Chinese walker

Described as “the world`s first long-haul budget airline”, Oasis Hong Kong Airlines could hardly have come at a better time. Profits are soaring at low-cost European favourites like Ryanair and Easyjet, the Chinese aviation market is just opening up, and demand for flights between Europe and east Asia has never been higher.

Or maybe it could not have come at a worse time. Aviation`s contribution to carbon emissions is more fully appreciated than ever before, the EU has plans to impose emissions controls on all flights under its jurisdiction, and budget airlines have become some of the worst culprits in an aviation boom that seems to fly in the face of the environmental consequences.

Still in its first months of regular service flying from London Gatwick to Hong Kong, Oasis, promising a “fresh approach to flying”, has generated an impressive amount of press for its jaw-dropping fares (advertised as %26pound;75 [US$147] each way, before tax). The lowest round-trip, all-inclusive fares found by this author came to %26pound;261 (US$513), with fares from %26pound;300 (US$589) up much more typical. At the same time, low-cost sites like Expedia and Travelocity turned up tickets on major carriers from around %26pound;390 (US$766).

And prices are expected to keep falling. If the long-haul budget market even approaches the size of, say, the European market dominated by Ryanair and Easyjet, we can expect people to fly from London to Hong Kong almost as casually as they now fly from London to Berlin.

But at the moment, the euphoria of travellers is still managing to outshine the concerns of environmentalists.

While the ecological impact of Oasis is negligible in comparison to major airlines like British Airways or (Oasis competitor) Cathay Pacific, the new airline`s launch is another indication that the budget airline model is spreading fast and that the number of flights to, from, and within China is growing exponentially.

Ryanair, in particular, has redefined our sense of the possible for budget airlines. The Irish carrier now flies 362 routes to 22 countries, recently reporting %26euro;116 million (US$150 million) in net profits this year, and contributing significantly to commercial aviation`s role in carbon-dioxide-caused climate change. There have been few efforts to curb this kind of growth%26mdash;in fact, the expansion of airports and tax breaks has fueled it.

According to Steve Miller, the airline`s CEO, Oasis has plans to follow the same trajectory, scaling up its model significantly to include destinations in the U.S. and Europe and acquire 25 airplanes.

Unlike Ryanair, whose CEO, Michael O`Leary, recently stormed against the plans of UK climate change minister Ian Pearson, Oasis takes a fairly moderate stance on the environment. Miller told me: “We are very much aware of pollution here in Hong Kong. We do take this very seriously. The most important thing we`re looking at is, just as soon as we can, going into the newest technology of aircraft. We will look at offsetting whatever [carbon emissions] we contribute, and we`ll certainly join any industry-wide initiative.”

Miller, however, did not identify any specific plans to offset the airline`s contribution to climate change. Talking about the airline`s current thinking, he said: “You contribute X amount of carbon and you plant Y trees, and we`re looking at all the options, something which is really meaningful.”

But Richard Dyer, a campaigner on aviation issues for Friends of the Earth, called the coming of long-haul budget travel “a very worrying development.”

“We can expect aviation`s climate changing emissions to grow even faster than they are already,” said Dyer. “There are no technical solutions on the horizon for decades that will radically cut aviation emissions.” So what are the best solutions for combating runaway climate change? Dyer is clear: “Abandoning plans to expand airports and introducing economic measures to manage demand.”

But for every pessimistic environmentalist, there`s an optimistic aviation executive. Steve Miller told me that outbound travel from China is poised to explode, thanks to new-found prosperity: “We are hitting this US$3,500-4,000 GDP per capita level in the Pearl River delta now, so there`s going to be a lot of stimulation [to travel] in those areas. We`re already seeing it.”

Miller said that currently: “60-70% of [Oasis`] traffic originates in the U.K since people in the U.K. are already accustomed to what we`re trying to do.” But that is likely to change soon.

Citing an estimate of some 20 million outbound trips from mainland China at present, Miller called this “the tip of the iceberg.” According to Miller`s figure, less than 2% of China`s population travels abroad each year, but for developed countries, “the generally established figure for outbound travel is 10%.”

Few would deny that increased mobility for people of varying incomes is good in and of itself; the problem is this happening against the backdrop of an airline industry that has yet to face up to its role in carbon emissions and climate change.

