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Israel Klabin

Israel Klabin: Green capitalism

The former businessman, now an environmentalist, discusses environmental future optimistically

Léo RamosShimon bar Yochai, a Hebrew rabbi and cabalist of the second century A.D., liked telling the story of a boat full of men that was calmly sailing until one of them started making a hole under his place. When they saw this, the others protested: “What are you doing? Stop!” The man replied: “What is it to you? I’m making a hole under my place.” He then heard a lesson: “You fool. Yes, it is our business because you’re going to sink the boat and we will all drown.” To wrap up the story, the rabbi would then say: “Every decision and attitude that we take not only affects us, but all of mankind.” Luckily, there are still some who think like him. “We live and build our world with the feeling that natural resources are endless, but we must remember that it’s not the planet that’s threatened, but human life within its habitat. It remains to be seen whether we are going to drive this process or whether we’ll be obliged to act or perish due to the fury of nature,” warns the environmentalist Israel Klabin, chairman of FBDS, the Brazilian Foundation for Sustainable Development, which he founded in 1992, in the wake of Rio-92, the United Nations Conference on Environment and Development. This month, Klabin is launching A urgência do presente [The urgency of the present], with Biografia da crise ambiental [Biography of the environmental crisis] as its subtitle. In this book, he recalls his transition from businessman to environmentalist and discusses the agenda of the environment for the present and the future. “I have always been concerned about the environment,” he assures us. After graduating as an engineer and doing his master’s degree in mathematics and chemistry, he went to France, where he got a doctorate at the Institut des Science Politiques in Paris. Upon his return, he worked on development projects for the Joint Brazil-USA Commission and helped to found Sudene and Iseb, the Higher Institute of Brazilian Studies. At the age of 30, when his father died, he took over the management of the family business, Klabin Irmãos & Cia, which produced pulp, paper, ceramics, tiles and sisal. “There I implemented the entire area of sustainability,” he recalls. He remained with the company as a managing partner until 1988, when he “stopped being a businessman” to return to the academic world, as a member of the development council of PUC-Rio (the Pontifical Catholic University of Rio de Janeiro) and of the international council of the University of Tel Aviv in Israel. From 1979 to 1980, he was the mayor of Rio de Janeiro. Today, at the head of FBDS, he is a respected spokesman in debates about the climate and the environment, and a link between the business elite and the State, firmly prodding both to discuss the chances of “sustainable development.”

It is currently fashionable to talk about the environment, a concept that encompasses both serious research and ingenuousness or even opportunism. What is your view of environmentalism?
Environmentalism is a concept that is being consolidated. Its basis is multilateralism and multidisciplinarity. Naming all these movements, which may be political, ethical or scientific, is unimportant. The fundamental thing is to establish the directions that will build the model of life in the future. The environmentalist’s work is a view of the future. Twenty years ago, when we started FBDS, the Brazilian Foundation for Sustainable Development, nobody had the slightest idea what sustainable development was all about. After all, it is a paradox, because development has its own dynamics, while sustainability requires a more static posture. How can we build a model that will benefit us, integrating economic growth, social inclusion and an awareness of the limits of “natural capital”: We haven’t yet seen in practice this sustainability tripod, this triple bottom line. In all these years, I have seen companies and governments try to understand the practices that bring us closer to the sustainable ideal, but they did not take enough action. “Sustainable” is still an abstract quality. I myself can’t stop rethinking this expression, “sustainable development,” which is used too much and often poorly employed. We need to think about the design of a new economic model that can ensure the continuity of natural resources. Little or nothing will be done if we don’t grasp that they are finite. Likewise, the concept that excess emissions, above the planet’s absorption capacity, are one of the critical factors of environmentalism, a problem that was already beginning to form in the late nineteenth century with the Industrial Revolution. We know that in 2050, we’ll have more than 9 billion inhabitants and only then will the progression of the demographic impact stabilize. Therefore, environmentalism consists of preparing all the models needed to take care of this future. It’s a prospective thought process that forces us to rethink the energy structure, the concept and the mechanisms currently used for development and the very model of democratic governance, which is incapable of putting into action in a timely manner that which humankind needs fast.

