Executive Summary:
It is proposed that the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM) through Escuela de Graduados en Administracion Publica y Politica Publica (EGAP), in collaboration with Wharton, MIT, and Stanford Universities; and other national academic institutions; jointly establish with additional funding from the public and private sectors a “Research and Business Institute for Sustainable Development in Mexico (RBISD).”
Sustainable Development is defined as meeting the needs of the present without compromising the ability of future generations to meet their own needs. Caring for the environment is profitable and the benefit is to increase resource productivity from less energy and raw material input as well as, develop new goods and services while reducing environmental impacts.
In 1992 business received a wake-up call. The Rio Earth Summit highlighted the potential risks to ecology and long-term economic and social development created by current patterns of industrialization, population growth, and social inequality. The World Business Council for Sustainable Development (WBCSD) is a global organization that has been established to encourage the initiatives and further develop policy proposals and best practices including, the concepts of eco-efficiency. Its specific objectives are:
1. Business leadership- to be the business advocate on issues connected with the environment and sustainable development.
2. Policy development- to participate in creating a framework that allows business to contribute effectively to sustainable development.
3. Best practices- to demonstrate progress in environmental and resource management in business and share leading edge practices with members.
4. Global outreach- to contribute to a sustainable future for developing nations and nations in transition. Eco-efficiency, a concept within Sustainable Development encompasses both ecological and economic resources- the latter refers to optimal use of both. Eco-efficiency objectives are:
* Reduce the material intensity of goods and services.
* Reduce the energy intensity of goods and services.
* Reduce toxic dispersion.
* Enhance material recyclability.
* Maximize sustainable use of renewable resources.
* Extend product durability.
* Increase the service intensity of products.
Sustainable Development has been defined by the Brundtland Commission as “development, which meets the needs of the present without jeopardizing the needs of future generations.” This means economic growth that does not deplete irreplaceable resources, does not destroy ecological systems, and helps reduce some of the world's gross social inequalities.
RBISD will be the first multi-disciplinary, multi-institutional institute in Mexico and the Institute will differ from other local research institutions through its collaboration with the Businessman Associations that include the largest companies in Mexico . The purpose of RBISD is to build upon and harmonize the various sectoral economic, social and environmental policies and plans that are operating in the country. Also, the Institute will promote academic research and professional consulting in three areas:
I. Energy
Energy is crucial to all aspects of development from powering manufacturing and modernization of agriculture to providing electricity to run schools and health facilities, yet the impact of its production, distribution and use grows more severe with every decade. Although new alternative and renewable as well as cleaner and more efficient technologies are being developed and implemented every year, the strain caused by the rise in energy demand and global consumption outweigh the benefits brought by these improvements. Furthermore, the growing number of people without access to very basic energy supply predicates a rapid growth in demand in the coming years. The challenge lies in finding a way to reconcile the necessity and demand for energy supply with its impact on the natural resource base in order to ensure a sustainable path of development.
II. Economic Growth and Environmental Impact
Lowering the footprint while increasing yield of raw materials.
Priority actions include:
(1) entrepreneurial opportunities and productive resources;
(2) balancing the gains of development against the detrimental effects of growth on the natural environment;
(3) promoting sustainable development through trade liberalization;
(4) making trade and environment mutually supportive;
(5) providing adequate financial resources to Mexico in dealing with its international debt; and
(6) encouraging macroeconomic policies conducive to environment and development.
III. Social Impact and the Poverty Issue
Urgent and stronger emphasis on business ethics, education, and political stability.
Priority actions include:
(1) improving access to sustainable livelihoods;
(2) providing universal access to basic social services;
(3) progressively developing social protection systems to support those who cannot support themselves;
(4) empowering people living in poverty and their organizations;
(5) addressing the disproportionate impact of poverty on women; and
(6) working with interested donors and intensifying international cooperation for poverty eradication.