Cheap ticket prices are sending people one signal at the same time that concerned scientists and policy makers are trying to send another. According to a recent Oxford University report, for example, airplane emissions already account for 5.5% of total UK carbon emissions – and they are growing fast.

This is the big picture: the ceaseless expansion of airports, a predicted explosion in private aviation, and little political will to treat airlines like other polluters (which is what the new EU regulations would do, oh-so-gradually).

But at the scale of everyday life, the question is what to think about “the fresh approach” of Oasis. What difference would it make to take a stand against budget airlines when there are no “green airlines” to fly with? Is this not a case where governments – or aviation giants like Boeing, Airbus and the engine manufacturers – have to act before ordinary people can reasonably be expected to?

Ross Perlin is a graduate student at London’s School of Oriental and African Studies, focusing on the documentation and description of endangered languages.

The “elephant in the bedroom” is a phrase used to describe a problem that is looming large, but is too overwhelming to be engaged%26mdash;and is therefore ignored. As the climate change debate goes into overdrive, one elephant in the global bedroom is China. The rate of growth in China`s energy demand is so intense that it threatens to wipe out much of what the rest of the world does. At the same time, however, there are those who predict that China, because its problems are likely to become so severe, will become an incubator for solutions that can be applied worldwide.

Such issues were part of the backdrop to the recent G8+5 meeting in Washington, D.C., which was focused on climate change. On 16 February, delegates agreed that developing countries, as well as rich countries, would have to meet targets for cutting greenhouse gas emissions. The G8+5 Climate Change Dialogue was set up in the wake of the failure of UN negotiations in December to agree a timetable for forcing new cuts in emissions when the current Kyoto targets expire in 2012. In addition to the G8 nations, the two-day meeting attracted legislators from China and from Brazil, India, Mexico and South Africa. One part of the agreement was that a global market should be formed to “cap and trade” carbon dioxide emissions.

Although the declaration carries no formal weight, it is part of the current sea change in political mood. It should be seen alongside the astounding success of former US vice-president Al Gore`s film An Inconvenient Truth, which just won an Oscar. Even more significantly, climate change has bubbled up onto the agenda of the World Economic Forum, which included 17 separate sessions on climate change at the 2007 meeting in January, in Davos, Switzerland. This was clearly the year when the world`s leading decision-makers began to wake up to the scale of both the risks and market opportunities.

China and India, for various reasons, have been blowing hot and cold as they talk about tackling climate change, but both want accelerated transfers of clean technology to their emerging economies. Zhang Xiaoqiang, vice chair of China’s National Development and Reform Commission, emphasized this need when he told one Davos session that cement producers in his country are only about half as energy efficient as Western competitors%26mdash;at a time when the country uses something like 40% of world cement production.

Also significant was the announcement at Davos of a number of climate-related initiatives, including the Climate Disclosure Standards Board, a new international partnership of seven organizations that aims to establish a generally accepted accounting framework for climate risk-related reporting by corporations. Founding members include the California Climate Action Registry, the Carbon Disclosure Project, Ceres, The Climate Group, International Emissions Trading Association, World Economic Forum Global Greenhouse Gas Register and World Resources Institute. Member organizations have agreed to align their core requests for information from companies to ensure that they report climate change-related information in a standardised way%26mdash;which, it is hoped, will facilitate easier comparative analysis by investors, managers and the public.

Interestingly, the Forum summit was sandwiched between the publication of two major reports on the climate outlook. The second of these documents, launched by the Intergovernmental Panel on Climate Change just after the Forum closed its doors, concludes that we can be 90% confident that climate change is under way, that it is largely caused by human and industrial activities and that global temperatures are likely to rise even more steeply than predicted six years ago.

The first report, released late last year, was the hugely influential review by British economist Sir Nicholas Stern, head of the UK Government Economics Service. His report concluded that the costs of climate change, averaged over time, over the regions of the world and across a range of scenarios, are likely to be equivalent to a loss in average world consumption of 5 % to 20% per year. The study estimated that the cost of reducing emissions along a path of stabilisation at 550 parts per million of carbon-dioxide-equivalent (CO2e) will be around 1% of global gross domestic product (GDP) by 2050, which would imply around US$350 billion in annual costs by then. Given that global GDP is predicted to be around US$100 trillion by 2050, annual costs could be around US$1 trillion.

