Pavan Sukhdev sees “multi-dimensional crisis” if corporations don’t become greener

Crisis could hit by 2020 and combine Malthus and Marx’s worst predictions.

Pavan Sukhdev, a former executive at Deutsche Bank who has emerged as a leading corporate social responsibility (CSR) and biodiversity advocate, warns that if companies do not begin moving toward a green economy, the world will face a “multi-dimensional crisis” by 2020.

“We have tracks called the green economy, but the engine, which is the corporation, has to be re-engineered to move in that direction,” said Sukhdev who spoke during the recent Suscon conference in Bonn. “If it isn’t, you’ll see some combination of Malthus and Marx’s predictions that we can’t imagine today.”

The English economist Thomas Malthus theorised at the start of the 19th century that the world could not feed an ever-expanding human population. Later that century, the German economist Karl Marx predicted that capitalism would fail, as there was only so much exploitation the working class would tolerate.

Sukhdev, who after leaving Deutsche Bank joined the United Nations Environment Programme (UNEP) as a project leader, said that to avoid the disaster of 2020, four measures had to be taken:

  • disclosure of externalities – i.e. corporate reporting on the environmental impact of their business;
  • resource taxation – i.e. ending “perverse” and subsidies on agriculture and fishing that waste natural resources;
  • accountable advertising – i.e. removing the sheer profit-motive behind advertising and getting firms to inform consumers about such matters as product lifespan, country of origin and disposal;* limited leverage – i.e. limiting the financial risks banks and other corporations may carry. The measures are outlined in a new book called “Corporation 2020.”

Of the four measures, Sukhdev believes the most progress has been made on externalities, as multi-national firms like sport shoe maker Puma, software firm Infosys, food group Unilever, and UK airline Virgin Atlantic are publishing data on their environmental impact. “But even if people like Jochen Seitz (outgoing Puma CEO) and some others are leading on this issue, there is still a huge gap between them and the followers,” he said, adding that he and other CSR experts were developing a set of standards and guidelines to enable other firms to follow Puma’s example. The effort is a consequence of The Economics of Ecosystems and Biodiversity (TEEB) study that Sukhdev helped compile in 2010 (see interview below). As far as the other measures are concerned, the Sukhdev was less sanguine, noting that politicians were standing in the way of progress: “It’s easy to see how beholden they are to corporations. Who, after all, provides their campaign funding? Corporations. Who provides three-quarters of GDP growth and employment? Corporations. Taxes to finance the budget? Same answer.” Sukhdev said. He added: “Luckily, corporations do not have a vote. So the challenge is to make politicians aware that they are not there for corporate profits but for the good of the people.”

Link to RI’s previous interview with Sukhdev