General Objectives:
Launch a Research and Business Institute for Sustainable Development in order to develop a national sustainable development strategy as a tool for informed decision-making that provides a framework for systematic thought across sectors and territory. The RBISD will help to institutionalize processes for consultation, negotiation, mediation and consensus building on priority societal issues where interests differ. Development of the strategy empowers constituents to address inter-related societal and economic problems by helping them to build capacities, develop procedures and legislative frameworks, allocate limited resources rationally and present timetables for actions. Constituents will benefit from formulating strategies both directly (as a result of making development more sustainable) and indirectly (from the process itself).
The RBISD will provide to companies, the federal and local governments, and the society in Mexico the key elements to achieve sustainable development. These elements will include the sharing of knowledge to maximize profit without leaving a footprint on the environment, protecting social lifestyle, and reducing social inequality within the framework of the country's cultural background.
Regulatory Issues:
There is a worldwide public concern for the environment and there are efforts to translate the concern into public policies and in this regard representing important challenges to the legal system. Environmental policy makers in Mexico must make decisions that involve profound ethical choices. Environmental regulation determines how fairly environmental issues will be distributed across society. Law is crucial to establish the conditions that will reflect the world Mexico wants to live in and also, the future Mexico wants the next generations to inherit.
It reflects the existence of an ecological conscience, which constitutes at the same
time the conviction of individual responsibility in this context. The ethical relation to the environment incorporates the idea of respect and high regard for the value in the conservation of nature. The understanding of ecology means comprehension through education. Environmental pollution, work place safety and product safety are problems, which are primarily moral, cultural and political issues on which social regulation is based. The legal system needs to build a new framework for sustainable development
“Economical, environmental and social problems can not be addressed in isolation. Economic prosperity, environmental quality, and social equity need to be pursued simultaneously.” 1 Robert V. Percival and Dorothy C. Alevizatos: Law and the Environment, Page 276.
There also is the need to overcome the limitation of the economic reality and those of the regulatory systems in recognition of the interrelationship between economic and environmental public policies. The use of innovative approaches will be important in this regard. Modern regulatory systems must require from companies and communities accountability and transparency to ensure that the environmental and public health is protected. Sustainable Development objectives must include tax benefits that can enable cost reductions.
The use of economics and environmental systems is recommended, encouraging innovation through technologies that help reduce risks to human health and any harm to the environment. Firms, federal and local governments, international organizations and individuals have to work together with local communities to develop strategies that integrate economic growth, environmental conscience and social policy with the general public involvement within a renewed legal framework.
First Year Objectives:
1. To establish RBISD as a Civil Association linked to ITESM, Campus Santa Fe.
2. To establish a high level and strong relationship with key market segments.
3. To develop a sustainable development research exchange program with similar centers and institutes in Mexico and other regions in the world.
Two to Five Year Objectives:
1. To be self-sustaining at the end of the third year of academic, corporate and governmental sponsorship.
2. To extend the activities of RBISD in academic research and consulting through the Monterrey , Guadalajara , Chiapas and Veracruz ITESM campuses.
3. To sponsor seminars, conferences, courses and workshops on Sustainable Development.
4. To participate actively with the Mexican Congress in the next revision of National Development Plans in order to initiate systemic changes regarding Sustainable Development.
Structural Description:
Ongoing investigative research and professional consulting conducted by RBISD will be under contract and executed in accordance with the law and policy of Mexico . The Institute will also provide educational opportunities to advance the learning and understanding of sustainable development through research, seminars, courses and conferences with the participation of national and international experts.
Market Segments:
The primary market that RBISD will support is Mexico and to assess the opportunities of those markets we have established the following framework:
1. Sponsor Companies: CEMEX, and others to be defined.
2. Public Companies: PEMEX, CFE, LFC, and others to be defined.
3. Government Entities: SEMARNAT, SEDESOL, INDESOL, PROFEPA, The Mexican Congress, the Senate, including special committees created to investigate issues related to sustainable development and the Superior Auditing Unit (Auditoría Superior de la Federación).