One of the sectors that has switched on to the new challenge in interesting ways is the supermarket industry, a trend that could have long-term implications for exporters in the emerging markets. Companies already taking action include Marks %26amp; Spencer in the UK, which has committed to making its operations in the UK and Ireland carbon neutral. One target: to double regional food sourcing within 12 months and develop existing local supply networks, alongside minimising the amount of air freight used. Competitor Tesco has committed to add a carbon label to all its goods%26mdash;and has committed to halve its energy usage per square metre of store space by 2010. In the USA, Wal-Mart says it will run its US stores entirely on renewable energy.

In the longer term, there are major business opportunities arising from the need to reduce carbon emissions. For example, private sector carbon exchanges have already been established in Europe and the US%26mdash;and now China is joining the game. Working with the United Nations, the Chinese government aims to develop Beijing as a global exchange in the trade of carbon credits. Given that market opportunities for low-carbon products are estimated to be worth at least US$500 billion a year by mid-century, business looks set to remain centre-stage. In one Davos session, Scott Friedheim, co-chief administrative officer of Lehman Brothers, predicted that, “There will be a move away from corporate social responsibility, towards long term sustainability.” With 2007 being the twentieth anniversary of the Brundtland Commission, which brought sustainable development into the mainstream of business, this prediction marks a new phase in global sustainability strategy.

John Elkington is founder %26amp; chief entrepreneur of SustainAbility and blogs at http://www.johnelkington.com.

Jodie Thorpe is manager of SustainAbility`s Emerging Economies Program.

In a dank alleyway in the old quarter of Beijing is a half-renovated house with a gaping hole where the roof should be. It has no garden or pool and had, until recently, only a few modern amenities.

But this traditional courtyard home has just been sold for 110 million yuan (about $14.2 million, or %26pound;7.1 million) — thought to be a record for a residential property in Beijing. It is the latest sign of rising incomes, changing tastes and growing inequality as the capital undergoes a pre-Olympic housing boom that puts even London in the shade.

Despite government measures to cool growth, the Beijing housing sector has never been hotter. According to the local media, average prices in the city increased by almost 10% in February. Estate agents claim that many luxury homes have doubled in value in three years.

Until a few years ago, most speculators focused on modern apartments in inner-city tower blocks and new villas in the suburbs. But the record-breaking home is an old-style siheyuan (courtyard) in the downtown houhai (“back sea”) area of the city.

Walled quadrangle residences were popular with the nobility and courtiers, but after the communist revolution of 1949, many were requisitioned and partitioned for families loyal to the new government. Often overcrowded and notorious for their smelly communal toilets and unsafe coal-fired boilers, many of these old neighbourhoods have been treated as slums by the authorities. In the race to modernise in time for next year`s Olympics, tens of thousands of homes have been demolished in the city`s old hutong alleyways.

In the central area, only 3,000 courtyards remain, giving them a rarity value that has pushed up prices. The one just sold was particularly valuable because it is a huge property, ideal for modernisation, and close to the city`s liveliest lakeside entertainment district.

Each of its 3,028 square metres sold for more than 36,000 yuan (over $4,600, or %26pound;2,300), more than double the price previously fetched by any home in the neighbourhood. The buyer remains anonymous, though local media have speculated that he is a coal-mine owner from Shaanxi province or a Russian billionaire.

The new owner will be in mixed company. While many Beijing siheyuan are still occupied by working-class families, others have been snapped up by wealthy foreigners, senior officials, contemporary artists and the new rich. Two years ago, media tycoon Rupert Murdoch reportedly was pressed into buying one for 30m yuan by his wife, Wendi Deng.

Such purchases can be risky in a city where planners often requisition land for development. Last October, Beijing`s first courtyard auction was cancelled after an hour because wary bidders failed to meet even the reserve price of $225,000 (%26pound;113,000). But the passage of the nation`s first property law this year and state protection orders for hundreds of courtyards appear to have strengthened the market.

“The reason courtyards were not that popular before is because people did not appreciate their value and potential for investment,” said Hu Chaohui, manager of a real-estate company. “But they are very special. They are rare and centrally located. In addition, their prices not only include the usage value but also the historical and cultural value.”

