Latest Articles by Simon Zadek

Accountability: the other climate change

Simon Zadek — Fri, 24 Nov 2006 16:09:00 +0000

An appeal to both self-interest and long-term thinking is essential to tackling the pressing threat of global climate change, says Simon Zadek.

The Stern Review’s report on the economics of climate change published on 30 October 2006 is an impressive document that calls for action to meet a global challenge on a civilisational scale. It is also unlikely – on present evidence – to have the effect required, for one simple reason.

Today’s vested political and economic interests are likely to prevent us from effectively addressing climate change, and so securing a decent future on this planet. It’s ghastly, it sticks in the throat, and it’s awesome to think it even as I write it. But it’s probably true.

This prognosis is suggested by Jared Diamond’s best-selling analysis of why societies collapse. Societies are endangered, he argues, when their elites insulate themselves from the negative impact of their own actions in pursuit of power and privilege. His paradigmatic case is of Easter Island, where the overuse of wood products in the production of competing religious totems eventually destroyed its inhabitants’ survival prospects.

Jared Diamond argues that this self-destructive spiral might have been halted if those with the power to enforce the cutting down of wood had far earlier suffered the economic and political consequences of this process. As economists would have it, these leaders succeed for too long to “externalise” these costs onto the shoulders, and ultimately the lives of others.

But surely, some might argue, this could not happen to the rich countries of the world, with the knowledge they have, their many institutions for collective action and capacity to hold those with power to account?

Here, however, is exactly where the problem lies: a lack of accountability where it really matters. In the microcosmic areas of social life - fines for taking our children on holiday before the school break, or for allowing our dogs to do what is natural to them in the park – we are overwhelmed by accountability mechanisms. Yet on big, important, collective issues, accountability mechanisms are either non-existent or failing. After all, no rich-nation leader will pay the human and financial costs of the Iraq war, or compensate for the poverty resulting from the failure of the Doha trade round.

Jared Diamond’s story shines a sad and disturbing light on our current situation. Our elite do not feel enough pain to allow, let alone lead in making the changes we need.

So what is to be done? Pragmatism and a hard-headed reading of history suggest that “the people” are unlikely to resolve our current crisis. Far from it, we are more likely to degenerate into a toxic blend of hedonism and divided fundamentalisms. Faced with an apparently insoluble problem, the citizens of the world will unite in partying until the curtain comes down.

photo by KellyK

The terms of debate

Yet there is an alternative – unpalatable but essential. If we cannot make those with power feel the pain, can we help them to profit from taking us along the right path?

This would involve rewarding political leaders who take a stand on climate change, who are willing to tell citizens the tough story, make enemies of those who would deny, and dedicate themselves to creating coalitions of the unwilling. Such political leaders must be empowered, whether by the ballot-box or the amplifying effects of global civil society and the media. And those leaders who choose to pipe an old tune, whoever and wherever they are, along with their advisors and sponsors, must be exposed in their naked splendour for all to see.

And that brings us to business leaders. Business will not solve climate change by what it does not do; compliance will only ever be a marginal part of any serious solution. Business will make a difference by what it does and does best: inventing, making and selling new products and services. (That is why our Accountability Rating of the world’s largest hundred companies measures how smart rather than how moral they are in embedding social and environmental dynamics into their business models and practices).

Co-opting those who can make, or prevent, change requires that “corporate responsibility” grows up and becomes a driver in shaping a global, responsible competitiveness between nations and regions. We need global markets where money is to be made by doing the right thing, creating value and profit by “internalising externalities” that will otherwise destroy us.

Business cannot, and will not do this on its own. Reshaping markets requires unlikely alliances between business, governments and civil society. We have proven we can do this across such diverse challenges as labour standards, access to life-saving drugs, corruption and animal rights. We can and must do it for climate change, reshaping the terms on which business is done to our collective good.

Who will take the lead?

On Easter Island, no leader emerged from any of the dozen clans to reshape timber markets. It is instructive to consider which countries or regions - today’s global “clans” - will provide leadership in driving forward responsible competitiveness tomorrow.

