KNOSSOS1 POLICY BRIEFINGS: GREEN ECONOMY
Discussion Paper
GREEN ECONOMY AND SUSTAINABLE DEVELOPMENT
An historical account of the discourse around sustainable development and green economy
By Axel Volkery and Sonia Rouabhi
With support from Patrick ten Brink and Doreen Fedrigo-Fazio
Summary
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The green economy concept is not new, given that the debate about the needs for changing course of
economic growth and finding an alternative socio-economic model has assumed different approaches
and discourses throughout the last 40 years.
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A strong focus on environmental limits and the needs for preserving living conditions were the
original starting point of the discussion in the 1970s and 1980s.
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Much of the political sustainability discussion in the 1990s and 2000s turned to aligning economic,
social and environmental concerns. This ‘three-pillar-model’ understanding led to new alliances and
repositioned the environment discourse to reform discussions in other policy fields, particularly
economic and fiscal policy. But it also created a hyper-complexity of approaches that are difficult to
absorb and manage by political systems.
In the early 2000s, many Member States prepared national sustainability strategies. An EU
Sustainable Development Strategy was also created. However, the strategy process was fraught by its
unclear and contentious relationship with the ‘Lisbon Strategy’, leading again to an unclear link
between the growth and the sustainability agendas.
The early discussion in the 1970s about ‘limits to growth’ (availability of finite resources) is re-entering
the political agenda, but with a different focus on ‘growth within limits’: The critical state of many of
the planet’s ecosystems and the threat of losing key life-supporting functions is creating new limits
that need to be reflected.
Sustainable development has been institutionalised at EU level in the form of a strategy and several
high-level political commitments. When measured against the overall rationale and ambitions of the
sustainable development discussion, EU level action towards sustainability has experienced serious
shortcomings. The discussion has considerably distanced itself from its original starting point, about
meeting needs within clear limits, the latter being defined by the environment.
Our growing understanding about bio-physical boundaries that should not be crossed in connection
with the world economic and financial crisis is moving the overall discussion back towards growth
within limits. Activities on the green economy and green growth open the door for wider discussion
about fundamental objectives.
Our environment defines the operating space for our daily interactions. The advent of modern
industrial society and market forces led to ruptures in the fabric of social life that had previously been
embedded in the natural environment. The economy, which had been defined among others by the
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1 The KNOSSOS Project is funded by the EU 7th Framework Programme.
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conditions of the natural environment, was released from that link. The green economy offers the
potential for a mainstream discussion to create political commitment to recreate that link.
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Introduction
This policy briefing focuses on the green economy and its relationship to sustainable development,
taking a historical perspective. It should be read in conjunction with the other policy briefings that
have been developed on the green economy.
‘Ecological modernisation’, ‘Sustainable development’(SD), ‘green economy’(GE), the debate about
the needs for changing course of economic growth and finding an alternative socio-economic model
has assumed different approaches and discourses throughout the last 40 years. The concept of the
‘green economy’, which is currently receiving a lot of attention and momentum since the 2008
global financial crisis and in the run-up to the Rio+20 Summit, is not new. And it is building in many
ways on previous discourses, particularly about ecological modernisation. In order to gauge the
potential for steering needed changes ahead it is helpful to take a look at some of the past
developments in the debate and lessons learnt.
Greening the economy cannot be an end in itself because it is relative to wider societal and
environmental constraints, where clear, absolute objectives can be articulated. It needs to be
understood as a critical means to achieve a healthy environment as the key end, a precondition for
human well-being. Here, the discussion about a ‘green economy’ offers a useful hook to reposition
the discussion about ‘sustainability’ as a key guiding principle, which is in urgent need of
repositioning. Ecological (or planetary) boundaries (at global, national, regional and local levels)
need to be given much greater priority and emphasis.
A strong focus on environmental limits and the needs for preserving living conditions were the
original starting point of the discussion in the 1970s and 1980s. Also Our Common Future, the United
Nations report (also called ‘the Brundtland Report’1) clearly accounts for thresholds that cannot be
crossed without endangering the whole natural system, in spite of its compromise language on
aligning economic and environmental interests. Much of the political sustainability discussion in the
1990s and 2000s turned to embracing and aligning economic, social and environmental concerns.