Critics say, however, that “conservation” often means knocking down an old building and replacing it with a structure in a traditional style. “The way now is to build fake old. It is not nice,” said Ma Yansong, an architect. “The hutongs attract many tourists. The poor, old residents are either like actors in a theme park or else they are kicked out so the rich can buy up the properties. The old community spirit is being lost.”

http://environment.guardian.co.uk/

The April 22 attack on a Chinese-run oil field in Ethiopia has brought to the fore a rising threat that confronts China in its hunt for oil and other natural resources in Africa: rebel insurgency.

There are militant groups pursuing a number of different agendas in virtually every oil-producing region of the continent, and the barbaric attack by the Ogaden National Liberation Front (ONLF) is not the first that Chinese oil workers in Africa have experienced in recent times. In Nigeria`s Niger Delta, where China National Offshore Oil Corporation (CNOOC) last April procured a major oil bloc, attacks on oil workers have become an increasingly regular occurrence.

For China, the attacks represent not only a threat to the lives of its citizens working in these troubled areas, but also a big challenge to its economic projections. China may know what it wants in terms of economic development, but it does appear to be at loss over how to handle the threat militant groups pose to its operations in Africa.

Tough choices

These days, one would be hard pressed to find anyone with access to the global media who is unaware of the rise of China. With growth rates averaging 10% a year since 1990, China`s economic performance has been nothing short of extraordinary, outshining even the Asian tigers that went before it. And while China has received the most column inches of all the emerging markets in recent years, India has also received significant attention, with the two countries frequently being compared and contrasted. While India has sometimes been described as a “lumbering elephant” to China`s “agile dragon”, India is also seen by some as more stable in its growth, given its strong democratic setup, wide base of education and focus on the more value-added service sector.

Such comparisons were at the back of our minds on a recent visit to India – as was the scale of the significant challenges these countries face before their full potential may be realised. India, like China, has seen the impact of economic surges coupled with expanding populations and the retreat of natural ecosystems. Indeed, as you head into Bangalore%26mdash;undergoing a major boom since the information technology sector took off in India%26mdash;there is much to remind you of boom cities in any emerging economy. Traffic crawls at a snail pace all day long. You can almost chew the air. The kites and other birds of prey that circle in the haze must be breathing in the equivalent of several hundred cigarettes a day. And the widespread poverty, although not as obvious as in other Indian cities like Delhi and Mumbai, is plain to see. But there is an excitement in the air, too, fuelled by the sense of momentum and, at least for some, opportunity.

Whatever their many differences, China and India share a desperate need to create and spread these growing opportunities. Despite being viewed enviously by pretty much the rest of the world, these countries also have vast marginalised populations living in varying degrees of poverty at the base of the global economic pyramid.

Ten days after New York City`s World Trade Center was destroyed in the “9/11″ attacks that claimed nearly 3,000 lives, then-mayor Rudy Giuliani (echoed by US president George W Bush) suggested a way in which people could help the reeling metropolis to get back on its economic feet. “Come here and spend money, just spend a little money,” Giuliani told a radio audience on September 21, 2001. “Go to a store, do your Christmas or holiday shopping now, this weekend. %26hellip; buy your birthday gifts for the next three or four months.” He added: “We`re the best shoppers in the world.”

Al Gore with Pan Shijiao, director of Beijing Shenzhou Daxu Bio-energy Technology Company Ltd, winner of the Ashden Award for Enterprise.

“Today is the fifth day of burning and the most serious so far. Out in the street, cars are moving slowly with their headlights on because the visibility is only about 10 metres.” Ge Bo, writing on chinadialogue, described this terrifying scene last week, as farmers burning crop waste in the fields around Xuzhou shrouded the east China city in smoke.

Ge Bo`s testimony highlights the great proportions of China`s pollution crisis. But it also points to a positive example of how the country, due to the seriousness of its environmental challenges, can become what John Elkington and Jodie Thorpe have called “an incubator for solutions that can be applied worldwide.”

The Live Earth concerts, to be held on July 7, have brought the debate about energy consumption in the music industry right to the fore. It is a long process that takes a musician from strumming the opening chords of a new song until the CD is sitting in shops, available for us to buy. Moreover, it is a process with a carbon footprint that sounds a “THUD” like a dinosaur from the film Jurassic Park. There is a vast amount of heavy duty, energy-sapping technology used in the modern music industry.

