Financial Times

Malawi, Laos poor in income but ahead on environment
Sri Lanka far behind in sustainable development
When Peter Harrold, World Bank, Country Director and chief guest spoke at the recent ACCA Sustainability Reporting Awards, his message was about the need for companies to become more responsible when it comes to corporate behaviour.

He commended ACCA for taking the initiative to launch a programme that would encourage the corporate sector to be transparent and accountable in reporting its economic, environmental and social policies, impacts and performance.

“It is encouraging to note that the interest of the corporate sector to participate in this programme is growing,” he said. Pointing out that sustainability reporting tries not only to understand what’s happening in a particular business, “but also seeks to understand how an organisation sees its products and services in the context of sustainable development”, a development that meets the needs of the present generation without compromising future ones.

“High economic growth rates are a pre-requisite for poverty alleviation. Yet we don’t need this growth to be a short-term phenomenon. It must be sustainable. But sustainable development cannot deliver all desirable policy objectives, and in practice we would expect there to be trade-offs among competing goals such as sound economic policies to foster growth and a better environment,” he continued.

Sri Lanka was the first in Asia to prepare a National Environmental Action Plan in 1992. Therefore, “the country does not lack a sustainable development plan, but needs to urgently improve its poor record of implementation”.
The 2005 Environmental Sustainability Index (ESI), which benchmarks national environmental stewardship, has alarming news for Sri Lanka. Countries such as Malawi, Tanzania, Bosnia Laos, Cameroon, Botswana, Mali, and Papua New Guinea are a few that are ranked well behind Sri Lanka in terms of income but well ahead in their quest to ensure environmentally sustainable development.

“This implies that Sri Lanka’s economic growth is not environmentally sustainable,” he said. The effectiveness of Sri Lanka’s management of its natural resources is seriously questioned by the ESI ranking,” the director said.
Mr. Harrold noted that it was interesting to see that the resources that need better management were the ones that can be considered common property or public goods. “In Sri Lanka, the price of the use of a resource held in common is zero at present. For example, no charges are imposed on a power plant or industry that obtains water from a river and then discharges pollutants,” he said.

It was also noted that the absence of proper regulations and management opens the door for individuals or corporations, acting in their own self-interest, to abuse the commons; where the costs of the abuse are shared by all.
“The legislative and regulatory approach alone, as practiced here, does not appear to be sufficient to reverse the trend of natural resource degradation that is leading Sri Lanka down a path towards unsustainable development,” he warned.

“The 2005 ESI should be considered a ‘wake-up call’ for Sri Lanka — government, private sector and civil society. The time to translate words into action has arrived. Sri Lanka’s development programme should be based firmly on ensuring sustainability.”

These days sustainability reporting is a first step towards the acceptance of transparency and accountability of an organisation’s economic, environmental and social performance.

It was also noted that “sustainability reporting is only a means to an end”, with the next logical step being an environmental and social audit to determine the extent of the problem and what action needs to be taken.

It seems these days that environmental consciousness tends to influence purchasing choices in the west. Environmental NGOs are calling upon western consumers to “buy green” or buy products manufactured in countries that conform to internationally acceptable environmental norms. While this trend may not be widespread at present, it would be wrong to underestimate the power of persuasion. “Regulatory pressure should have little to do with Sri Lanka’s corporate sector conforming to environmental standards and better management of your local ecosystems. It just makes good business sense!” the director said.

In his concluding remarks, Mr. Harrold said he was once told that in rural areas people don’t harvest all the fruit off trees in their homes, even though their livelihood may depend on it, leaving some fruit for the birds and squirrels. “I think the time is right to take a page from their book and leave some of our natural resources for future generations,” he said.

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