Canada and Agenda
21Canada and Agenda
21
CHAPTER 33
Financial Resources and Mechanisms
-- Matthew Kiernan --
Dr. Matthew Kiernan is the President of the Innovest Group International, S.A. The views expressed in this chapter are those of the author who has received comments from a number of stakeholders, and do not necessarily reflect the views of the Projet de Société.
THE NATURE OF THE PROBLEM
To ensure the implementation of the activities recommended in Agenda 21, very large investments are needed. Although most of this funding will come from national public and private sectors in both North and South, special collective efforts will be required by the international community to ensure that developing countries have the necessary financial and technological resources to meet their Agenda 21 commitments.
Sustainable development strategies and enhanced and predictable levels of funding in support of longer term objectives are clearly needed to ensure global sustainability. Funding mechanisms therefore must be put in place to provide "new and additional financial resources that are both adequate and predictable" if the objectives of Agenda 21 are to be met. At the same time, this emphasis on additional resources must not be allowed to distract us from the enormous potential which exists to mobilize and redirect existing capital flows towards a more sustainable development trajectory.
PROGRAM AREAS AND OBJECTIVES
Chapter 33 has three primary objectives, which are fundamentally related to the implementation of all the other chapters of Agenda 21:
(1) To establish measures concerning financial resources and mechanisms for implementation of Agenda 21;
(2)To provide new and additional financial resources which are both adequate and predictable; and
(3)To seek full use and continuing qualitative improvement of funding mechanisms to be utilized for the implementation of Agenda 21.
Some of the key elements for achieving these objectives include;
reaffirmation of the official development aid (ODA) 0.07% GNP target;
consideration to be given to the concept of an Earth Increment to the World Bank International Development Association (IDA);
review of debt relief measures;
government reporting to United Nations General Assembly (UNGA) 47 on financial commitments;
no new forms of conditionality to be attached to Global Environmental Facility (GEF) funding;
GEF to be restructured; and,
developing countries to begin to prepare national plans for sustainable development.
CANADIAN POSITIONS AT RIO
1.Official Canadian Position
Canada has been committed to addressing the financial resources question and, in particular, making a funding contribution that will be both fair and equitable as well as realistic -- given domestic economic realities. With regard to the funding of Agenda 21, the starting point for the Canadian position was that more effective use should be made of existing bilateral and multilateral ODA as well as private sector financial flows. Canada did not support the establishment of a separate Green Fund, in part because it was felt that this might detract from efforts to integrate environmental considerations more comprehensively within all aspects of ODA spending.
Canada did, however, support the replenishment of the Global Environment Fund, and committed itself to pay its fair, proportional share. Canada views the GEF as the forerunner of the permanent financial mechanism for implementing both the climate change and biodiversity conventions. GEF is therefore viewed as being of major and strategic importance.
In addition to GEF, Canadian Green Plan resources have been dedicated to support the following major international environmental initiatives:
Montreal Protocol Multilateral Fund;
United Nations Environment Program (UNEP) Fund; and
United Nations Development Program (UNDP) Capacity '21.
2.Non-Governmental Organizations
Canadian NGOs called on Canada to meet its ODA targets. They were clearly disappointed with Canada's refusal to commit to specific timetables for meeting its ODA commitment.
Canadian NGOs also urged for Canada not to redirect current development aid flows to cover the costs of Agenda 21, but rather to commit to new and additional resources to cover these costs. Likewise, they expressed concern that the mere pledging of new monies through the Breton Woods institutions will not solve, but rather exacerbate current environment and development problems. As well, NGOs lobbied for government to look favourably upon a Green Fund, and not just continued contributions through the GEF and ODA, as a good financial source for sustainability projects.
On the question of debt, Canadian NGOs urged for Canada to support the alleviation of all remaining government and commercially held debt of developing countries. Moreover, that immediate debt relief be provided through expansion of the "Trinidad Terms" to cover multilateral bank debt.
A major criticism held by many Canadian NGOs is that Agenda 21 does not direct attention to reducing the global trade in arms, which is worth over $1 trillion U.S. annually. They contend that Canada should move to make aid assistance to lesser developed countries (LDCs) conditional upon a curbing of military expenditures in recipient countries. Canadian NGOs also urged the Delegation to show its support for the peace dividend concept.