One recent piece of research by the Edinburgh Centre for Carbon Management (ECCM) confirms this with some shocking facts. Industry sources estimate that 1.6 million copies of British band Radiohead`s “Hail to the Thief” album were produced. The ECCM calculated this venture created a whopping 2,192 tonnes of carbon dioxide (CO2) in producing the raw materials, manufacturing and distributing the CDs. In fact, this one album produced the same amount of CO2 the average British person would produce if they were alive for 233 years; and it would take the average Chinese person 685 years to do the same.

Steps towards introducing sustainable energy use into the music industry are clearly long overdue. But away from the celebrity buzz of the Live Earth concerts, one studio in London is already on the case. Premises Studio is home to Europe`s first fully solar-powered recording studio, powered by 18 photovoltaic panels on the studio`s roof. Furthermore, “Studio A” was built with an amazing array of recycled materials, from the 100 car tyres underneath the floor to the double-backed ultra-thick doors (which were previously owned by oil company Enron, of all people). The studio is so well-insulated that it doesn`t require heating!

I went along to see Europe`s most sustainable studio in all its glory, and got the low-down from studio director Nathan Hale.

chinadialogue: The first and most obvious question about solar power is how do you manage to generate power to run the studio when it`s a wet, grey day in north London?

Nathan Hale: We have non-solar power as well, and all the energy generated by the solar panels feeds into our general grid and is stored there. On days when it`s very sunny you get an excess of power – more than you actually use — and it`s saved up for rainy days. We`ve done all the calculations and over a year it evens out, so that the solar power generated supplies all of the needs of Studio A, our sustainable studio.

cd: How did you get started with creating the %26lsquo;sustainable studio`?

NH: We had to calculate how many panels we would need to meet our consumption. We can monitor how much it`s generating, but it`s basically self-reliant now it`s set up: the system is self-cleaning and maintains itself.

The insulation is important too – the temperature in Studio A stays pretty stable at 22 degrees, and if we need air conditioning, that all comes out of the solar-powered bit of our energy grid as well. The walls are all about two feet thick, and the windows are all double-double-glazed, or at least triple-glazed.

So many different bits of the studio`s design were really thought about. Just the fact that we have an unusually high number of windows to the room – getting away from that idea of the dark, dank recording studio in a basement — means that fewer lights have to be used, and therefore less power is consumed.

cd: Recycling materials seems to have been integral to the studio`s design as well.

NH: That`s right. A lot of the major fittings are taken from reclaim yards [the kind of places that furniture and fittings go to die] – this extremely heavy door was the front door to a bank. We wanted a door with very thick glass, so what kind of place would have that kind of door? Obviously, a bank.

Another advantage of this approach is that you can save a lot of money on paying for new fittings, without compromising on quality. If you`re very particular and specific about what you want that makes it a lot easier to track the right stuff down.

cd: Is that how you came across the “Enron door”?

When politicians talk about energy “security”, they worry about securing the supply of energy to the west. But when politicians talk about climate change, they are more likely to adopt a global perspective, worrying about the planet as a whole and not just the west. Yet both challenges are interrelated and both require a global cooperative approach.

Those who worry about energy security fear that Europe will become too dependent on Russian or Middle Eastern oil and gas, and that competition to secure new sources of supply could lead to conflict. The Great Game is the term used to describe the way Russia uses its energy policy to exert influence over its neighbours in the Caucasus or central Asia. And the term Scramble for Africa is applied to the west`s competition with China over oil investments in Africa.

Conflict and security is also a concern for those who worry about climate change, but it is conflict among non-state actors far away rather than major states. Margaret Beckett, the former British foreign secretary, referred in a recent speech to the conflict in Darfur, Sudan, as a climate-driven conflict. Underlying the crisis, she said, was a “struggle between nomadic and pastoral communities for resources made more scarce through a changing climate”. And she warned of similar conflicts in other parts of Africa and the Middle East.

But neither of these concerns explains why humans compete rather than cooperate in managing scarce resources. Energy security and climate change could be treated as an opportunity as well as a danger. The shared risks of running out of oil and heating the planet could lead to common action rather than conflict.

In the case of energy security, the risk is not so much conflict among major powers but the instability within producer countries and their regions that results from over-reliance on oil revenues. Our dependence on oil has distorted the states and society of countries that produce oil.