Europe has enormous potential, with its leadership on Kyoto and its history of linking social inclusion and markets. But a region characterized (by Nick Robins) as having a “responsibility surplus and an innovation deficit” has to date failed to turn this “social good” to its competitive advantage.

The United States too is an unlikely candidate, essentially the mirror-image of Europe's strengths and weaknesses, over-innovating without focus on the things that count. Directing its business community towards long-term issues is, with some notable exceptions, a contradiction in terms. It would require a seismic shift in the time-horizons and interests of the American electorate and its investment community, unlikely although not impossible on both counts.

Perhaps then we need to bet on China for leadership. We might point today to its dirty economy in more senses than one. But China's culture and practice of decision-making is like no other, rooted in a history of long-termism. Could it be that tackling climate change will be China's equivalent of the moai in the era of their creation: a powerful symbol of emerging leadership?

Home page photo by -marko

Simon Zadek is chief executive of AccountAbility.

AccountAbility’s report Responsible Competititveness in Europe: enhancing European competitiveness through responsible business practices was launched on 23 November 2006

China's opportunity to embrace responsible competitiveness

Simon Zadek — Fri, 19 Oct 2007 05:58:00 +0000

Can China influence the next generation of responsible business standards, and help to reshape global markets? Simon Zadek says it just might.

China’s competitiveness strategy is changing gear. Exporting “cheap and dirty” has underpinned several decades of successful, super-charged economic growth. But this development pathway is now reaching its limits for China and the rest of the world.

Forced closures of factories producing contaminated food, strengthened labour laws and harsh penalties for senior officials found to be corrupt are all signs of changing times. Official Chinese responses to environmental concerns by the international community are shifting from defensive references to the need to sustain growth to claims of responsibility. A recent handbook produced by the Chinese Forestry Ministry, in its own words, “positively guides and standardises Chinese companies' sustainable forestry activities overseas, promotes the sustainable development of forestry in those countries [and] protects the international image of our government being responsible.”

Chinese companies like China International Marine Containers ltd., Haier Group Company, and the China Ocean Shipping Group (Cosco) have embraced the UN Global Compact’s newly launched “Caring for Climate” initiative, thereby committing to make reversing climate change part of their long-term responsible competitiveness strategies. According to one recent survey by HSBC, the Chinese are among the world’s most concerned about climate change, and the most optimistic that it can be overcome. Premier Wen Jiabao said that China’s response to climate change is “a test of the government's accountability and also the responsibility China should bear for the international community.” Underlining the importance of responsible business practices, former president of SINOPEC Wang Jinming stated at the UN Global Compact’s Ministerial Roundtable “environmental protection and sustainable development is the duty-bound responsibility of the enterprises”.

Shifting gear towards a more “responsible competitiveness” makes economic sense. Allegations by competing nations of China’s social and environmental dumping creates barriers to trade; concerns over China’s unwillingness to apply social and environmental investment criteria may ultimately restrict access in its search for natural resources across Africa and elsewhere; and its growing appetite for acquiring global brands as a means of moving up the value chain may be frustrated in the face of powerful opposition from civil society organizations concerned over China’s record on labour standards and environmental security. Moving up the value chain is about productivity and innovation as well as reputation. Flexible manufacturing, just-in-time inventory management, working with highly mobile knowledge workers, developing a globally competitive service culture, and employing people closer to export markets, all require Chinese companies to move on from their current “command and control” management style associated with poor labour conditions and a disinterest in impacts on the wider community and environment.

Finally, responsible competitiveness is as much about domestic conditions in China as it is about export markets. China Construction Bank, in its first “corporate responsibility” report, sums up the challenge, “…our nation is still facing challenges on many fronts, such as imbalanced developments between cities and rural areas, the eastern regions and the western regions, economic growth and resource conservation…building of social harmony...remains a solemn mission which is not to be accomplished in the short term and which will require nothing less than participation and dedication of the society as a whole, including every individual enterprise and citizen”.