3.Business and Industry
On the whole, Canadian business and industry adopted a positive and constructive approach to Agenda 21, acknowledging that industry has a major leadership role to play. As society's principal generator of wealth, employment, and innovation, private industry has the means to make a major contribution. And, as the principal generator of environmental degradation, industry has the responsibility.
Some concern from business arose over the question of new funds. Concern was also raised over the tendency to regard economic instruments as a source of generating new public and private financial resources to finance environmental needs. This is based on the premise that any inclination to design economic instruments for their revenue raising potential should be resisted. Rather, they should be designed in such a way as to actually influence changes in corporate and consumer behaviour.
4.Indigenous
Indigenous Peoples identified the need for support for the creation of Indigenous Peoples' financial institutions which hold indigenous values and promote Indigenous development. This can be modelled after the concept of the Indigenous Peoples' Fund that is being supported by the Inter-American Development Bank. These institutions must be controlled and managed by Indigenous Peoples.
In addition to financial institutions there is a need to support the creation of Indigenous Peoples' non-government (local, regional, national and international) organizations oriented towards development. These are essential to Indigenous Peoples for the purposes of fulfilling their development, capacity building and local control needs. Moreover Indigenous NGOs are vital for the establishment of new relationships, in terms of interaction and communication, between them and the Western NGOs and other international organizations.
COMMITMENTS MADE BY CANADIANS
1.Legally-binding Documents
None.
2.Political Pronouncements
The Green Plan provides the framework for sustainable development in Canada, and also creates the context for Canada's international initiatives in this area. The Canadian Prime announced the following commitments at the Earth Summit:
Canada will convert $145 million in debt held in Latin America countries into environment and sustainable development projects;
Canada will allocate $16.6 million to the Brazilian Rainforest Pilot Program, created under the auspices of the G-7;
Canada's annual contribution to the UNEP will double over the next five years from $1.1 million to $2.2 million.
Canada will provide $2 million to a $10 million program under the UNDP to help developing countries prepare national sustainable development plans.
Canada will expand the mandate of the International Research Development Centre (IDRC) to emphasize sustainable development issues, particularly in the context of developing countries. And in a domestic environment of acute fiscal restraint, IDRC's annual funding of $115 million will be preserved and dedicated in large part to the implementation of Agenda 21.
Canada will allocate $10 million to work with Brazil, Mexico, and Malaysia to establish sustainably managed forests along the lines of the model forests concept now being developed in Canada.
Prime Minister Brian Mulroney also reaffirmed Canada's commitment to achieving the target of providing 0.7% of Canada's annual GNP to ODA.
3.Alternative NGO Treaties and Kari-Oca
NGO Treaties
At the same time as UNCED, two major international events were also held at Rio. One was the International Non-Governmental Organization Forum (Global Forum). At the Global Forum, 3,100 NGOs discussed a number of matters related to environment and development and produced a parallel set of documents: an NGO Earth Charter and 38 Alternative NGO Treaties. Canadian NGOs played a significant role in developing the Treaties and took a lead in coordinating their dissemination. Of these treaties, one addressed the issues discussed in Chapter 33.
NGO Debt Treaty
As part of the NGO Debt Treaty, one pledge made was to, "(h)old Northern countries accountable to the minimum level of Overseas Development Assistance (ODA) at 0.7% of Gross National Product; while working to ensure that financial flows to the South support ecologically, socially sustainable, and participatory development; with the ultimate goal of eliminating the dependence of the South on this form of assistance."
Kari-Oca
The second alternative forum at Rio was the International Conference on Territory, Environment and Development (the Kari-Oca Conference). The Kari-Oca Conference was held immediately prior to UNCED by and for the world's indigenous peoples. More than 650 indigenous representatives participated in meetings and cultural events during the conference, where they also developed and adopted a 109-point Indigenous Peoples Earth Charter. Of these, one referred directly to the subject matter of this chapter.
Statement number 107 declared that, "(A)t local, national, international levels, governments must commit funds to new and existing resources to education and training for indigenous peoples, to achieve their sustainable development, to contribute and to participate in sustainable and equitable development at all levels, particular attention should be given to indigenous women, children and youth."
DEFICIENCIES, GAPS AND CONSTRAINTS WITHIN CHAPTER 33
One major and fundamental conceptual weakness of Chapter 33 of Agenda 21 is its exclusive focus on "new and additional financial resources". As Rio amply demonstrated, any attempt to generate new and incremental funding in the current global economic climate is likely to be extremely difficult, time-consuming, and unproductive. Moreover, in focusing on incrementality, the Chapter overlooks the considerable opportunities which could be created far more readily by leveraging existing resources more strategically and effectively.