Typically, oil-dependent states are weak and/or authoritarian states. In places such as Iraq, Chechnya, Nigeria or Colombia, pipelines are blown up, oil workers are taken hostage, smuggling and corruption are widespread, and oil rents — whether obtained legally or illegally — are used to finance violence.

This instability is exacerbated by geo-political competition in the form of the Great Game or the Scramble for Africa, as outside powers back different factions.

In the case of Darfur, the explanation may be the same. It is not climate change per se that has caused the conflict. The Sudanese government’s backing for the Janjaweed militia and its failure to prevent or stop the conflict or to allow a substantial international presence is an equally important explanation. Like Iraq or Russia, Sudan is a weak and authoritarian state, dependent on oil revenues to sustain the apparatus of government. Competition between the west and China, as well as within Sudan, to capture oil and its revenues further exacerbate the conflict.

Studies suggest that dependence on oil revenues is a significant factor associated with violent conflict. Yet there is no clear evidence that either resource scarcity or natural disasters contribute to conflicts — they can lead to cooperation and to conflict. But the evidence of a correlation between violence and a state’s dependence on oil rents as its main form of revenue is compelling.

Oil-dependent states are “rentier” states. Governments do not depend on taxation to finance their activities, and therefore do not need a social contract with their citizens. Instead, oil rents are distributed through patronage networks.

When oil prices are high, states such as Russia, Iran, Saudi Arabia, Nigeria or Venezuela can survive through a combination of patronage, repression and a nationalist, often anti-west, rhetoric. But as competition for the oil rents surpasses the available revenues, oil states often degenerate into sectarian conflicts among competing, often transnational, networks. In the Caucasus, for example, unsavoury networks of oil traders, enterprise managers, security services and ethnic nationalists are an important conduit for energy rents, exploiting local conflicts in places such as Chechnya, and manipulating relations with outside oil interests.

The scenarios of geo-political conflict with Russia or more climate-driven conflicts over scarce resources presuppose an old-fashioned view of sovereignty in which each group or state takes unilateral responsibility for securing resources and has no concern for others. Yet we live in an era of globalisation. Because of the myriad ways in which events in one place influence others, this unilateral approach is self-defeating — any attempt to secure energy supplies unilaterally is bound to backfire and exacerbate the spread of conflict.

This is why any solution to energy shortage, climate change and violent conflict has to address the interdependence of this triple challenge and has to involve global cooperation. The solution is not just reducing the dependence on oil of the west and emerging markets. Any effort to solve the problems of energy security or climate change unilaterally by, for example, reducing dependence on particular oil producers could risk instability in producer countries and undermine the prospects for finding common approaches to climate change. It could accelerate the process of state failure.

In his 2006 state of the union address, president George W Bush talked about weaning America from its addiction to oil. But we also need to wean the producing states from their addiction to oil rents. The oil dependence of producer states can be reduced through diversification, but this does not happen in most oil-dependent states because the funds that should have been invested in diversification are siphoned off by rent-seeking sectarian patronage networks.

Oil revenue transparency and public debate are crucial in addressing this problem, and they need to be supported by outside states and international agencies. Moreover, energy security needs to be about access to energy supplies for individuals and communities everywhere and not just the west.

A reduction of oil dependence and other CO2-emitting fuels among both consumers and producers and a fair distribution of resources require the construction of legitimate states operating within a framework of global cooperation. In other words, saving the planet is not a technical problem, even though a lot of scientific knowledge is required; it goes to the heart of the way we as human beings govern ourselves.

Mary Kaldor is professor of global governance and co-director of the Centre for the Study of Global Governance at the London School of Economics. Her book, Oil Wars, is published by Pluto.

http://environment.guardian.co.uk/

Copyright Guardian News %26amp; Media Ltd 2007

Homepage photo by Vista

In recent months, American companies have been grabbing the headlines with their announcements of major new environmental initiatives. Bank of America announced that it would invest $20 billion in environmental projects over the next decade, for example, then Citigroup said it would invest $50 billion. General Electric says revenues from its %26lsquo;ecomagination` initiative have doubled to $12 billion in just two years, with an amazing $50 billion of orders in the pipeline. And Wal-Mart, after years of facing increasingly damaging attacks from activists and the media, has launched programs in areas as diverse as renewable energy and sustainable fish. All welcome developments, true, particularly when the Bush administration seems committed to stalling progress on critical issues like climate change, but there is a risk that this increasingly competitive green-flag-waving in the United States will divert attention from equally interesting changes taking place elsewhere.

