contribution to MEA implementation

On the 16th and 17th June 2005, the Organization for Economic Cooperation and Development (OECD), in collaboration with the Finnish Ministry for the Environment and the Finnish Environment Institute, organized a workshop on how to help implement multilateral environment agreements through private investing. The audience was a mix, representatives from the main Rio conventions and some NGOs, as well as representatives from the private sector. Participation was around 40 people, mainly the speakers themselves and some observers from the Finnish Ministry of Environment. The Ramsar Convention was invited to explain its partnership with the Groupe DANONE, as an example of how the private sector can help MEAs in implementing their objectives.

Representatives from other MEAs and environment-related organizations included the CBD, UNFCCC, UNCCD, as well as UNEP, the GEF and the World Bank. The NGO/IGO sector was represented by IUCN and Fauna Flora International. Representatives from the private sector included, among others, Unilever, M-Real, Isofotón, Unisféra, etc.

During the first day, the debates were centred on the current situation: what are the current links existing between MEAs and the private sector? The workshop was mainly focusing on the Rio Conventions, as well as on the Kyoto Protocol. Very quickly, the biodiversity conventions were set apart, due to the difficulty of linking "trade" with their area of activity.

The CBD highlighted the need to collaborate with the private sector in order to be more effective in implementing the Convention, but recognized that the participation of the private sector in the CBD's work is still very limited at the moment. The UNFCCC is basing its collaboration with the private sector on emissions trading, and the UNCCD is, like the CBD, far behind in developing partnerships with the private sector due to the lack of a "marketable product" it is dealing with.

On the other hand, the representatives of the private sector highlighted the fact the MEAs seem to speak a different language and "live in a different universe". Unilever, in particular, emphasized that they are willing to participate and collaborate with the "public" sector, but that, by now, they have received very few concrete proposals to do so, their partnerships being limited so far to WWF for the Marine Stewardship Initiative.

The private sector identified the main components for public/private partnerships:

- companies need some mechanisms to reach MEAs;
- MEAs need to propose concrete things and not simply ask help to implement vague concepts;
- there is a basic need for image/trust between partners;
- MEAs need to tailor their activities more towards business activities (clear objectives, considering scale, efficient implementing mechanisms, etc.)

The main barrier for public/private partnerships seems to be a culture/language problem. Private companies and MEAs don't speak the same language, don't have the same way of "making business", don't have the same objectives or the same way to deal with them, and this is one of the main issues in building bridges between the two of them.

Some examples were given: things take five times more time to be done in a MEA than in a private company, MEAs don't look after efficiency and benefits, many private companies don't even know what an MEA is, there is a kind of skepticism between private and public sectors, and there is a lack of clear business case and valuation issue.

In the afternoon, participants broke into working groups, and Ramsar was invited to make a presentation in WG2 on "Cooperation and partnerships between stakeholders". The partnership with the DANONE Group was given as an example of how the private sector can help MEAs in their daily activities.

At the end of the day, participants merged again for a wrap-up session, of which the main conclusions were:

- MEAs must represent an appealing environment to attract investment.
- Governments are the ones who carry the main responsibility, not only for implementing MEAs but also for involving/enhancing private sector participation (national vs. international regulatory framework).
- MEA design relies on governments. MEAs should be as clear as possible; have a road map and realistic timetable for the future; be less discouraging for business to be involved in; be willing to find ways to deal with the macro-economic picture; and be alert to the needd for minimal corporate social standards.
- There is a need for a stable framework and long term perspective for private sector involvement.
- MEAs and the private sector have to find a common language.
- It is advisable for MEAs to look at the private sector individually and not through a group of conventions/agreement, in order not to lose individual attractiveness for the private sector.
- Knowledge to the public is key for the private sector. Customers are the ones guiding business investments and the majority of the people don't know about MEAs.
- Trust between partners is essential for successful public/private partnership.

