Growth and Investments – Necessary Conditions for Sustainable Development

NEWS Published

OPINION Economic growth is often depicted as an obstacle to rather than a necessary condition for creating environmentally sustainable development. But this view is increasingly being questioned, as research and empirical data now clearly point to a convincing conclusion — that economic growth and investment are essential to stemming environmental and climate challenges, writes Nicklas Skår, environmental rights specialist. 

That a correlation exists between investment and growth on the one hand, and sustainable development on the other actually should seem obvious. Growth provides the opportunity to set aside funds for research and development, especially in commercial activities. This, in turn, leads to smarter solutions for the environmental challenges we face. Yet, public debate is filled with many who argue that growth is a negative force, that slows (or even blocks) transitioning to a sustainable society. 

But, two publications released this month debunk this outdated view once and for all. First, the international research project, New Climate Economy, presented their report to the Swedish parliament. A collaboration between eight world leading universities, the New Climate Economy, in its report, highlights concrete proposals for measures governments and businesses can take to improve economic growth while still reducing CO emissions. Innovations and investment are identified as critical to dealing with climate change.

Soon afterwards, the International Energy Agency presented a preliminary annual report showing that worldwide CO emissions remain at the same level as the previous year despite greater growth in the same period.

Regarding Sweden, statistics from the Swedish Environmental Protection Agency show the country reduced emissions by 2.3% between 2012 and 2013. A significant share of this decrease came from lower emissions from manufacturing processes and reduced combustion emissions. Both reductions are the result of business investment.

Seemingly small investments and innovations within industry can have significant effects.

For example, over 300 million electrical motors are used worldwide in industry. Another 30 million are added every year. These run fans, pumps, generate compressed air, move material, and much more. These motors represent about one quarter of global electrical power consumption. But newer variable-speed drive motors produced in Sweden consume 40% less electricity. Just those currently in use have already saved more than Sweden’s entire yearly CO emissions, and they have the potential to do much more. Theoretically, this innovation could save as much electricity as is produced in all the world’s nuclear reactors.

But, a variety of solutions will certainly be necessary. Innovation is trivial as more energy efficient vacuum cleaners may contribute substantially to a more sustainable society. The latest generations of vacuum cleaners are twice as efficient as just a few years ago.

The problem is that many companies in Sweden do not feel conditions are favourable enough for them to invest in the type of innovations that contribute to reducing emissions. This is in part due to an outdated view of growth, of investment, and the role private businesses have in producing sustainable society.

Luckily, things are changing. Businesses will continue to generate growth and contribute to reducing emissions, but new solutions also require large investments.

The Confederation of Swedish Enterprise welcomes the change in attitudes on growth and investments. But progress is slow and, sadly, many politicians still believe that environmental good can be generated only through regulation.

Regulation can, however, never clear the way for improving the environment. We hope that Sweden’s decision-makers, its politicians, and governmental agencies, take note of this recent research and empirical data.

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