Speech to the Business & Environment Program Delivered at
San Francisco's Ferry Building on Mon. 7th Nov. 05 -- Part 1

By His Royal Highness Prince Charles
November 28, 2005

HRH Charles, Prince of Wales
Part 1: Concern for a World in Peril

I am enormously touched and flattered by such a warm and friendly welcome here in this remarkable part of the world, in this particularly remarkable city.

And -- although after talking to you all for the last hour I am going to lose my voice! -- I just did want to say that it seems far too long since I was last in California. It really must be something like 29 years ago that I picked up this splendid tie! It is wonderful to be back here in this wonderful part of the world again with my darling wife.

And, if I may say so, I am so glad that you still have in this city the wonderfully evocative sounds of the trams in San Francisco and that they haven’t changed. It is a very evocative sound, I promise you. It reminds me of the sound of our trams all those years ago. It was also a great treat to see some of the rural side of the state -- Marin County a few days ago. But what fascinates me is the way the state here has become both an economic powerhouse and the center of so much environmental thought and action.

I am told that one of the first issues faced by the newly formed state government in the 1850s was what to do about the debris from hydraulic mining for gold. And, of course, similar challenges of reconciling prosperity and the natural world have been faced ever since.

This dilemma in our society has been highlighted in our own age by the sheer extent of the impact our technology can make on the natural environment. That is why, eleven years ago, I set up my Business and the Environment Program, specifically to challenge business leaders to understand and engage with a wide range of environmental and social issues. Since then, more than 1,200 senior business people have attended the Program’s four-day seminars, creating a powerful alumni network. In addition to being the foremost learning program on sustainable business in the United Kingdom, it has also had huge success in Continental Europe, on the East Coast of this country and in Southern Africa.

The B&EP Comes to California
I am delighted that this occasion marks the launch of the Business and the Environment Program here on the West Coast, and I am enormously grateful to all those whose generosity has made today’s event possible.

I receive a lot of very enlightening feed-back from the people who attend the seminars. They tell me that the sheer pace and intensity of everyday business life makes it difficult for them and their colleagues to see the big picture. As a result, environmental considerations can be all too easily overlooked. But it is equally clear that, when business leaders do have the opportunity to concentrate on these issues, and are convinced by what they hear, they have extraordinary capacity to make things happen.

For instance, in 2004, Fred Buenrostro, Chief Executive of this state’s Public Employees Retirement System pension fund, CalPERS, took part in our seminar at Cambridge University in England. When he returned, he talked to his counterpart in the state teachers’ pension fund and the two organizations have now jointly committed $1.5 billion to sustainable investments. They have also taken a series of other actions to secure environmental benefits through their investments. This sort of leadership is not without risk, as you can imagine, in the rather conservative world of investment management, and I am particularly pleased to be able to acknowledge it here in California.

Persuading people to look seriously at environmental issues can be a bit of a challenge. I know -- I’ve tried it for quite a long time! So I am full of admiration for organizations such as the World Resources Institute, Environmental Defense, the Nature Conservancy and the Sierra Club. They and others do really magnificent work in raising awareness of both problems and solutions. But there are always calls -- from both believers and disbelievers -- for ‘more science’ and ‘better data’. So the publication of the Millennium Ecosystem Assessment, commissioned by the United Nations and drawing together contributions from more than 1,300 experts around the world, was an important milestone. Incidentally, I really do recommend you all read it as a matter of priority.

The Millennium Ecosystem Assessment
The Millennium Ecosystem Assessment shows quite clearly that, in the words of the authors, "human activity is putting such strain on the natural functions of the Earth that the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted." The report goes on to describe climate change as "a chemical experiment humans have been conducting on the atmosphere for the past century and a half," and says it is an unprecedented challenge to the resilience of the Earth. Coming from the United Nations, this is pretty powerful stuff...

In Europe, we have recently faced extraordinary droughts, heat-waves and flooding; perhaps partly as a result of climate change. All the serious scientific advice we receive indicates that we will see more of these and other damaging consequences as climate change starts to bite. So we can easily understand the concerns in this country that similar effects, such as the predicted potential for increased ocean temperatures to drive more intense hurricanes, may be seen here -- if, indeed, they are not already having an impact. It is certainly not a coincidence that the insurance industry, which needs to look harder and further ahead at risks than most, has been in the forefront of identifying the potential consequences of climate change.