This ‘three-pillar-model’ understanding has led to new alliances and repositioned the environment
discourse to reform discussions in other policy fields, particularly economic and fiscal policy. But it
has also created a hyper-complexity of approaches that are difficult to absorb and manage by
political systems. Moreover, sustainability has become a catch-all-concept. It is used in different
places to describe different things, for example in the market-place to describe robustness of
economic operations (return on investment, steady accumulation of wealth). By now, sustainability
as a guiding principle means different things to different people. It is no wonder that the
sustainability discourse has lost a lot of political momentum, particularly on the European Union
(EU) level.
Yet is should not be discarded, but rather re-coined. Recent scientific research shows that critical
ecological boundaries are in fact being approached or might have been already passed, in many local
and regional contexts. It also highlights the economic costs attached. The early discussion in the
1970s about ‘limits to growth’ (availability of finite resources) is re-entering the political agenda, but
with a different focus on ‘growth within limits’: The critical state of many of the planet’s ecosystems
and the threat of losing key life-supporting functions is creating new limits that need to be reflected.
In this context, the potential and limits of a ‘green growth’ or ‘green economy’ approach need to be
carefully assessed. In its essence, the concept of the ‘green economy’ rests on decoupling of
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resource use and environmental impacts from economic growth by means of radical technological
innovation. An efficiency approach can take us a long way down the road. However, rebound effects
(where efficiency gains are lost due to increased consumption of the same product or other products
or services, for example efficiency gains from more efficient vehicles are lost due to more car
ownership and longer distances travelled) are real and well documented. In the end, an efficiency
approach needs to be complemented by a sufficiency approach, past experience tells us. Life-style
changes and sustainable consumption need to be part of a discussion about a green economy to
help avoiding the rebound effect.
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Starting the debate: Environmental limits and ecological modernisation
Sustainability emerged in the 1970s and became more popular in the 1980s. It was implicitly dealt
with in two to the most important books in the 1970s, the ‘limits to growth’ report from the Club of
Rome2 and Herman Daly’s ‘Toward a steady state economy’3. In 1980, IUCN published its world
conservation strategy, along with UNEP and WWF4 with a focus on preserving environment in the
self-interest of humans (ecological sustainability). It was linked to discussions about concepts of
‘qualitative growth’ or ‘de- or non-growth’. At the same time, ecological modernisation developed
as a strategic discourse, mainly in a few western European countries, where scholars looked into
options to decouple economic growth and environmental degradation (see Box 1 below for various
definitions of sustainable development). Ecological modernisation was an attempt to point to the
positive links between environment and economy, by stating the huge potential for efficiency gains
in energy and materials use and their positive competiveness effects (win-win solutions).
The late 1980s saw an upswing in the sustainable development discussion on the international level,
particularly fed by the UN sponsored report ‘Our Common Future’. It coined the understanding of
sustainable development as “meeting present needs without compromising the ability of future
generations to meet their own needs”, linking two main concepts, namely ‘needs’ and ‘limits’ and
thus bringing together the discussion about environment and poverty reduction. Balancing
developed and developing countries interests it stressed that while economic growth cannot stop it
needs to change course to adhere to the planet’s ecological limits, giving primacy to the need for
long-term preservation of living conditions following principles on intra and inter-generational
fairness. Needs should be met within limits, the latter being defined through the environment.
At the EU level, sustainable development was mentioned for the first time in a high-level document
in the Rhodes European Council Presidency conclusions in December 1988, with the ‘Declaration on
the environment’ annexed to the Presidency conclusions. The text starts off by stating that solutions
to environmental problems must be found ‘in the interests of sustained growth and a better quality
of life’5. Sustainability is introduced in conjunction with the principle of integration: ‘Within the
Community, it is essential to increase efforts to protect environment directly and also to ensure that
such protection becomes an integral component of other policies. Sustainable development must be
one of the overriding objectives of all Community policies’6. Already here one can see how ‘sustained
growth’ and ‘sustainable development’ wavered, already revealing the ambivalence towards the
new concept.
Box 1: Definitions of sustainable development and green economy and growth
The Our Common Future (otherwise known as ‘the Brundtland report’) definition of sustainable development
is development that meets the needs of the present without compromising the ability of future generations to
meet their own needs. It contains within it two key concepts:
 the concept of 'needs', in particular the essential needs of the world's poor, to which overriding
priority should be given; and
 the idea of limitations imposed by the state of technology and social organisation on the
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environment's ability to meet present and future needs.