China’s strategic shift is timely. Three Chinese companies are now in the top 30 of the Fortune Global 500. Altogether the 24 Chinese companies in the ranking have joint revenues of US $838 billion. In four years, China has gone from having the eleventh largest GDP to standing at number four. Still, China’s current practice of “responsible competitiveness” remains weak by international standards.

AccountAbility, the international think-tank, recently launched its fourth bi-annual report, ‘The State of Responsible Competitiveness 2007’, at a Ministerial Roundtable at the UN Global Compact Leaders Summit in Geneva; a summit attended by over 100 Chinese delegates. The report includes a unique index measuring progress of 108 economies in advancing responsible business practices as a driver of national competitiveness. Data weaknesses and interpretation problems limit the Responsible Competitiveness Index (RCI)’s scientific precision. Caveats aside, however, the RCI 2007, the third AccountAbility has produced since 2003, has advanced considerably in applying sophisticated econometrics in blending 21 data streams from authoritative sources as diverse as the International Standards Organisation, the International Labour Organisation, Transparency International and the World Bank. The index also factors in the level of country development, thus creating the most comprehensive assessment of responsible business practices around the world to date.

The RCI seeks to measure how embedded responsible business practices are in a nation’s economy, and so the basis on which it builds its competitiveness in global markets. It is therefore particularly relevant to compare it with relevant measures of international competitiveness. The very high correlation between the RCI 2007 and the World Economic Forum’s Growth Competitiveness Index (R2=0.85) indicates a strong relationship between responsibility and the most authoritative measure of country competitiveness. This result is striking given the very different data being used by each index. Comparing the RCI 2007 with the World Bank’s annual ‘Ease of Doing Business’ country index also yields high correlations.

At a country-level, the RCI 2007 headline results are that:

* China is placed 87th in the RCI, the lowest of the BRICS (South Africa leads in 28th with India in 70th), and above many ‘less developed’ African nations and a number of South Asian countries (Pakistan in 103rd, Bangladesh in 106^th)

* Several emerging economies perform well within the top quartile, notably Chile,

Malaysia and Rep. of Korea (24th, 25th and 27th respectively). Thirteen of the ‘Top 20’ are European countries, Asian high-scorers include Hong Kong (treated separately from mainland China), Japan and Singapore, with the US trailing at 18th position.

Headline results disguise considerable variation across specific indicators and domains.

* China, for example, scores well on wage equality between men and women, above average on occupational fatalities, just below average on the strength of auditing and accounting standards and staff training, and poorly on corruption and CO2 emissions.

* Comparing China’s performance against the other BRICS (Brazil, Russia, India and South Africa) across the three principles domains (policy, business, and societal) quickly reveals that it performs best in the policy domain, and worst on social enablers, whilst India and South Africa outperform the other BRICS on the business action domain.

Such analysis must be treated with some caution given the enormous differences between the 108 countries included in the RCI 2007, such as their economic structures, stages of development, and size. One particular problem is that wealthy countries can achieve high scores by externalizing negative social and environmental impacts into their global supply chains, which in turn counts against countries hosting major parts of those supply chains (the so-called “pollution haven hypothesis”). One recent study showed that up to 40% of air pollutants in the Pearl River Delta in low-scoring China are directly linked to exports to high-scoring importers across Europe and North America. Unfortunately, at this stage there is inadequate systematic data across our large country sample to test this hypothesis within the main RCI. We did explore this issue by correlating a subset of RCI countries against data from UNCTAD of imports of polluting goods and services, but the results were statistically too weak to provide insights or policy-relevant results. We are committed to doing more work on this issue in future editions.

