During May, the ISC will be featuring essays written by experts on Rearticulating Human Development. This is a joint project with the UNDP. ISC members and your networks are encouraged to participate. For an abridged version of this interview, click here.
Interview by Asun Lera St Clair @AsunStClair
Dr. María Mendiluce has over 20 years’ experience in sustainable development, energy and climate action. She sits in the Senior Management Team of WBCSD, guiding over 200 member companies on transformative climate policy and energy transition. In addition to her role at WBCSD, María is also CEO of the We Mean Business coalition. Below is an extract of an interview with her on Rearticulating Human Development.
Human Development as resilience
You have worked for many years for the World Business Council for Sustainable Development Council (WBCSD) and have just taken up the challenge of leading the We Mean Business Coalition. In your opinion, how could we rethink the conceptual understanding of human development? What does human development needs to mean today?
When I think human development in today’s context with the COVID 19 pandemic, something really concrete and specific challenging all, something that perhaps won’t happen again in 100 years, I realize human development in about resilience. Resilience is the capacity of people and systems to bounce back after a shock and to adapt to new circumstances. As humans, we live through different shocks, and in particular we know that there is a major threat waiting for us, climate change, thus what we need the most is to get ready, to become resilient. We are seeing how a health challenge, this terrible epidemic, has become a major economic crisis impacting people and impacting development. We can also see how those most vulnerable, those who already were less resilient to shocks, are being impacted the most and are less able to respond. It is very sad to see that people in low income sectors of societies. Those less educated, and those who lack access to basic resources are having a very touch and difficult time.
Thus, when I think about human centred development I think about education, I think about wellbeing as fundamental pillars for resilience. I believe that education is a major driver, an engine for people to be more resilient, for people to have live better lives. Clearly education has been made more and more accessible to many. We have progressed enormously thanks to the internet and other technologies, but more focus on education as a fundamental element of resilience and thus of human development is to me important. Well-being is also quite important, but we ned to extend the scope of what we consider the sources of wellbeing. To me it does relate to the natural environment. Well-being can be physical, now with the pandemic we see this clearly, we all need access to medicines, access to health systems. Yet, wellbeing is also economic, as it requires having the financial means not only to survive but also to have a good life. But then there is a third fundamental component of wellbeing, and this is related to our natural environment. It is not only that climate change impacts profoundly the lives of all people and specially those most vulnerable. Lack of a healthy environment is a threat to our health, such as for example the evident impact on wellbeing that has air pollution or the lack of access to natural resources. These environmental factors are key for wellbeing and are key for resilient people. In short, I believe that one way to rethink the concept of human development today is to link it with resilience and to expand the human centric focus with the integration of the natural environment as a central pillar for human beings.
You have a lot of experience in promoting the idea that business and industry are central actors in meeting the SDGs and contributing to resilient societies. Taking those lessons as point of departure, what do you think are the most important challenges to human development today?
I believe that the most important challenges to human development today are the trade-offs that need to be made between the economy, the environment, promoting development and addressing inequality. It strikes me as difficult to find the right balance amongst them. The economic recession that is already clearly looming today is going to have a huge impact on the development of people. At the same time, if we favour more addressing environmental challenges (which require our attention) wile at the same time paying attention to the social dimensions of development, we see that all this will have an impact on how to respond to the economic crisis.
So they key challenge is how are we going to balance these factors, the competing interests of the economy, the environment and social issues. But at the same time, I believe that it is by seeing the interconnections among them what offers us a way forward. For example, we know that a well performing economy is dependent on people who are health, who are satisfied, whose basic needs are met. And this means people require a healthy environment. So, there are difficult trade-off amongst those issues but there are also some multipliers. At the end of the day, what matters the most is to ensure that we can make sustainable development a profitable business model. This in turn, will create positive spin-offs on the economy and on social well-being while reducing inequalities.