The second day of the workshop was dedicated to concrete examples of technology transfers, private sector investments for sustainable development, and public/private mechanisms to finance development projects. Again, the different language and culture between MEAs and the private sector was underlined, stressing the need to build bridges between the two.

In the afternoon, participants broke up into working groups again, trying to answer some key questions:

- how to design efficient mechanisms for technology transfer and public/private partnerships?


o There is a basic need to improve communications between financial institutions, governments and MEAs.
o MEAs should be clear in their objectives;
o Increasing consumers' awareness about MEAs can be a way to involve private companies in sustainable development (example of ozone-free fridges with Unilever). Private companies are driven by their consumers' demand. If the consumers are aware of the work of MEAs, private companies will be more inclined to collaborate.
o Governments are, in the end, responsible for the implementation of MEAs. They are the ones in charge of bringing together the MEAs and the private sector. Secretariats of the MEAs are not the right body to deal with as they depend on the decisions of their contracting parties.
o The Millennium Ecosystem Assessment was identified as a possible starting point to channel initiatives.

- what conditions are needed, what obstacles should be removed for private involvement?

o It is difficult to generalise technology transfers. Each case and each MEA has its own particularity, and a good model with one is not always reproducible with others.
o CDM for the Kyoto Protocol was identified as a good model for private sector involvement, with a clear market and benefits. But this model cannot be replicated with other MEAs where the markets are not so well defined or when other aspects intervene (property rights on biodiversity, etc.)

- what MEAs can do in terms of creating new markets?

o The main problem is the clash of cultures between public and private sector. Private companies think in terms of benefits, MEAs in terms of guidelines, frameworks and other theoretical aspects.

- what can governments do?

o If markets are the key for private sector involvement, governments have the responsibility to create markets, through the MEAs. In the end, the governments are the ones to decide how the MEAs are designed.
o They should also promote a better information environment between partners (public and private)

In conclusion, communication was highlighted as the key element to implement MEAs - communication among partners (language between public and private sectors), but also communication and awareness raising about MEAs to the public, in order to raise the interest of the public and their level of knowledge about MEAs and drive the private sector response through their customers' demand.

Dialogue must be enhanced between all the partners (MEAs, governments and private sector). The MEAs should try to change the risk perception and the image of inactivity they give to the private sector, in order to build confidence among the investors. Public/private partnerships could, for example, allow a sharing of the load in case of failure. The private sector needs more confidence in the MEAs and their work in order to take the risk to invest.

More information and background documents, as well as the presentations made during the workshop, can be found at: http://www.oecd.org/env/investment/workshop.

In conclusion, private investment seems to be a key for the development and implementation of MEAs. Public investment is not enough and "new" (most recently created) MEAs already integrated the possibility and the need to seek private funding since the early stage of design of the agreement. For older ones like Ramsar and the CBD, for example, the integration of the private sector has come later, through resolutions or other decision mechanisms recognizing the limitations of public funding and calling upon partnerships to develop the capacity of MEAs.

Ramsar already integrates these decisions to seek private funding for its activities. Several partnerships like the DANONE Fund, Wetlands for the Future fund, finances mainly through Gillette and a consortium of US companies and the emerging partnership with Star Alliance demonstrate that the possibility exists and that the incorporation of private funds can help a MEA to communicate, improve its outreach strategy, or develop new projects. The main limitation of the Ramsar Convention is its budget and the fact that it is not dealing with a tradeable items (like carbon emissions for UNFCCC), which is also the case for the CBD. In this sense, partnerships and synergies between the two conventions are vital in order not to compete for the same resources. The development of new partnership also implies some risks and the need to have a proactive strategy, not always in accordance with the mechanisms of MEAs.

It is thus clear that private investments can enhance greatly the financial situation of Ramsar and allow the Convention to be more practical, more efficient on the ground and, as with the DANONE Fund, communicate better.

-- reported by Sebastià Semene Guitart

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