A thorough review of mainstream capital markets and their activities is vital. In the specific context of global finance, a concerted effort is needed to harness the power of the mainstream capital markets and redirect at least some of their considerable momentum in the service of sustainable development objectives. Most contemporary analyses of environmental problems focus on industrialists, regulators, or consumers, with varying degrees of responsibility assigned in each case. In fact, however, it is capital markets which provide greater leverage on environmental issues than any of the three sets of actors usually deemed to play key roles. The conditions upon which both debt and equity financing are made available, ultimately determine the quality, environmental and otherwise, of the resulting projects. Subsequently, attention must be placed on changing the basis upon which money is loaned and invested for necessary resources to be made available for Agenda 21, and other sustainability related initiatives. In doing so, the need for Agenda 21's "new and additional financial resources" would be reduced accordingly.
The most promising vehicles for accelerating this necessary transformation might include the following:
1.Changing federal and provincial tax regimes to encourage a longer-term, sustainable investment perspective.
2.Creating and using indicators of corporate financial performance which are broader, more comprehensive, and more strategic than the traditional accounting indicators. Foremost among the new indices would be some systematic method of appraising companies' capacity for strategic environmental management.
3.A recognition by the Canadian banking and financial industries of the need to move beyond a "disaster-avoidance" mind-set towards a new paradigm of investment analysis which systematically seeks out environmentally-driven opportunities.
4.Greatly improved "information transparency" and reporting requirements for corporate environmental performance. These requirements generally fall under the jurisdiction of provincial securities regulators.
5.New venture capital instruments to promote the development of early-stage environmental technology companies.
6.The creation and implementation of a national, 21st century economic development strategy which consciously utilizes environmental regulation and legislation as catalysts for developing environmental industries and technologies.
In addition to its focus on new and additional resources, the Chapter is also inadequate in a number of other ways. Firstly, it does not discuss any prioritization of program areas, given the huge sums needed to fully implement Agenda 21. Secondly, the feasibility or practicality of raising funds from the mentioned sources is not addressed. Thirdly, there was no discussion regarding the tremendous sums of money spent through military and defense budgets ($ 1 trillion per year) and the need for the reallocation of military expenditures by both developed and developing countries to sustainable development.
COMPARISON BETWEEN CURRENT CANADIAN GOVERNMENT POLICY AND COMMITMENTS MADE
For some years, Canada has committed itself to providing 0.7% of its annual GNP to ODA. Moreover, at Rio Prime Minister Brian Mulroney reaffirmed Canada's commitment to achieving this target. In 1991-92 however, Canada committed only 0.49% of its GNP to ODA due to economic pressures. More recently, economic considerations have again affected Canada's ability to reach the ODA target of 0.07% of GNP.
Canada's current investment in both national and international organizations such as the IDRC, IISD, CIDA, World Bank, IDB, ADB should, however, be noted. These existing financial resources and mechanisms are of particular importance for meeting the challenges of Agenda 21. Additionally, through the IDRC and CIDA, Canada provides support to numerous international and national NGOs involved in environmental and development activities related to a variety of programs.
With respect to Canada's fledgling environmental industry, there is a potential role for the Canadian government to act as a catalyst. A number of encouraging signs are already visible, including federal support for the early-stage development of a key new industry NGO, the Canadian Environmental Industries Association. In addition, plans are well advanced to develop three major new centres for environmental technology innovation and commercialization. All of these initiatives, and others, should be viewed in the context of strengthening Canada's competitiveness in a knowledge-based, 21st century global economy.
CANADIAN ACTIVITIES EVOLVING THROUGH THE SUSTAINABILITY PROCESS
One distinctively Canadian contribution to the international sustainable development movement has been the creation of a number of high-level Round Tables on environment/economy issues. Round Tables exist at national, provincial, and local levels, and have done much to elevate awareness, debate, problem-solving, and the integration of environmental and economic perspectives.
In addition, an extensive network of Canadian NGOs provides financial assistance, both nationally and overseas, to promote and support various types of environment and development programs and activities. Similarly, steps are also beginning to be made within the business community to generate financial resources and mechanisms for implementing sustainable development strategies. Currently targeting 10% of corporate donations to environmental projects, Falconbridge is an example of such a corporation. They are also aiming to raise this amount to 20% of corporate donations.