How did the Brazilian environmental agenda evolve?
Slowly, because for quite a while the country ignored the importance of this agenda, leaving the door open for anachronistic development models, which help businesspeople not to feel responsible, in line with this “adaptation” that is provided by the lack of public policies in the environmental field. In 1972, the Brazilian government actually declared: “Let pollution come to us. The polluting industries that want to come into Brazil will be welcome.” In 1992, this was no longer possible and in 2012, it will be unimaginable to say anything of this kind. Little by little, we are developing public awareness that we are undergoing a critical period of the economic model and the structure of energy production. Especially in the private sector, the awareness that one must move toward what is called a green economy is becoming greater and greater and I’m not talking about the “dreaming greens.” Brazil knows how to appropriate very quickly the technological and conceptual evolutions that appear and feed economic development, along the lines of what China did to absorb modernity. From 1992 to 2002, the evolution of the adverse negatives, in other words, the vigorous increase of emissions and of their consequences for climate change, outdid the dedication to find solutions, which gives us an idea of how little room these concerns take up in the national agenda, even though one cannot deny that they are growing. In a way, Brazil has a privileged position, due to several natural factors; however, nowadays, nobody has privileges, given that all consequences encompass the planet. We must quickly reduce the use of fossil sources of energy and the priority is energy efficiency. This means a lifestyle change, because we will have to become disciplined in order to rationalize and to make more efficient use of the available energy. This is the minimum price than humankind should pay, in particular the United States and China. Above all, people need to understand that the climate and environment problems that we face are the result of models of economics, governance, consumption, transport. In sum, of how we live. The evolution process necessarily goes through global responsibilities, the responsibilities of governments and of companies, but also, and mainly, through changing our lifestyles. We must urgently establish new social inclusion ethics that should take into account energy security, access to food, to water, to housing and, above all, to education. In sum, a new development model that can extend its benefits to future generations. Some countries already believe that economic growth is the result of how knowledge advances. The knowledge society is emerging as a rational and fundamental factor for sustainable development.

LEO RAMOSWhat is the role of businesspeople in this process? I know that you don’t like being called a businessperson…
That is true. I get my living from the company, but I’m proud that it’s Brazil’s greatest reforestation organization. Twenty years ago, however, I thought that I had to be totally and absolutely independent from my family roots and from the business, and even from my technical and scientific education. My career, my youth, centered on an academic possibility, but family problems arose and obliged me to undertake a business interlude. When I turned toward this challenge of a prospective vision, I understood that I’d have to isolate myself from this past in order to gain creative and critical freedom and not want any ties to any sector, even the environmental one. However, this has not led me to renounce certain things, like profit for instance, which I regard as a measure of efficiency. Profit as the activator of a superfluous consumption market is bad, as it is when it is used for or results from a speculative game and is not productive for society. Therefore, what we actually lack is a benchmark currency. When one says “profit,” one is talking in a currency, in currencies that no longer exist. The dollar or euro references no longer exist; we are undergoing the critical stage of an economic cycle that will only resist if a real currency is created backed by renewable and non-renewable natural resources. In sum, a currency anchored in a profit system whose specific target is to increase global wealth. We should enter into another Bretton Woods agreement, a conference remodeling the macroeconomic system based on the planet’s environmental sustainability. The underlying basis would not be called currency, but rather, environment.

Are the Brazilian businesspeople ready for this?
There has been significant evolution, but the environmental issue is still peripheral within the company context; it hasn’t yet reached the heart of companies. What is conventionally called sustainability is to be found in marketing departments, but it hasn’t reached the core of business decision-making. Businesspeople must not only advance toward the sustainability of their operations, but also extend their actions, for the government to embrace sustainable practices as well. The problem of the formation of a political, ethical model is fundamentally important. For as long as we lack a benchmark currency, a governmental ethics system, an elite that is aware and a system in which social inclusion is not only a tax project, but one that encompasses the entire economic system, we won’t get to 2050 in one piece. Whereas a politician’s sight focuses on the few – four – years of his term and on elections, the businessperson’s sight is set on the bottom line, on the last line of profit. Now, as consumers start demanding from producers environmentally healthy behavior, in other words, sustainability, changes will occur. The fit between the consumer and the producer that is using his assets to make a profit is very important. The Brazilian business class still hasn’t felt the need to take action in this respect, because the notion of a company is to produce for a market. If the market demands it, the firm responds. However, consumer education is very important. As the consumer demands a different sort of behavior from firms, they will have to fulfill this requirement. This is the good businessperson, and this is the good consumer. Still, the businessperson must also pay attention to the industrial process, which leads to the need for industries and universities to work in synch with each other, so that the scientific resources and business practices come closer together.