Take France. The country, which has just elected a new President, Nicolas Sarkozy, is not known for its environmentalism. One of the most striking examples of the French way was the sinking by the French secret service of the Greenpeace ship Rainbow Warrior in Auckland harbour in 1985, resulting in the death of a Greenpeace photographer. It also invested heavily in nuclear power at a time when much of the rest of Europe was turning its back on this energy source, though as climate change grows in perceived importance this may prove to have been a particularly strategic move. In summary, however, even though they may be famous for the quality of their food and wine, the French have not been noted for their appetite for sustainable development.

But things may be changing, with companies like Danone, Lafarge and Suez moving strongly into this space. Suez has publicly embraced sustainability in its pursuit of market opportunities related to energy, water and other infrastructure projects around the world, while Lafarge led the cement manufacturing sector in reporting its greenhouse gas emissions. But more interesting still is Groupe Danone, known for its Evian brand bottled water and Danone yogurt. Not only has Danone bought a leading US organic food company, Stonyfield Farm, but it has also now formed an innovative social partnership with the Grameen Group in Bangladesh%26mdash;and is talking about launching a very unusual fund to support microfinance around the world.

Danone Chairman and CEO Franck Riboud explains that these initiatives are all part of his company`s efforts to spur “positive globalization.” This approach sets Riboud apart from many of his countrymen, who tend to be deeply uncomfortable with the way in which globalization is developing. He believes that new business models can both help multinational companies to adapt to the new market pressures globalization brings, and begin to meet the needs of those who are so far largely outside the market system. Like US-based professors C.K. Prahalad and Stuart Hart, both of whom have spotlighted the money to be made in %26lsquo;base-of-the-pyramid` markets, Riboud believes that companies like Danone can rise to the challenge. “There are 3 billion people living on %26euro;2 a day,” he has noted. “So why not create a business model that can work with this very low but huge income group? Not for charity but with the idea of profit sharing.”

In 2006, Riboud formed a joint venture in Bangladesh with the Grameen Group, founded and led by Muhammad Yunus, who won the Nobel Peace Prize the same year. Yunus is famous for his efforts in the field of microfinance, involving lending to the very poor. The new joint venture with Grameen has completed the first of 50 planned yoghurt factories in Bangladesh. The first plant cost %26euro;700,000, but the expectation is that the second factory will cost 30 per cent less, allowing local villagers to become shareholders in the project. The products are designed to help malnourished children return to health.

Such initiatives have deep roots at Danone. The business was founded in 1966, initially as a packaging company but later morphing into the leading food group in France. When Franck Riboud took over from his father Antoine ten years ago, he decided to expand Danone internationally%26mdash;based on a strategy of “affordability,” which has involved developing and offering new ranges of products that poorer consumers could afford. The venture will not be profitable, by design, but Frack Riboud argues that the joint venture with Grameen is providing a laboratory for Danone that in turn could help the company develop innovative products for rich-world markets.

Even more ambitious is Danone`s plan to launch a new fund, %26lsquo;danone.communities,` which will aim for the maximization of social objectives, not of profit. Danone hopes to raise an initial $135 million, promising it will return a guaranteed rate comparable to a money-market account%26mdash;about 3 percent to 4 percent annually. The fund is to be managed by bankers Cr%26eacute;dit Agricole, and will be open to the French public as well as institutional investors. The social impact of projects on local communities will be assessed on the basis of indicators that include their contributions to public health, the reduction of malnutrition, and the alleviation of poverty, with an eye to any environmental and social impacts. Interested Danone shareholders will be able to reinvest all or part of their dividends in the fund in the form of “social dividends.” For Danone, the returns come in the form of the company`s reputation, its license to operate and its ability to attract and retain talent.

We knew shareholders were meant to vote on the proposed fund recently and were surprised not to read the result in the week after the vote was due to have taken place. Indeed, we began to worry that the vote had gone the wrong way. But when we contacted Danone we found that the vote had gone the Danone Way, with an extraordinary 99.8 percent of shareholders voting in favour. In a different world, that would have been a big news story.