Complementing and going beyond the data, the report includes 15 essays from world leading experts exploring the potential for responsible competitiveness strategies to deliver economic success. Sir Nicholas Stern, until recently the UK Treasury’s Chief Economist and author of the ground-breaking study of the economic consequences of climate change, along with Jonathan Lash, President of the prestigious World Resources Institute, highlight how aligning smart business strategies and public policies could give nations and businesses a first mover advantage in an emerging US$500 billion a year market driving adjustments to climate change. Jean-Philippe Courtois, President of Microsoft International, details how these practices are benefiting their business. Guy Ryder, General Secretary of the International Trade Union Confederation, and Ros Harvey from the International Labour Organisation provide convincing evidence that improved labour standards drive up productivity and enhance nations’ attractiveness for risk-free procurement by reputation-conscious global brands. And Peter Eigen, Chair of Transparency International’s Advisory Council, and Anwar Ibrahim, formerly Malaysia’s Deputy Prime Minister and now AccountAbility’s Honorary President, drive home the argument that overcoming corruption must lie at the heart of any national strategy for achieving sustained competitiveness.

Responsible competitiveness, the report stresses, is not just a matter of being ethical in dealing with social and environmental issues. Gaining competitive advantage through responsibility requires smart strategies in practice. As the Honourable Al Gore emphasises in his foreword to the report:

“A sustainable future means markets that reward long-term performance. It means seeing responsible business practice as the guide to the quality of the business and its management. It means public policies and citizen action that help businesses do the right thing”

And such strategies vary between countries and over time. For example, Günter Verheugen, vice-president of the European Commission in charge of Enterprise and Industry, highlights in the report the role of responsible business practices in enhancing European competitiveness:

“…the key word for competitiveness in today’s knowledge-based economy is innovation, and the best enterprises have realised that CSR and innovation are intimately linked”.

The report identifies four country clusters, each distinguished by their strategies towards responsible competitiveness:

* Starters: comprising 31 low scorers, including China, Bangladesh and the Russian Federation. Many have signalled a commitment to responsibility through signing and ratifying international treaties, and other policy drivers, but struggle to implement the basics, like worker health and safety and corruption.

* Compliers: Excepting India, this cluster of 32 countries are middle-income, including Brazil, Turkey and Mexico, accounting for US$1 trillion of global trade. Compliers focus on demonstrating progress on meeting international quality, labour and environmental standards, already seeking to capture share of quality-conscious branded markets.

* Asserters: comprising 24 countries seeking to seize opportunities in responsible competitiveness. Some, like Chile and South Africa, actively promote international standards to gain competitive advantage. Some are building national ‘responsibility’ brands to attract foreign direct investment and export a first generation of global product and corporate brands.

* Innovators: this most developed cluster of 20 countries are embedding responsibility in the core of their domestic economies, stewarded by relatively well-enforced statutory regulation, reinforced in most instances by ethics-conscious consumers underpinned by civil activism. Knowledge-based innovation is key to the competitiveness of these economies, which requires flexible working conditions, and dynamic, trusted public and private institutions.

Responsible competitiveness will have to underpin any sustainable future, and China’s strategy for securing long-term competitiveness in the global economy will be key to achieving such a future, for China and for the rest of the world. Collaborative approaches to governing markets involving private and public actors are likely to be most effective in achieving responsible competitiveness. As Pascal Lamy, Director General of the World Trade Organisation, pinpoints in his opening comments in the report:

“Responsible competitiveness…blends forward-looking corporate strategies, innovative public policies and engaged and vibrant civil societies. It is about creating a new generation of profitable products and business processes underpinned by rules that support societies’ broader social, environmental and economic aims”

Designing and implementing such strategies will require business leaders to rise to the challenge and associated opportunities. New knowledge and competencies are needed for the world’s business communities to become skilled in turning social and environmental costs into profitable products and processes. It has become a core business competency to be able to build partnerships involving public and private, commercial and non-profit organizations that are effective in creating new standards, networks of relationships and sources of innovation. As Aron Cramer, President and CEO of Business for Social Responsibility, writes in the report, “China’s approach to responsible business is now evolving in a way that marries local perspectives and global debates.” The Chinese Federation for Corporate Social Responsibility (CFCSR), launched in October 2006, is one of several new business coalitions that are emerging in China to help businesses share experiences and grow relevant competencies. The CFCSR’s alliance with the international business network, the Global Leadership Network exemplifies the learning and relationship building networks that will help the next generation of successful Chinese businesses to learn the art of responsible competitiveness.