The Canadian Government, NGOs and business representatives have been monitoring and been involved in the discussion on financial resources at the United Nation's Commission for Sustainable Development.
Within the Canadian NGO community, there is an increasing degree of discussions on where, how and why Canada uses its own financial resources domestically and how Canada could increase its level of financial assistance to developing countries,. NOGs are not only looking at the "traditional" suggestions of increasing financial assistance and rediverting military resources to the South, but are also looking at possibly ways that Canada could structure its financial resource allotments in a more sustainable way. For example, NGOs are focusing not only on finding "new and additional resources" , but they are also concerned that funds do not go through old and obsolete spending patterns which have been found to be ineffective and unsustainable. These discussions range from the international to the nationals to municipal perspectives.
In addition to looking at how Canada could increase its level of financial assistance to developing countries, NGOs have also been discussing how Canada could increase its level of financial assistance to the major groups which were identified within Agenda 21 such as youth, women, NGOs, indigenous peoples, farmers, etc. (see Chapters 23-32) as having essential roles in achieving global sustainability.
OTHER RELEVANT INTERNATIONAL SUSTAINABILITY-RELATED FORA
United Nations Commission on Sustainable Development (CSD)
Earth Council
[Set 4,0] Global Environmental Facility (GEF)
[Set 4,0] International Chamber of Commerce (ICC)
[Set 4,0]World Industry Council for Sustainable Development (WICE)
[Set 4,0]Business Council for Sustainable Development (BCSD)
SUGGESTED READINGS AND INFORMATION SOURCES
Culpepper, Roy. Managing the Global Commons: The Economic Setting and Financial Options (Ottawa: The North-South Institute, September, 1991).
Government of Canada. Canada's Green Plan, (Ottawa: Environment Canada, 1990).
. Canada's Green Plan and the Earth Summit, (Ottawa: Environment Canada, 1992).
. Canada's National Report: United Nations Conference on Environment and Development Brazil, June 1992, (Ottawa: Environment Canada, 1991).
International Development Research Centre (IDRC). Agenda 21: Abstracts, Reviews, and Commentaries, (Theodora Carroll-Foster, editor), (Ottawa: IDRC, 1993).
. The Global Cash Crunch: An Examination of Debt and Development, Search Series 5, 1992.
Keating, Michael. Agenda for Change: A Plain Language Version of Agenda 21 and the Other Rio Agreements, (Geneva: Centre for Our Common Future, 1993).
Kiernan, Matthew. The Colour of Money, Environment Risk, March 1993, pages 34-36.
. International Business: the Quick and the Dead, EcoDecision, December 1992, pages 43-47.
MacNeill, Jim, Cox, J. and Runnalls, D. CIDA and Sustainable Development: how Canada's aid policies support sustainable development in the Third World more effectively, (Ottawa,Institute for Research and Public Policy (IRPP), 1990).
Runnalls, David. "What's Gone Unsaid at UNCED: Institutional and Financial Options for Sustainable Development".
United Nations Association in Canada (UNAC). UNCED: Institutional and Financial Options for Sustainable Development, Briefing Paper 30, (Ottawa: UNAC, 1991).
World Commission on Environment and Development. Our Common Future, (Oxford: Oxford University Press, 1987).
Information Sources:
Business Council for Sustainable Development (BCSD)
Earth Council
Global Environmental Facility (GEF), c/o World Bank, 1818 H Street, Washington DC, 20433, USA, tel: (202) 473-1053, fax: (202) 477-0551.
International Chamber of Commerce (ICC), 38, Cours Albert 1er, 75008, Paris, France, tel: (33-1) 49-53-28-28, fax: (33-1) 42-25-86-63.
United Nations Commission on Sustainable Development (CSD), Department of Policy Coordination and Sustainable Development, Room S-3060, United Nations, New York, N.Y., 10017, USA, tel (212) 963-5959.
World Industry Council for Sustainable Development (WICE), 40 Cours Albert 1er, 75008, Paris, France, tel: (33-1) 49-53-28-28, fax: (33-1) 42-25-86-63.
Cite as: Projet de société: Canada and Agenda 21.Winnipeg: IISD, 1995. Online. Internet. http://iisd.ca/worldsd/canada/projet/c33.htm.
