Advancing Sustainable DevelopmentThrough Innovation

I S S U E 3 M A Y 2 0 0 7

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E-mail: info@iisd.ca Web site: http://www.iisd.orgIISD Linkages: http://www.iisd.ca

Bring your walkingshoes and sunscreen!June 13-15, 2007 | The IISD Board ofDirectors Meeting is taking you back to 1874 to rediscover the sustainableways of our past and to explore thehistory of the Canadian prairie.Sustainability today requires new technology and new ways ofthinking. But it also requires taking a look back and rediscoveringthe sustainable ways of our past. IISD is taking our Board ofDirectors and invited guests on a tour of 1874 on the Canadianprairie. A guided tour through the Mennonite Heritage Village inSteinbach, Manitoba, will be a treat for our international guestson June 13th. The next day will be a full one with the Board ofDirectors meeting being hosted by Loewen Windows. LoewenWindows recently celebrated its 100th anniversary and was

recognized last year as the first North American window anddoor manufacturer to receive the Forest Stewardship Councilchain of custody certification.

Repast that evening will be a “100 mile dinner”. Focused onfoods grown and produced within 100 miles of the event, thedinner will feature the prairie produce of Manitoba’s finest farms.Guests will also be treated with traditional Mennoniteentertainment at the Heritage Village.

The final day of this event-filled Board of Directors meeting willinclude hands-on activities at the Heritage Museum, such asgrinding wheat in the windmill, making bread, seeding withheritage seeds and tours of the late 1800s buildings.

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Emissions trading, an integral part of the Kyoto Protocol, works muchlike any market: One company can pay another to reduce emissions onits behalf, which lowers the overall cost of pollution reduction. Canadais one of the few developed countries that doesn't yet allow firms toget credit for participating in global emissions markets.

Environment Minister John Baird recently indicated, however, for the firsttime that he may be open to including international trading in hisforthcoming climate change plan. This announcement was a majorsurprise, and a welcome one. For several years, the federal Conservativeshave said international emissions trading is ineffective and a waste oftaxpayers' money. But nothing could be further from the truth —emissions trading is one of the essential tools needed to preventdangerous levels of climate change. It also is essential to help the world'spoorest countries achieve development without imperilling the planet.

Carbon dioxide is the main greenhouse gas. When CO2 is emitted, itmakes its way up into the atmosphere, where it circulates and lasts fordecades, causing changes in our climate on a scale not seen in modernhuman history. The impact is global; a tonne of CO2 emitted in Indiaaffects us just as much as a tonne emitted in Canada.

The recognition of CO2 emissions as a global problem inspired thecountries of the world to come up with an ingenious solution whenthey met in Kyoto in 1997. They created the Clean DevelopmentMechanism, allowing countries to achieve part of their greenhouse-gasreductions through emissions trading. This novel idea was driven bythree realities:

■ First, because industrialized countries have been the primary cause ofglobal warming (they produce 75 per cent of the world's CO2 with just20 per cent of the population), they need to take the first steps toreduce emissions.

■ Second, it is essential to get developing countries involved inemissions reductions as soon as possible, because if they fuel theireconomic growth using old, dirty technologies (the way we did), it willspell disaster for the Earth's climate.

■ Third, including developing countries in the Kyoto regime lowers theoverall cost of reducing emissions, since there are many opportunitiesfor low-cost reductions in poor countries.

The Clean Development Mechanism allows rich countries (includingCanada) to buy emission reduction credits from developing countries.

The choice of the word “credit” was unfortunate; it makes it sound likeno real reduction is occurring, when in fact there will be every bit asmuch reduction — it's just that it will happen somewhere else, andhave just as much benefit for our climate. Maybe a better term wouldhave been clean development “investment.”

Lately we have heard some federal politicians (and others) say thatCanada would have to ruin its economy to meet its Kyoto targets. Butwhen they say that, they are ignoring emissions trading. They areassuming Canada has to meet its entire Kyoto target through domesticcuts. But that is not what Kyoto requires; it says that countries will meettheir targets through a combination of substantial domestic cuts plusinternational trading. If Kyoto had allowed only domestic cuts, Canadawould never have agreed to such an ambitious reduction target.Canada and other countries set their Kyoto target knowing they couldbe met, in part, by investing in clean development abroad.

Emissions trading is not new. It was first invented by Canadianeconomist John Dales in 1968 and has since been used with greatsuccess. For example, the U.S. program to reduce acid rain usesemissions trading, and has achieved 25-per-cent greater emissionsreductions at 40-per-cent lower cost than through conventionalregulation. The success of the U.S. program inspired Ontario to developits own acid-rain emissions trading program.

So we know emissions trading can work. In fact, on a global scale, itworks a lot like international development aid — only better. Each year,Canada spends billions helping poor countries improve theirenvironmental, health, and socioeconomic conditions. Global emissionstrading is simply another form of development aid. In fact, it is some ofthe most effective aid we can give, because it helps poor countriesdevelop in climate-friendly ways. That helps them and it also helps us,since Canada will be one of the countries most affected by globalwarming, as we're already witnessing in the Arctic.

If designed well, emissions trading will help poor countries bysupporting clean development and help us by lowering the cost ofKyoto compliance and reducing the emissions that threaten our future.

Stewart Elgie is an environmental law professor at the University ofOttawa. Dan Gagnier was a senior vice-president of Alcan, Inc. and isthe chair of the International Institute for Sustainable Development.

