Synergy between governments and corporations can make this happen | The Daily Star
12:00 AM, November 13, 2019 / LAST MODIFIED: 01:07 AM, November 13, 2019

SUSTAINABLE BUSINESS

Synergy between governments and corporations can make this happen

Sir Mark Moody-Stuart has served on the boards of major corporations like Shell, Anglo American plc and currently the Saudi Aramco. He is also the chairman of the Foundation for the United Nations Global Compact. After a doctorate in geology in 1966 at Cambridge, he worked for Shell in various capacities. He is also one of the major patrons of Asian University for Women. In an interview with Tasneem Tayeb of The Daily Star, Sir Mark Moody-Stuart talks about how businesses and governments together can embrace sustainability.

 

You have been very passionate in advocating the importance of synergy between corporations and governments to promote sustainable development. But often when big corporations try to expand their business in new territories, they have to face multidimensional problems, including resistance from local communities and expectations from governments. From your experience, how does a corporation work around these challenges?

 

The first thing is, in order to have sustainability, you need collaboration between governments and businesses. No one party—consumers, governments, corporations—can do it on their own. If you take climate for example, which is a big issue and one which needs to be addressed: there has to be a transformation from fossil fuel to renewable energy, or use fossil fuel with capture and storage. In order to do that, you need a regulatory framework. The market will do some things, but we need a framework to guide the market in the right direction.

For many years now, we have been advocating putting a price on carbon. So, for having every ton of carbon dioxide there is a price that must be paid. All of the major oil and gas companies support this, which is slightly surprising, because it means a tax on their product. But without that we won’t have the incentive to shift the market to a lower carbon fuel, and so on. So, why doesn’t the government set up a framework?

Governments worry about two things: they worry about consumers—the voters, who worry about cost increase. They also worry about the views of businesses. The normal reaction of many businesses, if someone suggests a business framework, is if you do it just in our country then we will become uncompetitive and our costs will go up. So, what we need is an alliance between civil society and responsible businesses, who would say this is what we need to do, in the context of a framework that is the same for all businesses. And the alliance needs to reassure the government that they would be supportive of such a framework. So, this needs everyone to put on a societal hat and look at how we can drive sustainability forward as a group.

When you talk about a company going into a new country, opening up a new venture, the essential thing is to listen; I think this way one can learn more rapidly about what’s happening on the ground. That’s one of the reasons why I think the United Nations Global Compact (UNGC), which I have a long-term association with, has an important role to play in facilitating this. One of the requirements of UNGC is the establishment of local network. For example, you have here in Bangladesh a local network. If you go somewhere new, join the local network of UNGC because there you have big national businesses, the affiliate of other international businesses, small businesses, big businesses, civil society and hopefully also the involvement of labour unions. Local networks have enormous potential as a learning opportunity for a new company.

 

You are the Vice Chairman of the United Nations Global Compact Board and Chairman of the Global Compact Foundation. Human rights and labour are some of its key focus areas. How do corporations like Anglo American plc deal with the issue of child labour, especially in the mining industry?

If you are talking about industrial mining, children are not involved in major copper mines. Where children become involved is in artisanal mining—small-scale community mining, and that often happens around the fringes of bigger mines that deal with precious metals and stones. The problem is that the governments have a problem with artisanal mining, because they say it is unlicensed, the artisanal miners don’t pay tax, and they smuggle the resources abroad. This is often highly destructive for the environment and the working conditions for adults are also very dangerous. So, the attitude of some governments has simply been to say, we will remove these people, prevent them from doing it, chase them off. Now that can also lead to human rights abuses, because governments might resort to using force to drive these changes.

Another dimension to the problem is that artisanal mining is a means of livelihood for the people involved. The ideal solution would be to try and regularise it, build it into a cooperative. Encourage the use of proper equipment. You could have the product of these small mines taken into major facilities to properly process them, the people paid for it and then export the product to the buyers.

These artisanal workers and their working conditions need to be better. These people can be easily exploited by criminal gangs. Back in 1990s, when I was involved with Shell, and the question of child labour arose, my initial reaction was child labour is not a problem for us because we are a heavy industry and you don’t see children working in oil fields. But then our Brazilian affiliate said, yes but we put ethanol into gasoline and that comes from sugarcane plantations, which has a big problem of child labour. Then you have to go in and address the problem at the sugarcane plantations. It’s a challenge and it needs constructive collaboration to steadily improve the situation at all stages of the supply chain.

 

What role do big corporations like Shell have to play in the fight against climate change?

As I said, governments have to set the framework, but then corporations have to start modifying their normal processes to reduce their carbon impact. In many cases, this is a matter which can be a win-win because if you make the processes more energy efficient, you save money on energy and you also address the climate issue. So, there are many things you can do which actually have a cost benefit for the companies. And then you need to look at other methods of making sure that the energy that we use is cleaner. Then a business can say, can we acquire our energy from renewable energy sources, may be backed up by fossil fuel energy initially, but eventually we will opt for battery storage?

 

But on the surface of it, these initiatives increase cost per unit, which ultimately trickles down to the consumers.

In some cases, this is true. For example, it used to be true in renewable energy, but the cost of renewable energy is now no more than the cost of fossil fuel energy; so, it is already becoming more attractive to use renewable energy. But then you need to address the question of how you back up renewable energy, for when the sun doesn’t shine, or the wind doesn’t blow. So, cost is progressively less of a problem now. The bigger problem is intermittency and for that we have to look at storage. And then you have battery storage, and what goes in the battery—these metals which are mined very often in difficult countries with labour abuses, and we are back to where we started.

There is something I have been enthusiastic about for the last 20 years. There are processes that are difficult to electrify, such as heavy transport, shipping and aviation. If we could produce hydrogen which can be generated by electricity just from water, we will have a medium which could be used to fuel these processes. Also, it’s a way of storing energy. The problem with that is the cost. There are two costs in producing hydrogen: making the electrolyser, and what catalyst you need in it—because you need metals like platinum in it, so people are looking to see if we can replace that.

The other is electricity cost, which in a way is the easy bit, because if you are converting an economy to one that is driven by renewable energy, often, particularly at times of strong winds and sun, you have surplus of energy, and then you have to shut down the system. This is called curtailment. Somebody mentioned to me that the power of curtailment in China is enough to supply the whole of the United Kingdom. And if that surplus renewable energy, which means essentially zero marginal cost, could be used to make hydrogen, that would be very exciting, because you would have a storage mechanism which would not be dependent just on batteries but on hydrogen.

 

To finish off on a different note, you have been supporting Asian University for Women (AUW) for a long time now. In Bangladesh, 46 percent of the total unemployed are university graduates. How does AUW address this challenge?

One of the things that I have been enormously impressed with is the creativity of our students. These are young women who are very creative and imaginative. These girls can drive future progress. Imagine a network of young women from so many different countries—I think this is what makes the university special. A degree should teach you how to think, challenge and have a perspective of the world and this is what AUW aspires to achieve. The energy of this university is what captured my attention. The fact that you are enabling these unusual humans who just happen to be women, and when they get into the corridors of power and the changes that they can bring to this world, is fascinating.

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