Ecological modernisation is a theory set out in the 1980s suggesting that the environment and the economy, if
properly managed, are mutually reinforcing; and are supportive of and supported by technological
innovation”.
Green economy is “one that results in improved human well-being and social equity, while significantly
reducing environmental risks and ecological scarcities” (UNEP).
Green growth means “fostering economic growth and development, while ensuring that natural assets
continue to provide the resources and environmental services on which our well-being relies” (OECD).
Rebound effect refers to the behavioural or other systemic responses to the introduction of new technologies
that increase the efficiency of resource use. These responses tend to offset the beneficial effects of the new
technology or other measures taken. The rebound effect is generally expressed as a ratio of the lost benefit
compared to the expected environmental benefit when holding consumption constant . For instance, if a 5%
improvement in vehicle fuel efficiency results in only a 2% drop in fuel use, there is a 60% rebound effect.
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The sustainability discussion in the 1990s
Interestingly though, the next major EU summit on the issue, in Dublin in 19907, was far more
ambitious and linked sustainability to principles of precautionary and preventive action, calling for
considerable acceleration of efforts to ensure that the completion of the internal market and related
economic growth is promoted in a ‘sustainable and environmental sound manner’.
This discussion reflected the strong international dynamics around the notion of sustainable
development in the run-up to the 1992 UN Earth summit in Rio de Janeiro (for more details see
Supporting Briefing #1: Green economy in the context of Rio+20). The principles of sustainable
development underpinned the Rio Earth Summit, which adopted major international conventions
(UNCBD, UNFCCC, and UNCCD), two statements of principles and a major action agenda for
worldwide sustainable development (‘Agenda 21’). The Rio Earth Summit was in many ways a
successful summit, creating a strong momentum for the environmental agenda and (re)invigorating
many policy developments at the national level. However, with sustainability entering mainstream
politics, unresolved political questions were raised and conflicting interpretations became more
frequent. These ambiguities resulted from the absence of a detailed framework to help individual
countries turn these broad principles into practical policy measures, but also from the fact that
tensions between the growth and environment agenda were covered, but not solved.
This problem became clearly visible in the efforts to translate the sustainability principle into
political practice on an EU level. Notwithstanding the political momentum from Rio and the
ambitious language of the 1990 Dublin Council, Member States could not agree on integrating
sustainable development as an objective in the Treaties in 1992. The Maastricht Treaty simply noted
sustainability as embedded in concepts of ‘economic and social progress which is balanced and
sustainable’ or ‘sustainable and non-inflationary growth respecting the environment’.8 ‘Sustainable
growth’ ended up as the compromise formula, with the qualifier ‘respecting the environment’ being
added to appease Member States supporting a stronger sustainability positioning.
Though sustainability failed to gain full legal recognition, the concept nevertheless continued to
make headway in the political discourse, most notably in the 5th Environment Action Programme of
the EU, which has sustainability as its core guiding principle and theme. In fact, it can be regarded as
the EU’s first sustainable development strategy, although it was not named like that. At the same
time, an increasing number of Member States tried to set up long-term and target-led approaches to
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environmental policy, including national environmental planning or sustainable development
strategies.
Ten years after the publication of Our Common Future, with the Treaty of Amsterdam9, sustainable
development was legally recognised in the Treaties as an objective of both the European Union and
the European Commission. From that time, it also started attracting high-level political attention and
regularly featured on the agenda of the European Council.
In that sense sustainability has been a useful concept, as it opens doors to mainstream politics.
Nonetheless, the sustainability discussion lost a lot of its environmental connotation in this
context, as the discussion increasingly was about economic, social and sustainability aspects. The
conceptual discussion advanced with a proliferation of concepts and suggestions how to equally
balance economic, environmental and social concerns (the three-pillar model), sometimes including
cultural concerns (four pillar model), leaving many politicians, researchers and the public alike
confused about what sustainability was really all about.
More narrowly, the discussions about greening the economy, or ecological modernisation,
continued to get renewed impetus from different sides, particularly through the Kyoto Protocol
process which pushed Member States to act on climate change and energy issues. It helped
discussions around the greater use of market-based mechanisms, at both Member States and EU
levels, helped to put forward the European Emissions Trading System (EU-ETS) and prepared in many
ways the ground for the later successful adoption of the ‘20/20/20’ Climate Change and Energy
Package. Ecological modernisation was also pushed to a certain extent by the ‘Cardiff Process of
Environmental Policy Integration’10, where several Council formations were asked to develop
sectoral integration strategies. This requirement forced several Council formations to better account
for environmental policy needs, although the appraisal of the real policy changes remains
controversial.
