ITC Executive Director speech at the Sustainable Economy Forum
12 April 2018
San Patrignano, Italy
Buon giorno Signore e Signori, è un piacere essere presente oggi qui in occasione del primo Forum Internazionale sull’economia sostenibile.
Ringrazio calorosamente Letizia Moratti per l’invito e la città di Rimini per ospitarci.
E’ un onore partecipare a questo importante evento e avere due partners quali Confindustra e San Patrignano adatti a guidarci nella discussione di questi giorni che non sarà solo su temi critici globali di sostenibilità e responsabilità, economia circolare, di crescita, finanza, empowerment femminile, Africa, il ruolo del settore privato ma anche di valori importanti per raggiungere alle radici chi ha piu’ bisogno.
Continuo ora in inglese per i molti relatori e ospiti internazionali presenti.
Over the last 30 years we have seen incredible progress.
In 1990, close to 40% of the global population lived in extreme poverty. Today less than 10% of us do.
In 1990, nearly one in five human beings was undernourished. Today, that proportion has been halved.
The rate of illiteracy has also fallen sharply. Today, we live longer than at any point in history.
More children, especially girls, survive infancy and go on to school than ever before. More people can reasonably expect opportunities to pursue more fulfilling lives.
Yes, the news headlines are frequently alarming. But our chance of dying in armed conflict have actually never been lower. If you could choose the timing of your birth, the best moment in history to be born would probably be today.
None of this means we can afford to be complacent. Our current pattern of growth and resource use is not sustainable. Climate change and water scarcity threaten to roll back the remarkable human development progress of recent decades.
At the same time, too many people, communities, and countries have not shared fully in our rising collective prosperity. More than 800 million people still live in hunger and extreme poverty, even as we waste 1.3 billion tonnes of food each year. More than 22 million people around the world are refugees, and twice that number are displaced within their home countries. There are pockets within many advanced economies where parents have reasonable grounds to fear that the next generation will be worse off. Over 1 billion women around the world still encounter legal and social barriers to economic opportunities – and our failure to empower them as equal economic actors is weighing on growth, including here in Italy.
The world faces two big challenges: sustainability and inclusiveness. The international community recognised this in the United Nations Sustainable Development Goals. These Global Goals represent our shared compass towards to eradicate extreme poverty by 2030 and leave no one behind.
So far so good. But the challenge now is to move from words to deeds and to action at scale. And for that I believe five ingredients will be essential.
1. Multilateralism, including on trade, as the most efficient means to deliver results
Both trade and multilateralism are key ingredients in eradicating poverty. Yet, both are currently facing headwinds.
The open global economy, anchored in the rules-based multilateral system, has come through for the most part – enabling developing countries to achieve fast growth, create jobs, and lift hundreds of millions of people out of poverty.
A lot of work still needs to be done to better ensure we include more people in the benefits of multilateralism – because the fact is that multilateralism is an indispensable part of our global DNA. Our shared interest in issues ranging from carbon emissions to disarmament, migration is proof of this.
As for trade, it is true that regional processes are also important. Africa’s recent adoption of a Continental Free Trade Area promises to spur value-addition and job creation across the continent. But some trade distorting policies, such as farm subsidies or industrial overcapacity, cannot be addressed by two or three countries or even a region. They can only be dealt with globally. And since one of the central problems in the global economy is the continuing marginalization of some countries we need effective fora where all countries are represented at the table!
2. Solidarity because what is good for others also makes you stronger
At its core, the notion of solidarity is simple: those that are doing relatively well do a bit to help those who are doing less well. We need solidarity between the traditional North and South, but also within the South, between small and big markets and within countries, as in Italy. We need solidarity to empower women as equal players in the economy. And we need solidarity to connect smaller businesses to international markets, because micro, small, and medium-sized enterprises, or MSMEs, account for the vast majority of jobs and are thus the key to making growth more inclusive.
Business has an important leadership role to play in promoting solidarity. Here I am talking about responsible conduct towards workers, governments, and the environment. But I am also referring to responsible sourcing. Small tweaks to big businesses’ procurement practices can make a major difference to the economic opportunities available to women entrepreneurs. Sourcing practices can also do much to promote environmental sustainability.