It seems that there is now almost complete global scientific consensus about the links between climate change and developments such as the rapid changes to Arctic sea ice and major reductions in permafrost in Russia -- and this appears to be better reflected in the media and public discourse than previously. At the recent East Coast seminar of my Business and the Environment Program, there was almost unanimous agreement amongst the business delegates that climate change is indeed a current reality and that it is imperative there is no further delay in finding and implementing a full range of appropriate responses. But, of course, the $64,000 question (allowing for inflation and the exchange rate!) is whether we can rise to this challenge quickly enough...

Carbon Down; Profits Up
Now, anyone who might be inclined to doubt the commitment of major businesses, on both sides of the Atlantic (and indeed around the world) to taking action should look at the publication "Carbon Down; Profits Up" produced by the Climate Group.

This documents the achievements of business, cities and whole regions in reducing emissions and deriving significant economic benefits from doing so. One of the most significant examples quoted concerns this state. California, which, of course, is also the world’s sixth largest economy, has already saved $20 billion in electricity and natural gas expenditures and, by 2011, forecasts saving a further $57 billion. Among companies, GE stands out for its Ecomagination initiative, which will see $1.5 billion invested every year into clean technology by 2010.

In addition to climate change, the Millennium Assessment and many other recent scientific reports provide us with stark warnings (and they are stark) about other growing environmental problems, such as over-fishing, desertification, loss of forests, declining freshwater aquifers and nutrient pollution.

Addressing all these threats to our long-term survival will clearly require a massive and coordinated response from all sectors of society and in all nations. We simply can’t go on as we are. Somehow we have to find the courage to re-assert the once commonplace belief that human beings have a duty -- a duty -- to act as the stewards of creation.

An important first step will be to stop arguing about how we got into this situation -- or, indeed, about whether the situation exists at all -- and start thinking creatively about what we need to do to start putting things right, before it is actually too late. We might start by inviting all concerned to accept that the world of business depends on the natural environment and natural resources, and not the other way round. That means that the business community, whether they realize it or not, has a common cause with a wide spectrum of environmental organizations in taking effective action on behalf of the natural environment.

Let me just explain that a bit further, because I know it goes against the grain of some people’s thinking. Long-term success in any business is achieved at least partly, I would have thought, through minimizing risks and building value. And neither of those things is going to be possible in the kind of unstable world of diminishing natural resources and degraded ecosystem services described by the Millennium Ecosystem Assessment.

In the 19th Century, we learned that to keep our economies growing it was necessary to invest in maintaining the social conditions necessary for that growth. We no longer argue about the importance of making investments in health or education or a social safety net – even though we will probably always argue about how best to do this. In the 21st Century, we clearly need to learn to invest in maintaining the environmental conditions for continued economic development. One of the hard lessons from the Millennium Ecosystem Assessment is that we are not yet investing enough in this area.

Against this background, it is tempting to argue that we will need a radically different economy to make real progress towards an environmentally secure and sustainable future. And perhaps we will. I don’t pretend to be an economist, but surely, we should first look at what we already have, and find ways to make it work better?

We Need a Radically Different Economy
The market economy has got us where we are today. For better or worse, we know how it works and we know that it has changed and adapted successfully in the past. Economic theory says that the market provides an efficient way of mobilizing resources -- such as capital, land and labor -- to improve people’s lives. But for the market to work in the cause of environmental sustainability, the price we pay for things would need to reflect accurately all the true costs of production.

This would mean factoring in all the costs of environmental damage and resource consumption. It would also be essential to look at the role of subsidies. Experience shows that, whatever their intention, subsidies tend to work against the protection and enhancement of natural capital. Too often in the past, even when introduced on environmental grounds, subsidies have ended up creating even greater, if unintended, disbenefits in other areas.

One of the dilemmas we face is that this sort of approach will inevitably require careful direction of entrepreneurial activity. Political courage, good judgement, well-designed regulations and wise fiscal policies are all essential if business endeavors are to produce benefits to the environment and to posterity, as well as to shareholders.

This, of course, is very much a role for Governments. The power of the consumer can also be harnessed in this process, to deliver additional signals about what is and is not acceptable and desirable in the eyes of society. But the consumer cannot make proper choices without a degree of transparency that is not always attainable. Cross-sector partnerships have much to offer in this respect, with initiatives such as the Diamond Development Initiative leading the way in demonstrating what can be done to inform consumer choice and drive change.

Concluded in Part 2.

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