blue oil water and finance - united nations environment programme finance … · 2007-12-15 ·...

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DEDICATED TO MAKING A DIFFERENCE

2007 Global Roundtable – Awareness to Action

How business can contribute to development in difficult local environment

UNEP Finance Initiative

Melbourne - 24 October 2007

Jürg Gerber, COO WBCSD, Geneva, Switzerland

Blue Oil

Water and FinanceAligning MDG7 with Business Opportunity

Perspective from the broader private sector

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• The starting point: water and finance facts

• Governance and rule of law

• WBCSD and Development

• WBCSD and water

• Way forward

Agenda

KAF Brussels WBCSD 1 Oct 07 Ge

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Awareness / mindset - drinking water – sewage - health

connect (Foto: Ghana 2006)

Source:Alcan

UNEP FI Melbourne 24 Oct 07 Ge

Who can change this?

- Facts are available, but what about:

- Knowledge and understanding at

- micro level

- macro level

- Governance and responsibilities

- Quality of projects to improve

- Leadership

Comparable situations exist in the

developed world, but less visible:

- broken water supply pipes

- leaking sewage systems

Efficiency of treatment

Impact on groundwater tables

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Water in development - Societal needs

About 2.3 billion peoplesuffer from diseases linked to dirty water. 1

Rural populations especially lack basic sanitation.

Clean water is essential for drinking, cooking, washing and sanitation. Yet too many people lack this basic need . . .

Source: World Bank. World Development Indicators 2005.http://devdata.worldbank.org/wdi2005/Section1_1_7.htm

Water-related diseases account for more than 5

million deaths each year. 1


What does it mean that half of the world’s population lives in urban areas ?

Many exposed in river deltas or next to seashore

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Risk Management on Global Water Issues

� Requires an understanding of a company’s water needs in relation to local externalities:

� Water availability – current and projected� Water quality� Water “stress” – people, environment and agriculture� Access to safe drinking water sources� Access to sanitation� Population/industrial growth

� Company’s needs = owned operations, employees, and supply chain…….and ultimately customers


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Water use around the world

Industrial use of water increases with country inco me, going from 10% for low- and middle-income countries to 59% for high-income countries.

Source: " Water for People, Water for Life." United Nations Water Development Report, UNESCO, 2003.http://unesdoc.unesco.org/


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Access to

finan

ce –a so

cietal need

Source for figure: Indicators of Access to Finance through Household Level Surveys: Comparisons of Data from Six Countries. August 2007. Authors: Anne-Marie Chidzero (FinMark Trust), Karen Ellis (UK Department for International Development), and Anjali Kumar (World Bank).Data sources: FinScope and World Bank.

Did you know

that…O

nly 1 billion of the world’s population are believ

ed to have bank accounts.1

Form

al and informal access-channels to finance

Source: 1C

onsultative Group to A

ssist the Poor. «

Mobile phone revolutionize A

frican banking»

UN

EP

FI M

elbourne 24 Oct 07 G

e

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Financial Flows:

Where does private capital flow?

Source: The World Bank. 2007. Global Development Finance 2007

Sub-Saharan Africa

5%

Latin America and Caribbean

48%

East Asia and Pacific

15%

Middle East and North Africa

2% South Asia5%

Europe and Central Asia

25%

More capital is going to East Europe and Central Asia and to East Asia and Pacific regions

Total net private capital flows to developing count ries

Sub-Saharan Africa

6%

South Asia6%

Middle East and North Africa

4%

Latin America and Caribbean

14%

Europe and Central Asia

42%

East Asia and Pacific

28%

20062000

The poorest 51 countries were

recipients of only 8% of total capital flows. 1


In 2006, net private capital flows totaled US $647 billion, a record

high, dwarfing official development assistance. 1

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ODA: Official development assistance

Source: Organisation for Economic Co-operation and Development, Development Assistance Committee


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Key challenges: limiting progress

• Lack of transparency and accountability both on the part of donors and recipients

• Need for good governance and sound regulatory frameworks� Comprehensive and equitable taxation policies

needed� Favorable banking regulations and sound financial

policies• Persistence of corruption• Laws need to keep pace with technological

change, to reduce transaction costs


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What can business contribute?

• Private investment and financing for large development projects

• Advise on regulatory reform and auditing procedures• Invest directly in local companies, assist with

transfer of technology• For financial institutions and insurance companies:

provide banking and insurance services for local entrepreneurs

New opportunities exist for business to actively en gage with thedevelopment community, participate in development p rocesses, andinfluence the development agenda.


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Assessing Governance

The World Bank identified six

criteria for assessing

governance

World Bank. “Governance Matters 2007” http://govindicators.org (27July 2007)

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Measuring rule of law today

Sou

rce:

Wor

ld B

ank.

“G

over

nanc

e M

atte

rs 2

007”

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://go

vind

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Lack of respect for the rule of law deters local entrepreneurship and

foreign investment.

