xiv

Transformations for Sustainable Development

EXECUTIVE SUMMARY

The 2030 Agenda for Sustainable Development is an aspirational call for action with a short time frame for delivery. In the lead up to its adoption, “transformation” became a buzzword, with much talk about transformation for sustainable development and how it would require additional finance, technology and greater capacity. But what does that mean in practice?

This report takes a step towards explaining that needed transformation. It proposes reframing and re-prioritizing the relationships between the economy, the society and nature through transformations in four areas—social justice, investment flows, economic structure and resource use.

These transformations will be fundamental to shaping the regional megatrends that are already defining the future of the Asia-Pacific region. They will determine what environmental pressures will be further created and the scale of those pressures, as well as who and how many people will be affected. In this new agenda, urbanization, economic and trade integration, rising incomes and changing consumption patterns must deliver, rather than undermine, sustainable development.

This report focuses on environmental sustainability in Asia and the Pacific. It examines the four areas for transformation through an environmental lens, highlighting policy and practical initiatives that hold transformative potential while recognizing the important links with the social and economic dimensions.

FOSTERING TRANSFORMATION

The urgency of the transformations needed cannot be overstated. While the benefits of past transformations, such as the green revolution or the industrial revolution, took decades to emerge, the transformation to sustainable development has a much tighter time frame, given the threats posed by climate change and other aspects of environmental change, increasing competition for resources and intensifying consumption pressures.

Top-down actions by government must foster the scaled expansion of bottom-up innovations and alliances between stakeholders. Government action in reforming structural framework policies and conditions, underpinned by shared values and a broad societal consensus that change needs to occur, is a decisive driving force in transformations for sustainable development.

xv

The role of the State is to support the creation, clustering and scaling up of good practices or “niches” for transformation. Changes in policy and institutional frameworks must recognize and reshape incentives, harness stakeholder values and provide direct support for innovation to scale up and nurture niches—areas for sustainability innovations, such as renewable energy, organic agriculture, green buildings and investments that support sustainability. Transformational policies will proactively align the interests of diverse stakeholders.

We must pay attention to creating the conditions that enable change on a wide scale by changing mindsets and behaviours. Among these conditions is the recognition of environmental limits in policy at different levels. There is evidence from the region where environmental limits are already shaping policy: There are greenhouse gas emission caps at the city level, constitutionally mandated forest cover targets and greenhouse gas intensity and renewable energy targets. A strong science-policy interface will have an important role in making these initiatives effective.

The potential of technology to facilitate transformations should be actively harnessed by science, technology and innovation policy. Investments in research and development should be guided by wider societal interests. The industrial revolution, the information technology revolution and the emergence of the knowledge economy provide examples of the role of technology in catalysing transformations.

RESHAPING THE RELATIONSHIPS BETWEEN THE ENVIRONMENT, SOCIETY AND THE ECONOMY

TRANSFORMATIONS FOR SOCIAL JUSTICE

Wide disparities exist in access to life-sustaining natural resources, such as food, water and energy, among different population groups in the region. Lack of access is more prevalent among the rural populations, impoverished households and women. Increasing access to natural resources for these population groups requires a human rights approach to development.

Changing inequitable outcomes requires a change in inequitable processes that produced them. Initiatives to redress these inequalities are emerging, although often at the local level, including community-based management of natural resources, corporate and civil society partnerships and participatory budgeting.

Governments can create the enabling conditions to accelerate these emerging and existing efforts. Doing so would trigger the transformation that redresses inequalities by translating international commitments into national frameworks and laws adhering to the principles of human rights. It would enlarge spaces for multistakeholder participation, promote access to information and promote more equitable flows of investment. Transparent governance and political will to engage stakeholders to achieve the 2030 Agenda are needed for social justice transformation to reduce inequalities.

xvi

Transformations for Sustainable Development

TRANSFORMING ECONOMIC STRUCTURES

Many economies are undergoing economic transformations in a context of severe environmental constraints related to climate change, land use change and resource availability. Globalization and other changes mean that the patterns and characteristics of more recent growth processes already diverge from the experience of industrialized countries. The most urgent actions involve increasing the productive capacities of developing countries, fostering sustainable consumption and production, keeping within environmental limits to improve economic resilience and addressing income inequality.

Aligning regional megatrends, such as economic integration, with sustainable development requires structural changes in the incentive framework to get the prices “right”. Also needed are long-term investments in sustainable development, low-carbon economic infrastructure and strengthening the transformative capacity of economies. Emerging niches, such as renewable energy and innovative business models that are based on social entrepreneurship, present strong potential for supporting economic structural transformation.