4. Large Companies: (Revenues of USD50 million/year or more)
5. Medium and Small Companies: (Revenues below USD50 million/year)
Financial Summary:
The initial budget for the start-up of RBISD is based on $2.5 million dollars committed from a United Nations Matching Funds Program and through other public and private donations. For the selection of research projects, several elements would be taken into account, among them: the sustainable development priorities, the costs involved and the market demand for the consulting activity.
Legal Constitution:
A Civil Association is the most convenient legal instrument to incorporate the RBISD. Its main corporate purpose will be focus on research activities and other parallel activities, which will have a general social benefit that will contribute also to the self-maintenance of the Institute and to the feasibility of its projects. Under this modality the RBISD may obtain tax-deductible donations.
This legal structure demonstrates before third parties a solid evidence of the professionalism of the project and its future economical independence. In order to make the Institute and its projects attractive to as many participants as possible, it is essential that the Institute maintain a complete operational autonomy.
The Institute's patrimony will be obtained from donations granted by diverse contributors and by contributions made by the Institute's Associates, as well as from fees arising from advisory services that the Institute will render to third parties. Finally the Institute may also obtain resources from the exploitation of some of its assets, such as intellectual or industrial property rights.
Organizational Structure:
The proposed organization for the RBISD consists of a horizontal structure with an administrative area; managed by a Director consulting a Board of Advisors. The administration and the group of researchers report to Board of Directors on their results and activity. Each of the different research and consulting departments, will be led by a Director who will be an expert in that specific area and will be in charge of coordinating and organizing the diverse research teams and consulting projects.
It is proposed that the ITESM, EGAP take the leadership on the establishment of a Research and Business Institute in Sustainable Development with a focus on “Hard Science” technological applications and multi-disciplinary experience to create a local “Research an Sustainable Development Team” formed of specialists that are competent, cost effective, and produce results that have maximal transferability and applicability to the public and private sectors; solving environmental problems and at the same time “pushing back” the frontiers of knowledge wherever possible.
It is also proposed that the RBISD maintains a “community” of other research partners both in Mexico and internationally, such as the universities of Wharton, MIT, Stanford, Harvard, ITAM, Colegio de Mexico, UNAM, as examples. The general purpose of the Institute is to deliver professional environmental research and generate income and services to the participating institutions.
Target Opportunities:
Mexico is a social and ethnic diversified country; there are gaps between economic and cultural sources that translate into differentiation; and no one would run a business without accounting for its capital outlays. Yet most public and private entities overlook the value of earth's ecosystem services. People and companies require resources to survive, produce and or create income trough products and services. Consumption of raw material has to be done in terms of maintaining or regenerating the source of provision.
Companies in Mexico need equilibrium between lucrative business activity and the relationship to be sustainable and permanent. There is a challenge by integrating the safekeeping of the environment to the productive processes and by keeping social and cultural community values. Government and business entrepreneurs are the first source of influence in any country's development. The Congress and Mexican established companies (ignoring their nationality), maintains an important role in society and is responsible to promote a sustainable development culture in the country.
Project Goals:
1. To establish the RBISD as a focal point for Scientific Research and Research Coordination.
2. To constitute the RBISD as a Civil Association to take advantages of legal and fiscal provisions.
3. To develop and grow the research funding source data-base.
4. To facilitate the development of an environmental research information exchange program.
5. To extend the size and scope of the environmental experience so that it provides an extensive reference collection for research as well as for consultation by industry.
6. To contribute to management philosophy that links environmental excellence to business excellence and is synergistic with general trends in leading edge businesses.
7. To support and extend the information networks between researchers and research groups locally and internationally.
8. To recognize that support of patronage is temporal. Eco-leadership and sustainable development actions will provide entities such as government and companies, as well as other data providers and research participants with a source of income and a social and moral role.