There is considerable opportunity for the most innovative businesses in joining with government and non-profit organisations in raising the consciousness of Chinese citizens towards these issues. As elsewhere in the world, they will drive business’ responsible competitiveness strategies and practices by demanding improved standards from the businesses they buy from or work for. This will improve the effectiveness of Chinese legislation by creating in effect an army of ‘market-based inspectors’, at considerably reduced enforcement costs to the government. But as important is that it will improve the Chinese business community’s ability to compete globally higher up the value chain where premium products can capture premium prices. Strengthening China’s ‘social enablers’ in such ways will accelerate China’s shifting gear towards a higher value-added economy.

Internationally, China could influence the next generation of standards that will reshape global markets towards more responsible competitiveness practices. Its dominance of global supply chains across many sectors provides it with a unique window of opportunity to actively ‘export’ good practices, much as Europe has done in exporting its domestic standards through its ability to provide access to the region’s wealthy markets. China is already engaging in this agenda for example through its involvement in ISO’s work on ISO 26000 Social Responsibility. Domestically, China has gained great experience with the China Social Compliance 9000 for the Textile and Apparel Industry (CSC9000T). China’s economy would now benefit, and create broader international benefits, in deepening its engagement in ‘soft regulatory’ standards initiatives related to trade and investment, such as the Equator Principles (on project finance), the Extractive Industries Transparency Initiative, Forest Stewardship Council, and MFA Forum (on responsible textiles). Engagement in such “collaborative governance” ventures will enable China to be at the heart of the design of the next generation of rules for the global economy, some of which will involve “soft regulation” alongside the rule of law.

Responsible competitiveness, in short, spells out the economic case for advancing responsible business practices at the heart of a nation’s economic development strategy. AccountAbility’s State of Responsible Competitiveness 2007 spells out global progress in doing just that, and illuminates China’s unique opportunity to take global leadership in advancing this agenda.

Homepage photo by tuija

Simon Zadek is AccountAbility’s Chief Executive, Senior Fellow at Harvard University’s John F Kennedy School for Government, and co-author of ‘The State of Responsible Competitiveness 2007’, which can be downloaded or hard copies ordered at www.accountability21.net

This article first appeared in Fortune China

“China needs time”

Simon Zadek — Fri, 06 Nov 2009 08:55:00 +0000

On Thursday, Graciela Chichilnisky proposed that the carbon market is used to avoid a stand-off between the US and China at Copenhagen. Here, Simon Zadek responds.

Graciela Chichilnisky’s proposal (see “Saving Kyoto”) offers food for thought, and an innovative mechanism of moving money elegantly from the United States to China. My issue, however, is not so much whether the mechanism would work – as whether it addresses the right challenge.

America will not pay for China’s mitigation costs through any route. First, this is because the domestic political optics do not allow for it. Second, because carbon is more expensive to mitigate in the Chinese power sector (at US$40 to $80 per tonne) than for example in Brazil’s rainforests (at US$5 per tonne), and US business is keen to buy cheap.

Fortunately, this may not be such a problem, as China’s issue is not really about the money anyway.

China has already given up on receiving any significant windfall rent through a climate deal. China’s hopes are to sustain economic growth, development and employment growth, and ensure international competitiveness across the value chain – which means protecting dirty jobs for now, while simultaneously investing in clean-tech leadership for the future.

What China needs from the international community, led still by the United States, is: first, everyone else to reduce emissions in order to minimise the climatic threat to their survival; second, no trade protectionism in the guise of climate management; and third, shared technology development and use to prevent technology-based exclusion from international markets or a repeat of today’s costly intellectual property lock-ins, as well as to accelerate global moves on emissions reduction.