Tells us more about what need to happen to make human centric sustainable development more profitable
The first thing is that we need to internalize the costs of environmental and social impact as to be reflected in the price of goods and services. So, this is not skyborne pricing, this is an exercise in pricing the cost of nature, and also pricing social costs. Until now, these nature pricing and social pricing doesn’t really exit. But it is imperative that we start operationalizing them, because at the moment those costs are included in the goods and services we purchase. Companies that do not include those costs are able to sell things cheaper and unless everyone includes nature and social costs in their products what will continue to matter is to produce and to sell as cheap as possible. So to me this regularizing this pricing is a very important issue.
The second thing I believe is key is that business needs to internalize the real risks that are occurring both on the social side and on the environmental side. Before the crisis, we saw an increase of social tensions; riots in Hong Kong, in Chile and many countries. People were really upset, and social discontent is in fact a fundamental risk for business. Companies were then worried of this where the is widespread social discontent because they depend on people, they are the employees, the customers, they are suppliers, the intermediaries. Companies must be able to maintain good relations with the members of the societies in which they operate, and they depend on social stability.
With the pandemic, we have another set of problems, with climate change we have another set of problems. That is, problems come in waves and that’s when they attract the interest of companies. Tactically we need to take advantage of those moments, when a particular problem is very visible, to accelerate the change that is needed. What must happen is that these potential problems are seen as a key element of the risk management processes of companies. It is when companies integrate into their financial reports a risk when it is that such risk is finally addressed. If a company demonstrates the use of clean technologies and reduced emissions, for example, this leads to many positive outcomes, as less risks will have a reduced costs of capital, and hence it would be cheaper for them to get taxes to capital, which is a very important element. So, you have cheap costs of capital because you are clean, and you can sell your products cheaper because they don’t have externalities. Then in the marketplace, what we get is have a very attractive company that has cheaper products.
Lastly, a fundamental factor for making human centric sustainable development more profitable is the focus on purpose. Consumers, employees, and even many providers want to work with companies that have a purpose. At the same time, companies that have a clear purpose are those who have the most motivated workforce are therefore better performers. Hence, they get better results. All those things play a key role, but I think probably the most important thing that governments can do now is to prize the cost of externalities, because that will generate a snowball effect. It will transform the financial system and thus have a direct and immediate impact on companies.
May business are engaged wit the SDGs, but we see little real change, how can we make the human development more impactful and influential?
I believe the most direct way to make human development more influential for business is to translate it in a way that measures the social and environmental risk and opportunities for companies. We need to come up with concrete metrics that can help companies measure how they are doing in those aspects. This is important and useful given companies can compare and benchmark each other in relation to those metrics. If those metrics emerge from the UN system and are then evaluated and validated by a UN body, this will be extremely important. There is a strong case to be built on the environmental risks. But the case for integrating social risks is less strong, it comes and goes in waves. Thus, an important factor to make human development more influential is to build a strong narrative for social issues. We need a stronger and more compelling narrative on why the social dimensions of buisness operations are important, how social unrest impacts business and why business need to measure, track and report progress and achievement of some metrics on human development that have been validated by the UNDP.
To conclude, what do you think is a meaningful definition of human development, keeping a business audience in mind?
If we want to appeal to the business, then it is important to speak their language. At a very practical level, what business understands well is the importance of skills, talent, the potential of people. I believe that any definition of human development that raises the important of these issues will be useful not only for business but also for the public sector. In the end, what we all want is to have people, consumers, employees, providers, distributors….etc that are very talented, skilful and that have wellbeing. This makes people better performers, and this leads to more successful companies.
In recent years, companies have become very familiar with the importance of for example gender diversity and human rights. I think business are realizing that more diverse companies, geographically, culturally, or gender wise are simply more successful. A team that has a lot of diversity brings the best of us and is very enriching. There is an important value on that. Many companies that have a complex supply chains and rely on many different types of people are making an effort to ensure they have decent jobs, decent working conditions, a good environment. These issues are very important, not only for the results of the company but also for the performance, sustainability and reliance of these employees within their supply chains. That’s something that companies will soon understand, that if their people are not resilient, they’ll go bankrupt
In short, what makes companies resilient is resilient people and resilient societies. I believe that is the key idea I wish to put forward in this exercise of rethinking Human development, it is about resilient people in a resilient world.