Logo

Passionate about investing

What is Sustainability

21 November 2012

Sustainability is a concept that is much talked about in today’s world which is a good thing because every individual, organization and country should consider it in its actions. Although it is usually very vaguely presented it raises some very relevant and interesting questions. Questions like what happens to our pollution rates if everyone in China and India is driving a car and what are the consequences? How much rainforest has been terminated in Brazil and is there a critical limit and why should we care about it? What happens to the coral reef at the coast of Australia which shelters millions of different species and how does it affect the hungry child in Africa?

There are many more of these kinds of questions. However, all these can be summarized by the question whether we should consume now at the expense of the well-being of future generations? The concept of sustainability takes into account the resources we use up and the resources we leave behind. This includes as well the environment we built, the productive capacity we created and technological knowledge we developed. All resources are limited and once used up only renewable ones can be renewed, and only if the necessary requirements are met. On the other hand one may argue that resources are fungible, which means goods and services can be substituted one for another.

There is no reason for our society for using up one particular input as long as we don’t leave behind a capacity to perform the same or analogous functions using other kinds of material. But which materials, which functions on the earth can we actually substitute and which can we not?

A correct principle, a correct general guide is that when something irreplaceable is used up, whether it is a forest, minerals or a fish species, a substitute of equal value should be provided. But here a fundamental problem of sustainability comes into play due to the vagueness in the notion of value. Whatever this might be, a material or a physical object, it can be knowledge or technology; it should be investment in the capacity of the future.

For functions to the earth that the rainforests and coral riffs have, we do not have valuable alternatives. And at this moment there is too much destruction, raising the risk for all living beings on this planet. Therefore this behavior must be stopped. However, to some extent I can understand local communities or individuals who terminate forests or overfish the seas. They want to provide for themselves, they want to provide for their families. I believe, given that we would be in a situation some of the poorest among us are, most of us would act in a similar manner. These are people who sometimes have no alternative and can change little if nothing to their initial situation. For those people, alternatives have to be developed so that a sustainable source of income is generated, not harming the society or the environment. This is particularly difficult in countries like in Cambodia where there is not enough capital to make or attract the right investments. How can you expect the indigenous person who has to feed his family to not go into the forest close to where he lives and cut down some timber only because some first world people are worried about their grand grandchildren while he is facing the dangers of survival, today.

Sustainability is a matter of distributional equity between current consumption and providing for the future.  In fact if we do not act sustainably we free ride on each other and we free ride on the future. Current environmental protection contributes to sustainability if it comes at the expense of current consumption and not at the expense of investment. Investment is so important because it adds to the capacity of the future.

The concept above was taken from a famous lecture on sustainability given by Solow in 1992 and is often referred to as the best description of sustainability till today. The paradox Solow sees in the concept of sustainability is the inconsistency in the concern of the well-being of future generations but no concern for the well-being of poor people today. While there are still people suffering today and this is a fact, we restrain our production possibilities and resource consumption to lower the eventual suffering of people in the future. Sustainability is investment into the future. Today’s poor want to consume. They do not have the means to invest. Therefore investing in sustainability also means creating alternative resources and income generating opportunities for those whose life are altered by our investments into the future. Sustainability is investment into the future, but also by improving our capacities today. Knowledge is such a capacity and it is even an environmentally neutral asset that can be contributed to the future.

Today’s global challenge is sustainable development. For poor countries this is even more difficult to achieve because the lower your income the more you invest into the present which means the more you consume relative to your income. Therefore it is only natural to find that low- and mid-income countries are investing less in sustainable development than high income countries do. For the case of Cambodia that is easily demonstrated when looking at the bad examples of land logging, dispossession and other terrible things that have happened because the government had no choice than giving away the land to the highest bidder without the means for concern about the characteristics of the investments.

This only shows the importance for sustainable investments into Cambodia, a country that has struggled so much in history. Every land concession which gives a good example for sustainable development can show the government that there is an alternative source of income, one that does not only give immediate rents but also protects the environment and society. Therefore we should create sustainability by investing in sustainable development including creating alternatives to the resources that should be saved, for the people who depend on it.

To say in in the words of Jeffrey D. Sachs, voted for one of the most influential persons in 2004 and 2005 and author of several bestseller books about economic and environmental sustainable development: “We need to defend the interests of those whom we’ve never met and never will.”

For me all these arguments are very convincing. We should change our policies, our habits, our way of thinking and try to reach for the long-lasting goals, the sustainable ones. And this is partly what is happening right now. Although the path is not always a straight line, people  have realized it is the only one to take; the only correct path humanity has to follow. But the change cannot only come from above. Sure, the concepts the ideas and models are more likely to be made and thought of in top universities and institutions. But there is enough publicly available knowledge to stand on the shoulder of giants no matter how small the project of your own interest. The concept of sustainability is an all-embracing concept. I, personally, am more than happy to help this organization, Broadgate Financial and its subsidiary Broadgate Plantations  to develop a clear plan on how to become more involved in sustainable development and how to design policies and bring them all the way to the implementation in all its facets.

Although this blog does not elaborate on specific solutions for some of our problems in particular; it was not intended to. Even if I wanted it to, it could not, because they all differ too much from one another, and even should not because there is no one single panacea. This paper intends to lay the foundation and show the direction of our future efforts. It intends to highlight that the world has changed, we have to adapt to it and we have to face the new challenges that have come with it. This implies keeping track of our use of resources; how much and which processes we are using when generating and consuming them and who has access to them. However, the importance of investments when changing towards a more sustainable world cannot be elaborated enough. Therefore, on my next blog I will focus on the importance of investment in sustainable development and show it at the case of Cambodia, a country desperately in need for investment.

 

David Max Schuetzeberg

Plantations Support Officer

david@broadgatefinancial.com