Research and Consulting Areas:
The RBISD will focus on but not be limited to the following areas of emphasis:
1. Eco Efficiency Teams- As there is a need to measure what you manage, this team will do mapping and measuring the ecological efficiency of the revised entity's processes.
Team members must ask, in relation to the value produced, what inputs are consumed and what outputs are generated.
2. Full-Cost Accounting Team- The team is developing a methodology to account for the total cost of making and using a product during the product's life cycle, including the true environmental costs associated with production usage, recycling, and disposal.
3. The Index Team- This team will develop the criteria by which business units can measure whether or not they're moving toward sustainability. They will work on a set of metrics that balance economics, social, and environmental factors.
4. The New Business/ New Products Team- This team will provide data and examination as of what will be valued in a marketplace that increasingly selects products and services that support sustainability. It will also look at areas of stress in natural systems and providing ideas for designing technological skills that could meet human needs with new products that don't aggravate – which may even repair – ecological damage.
5. The Water and Global Hunger Teams- This team will base its studies on how to develop and deliver technologies to clear water and alleviate world hunger. As an example, there are great opportunities when using agricultural skills to meet people's nutritional needs in developing countries.
6. The Communication and Education Team- This team will contribute by developing the training to give government, companies and communities a common perspective.
It will offer a framework for understanding what sustainability means, how people can play a role, and how they can take their knowledge to key audiences outside the company.
Based on the definition of sustainable development as meeting the needs of the present without compromising the ability of future generations to meet their own needs, Mexico 's diversity and growth potential represents one the best places in Latin America to establish the Institute and particularly, in Santa Fe due to its strategic location within Mexican and international corporate enterprises.
Mexican Government Environmental Protection expenses have increased and this fact presents both an opportunity and a challenge to capture part of it, promoting good public relations at key level of SEMARNAT, and other government entities. This will support the RBISD existence as “a high level research institute for sustainable development.”
Financial Rationale:
A Business Plan has been prepared for more than 3 years (39 months) in which the financial performance of the RBISD is forecasted for this period of time.
The key assumptions are that the Institute will received funding from the United Nations in the amount of $1,250,000 (One million two hundred fifty thousand U.S. dollars) and the complement for a similar amount will be obtained from the public and private sectors in Mexico .
The management of the funds will require the opening of a US bank account for a restricted use of such funds and the cash available will only be used through
Notices of Operating Expense previously authorized by the Administrators of the RBISD.
Monthly reports and required reports at any given time are to be distributed to the Officers of the Institute for their review and approval as well as a basis for decision-making.
A summary of the Statement of Sources and Uses of Funds has been prepared in accordance with generally accepted accounting principals of the United Sates of America and Mexico for non-profitable organizations. The RBISD will be primarily funded to make significant investments to comply with its purpose. Further, the funds will be reduced to a level in which the operation of the Institute requires funds to meet its operating expenses. The result of the funds received and the investments and operating expenses incurred will accrue at the end of each fiscal year. The cash available for the Institute is to be maintained to make a reserve for the eventual acquisition of its own land and building.
Cash Flow Assumptions:
A cash flow has been prepared that focuses on the specific items in which the RBISD is to invest its capital including, the fixed assets and the operating expenses such as salaries, subscriptions, conference arrangement expenses, marketing, telephone, legal and accounting and taxation fees, etc. One major issue in the detailed analysis of the cash flow is the operating income generated by the Institute in performing its duties to the various public and private organizations in Mexico .
As the RBISD has as one of its main goals to become self-sustaining, the revenue generated by memberships, conferences, publications, courses and diverse studies and internal services recoveries is quite important for the Institute's development and performance. The cash flow statement also shows additional donations and cash contributions from diverse private and public organizations. The RBISD is expected to maintain a certain level of cash in its restricted bank accounts. Also the major item in the assets is the investment in various fixed assets including the land and building.