Most of all, China needs time to get its act together. It needs to ensure that its development pathway over the next decade is not disrupted by climate-related international agreements or unilateral policy initiatives by their major trading partners. Chichilnisky’s proposal seems, if I have understood it, somewhat of a solution seeking to address a problem whose resolution is both unlikely – for other reasons – and not core to what needs to be done.

Simon Zadek is Managing Partner of AccountAbility

Can carbon trading save Copenhagen? What does China expect from industrialised nations? What do you think? What should be done? Tell us on our forum . . .

NEXT WEEK: Kevin Smith responds to Graciela Chichilnisky. Plus – Simon Zadek sets out his own proposal and chinadialogue authors respond.

Homepage image by Bert van Dijk

Revising plan A

Simon Zadek — Wed, 11 Nov 2009 12:30:00 +0000

Many observers now expect failure at Copenhagen. Unilateral and bilateral action, based on national self-interest, may now be our only hope to build a real deal to effectively manage climate change, argues Simon Zadek.

It is now clear that Copenhagen risks going down in history as a failure. Beyond recriminations, the real question is whether there is still a chance to forge the first really global deal of the twenty-first century.

The offers currently on the table would only bring emissions down by 9% to 14% from 1990 levels by 2020, even were they to be fully delivered. This is less than half of what is required to keep global temperatures below 2° Celsius and is unlikely to deliver rises much below 3° to 4°C. Such a rise would turn much of southern Europe into a semi-arid area, and overturn the livelihoods and exhaust the water supplies of hundreds of millions of people.

Money, we are told, is the deal-breaker, but the argument does not stand up to scrutiny. There is rough agreement on estimates of “incremental cost”, which would average about US$80 billion to $120 billion per year to 2020, roughly US$1.5 trillion in total. Delivering this would fulfil wealthy countries’ pledges to fund those incremental costs of climate change that are not financed through national budgets, international aid or private investment.

This is not a trivial sum, yet US treasury secretary Timothy Geithner estimates that the recession has cost around US$3 trillion to $4 trillion globally in lost output in just one year. The British prime minister Gordon Brown pronounced at the close of the G20 in London that sovereign states, collectively, would spend more than US$5 trillion to get us out of the global recession. In other words, the total amount needed for climate spending up to 2020 is only about 12% to 15% of what banking malpractice has cost us in just a few months.

If financed through low-cost, perpetual sovereign debt, delivering US$1.5 trillion over a decade might cost around US$15 to $20 billion a year, shared between all rich countries, whose combined national incomes would be about US$50 trillion to $60 trillion annually. This is less than half the US$40 billion we spend annually on pet food.

Short-term economics and the associated politics better explain our failure. There would certainly be losers: dirty industries that do not clean up their mess and nations stuck on dirty energy or unsustainable citizens’ behaviour. But there are many more potential winners from low-carbon growth, and the costs of paying off the losers are trivial.

Short-term losers are, however, out in force. The Environmental Defence Fund estimates that there are over 2,600 registered corporate lobbyists working against a deal in Washington; sustained public campaigns in the United States have lowered the numbers of citizens who believe that climate change is caused by humans, from 72% to 57% during 2009.

In Europe, despite leadership in mitigation commitments, the retrograde attitudes emerging from eastern Europe’s leaders is reducing the continent’s role to that of enlightened bystander. And the “G77+China” grouping – although correct about the west’s historic responsibility – suffers from a toxic combination of short-term imperatives and deeply ingrained distrust in the promises of wealthier nations. Nature’s irreducible bottom line is that development efforts will be shattered if we fail to act collectively and ambitiously now.

Our greatest enemy is our view of the task at hand. Progressive forces are united in believing that our mission is to create a binding international agreement, negotiated and overseen by sovereign states. But the most important lesson about marketing is never to be fooled by one’s own sales pitch. There might be a more effective way to do a deal. Global deals underpinned by sovereign binding commitments have almost always proved disappointing. The forces that have made history, for better and worse, have been less appealing: “Might is Right”, fear of mutual-assured destruction, unilateral actions based on self-interest – and, in rare but extraordinary moments, the direct action of citizens.