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One belief…… business cannot succeed in societies that fail

The paradox….. business cannot solve poverty….but poverty can never be solved without business

The good news #1…… more and more Governments, IGOs, Development Agencies and NGOs recognize the need to engage with business

The good news #2…… business can and is doing more business with low income communities

The bad news…… examples of successful scaling up are nowhere near enough to achieve the MDG target

WBCSD and Development


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MDGs

Development community

Globalization

Companies

Developing countries

Framework for actionCentral role for the private sector

Donors looking for ODA-FDI synergies NGOs more willing to work with businessNew business opportunities Growing public expectations

Growth strategyCorporate reputationImproving framework conditions Efforts to attract and retain FDI

�Convergence of objectives & realization that business is the main engine of wealth creation

The business case for companies engaging in

development


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FOCUS on your core competencies :Play on your key strengths; More likely to tackle an issue effectively; Make a viable business.

PARTNER across sectors:Common goals, different skill sets; Many willing partners in the development community encouraging PPPs; Partnerships across industry sectors.

LOCALIZE the value creation:Operating in emerging economies means that the « usual » infrastructure and support systems may be missing; Tap into local network and local knowledge.

…and INNOVATE along the value chain

Doing business with the poor: a field guide.WBCSD (2004)

Business engagement: The golden rules


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Business guide to development actors

� Aims to introduce the business community to potential partners in the development community.

� Intended audience for this guide is business managers looking to work with development organizations, but who are unclear where to start in the search for effective partners.

� Guide & online database available at http://www.wbcsd.org/web/devguide.htm


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The global view: SME contribution to

Employment and GDP

SME contribution to employment and GDP (median values)

For government , SMEs contribute to wealth creation and generate tax revenues.

SMEs constitute an important source of local supply and service provision to larger corporations.

SMEs have extensive local knowledge of resources, supply patterns and purchasing trends.

In society , they are an important source of employment.

In business , SMEs represent an important source of innovation.

Source: World Bank


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Which legacies need to be un-

locked to enable more sustai-

nable water practices and

more appropriate solutions?

Who should have a seat at

the table for fair water

allocation and why?

What could be a governance

Structure for a more holistic

water management and what

could trigger it being set up?

Questionsfor

discussions

WBCSD Global Water Scenarios to 2025


2020

WBCSD Water Tool: Do you know…

• How many of your employees live in countries that lack access to improved water and sanitation?

� How many of your sites are in extremely water- scarce areas? Which sites are at greatest risk? How that will change in the future?

� How many of your suppliers are in water scarce areas now and will be in 2025?


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WBCSD Water Tool: Data Credibility

• Dataset owners gave permission to WBCSD for use in the Tool • Original datasets have not been modified• The datasets

� Have global coverage� Are available in the public domain� Are considered valid by the global community of water

stakeholders � Are recent � Will be updated

World Health Organization & UNICEF Joint Monitoring Program (JMP)

Food and Agriculture Organization (FAO) AQUASTAT

University of New Hampshire (UNH), USA

World Resources Institute (WRI)


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WBCSD Water Tool: Benefits

• Compares your company’s water uses (including staff presence, industrial use, and supply chain) with key externalwater-related data

• Creates key water GRI Indicators, inventories, risk and performance metrics and geographic mapping

• Establishes relative water risks in your company’s portfolio to prioritize action

• Enables effective communication with internal and external stakeholders on your company’s water issues

• Allows calculation of water consumption & efficiency

FREE and EASY-TO-USE


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Mean Annual Relative Water Stress Index

Ratio of Industrial to Total Water Use

Access to Improved Water Access to Improved Sanitati on

Many Global Maps available


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What are the challenges to improved water

management?

� Missing infrastructure and financial resources� Competing water demands from other sectors – need

for a better focus on catchment area capacities� Stringent regulatory frameworks needed� Lack of incentives for private investment� Lack of transboundary cooperation and collaboration

Challenges include :

Water is free from nature, but infrastructure neede d to deliver water is expensive.

Inadequate access to water is not necessarily due to lack of freshwater available, but rather a lack of infrastructure to deliver water and sanitation services.

For many people, it

is a struggle to meet

daily water needs,

including having to pay for the high costs of

this necessity.

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How can business contribute to improve water

management?

• Develop innovative solutions to� Offer affordable and accessible solutions at the base of the pyramid� Reduce the water footprint of local industry

• Maintenence of existing infrastructure� Introduction of leak detection technologies

• Participate in market-based mechanisms� Water quality trading, payments for wetland protection

• Enter into creative partnerships with� National government

and local authorities� Local communities � Non-governmental groups� Donors� The scientific community

What can government do?�Create incentives for private sector investment �Encourage water savings among businesses and individuals�Discourage the practice of water contamination


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Latest WBCSD publication


Doing Business with the World

The new role of corporate leadership in global development

• 10 Topics

� Ecosystems

� Education and Training

� Energy

� Enterprise Development

� Financial Flows

� Governance

� Health

� Mobility

� Trade

� Water

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Thank you!

[email protected]

www.wbcsd.org

DEDICATED TO MAKING A DIFFERENCE


blue oil water and finance - united nations environment programme finance … · 2007-12-15 ·...

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