Technological innovation will be an important contributor to achieve sustainable development but it will not be sufficient. The new economic transformation needs to be built around a shift from resource-intensive and environmentally destructive patterns of development to sustainable ones. A shift in the balance of inputs (including all types of resources) involved in the process of production must complement sectoral shifts.

As economic structures change, so do the skills required. Investments in education to ensure that populations are able to adapt and benefit are needed to deliver an economic structure transformation that is also just.

TRANSFORMING INVESTMENT FLOWS

Mobilizing the Asia-Pacific region’s capital is essential for achieving the Sustainable Development Goals (SDGs). Too little investment is supporting the transition to a green economy, and too much continues to be invested in high-carbon and resource-intensive, polluting economies.

Transforming financial flows will address systemic issues. These include environmental externalities that remain unpriced and the rules and incentives governing financial markets that disadvantage long-term perspectives in decision-making and consumption and production behaviour. The impacts of environmentally and socially beneficial investments are inadequately valued. Such market distortions can lead to a misallocation of capital and increase the potential risk to an economy and flow of ecosystem services.

There is an urgent need to act to accelerate the transition to a green economy by better directing the financial system towards building the resilience and the long-term success of an economy. This means more effective regulations and policy initiatives that support sustainable development objectives. The region is rich with good practices on financial market policy and regulatory innovations that support the greening of financial systems.

xvii

TRANSFORMING RESOURCE USE

Trends in material, energy and water use indicate significant scope to improve the efficiency of resource use in the region. Transformation towards sustainable resource use could be achieved by high-level policy action to reform the incentive frameworks that govern resource use and investments. Among the structural policies that are important are those that address pricing mechanisms, nudge consumers, manufacturers and investors to make sustainable choices and enable and reward innovation of more efficient and less polluting technologies.

These policy reforms help to nurture and create bottom-up actions that increase demand for resource-productive products and services. Introducing policy reforms also means getting rid of inefficient policies. The SDGs and the management of urbanization present critical opportunities to invest in infrastructure and processes that can lead to sustainable resource use for decades to come.

CAPACITIES AND REGIONAL COOPERATION FOR DRIVING TRANSFORMATIONS

Governments must develop the capacity to set a clear direction for transformations and initiate strategies to steer society in that direction. Mainstreaming shared societal values into legislation, discourse and practice is critical when the issues are complex and when the power and capacities of different stakeholders to shape agendas and ideas are highly unequal. Governance should be adaptive and emphasize monitoring, learning and reflection.

There must be government capacity to implement structural changes. While there is a range of literature discussing the various policy instruments, what is lacking is discussion on how to create the conditions that enable the follow-through on policies. Managing such politically complex processes requires confronting issues of power and vested interests and recognizing the values of all stakeholders. Implementing structural changes also requires the capacity to recognize and act on political windows of opportunity that may arise during times of crisis.

Capacity to manage the transformation process will determine the outcomes. Managing transformation means coordinating top-down State-driven actions with support for stakeholder alliances and innovations, mitigating any distributional impacts of transformation and coordinating horizontal and vertical actions to respond to complex multisector and multidisciplinary issues. The role of local governments and capacity to create spaces for meaningful citizen engagement through legislation and policy are important elements when managing transformation.

Regional cooperation holds the potential to establish shared normative visions and can help to align regional megatrends with the needs of sustainable development. Regional trade and investment frameworks and responses to common regional challenges (urbanization, energy security and resource scarcity) must be used by governments to facilitate joint investments in strategic niches that have high transformative potential. Emissions trading systems, for instance, would deliver more environmental and economic benefits if the geographic coverage is larger. Transformation needs to be underpinned by a “skills revolution” in learning and innovation capacity and facilitate the flow of knowledge, technological know-how and financial resources.

xviii

Transformations for Sustainable Development

The most crucial issues in the environmental domain that require regional investments in research revolve around understanding and monitoring regional and local thresholds of planetary limits. Good practices in increasing energy efficiency, renewable energy, green buildings, public transportation systems and technological innovations are emerging that can facilitate peer learning across the region. The Asia-Pacific Forum on Sustainable Development can facilitate this, particularly in the context of mobilizing the means to follow through on the SDGs, to follow up and review the progress towards the 2030 Agenda and garnering mutual support for transformations.

The opportunities for delivering on the expectations of the wide range of stakeholders who invested time and resources in shaping the 2030 Agenda for Sustainable Development has never been greater. As United Nations Secretary-General Ban Ki-moon emphasizes, “What counts now is translating promises on paper into change on the ground.”