This coming together is desirable, but doesn’t always happen.
Companies don’t always have the necessary vision and security to make the sustainable investments that would make them advance toward a viable future. This is a criticism of the taxation system. In any country in the world where innovation drove economic cycles, there were taxation systems that allowed this. One must motivate the business class to take this project forward. Today, Brazil is a catalyst for minds available elsewhere, who would very much like to come and work here. There are admirable centers here that might leverage solutions. But the tax model doesn’t help. The business class must strive for another model, one that can render innovation feasible.

And how do universities react to this movement? Some people think that academia is isolated.
Both sides are at fault: one doesn’t like cosying up to the other. One of the uses of profit that I feel is among the most useful is in universities, with businesspeople developing their own human raw material within these institutions. Public universities find themselves in catastrophic isolation, because they espouse the old-fashioned, civil-service oriented notion that universities should generate intelligence for the civil service, whereas they should be closely tied to the reality of production and of management, to social reality, an integration between the business class, universities and the government itself. If this were to happen, one would progress greatly regarding advanced technologies, in management terms.

Businesspeople don’t always like State interference…
Yes, but in the case of the environment, the State must have an absolute presence, though being aware that this is a go-between. The State, like companies and universities, has its limitations. However, we live in a society in which this limit must be fluid enough for them to coexist. The State should be the meeting point of all the elements that form society and the regulator of the distribution of wealth. Nevertheless, there is government and there is the State, and they are different things. What has happened is that the government has been using the assets of the State, including the natural assets, perversely. The government has to adapt to long-term views, rather than to four-year terms.

Do you advocate modifying the democratic governance model?
National governments must understand that in the last 30 year, they acquired a relationship of global responsibility. Democracy such as we are used to seeing is one governance model. However, I regard democracy more as maintaining humanistic values. Are these values being advocated in order to promote the said democracy? I think that they, along with maintaining the vital resources of future generations, are not being properly defended. What we need is a center of decision with a truly prospective vision. Maintaining the environmental assets of tropical forests is fundamentally important for the future, not only of Brazil, but of the planet. There is the integration of the national and global factors. When the national factor clashes with overcoming global problems, we run into serious problems, as one sees, for example, in the United States and in China, which have failed to understand the importance of changing their energy standards, because their domestic problems mean that their governments lack the power to modify their energy model, regardless of cost. So is this democracy? I think that it is a democracy that meets the need of a few, while offending all. There is no possible solution in a world of nations that make decisions looking at what is convenient for them from within.

LEO RAMOSBrazil has a huge surplus of clean energy, but in strategically complex areas, of  great environmental impact, such as the Amazon region. How should one deal with this dilemma?
No matter how great the danger, and may my environmentalist friends forgive me, I favor using the clean energy potential of the Amazon region, although sustainably. We must be responsible. When they say that Belo Monte can generate 11 thousand kilowatts, this is untrue, because the variation of the water flow of the river will yield less than 4 thousand megawatts. In other words, it isn’t economic. Additionally, studies have shown that our wind potential is far greater than our water potential, but it hasn’t been developed yet. Why don’t we start with this? We also have giant solar power potential. Why not advance with research and innovation in order to use the latter? There are also many other sources. Why don’t we use them? Well, this has to do with the government’s decision process, which is increasingly complex, and the connection between politics and the environment, which is undergoing a transition among generations. When questioned, a young person will say that he is an environmentalist. If you ask a farmer in Mato Grosso state, he will answer as a ruralist, in the bad sense of the word. The new generations know what they want, but they don’t know how to get there. So the political problem, as Fernando Henrique [Cardoso, former president of Brazil] said, isn’t what to do, but how to do it. Suffice it to witness the success of a non-viable candidacy, like Marina Silva’s was, to feel that there is something new in the air and a general fascination among the younger generation with the conservation of the environment.