4. The sustainability discussion in the 2000s
In the first half of the 2000s, sustainability strategies were en vogue in Member States, linking
different reform policies under one banner. But the broad connotation of sustainability often lead to
a hyper-complexity that was difficult to digest for political systems and their decision-making
processes. Again the discussion on the EU level is illustrative. In view of the limited effects of the
Cardiff Process and as a consequence of international commitments, the European Council decided
to start the initiative for an EU Sustainable Development Strategy11. However, from the beginning
the strategy process was fraught by its unclear and contentious relationship with the other major
strategy processes on the EU level, namely the ‘Lisbon Strategy for Economic Growth and
Competitiveness’, where the Sustainable Development Strategy was meant to provide for the
environmental component, leading again to an unclear link between the growth and the
sustainability agendas.
It is noteworthy that the Gothenburg Council failed to adopt the Commission proposal for an EU
sustainable development strategy in 2001, but only adopted ‘basic contours’ of a strategy as part of
the Council conclusions, leaving considerable uncertainty about the political weight and relevance of
this initiative. It becomes a ‘forgotten issue’ until 2005, when the revision was due. This led, under
pressure from various sides, to the development of a new strategy which was adopted in 2006. The
new strategy contained useful elements, but failed to meet overall expectations with regard to a
target-led process to push for a new basis of socio-economic development in the EU.
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The follow-up to the Rio Earth Summit, the 2002 Johannesburg Summit, suffered from a similar fate.
While it attracted a lot of preparatory work, it failed to reinvigorate the political momentum for the
sustainability discussion globally. A greater part of this was due to a lack of political commitment,
but part of this was also due to the fact that the concept had become so multi-facetted and multipurpose that it was difficult to organise a targeted dialogue around it. However, the meeting ended
with the production of the Johannesburg Plan of Implementation, containing a number of
‘Millennium Development Goals’ (MDGs) which focus on reducing or eliminating the worst elements
of poverty. A very recent celebration of the meeting of one of the MDGs, that of halving the number
of people not having access to clean drinking water by 2015, shows that the MDGs do carry political
weight that results in achieving targets.
The sustainability discourse on the EU level helped, however, to balance the internal Impact
Assessment (IA) procedure of the Commission which has become obligatory for EU legislation and
major political initiatives. Environmental policy proposals were increasingly attacked for being
unsustainable in the middle of the last decade when incurring larger economic costs or when
concerns of economic competitiveness were raised. Sustainability thus gained a strong economic
and financial connotation, and the internal IA procedure was feared by many environmentalists to
be a key tool for sidelining environmental concerns. However, the past years show that such a
sidelining has not systematically happened and that the IA procedure rather helped to spur
processes of policy learning and better consideration of environmental concerns and trade-offs with
economic and social concerns.
The increasing connotation of sustainability as “economic” or “financial” sustainability led to calls for
a “greening of sustainability” as claimed for by the Network of European Economic Advisory
Councils. However, the discussion rather lost momentum. Since 2006, the EU Sustainable
Development Strategy process has largely failed to provide overall strategic direction in substantive
terms. It was initially to be implemented by a process of annual stocktaking with all three
dimensions of sustainable development reviewed at the annual Spring European Council. But the
criticisms abounded: insufficient coordination, not adequately addressing key concerns, and a lack of
solid obligation and commitments across the EU institutions. It is also noteworthy that the Cardiff
Process of Policy Integration came to a still-stand during the first half of the 2000s.
Much greater policy momentum came from the policy integration angle, however not in a
systematic manner as envisioned under the Cardiff Process but rather as a consequence of the
successful implementation of the Climate Change and Energy Package, which built on its own logic of
driving factors.
The Millennium Ecosystem Assessment12 turned discussion upside down and refocused on the
environmental limits of a planet with constrained ecosystems. The planetary boundaries discussion
is an attempt to reconnect to the “old” discussion of the 1980s that tried to distil global long-term
environmental limits for economic development, but coming from a much deeper understanding of
the inter-linkages and increased speed and scope of global changes. Discussions around the concept
of green economy go back to the discussion around ecological modernisations that have evolved
since the 1980s, but remained in academic circles and never reached the political mainstream.