Emissions trading:Like foreign aid, but better. BY STEWART ELGIE AND DAN GAGNIER

Web-exclusive CommentSpecial to Globe and Mail Update March 21, 2007

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The short answer is no. Whileestablishing appropriate programs andinitiatives might mean some initial costs,ultimately CSR saves a company money.The majority of activities done underthe CSR banner relate to increasingenergy efficiency, reducing energywaste, recycling, reducing packaging,transportation costs and paper costs,and increasing corporate efficiency.

But companies need to look furtherdown the road, beyond the bend of

the next fiscal quarter. They need to see their company's futureby viewing the innovation, increased productivity, energysavings, reduced environmental footprint, reduction of waste,and new product design and development that come with abusiness model guided by sustainable development principles.They need to view their CSR investment as leading the way tothe final destination of corporate sustainability. Along the way,the benefits will become evident.

As a company's efforts to become sustainable grow inrecognition, so, too, will their reputation of providingprogressive leadership and quality management. This will helpa company increase employee motivation, engagement, loyaltyand creativity. Attracting prospective and passionate employeesis easier when sustainability is the guiding principle behind thecorporate logo.

Awareness of CSR and environmental issues also brings abouta new breed of consumers. These customers are passionateabout the environment, aware of their own carbon footprintand wanting to build a relationship with a company, ratherthan simply blindly buying their products. It is theserelationships that can and do build a sustainable corporationand world.

Sustainability isn't just a new “green” fad for today'scorporations. It just makes good business and global sense.

From “Greed is Good”to “Green is Good” BY DAN GAGNIER

Published in Embassy Magazine April 18th, 2007

One of the most important and sustaining features of themarket economy, is its ability to rapidly transform itself.Companies sense the changing economic and social climate,and can quickly shift from making buggy whips to cell phonecovers. They can also quickly modify their products to meetpeoples' growing expectations. It is that inherent flexibilitythat will ensure economic growth, even while the planetaddresses environmental degradation and climate change. Infact, business will not only increase, but it will be at theforefront of the changes that need to occur to ensure thewell-being of our economy and environment.

Corporate social responsibility (CSR) has evolved over the pastthree decades into an established, integral part of a globalbusiness operation. While largely unheard of in the “greed isgood” era of the 1980s, corporate social responsibility is nowan important part of the “green is good” new millennium.Corporate divisions and functions which carry titles such ascorporate sustainability or sustainable development areincreasingly the norm. Directors are not mere figureheads,standing on the sidelines and brought in only for photo ops;they are at the decision-making tables, advising seniormanagement about the direction in which their company canmove forward sustainably.

So let's deal with the most fundamental question: Does CSRincrease a company's costs?

“In today's trust-starved climate, our market-driven systemis under attack ... large parts of the population feel thatbusiness has become detached from society, that businessinterests are no longer aligned with societal interests...The only way to respond to this new wave of anti-business sentiment is for business to take the lead and toreposition itself clearly and convincingly as part of society.”–Klaus Schwab, president of the World Economic Forum, speaking in Davos,Switzerland, to the world's top business leaders. Newsweek, February 2003.

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For more information about the IISD Innovation Fund, contact:Sue BarkmanDirector of Fund DevelopmentTel: +1 (204) 958-7700Fax: +1 (204) 958-7710sbarkman@iisd.ca

IISD's vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States.IISD receives core operating support from the Government of Canada, provided through the Canadian International Development Agency (CIDA), the International Development Research Centre (IDRC) and EnvironmentCanada; and from the Province of Manitoba. The institute receives project funding from numerous governments inside and outside Canada, United Nations agencies, foundations and the private sector.

Edited by: Oli Brown and Mark Halle, IISD; Sonia Peña Moreno and Sebastian Winkler, IUCN.Published by Earthscan.

Speaker: Dr. Lloyd Axworthy, President and Vice Chancellor of the University of Winnipeg, andformerly the Director and CEO of the Liu Institute for Global Issues at the University of BritishColumbia, and Canada’s Foreign Minister from 1995 to 2000.

“The reality is that badly designed trade and aid policies are too often increasing thelikelihood and longevity of violent conflict.” Dr. Lloyd Axworthy – Foreword

We invite our donors to continue to learnmore about sustainable development and thework that we do here at IISD. The InnovationFund program offers our staff the opportunityto explore and develop new and innovativeconcepts related to sustainable development.Please visit our website often at www.iisd.orgto catch up on the latest commentaries,books, research material and events.

Contact Sue Barkman, Director, Development and Community Relations for more informationabout how you can partner with IISD in promoting global sustainable development.sbarkman@iisd.ca

IISD BOARD OF DIRECTORS

Daniel Gagnier, Chair

Stephanie Cairns

James Carr

Angela Cropper

John Forgách

Roger Gibbins

Chuck Hantho

Laxanachantorn Laohaphan

Charles N. Loewen

Måns Lönnroth

Claude Martin

Gordon McBean

Mark Moody-Stuart

Khawar Mumtaz

Robert Page

Mohamed Sahnoun

Mary May Simon

Tensie Whelan

Milton Wong

“A compelling contribution to our evolvingunderstanding of the links between trade, aid andsecurity and what the international communityneeds to do to ensure peace and development in the world” Achim Steiner, Executive Director, UNEP

The International Institute for Sustainable Development (IISD) and The WorldConservation Union (IUCN) are pleased to announce an important new book.

Trade, Aid & Security: An Agenda for Peace and Development

IISD & IUCN Book Launch Friday, June 8, 2007, 10:00 am to 11:30 amInternational Development and Research Council (IDRC)14th flr., 250 Albert St., Ottawa

The Innovation Fund keeps growing!

THE I ISD INNOVATOR is publ i shed by the Internat iona l Ins t i tute for Susta inab le Deve lopment

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