Also, the donations and initial contributions to the Institute are being reflected as part of the equity of the RBISD. At the beginning of its operations the Institute is expected to generate losses, which will result in a deficit of the RBISD. As previously stated, a major goal of the Institute is to be self-sustaining and it is forecasted that the deficit will be offset with the income generated through operations of the RBISD.
Management Structure:
The management of the RBISD follows the administrative needs and cooperative nature of the Institute. The Executive Board is responsible for the overall administration and direction of the Institute. Each Sponsor is responsible for the participation on the Research Committee. Each member of the Research Committee acts as a liaison, and provides communication between the Institute and each Sponsor. Each Sponsor will have equal access to the products of the research conducted under the Institute's auspices.
Any four –year college or university located in Mexico and internationally, private organization, or sustainable development related agency might petition the Executive Committee to become a Sponsor of the Institute. The petitioner must demonstrate how its participation will be beneficial to the successful continuation of the Institute. The Executive Board will be the sole judge as to the merits of the petition. A unanimous decision is required for the acceptance of the petitioner. The Board of Directors will be in charge of the general direction of the Institute. The Director will coordinate the general operation of the Institute. The Board of Advisors will consider the research and consulting projects and will determine the general research areas.
The Administration Department will be in charge of the financing, administration, further funding programs, the implementation of the general strategy of the Institute, and of disseminating the objectives and advances of the Institute. It will also be in charge of establishing a network of the stakeholders, and promoting international relations. The Institute Administrator will serve under contract to the Institute to oversee the day to day administrative functions necessary to support the Institute. Each of the different research and consulting departments, will be conducted by a Director who will be an expert in that specific area and will be in charge of coordinating and organizing the diverse research teams and consulting projects.
Conclusions and Recommendations:
Sustainable Development is a process of change that includes the exploitation of resources within the orientation of technology and the direction of any investment. “No one would run a business without accounting for its capital outlays. Yet most companies overlook one major capital component- the value of the earth's ecosystem services.” 2 Business and the Environment; Harvard Business Review, Page 1.
Far from requiring the interruption of economic growth, sustainable development incorporates it in the solution of problems such as poverty and underdevelopment.
Under these considerations it can be said that sustainable development must rest on a political will. “Sustainable Development cannot be achieved by one nation alone. It cannot be achieved in only one sphere such as the economic sphere. It will require types of partnership never before witnessed in human history.” 3 Charles O. Holliday Jr., Stephan Schmidheiny, Philip Watts: Walking the talk, Page 13.
Sustainable Development calls for serious economic growth in order to meet the needs of the present population. Companies find that in the search for new strategies, the concept of sustainable development opens new patterns of growth.
“Sustainable development broadens corporate vision”. 4 Charles O. Holliday Jr., Stephan Schmidheiny, Philip Watts: Walking the talk, Page 126.
Leadership learns to think in terms of social and environmental commitments considering economic and market conditions in today's global context. It fosters innovation and continuous skill development seeking new forms of dialogue and partnership among stakeholders in order to meet the challenges of the future. The time for a “Research and Business Institute in Sustainable Development in Mexico ” is overdo.
References:
Business and the Environment, Harvard Business Review, Harvard Business School Press, 2000
De Simone Livio D. and Frank Popoff: Eco-Efficiency, The Business Link to Sustainable Development, The MIT Press, Massachusetts Institute of Technology,1997
Gauzin- Muller, Dominique: Sustainable Architecture and Urbanism, Birhauser,2002
Holliday, Charles O. Jr., Stephan Schmidheiny, Philip Watts: Walking the Talk, The Business Case for Sustainable Development, First Edition, Greenleaf Publishing,2002
Kotter, P. John: Leading Change, Library of Congress Cataloging- in- Publication
Data, 1996
Luenberger, G. David: Investment Science, Oxford University Press, 1988
Percival, Robert V. and Dorothy C. Alevizatos: Law and the Environment, Temple
University Press, Philadelphia , 1997
Porter E. Michael: On Competition, A Harvard Business Review, 1996
|