Is politics harming the new Forestry Code?
The discussions should not be based on party arguments or shows of force of one or another link in the political chain; nor should they privilege the agenda of the economic agents. After all, the final format of the new Forestry Code is too serious a subject to be the target of arm wrestling that has little to do with actual national interests. Therefore, it is most encouraging to witness President Dilma signal her intent of vetoing the shocking proposal of a deforestation amnesty, which, if approved, would work like a password for the progress of deforestation. It is also essential to regulate control over the exploitation of forests from the federal sphere. Allowing states and municipalities to determine the acceptable limits of deforestation within their territories is a recipe for disaster. The federal government, however, cannot allow deforestation thinking that it will expand and democratize access to land, thus creating an alleged increase in farming productivity. We must take the same care with the land reform issue, which is having a deleterious effect on the environment due to being conducted in the wrong areas: most of the land takeovers occur in forest regions that are then promptly deforested. Brazil has a surplus of land, an excess of farmable land, and with new technologies, there’s no need to deforest. A rational attitude to land reform is needed, to integrate man into the land in an up-to-date manner.

How does social inclusion influence the environmental issue?
No economic or environmental activity can exist without taking social inclusion into account. It’s more than charity; it’s a reality to which profit should be subordinated. Future development can’t be reached only by raising individual income, but also by redirecting global wealth. The poorer strata could become the lever for the new development model, a factor people are still unaware of. But it’s an important point: the concept of sustainability also encompasses responsible inclusion, whereby government and citizens share the responsibility for common assets. Little by little, in this movement, companies will realize that they can be a tool for remodeling the concept of profit.

Does this apply to the rise of the new Brazilian social classes?
In this case, I think it works the other way around. The emerging C and D classes try to be consumers characterized by the consumption of the rich, which is a mistake. The middle class has to become demanding when it comes to certification. Some supermarkets are very worried about this already. There is merchandise that is no longer bought because it isn’t certified. Or, additionally, the plastic carrier bags are being replaced. Consumers are taking action and their pressure will produce a higher degree of sustainability in the manufacturing companies themselves, in other words, vertically integrating production and demand.

Do global initiatives, such as the Kyoto Protocol, reveal the limitations of adopting an environmental ? foreign policy?
Undoubtedly. Rich countries have established their high standards of comfort and wellbeing based on production processes that are putting at risk the mechanisms of planet adaptation to human life. Additionally, the developing countries are going in the same direction, declaring their moral right to pollution and further increasing the demand for energy. The political impasse between these two groups of countries has been at play since the meetings of the Kyoto Protocol, when different obligations were established: the rich countries were meant to limit their emissions, but the targets were in no way ambitious and there were no practical sanctions. For the developing countries, the obligations were even more modest, because their desire to reach a higher economic level was more important than concern with the health of the atmosphere and climate stability. The Kyoto system is dead. Isaiah Berlin, one of my gurus, warned us that nationalism was the “crooked walking stick of mankind.” We have to create a post-nationalist world. Consensus is impossible to achieve and multilaterality is not viable. Bringing together 192 countries around a single position on climate policy is an illusion. It’s more productive to enter into agreements among groups of countries, or between two countries, or at least among these countries that pollute the most, including the developed and developing ones. What the experts are preaching is to invest in the politically practical aspects of global issues. Instead of focusing on global legislation, we should stick to fields that are common to all, such as energy, transport and water. Brazil is in a spectacular position to become the proponent of this because it has all the assets required to say that there is no more room to discuss political regulation, only sector regulation. This is the new path that we are opening. Today, we are working on energy for all, in other words, on a redistribution of energy assets via a tariff change, and in the formation of a fund that would enable the social inclusion of the smaller consumers while penalizing the larger consumers.

Are you optimistic about the future?
I am, because I believe that any crisis generates a possibility. This is the history of man. This crisis could be highly productive for a better world. I’m old enough to have experienced many crises and they were all solved for the best.