We see historically in Italy a strong sense of solidarity. Not just in terms of the way Italians have borne a large share of the EU’s migration challenges, but also the way big and family-owned firms are practicing new kinds of philanthropy. Devoting know-how, intellectual and financial resources to such philanthropy can be a useful factor in achieving environmental and social sustainability.
3. Change in our production methods and consumption habits
Production is business but consumption is citizenship. We need a new global compact on this – which is why SDG 12 focuses on sustainable production and consumption.
Consumers increasingly want to know how the goods and services they consume are produced, by whom, and how. The purchasing power of the “conscious” consumer is a key driver for sustainable and inclusive products. Businesses and governments have to respond in kind.
Investing in resource efficiency makes good environmental sense but is also good business. Consider food loss and waste, which from farm to fridge accounts for roughly one-third of agricultural production. Reducing this waste presents an enormous opportunity to tackle nutritional insecurity for the one in nine people in the world today who do not have enough food. Italy, to its credit, is on the front line in the battle against food waste: in 2016 it passed a law encouraging firms to give food away rather than disposing of it.
For producers and consumers alike, we need to build and promote sustainable value chains. The public sector has an essential role to play here. Tax and regulatory frameworks should ensure that prices reflect true environmental costs.
The private sector is a key driver in this area as well. Voluntary or private standards and codes of conduct help encourage production in line with certain quality, social, environmental and safety criteria.
Ferrero has announced that by 2020 it would use only certified sustainable cocoa, responsibly sourced sugar and improve the traceability of their main ingredient, hazelnuts. Unilever has committed to sourcing 100 percent of agricultural raw materials sustainably by 2020. These commitments show that doing the right thing can be profitable!
Our own research and experience working with companies and industry associations such as SAI Platform and Illy Café suggests that sustainability enhances competitiveness and leads to positive returns. Lead firms can invest in helping MSME suppliers in developing countries comply with sustainability standards – thus broadening their supply network while helping small businesses tap into international value chains. This is our experience in working with a handful of Italian companies in Sri Lanka and Afghanistan building sustainable value chains in dried fruits and saffron.
4. Multilevel action is required
As we work to reorder our economies, societies and production networks to place them on more a more sustainable footing, every level counts: global, regional, national and local. The presence here of the mayors of Rimini and Pemba and representatives of different cities sends a clear message that sustainability matters at all levels. Many answers for sustainability and responsibility are at local and individual level. German cities recycle 56% of municipal waste recycled. The Indian state of Tamil Nadu generates more wind power than Sweden or Denmark.
As part of their efforts to raise awareness about the local dimension of sustainability, the EU – in collaboration with ITC - has launched a “Cities for Fair and Ethical Trade Award”. I take this opportunity to encourage Italian cities to apply.
5. Global Values to underpin collective action
It may not be fashionable nowadays to talk about values. But I believe that we need a greater focus on values to drive collective action towards achieving the Global Goals. In fact the values that will get us to the 2030 Agenda are global: care about future generations, protect our environment from further degradation and preserve our biodiversity, foster peaceful and tolerant societies. San Patrignano proves that values drive positive change and impact. Values drive business, management strategies and consumer decisions. We need to leverage our values in order for them to be the foundations of the sustainability, responsibility and inclusiveness agenda.
Values underpin the very work of the International Trade Center.
Trade and investment openness means opportunities to exit poverty.
Inclusiveness for us means focusing on connecting MSMEs at the base of the pyramid, often in fragile, least-developed and post conflict states, to international markets. Inclusiveness also means promoting women’s economic empowerment through our SheTrades initiative and ensuring youth connect to economic opportunities. The women in business in Kenya who got credit from the local bank to export avocados to the Gulf; the young start-up in The Gambia who grows chicken to be exported to Senegal. These are some of the faces of ITC work.
Sustainability means equipping businesses with publicly available tools to support value chains and business practices which are compatible with our finite resources.
Responsibility means working hand in hand with partners, in particular business and civil society to drive change. Allow me to take this occasion to encourage Confindustria and its many partners to join hands with ITC as potential buyers from the base of the pyramid, as sources of investment and as providers of technical expertise and know-how. Italy, with its strong clusters of MSMEs and excellence in sectors from fashion to food to technology, has a great deal to offer in the search for scalable solutions.
Let me in closing thank you for your kind invitation to join you in this first Sustainable Economy Forum of San Patrignano and wish you all a thought-provoking, idea-rich next two days.