Greening value chains, delivering on growth and sustainability (en)

28 avril 2015
ITC Nouvelles
Statement by ITC Executive Director Arancha González at the launch of the IISD-UNEP publication 'Trade and Green Economy: A Handbook'

Good afternoon and thank you for the invitation to debate about the interaction between international trade and the environment, against the backdrop of United Nations Sustainable Development Goals.

Developing a sustainable green economy- and increasingly moving towards a blue economy- is a priority of all countries and above all those that are more vulnerable to the effects of climate change, especially SIDS and LDCs.

However there remains some tension - often due to the lack of evidence-based information - on the relationship between trade and this notion of a green economy.

Some see this relationship as a challenging one. Through the work of the ITC, we have seen the opportunity for these two pillars to be mutually supportive to ensure “environmentally sustainable trade impact for good”.

The book that we are launching today provides evidence, stories and a series of tools for a roadmap on the role that we - individually as organisations and collectively as the one-UN – can play to help developing countries use trade as a platform for sustainability rather than as an input for environmental degradation.

Without the necessary regulatory framework, trade may increase pressure on environmental resources and lead to a faster path to environmental damage. If harnessed effectively within a 'whole of economy' approach, it can be a catalyst for positive economic, social and environmental change.

Trade has an important role to play in enabling this transition and the handbook published today by UNEP in collaboration with IISD and ITC is a valuable contribution to understanding the linkages further. I thank UNEP and IISD for this partnership and look forward to close collaboration in other areas.

Placing the Green economy as a central policy can be an important tool for achieving sustainable development and poverty eradication. There is a path to mitigate negative environmental impacts of trade and promoting sustainable growth through trade. The lessons from this book show that raising trade barriers may not provide the right solutions. Whereas pricing carbon and introducing strong national environmental legislation may do. The example of Costa Rica who in March 2015 moved towards generating 100% of its electricity from renewables provides an interesting example of the above.

Much has been written about the virtuous circle between trade and green economy. Today I would like to focus on what this means for suppliers and for buyers.

First it means that the crosscutting and interdisciplinary nature of environment, trade and development issues can reverse many of the negative externalities that may derive from some forms of economic development.

Trade is a driver of poverty reduction. The absolute decrease in global poverty has had an important engine in the expansion of global trade and emerging countries are today spurring the green economy. But this goes beyond emerging economies, overall developing countries invested over $ 130 billion in green energy in 2014.

Trade is helping spread innovative technologies and facilitating insertion into value chains. And value chains can indeed enhance economic and resource efficiency of production processes. And while we focus a lot of attention on goods, a growing part of trade is about services. This includes environmental and energy services and trade in ideas, and new technologies that allow developing countries and remote communities to leapfrog technology increasing efficiency and reducing wastage.

Trade represents huge livelihood opportunities for low income groups in rural areas across the developing world. But turning this opportunity into realities will require addressing supply side constraints. This is why Aid for Trade and trade facilitation measures are key avenues for building the capacity of developing countries to participate meaningfully in the green economy.

Both have a clear role in supporting the development of hard and soft infrastructure to allow countries most exposed to climate change consequences to be more efficient. For example by fostering national- or regional-level accredited institutions for conformity assessment; or supporting cleaner and more energy efficient production; or helping create national standards bodies; or supporting countries tap into the potential of the circular economy; or fostering more sustainable agri-food value chains.

Aid for trade can raise awareness about these issues, for example how simplistic “food miles” arguments may sound good and do little to reduce carbon emissions while damaging trade development prospects for vulnerable countries. Aid for Trade can help suppliers meet sustainability standards and through that contribute to greening value chains. This is why ITC has invested in developing a global public good called “Standards Map” to provide transparency on several hundred private voluntary standards so that both buyers and sellers of certified goods can understand and meet these standards.

The impact of these pro-trade but also pro-environment policies can have a great impact on vulnerable groups in these economies such as women producers who make for the bulk of the poor in rural communities, empowering them in agriculture with environmental knowledge and technologies for both environmental and trade growth purposes. In Kenya, ITC is training thousands of tea and coffee farmers on climate smart agriculture techniques. The result of these interventions is a more resilient environment (less greenhouse emissions, less firewood consumption) with increased income streams. In short, greener value chains.

The second element is from a buyer perspective. Indeed there is still a lot that can be done to promote sustainability from the consumer side. Let me give you an example on one very important buyer and often forgotten: public procurement made by government entities. The value of public procurement expenditure is globally over 10 trillion per year, and can account for up to 40% of GDP in some developing countries. Of this market SMEs represent less than 15% and women owned SMEs less than 1%.

Public procurement, in many instances, is no longer only about price, performance and availability. It is about the best value for money, while maximizing the social and environmental benefits to people and the economy. Sustainable Public Procurement is becoming an increasingly important item on the international agenda, as it is at the core of Goal 12 of the United Nations Sustainable Development Goals which aims to "ensure sustainable consumption and production patterns".

A number of public entities have introduced policies to support sustainable standards in public procurement. Some are also using public procurement to foster inclusiveness by promoting policies to procure from SMEs or from women vendors, such as Kenya, Uganda, Samoa and Rwanda to cite some examples.

Access to public tenders information is costly and difficult. Many companies based in developing and least developed countries are excluded from this market due to lack of information. This is where, for example, green economy could mean more opportunity for SMEs and for trade and development. This is why ITC is developing a new on-line tool to help companies gain knowledge and understanding over procurement opportunities and sustainability and inclusiveness policies and standards. This is yet another example of how we can turn value chains in the new green gold.

This brings me to my final point about innovation.

While the green and blue economies create new opportunities for SMEs in better connected markets, we need – and indeed are - supporting some of the most innovative and creative players in the economy overall (in renewable energy, in biodiversity resources management, in wildlife protection) and it is these players – essentially the private sector - that we need to work with in order for economies to benefit fully from the opportunities that globalization and technological change offer for better societies.

I commend this publication as a powerful instrument in our tool box that will help developing countries and their business community better connect trade policies and green economy opportunities.

Thank you for your attention.