Shaping the next industrial revolution.

• Author: Flavin, Christopher
• Position: Environmentally sustainable development

The need to achieve an environmentally sustainable world is shaping the evolution of the global economy. Ecological pressures increasingly will influence economic decisions, making some industries obsolete while opening up a host of new investment opportunities. Companies and nations that fail to invest strategically in the new technologies, products, and processes will fall behind economically- omicafly and miss out on the jobs these new industries provide.

The size of the world economy has quintupled since 1950, bringing unprecedented, though unevenly distributed, prosperity to many nations, but much of the affluence has been borrowed from future generations. Destruction and degradation of natural assets-air, land, water, forests, and plant and animal species-have subsidized the profits of many businesses in the late 20th century. For industries around the globe, the debts are coming due.

Sulfur dioxide, hydrocarbons, and other pollutants flow in immense quantity from smokestacks, fouling the air and shortening lives. Billions of tons of greenhouse gases that enter the atmosphere each year are expected to make the Earth warmer during the next century than it has been for the last 100,000 years. Heavy metals, PCBs, and thousands of other chemicals find their way into the rivers, lakes, and seas, while chlorofluorocarbons have damaged the protective layer of ozone in the upper atmosphere. The relentless search for new sources of timber, fuels, and minerals is bringing destructive development to the far corners of the planet, disturbing the remaining storehouses of biological and cultural diversity.

Laws enacted by some countries to address these environmental threats have yielded many gains, from lower sulfur emissions to reduced water pollution levels. However, the challenge ahead is more fundamental-going beyond pollution controls and better management to reshape industries in order to make them environmentally sustainable. Responding to problems such as global warming and the loss of biological diversity will require the revamping of today's enterprises, such as chemicals and paper, and the creation of entirely new industries.

Primary responsibility for creating an environmentally sustainable econontic system lies with elected governments, which represent the interests of society as a whole. Governments set the rules for environmental improvement, while consumers and local communities create the pressure for change- The challenge is to adopt policies that make economic and ecological imperatives converge, redirecting market forces to achieve the environmental goals. Since private businesses focused on earning profits, it is up to governments to ensure that the most profitable investments are the ones that are environmentally sustainable. Policies ranging from well-crafted regulations to taxes can be used to attain these goals.

In a world where private industry controls the bulk of capital investment, accounts for the preponderance of jobs, and provides trillions of dollars worth of goods and services each year, its role in damaging the environment-or ultimately in sustaining it-is central. In the end, it is industry that has the technological capacity, management skills, and investment capital to achieve an environmentally sustainable economy. Many large, diversified corporations-some with annual revenues that exceed the gross national products of many nations-now have the power to shift investments among continents as well as industries and to determine, in large part, the health of the environment. Small businesses also play a big role. While many have worse environmental records than large corporations do, they also contribute disproportionately to technical innovation in many industries.

Without the active participation of businesses of all sizes, there is little hope of achieving a sustainable global economy. In order to move forward, they will have to embark on extensive internal reforms that better equip them to respond to fast-moving environmental issues and opportunities. In a competitive global economy, corporations that allow themselves to fall behind will face serious financial risks. In short, those that fail to invest in the future may find they do not have one.

As the number of environmental concerns has multiplied in recent years, it has become clear that no corner of the Earth is unscathed and no industry free of responsibility for the dilemma that today's and future generations face. Gradually, focus has broadened from simple air and water pollution to sweeping problems of land use such as deforestation and soil erosion, and then to the long-range threats of ozone depletion and global warming. In the 1970s, it seemed that environmental issues could be solved one at a time through simple, focused solutions mandated by governments. Today, fundamental changes are inarguably necessary and, in some cases, already being pursued.

Once seen as a distraction to the real business of business, ecological awareness is becoming an engine of the next Industrial Revolution. It now is pervasive in traditional "dirty" industries, such as chemical manufacturing and metals processing, as well as high-tech and service industries, such as computer manufacturing and food companies. Businesses are likely to prosper in the future not by selling massive quantities of identical products-the traditional route to economic success-but by meeting consumer needs in the most efficient way possible. They will have to supply energy "services," rather than electricity; information," rather than a newspaper; and crop protection, rather than pesticides. The challenge of the coming environmental revolution is likely to include alterations in manufacturing processes, the adoption of new agricultural techniques, and the development of alternatives to fossil fuels...