A deal in Copenhagen that relies primarily for its success on binding, long-term commitments by sovereign states to reduce emissions and fund mitigation and adaptation in developing countries will fail. It is an unwelcome message that many believe could erode our collective ambition and play into the hands of those who want no deal at all. But the transparent failure of the process so far makes these cautions seem less relevant.

To reach a deal today we need to start from practice, which we can subsequently translate into principles and norms. There are three reasons: first, trying to make complex deals between almost 200 nations is a fool’s errand, as we see from both climate and trade negotiations. Second, binding commitments by sovereign states are not worth the paper they are written on: see how casually legally binding public deficit, competition and subsidy rules within the tightly regulated European Union have been discarded. Third, “globally deduced” deals are too focused on top-down mechanics and associated institutional arrangements. In almost every instance, these generate performance failures because of bureaucracy, political interference, rent-seeking or straightforward corruption – see, for instance, the fate of the US$5 trillion of official development assistance that has flowed over the last half-century.

Unilateral action based on national self-interest, supported where possible through international collaboration, is the only hope we have of effectively managing climate change.

The signs are encouraging. China’s 50 million electric vehicles, and the fact that it is erecting one new wind turbine every few hours, is testimony to such drive, as is Brazil’s unilateral commitments on deforestation and India’s hugely ambitious national solar plan. Europe stands out as a regional unilateralist that has led the way in experimenting with legal commitments and a continent-wide, carbon-trading scheme.

Such actions are not a “substitute” for a global deal: they are the only possible basis for an international game plan that could get us to where we need to be. Focusing on what happens on the ground rather than how to commit and rain funds down from the clouds is not “Plan B”, but the only “Plan A” that makes sense.

What would it mean in practice to focus on catalysing national action? I would highlight three particular components:

* Low-carbon growth and development: AccountAbility will launch in January 2010 a Country Climate Competitiveness Index that tracks and encourages progress along low-carbon pathways: how each nation is going to develop and prosper in a low carbon future. The UNFCCC can catalyse such efforts, not as a bureaucratic hurdle to access largely fictional finances, but as a process of domestic reflection that will build awareness, constituency support and strategies.

* Fast-start clubs: we have to rely more on temporary “clubs” to catalyse ambitious early action, rather than investing in top-down permanent institutions that rapidly become part of the problem. Action in key areas, such as energy efficiency, solar and other renewables and avoiding deforestation can more effectively be done through such clubs of nations and private actors, drawing from the lessons of the Global Fund to Fight AIDS, Tuberculosis and Malaria. A “fast-start fund” supporting such initiatives, enabling immediate actions to be encouraged, seed funded and counted, should be a major feature in Copenhagen, not a side event.

* Global Taxes: as the evidence mounts of the likely weaknesses and fragmentation of carbon markets over the next decade, our only hope for securing early, strong carbon price signals is likely to be through the imposition of carbon border tariffs, at a minimum by the United States and Europe. Knowing that this would be a political bombshell that would rock the global trading system does not dissuade me of its merits, nor do its technical complexity and administrative challenges. Equity and targeted effectiveness can be enhanced through blanket exclusions to all the Least Developed Countries (LDCs) and exclusions linked to sector-level agreements that demonstrate progress against defined commitments.

Nobel prize-winning economist Kenneth Arrow has demonstrated that flawed equilibrium solutions can be less effective than well-designed, disequilibrium options. I would be the first to applaud an effective global deal with commitments and targets. But it is a chimera, and a dangerous one at that. My three suggestions are not new, and may not even be the right or most important, ones. But the important thing is that in twenty-first century deals, practice will lead and induce norms rather than vice-versa. Second-best in theory – but the best way to get where we need to be.

Simon Zadek is managing partner of AccountAbility (simon@accountability21.net)