Green Economy and sustainable development

Significant progress has been made over the last three decades through international conferences and reports to seize the opportunities of sustainable development in view of the challenges of climate change, the limited carrying capacity of the Earth, and degrading ecosystems. In 2015, the UN General Assembly agreed on Sustainable Development Goals to guide their forward-looking Agenda 2030. Sustainable development emphasizes the enhancement of environmental, social and economic resources, with all three of them being critical to meet the needs of current and future generations. But despite the concept’s penetration into many segments of society and the rise of environmental policies throughout the world, the impact on global environmental trends has been limited. Bottlenecks in the way sustainable development has been approached in practice – with a focus on environmental protection and negative externalities – provide a basis for understanding the evolution of the Green Economy concept. In the aftermath of the last world economic crisis, the Green Economy gained attention as a concept that could overcome the connotation of environmental protection as a cost factor slowing down economic development and bring the environment and the economy into a positive relationship, in which the environment becomes an opportunity rather than a constraint, and a new driving force for economic development. Sustainability remains the vital long-term goal, but the Green Economy is describing a pathway to sustainable development. To put emphasis on the importance of including social aspects, the concept of the Green Economy has evolved and many organisations now refer to an ‘inclusive Green Economy’. As a key feature, the Green Economy promotes investments in specific areas – also broadly referred to as green sectors – which either restore and maintain natural resources or increase efficiency in their use. These investments can lead, as any other public investment, to the creation of jobs, generation of income and development of new markets but with less emissions, resource degradation and environmental pollution. While each country has its own national conditions and the design of a Green Economy and related policies will vary, key characteristics for the process of ‘greening’ can be described by: (i) an increase in the share that ‘green sectors’ contribute to the Gross Domestic Product as well as in a country’s population that is employed in these sectors; (ii) decoupling of economic growth from resource use and environmental impact; (iii) an increase in public and private investment going into green sectors; and (iv) a changing composition of aggregated consumption in which the share of environmentally friendly products and services increases. Building on UNEP’s report ‘Towards a Green Economy’, areas of policy-making which provide key enabling conditions for a green economy transition include: (i) promoting investment and spending in areas that stimulate a Green Economy (e.g. in technology, infrastructure or infant industries); (ii) limiting government spending in areas that deplete natural capital through a reduction of environmentally harmful subsidies; (iii) establishing sound regulatory frameworks that create rights, incentives, minimum standards and prohibit the most harmful forms of behaviour and substances; (iv) addressing environmental externalities and existing market failures by employing taxes and market-based instruments that promote green investment and innovation; and (v) strengthening international governance in areas where international and multilateral mechanisms regulate economic activity in addition to national laws. Depending on their current level of development, countries have different capacities to initiate and implement policy reform and cope with transformative change. Other supporting actions are therefore needed to increase capacity and strengthen institutions, provide training and skill enhancement to the workforce, and improve general education on sustainability.