In short, there was a brief upsurge in political attention for sustainable development in the wake of
the Johannesburg Summit, but the 2000s also symbolised a renewed EU emphasis on
competitiveness, growth and employment, dedicated to the ‘re-launch’ of the Lisbon strategy
(political priority eclipsed the Sustainable Development Strategy). Sustainable development is no
longer considered as a whole, and there is no attempt to provide an overall strategic direction in
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substantive terms. There are, however, a range of initiatives that are making discrete contributions
to developing a new momentum and direction for progress.
Particularly since the global financial crisis that began in 2008, there has been a range of new
initiatives creating (foundations for) new momentum around sustainability – the Green New Deal
discussions in response to the global financial crisis, UNEP’s Green Economy Initiative work13, the
OECD’s green growth work and the work on the value of nature – The Economics of Ecosystems and
Biodiversity (TEEB)14. Similarly initiatives around the measurement of progress, true wealth and
wellbeing of nations (e.g. Beyond GDP initiative15, the OECD’s Global Project on Measuring the
Progress of Societies’, the Stiglitz–Sen–Fitoussi Commission on the Measurement of Economic
Performance and Social Progress, as well as the United Nations work on the system of integrated
environmental and economic accounting) are offering discrete tools, developing partnerships,
indicating ways forward and creating momentum to improve sustainability measurement and hence
help operationalise some aspects of sustainable development.
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Outlook
Sustainable development has been institutionalised on an EU level in the form of a strategy and
several high-level political commitments. Some merits can be attributed to procedural gains,
particularly with regard to balancing off the internal IA procedure. However, when measured against
the overall rationale and ambitions of the sustainable development discussion, EU level action
towards sustainability has experienced serious shortcomings, and has evolved into a very
complicated, unclear and ambiguous discussion that is of little real concern to policy makers at the
moment. The discussion has considerably distanced itself from its original starting point in the
1980s, which was about meeting needs within clear limits, the latter being defined by the
environment.
Our growing understanding about biophysical boundaries that should not be crossed in connection
with the world economic and financial crisis that has been unfolding since 2008 is moving the overall
discussion back into this direction. Activities on the green economy and green growth open the door
for wider discussion about fundamental objectives. What should we perceive as a final safe
“operating space” (Rockström) for humanity – where are the bio-physical boundaries that need to
shape a green economy? How can we translate this scientific discussion into concrete policy
measures?
Part of this decision-making requires setting up a process for better operationalising environmental
limits based on our growing understanding of ecosystems, their services and their overall value for
humankind. This new valuation needs to feed into a new approach towards better participative
dialogue with civil society and relevant stakeholders about priorities ahead. It is important to stress
that a discussion about the green economy is not reduced to a simple articulation of technological
win-win measures. These are tremendously important and the EU, as other regions, has only started
to embrace the full potential that radical technological innovation already available would bring in
terms of system change and decoupling of resource use and environmental impacts from growth.
But a green economy discussion needs to remain a key means to an important end, namely to
provide a safe environment, where degradation of ecosystems is no longer affecting key lifesupporting services.
In addition, the green economy concept is seen differently according to the national situation: the
elimination of poverty, a wider use of appropriate technologies, development of markets, resource
efficiency and developing or safeguarding of natural capital and nature more widely etc. in the end,
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the discussion about a green economy inevitably leads to a discussion about the overall growth
model in modern capitalist societies, and needs for changes. Can we refine market forces to be
aligned with overall bio-physical boundaries and transform the growth imperative towards activities
that are both beneficial to the environment and human needs? Or does this need an altogether
different growth model? What is clear is that efficiency and sufficiency concerns need to be aligned.
But the lack of clarification is obvious. We lack a list of measurable criteria against which it would be
possible to judge progress towards a green economy, or ecological sustainability. ‘Better to have
clarity and risk losing a few unwanted adherents, than retain a vacuous 'anything goes' approach.
Policy-makers would also benefit from a clear technical definition to help them implement
sustainable development’16.
The advantage of a “green economy discussion” over the somehow broader, but also more unclear
“sustainability discourse” lies in a much clearer picture of what is at stake. The discussion should
avoid the mistakes made in earlier years, namely to assume that there is a possibility to align
economic, social and environmental concerns at equal terms. While it is clear that trade-offs need to
be accepted towards all sides depending on the specific circumstances, it is also clear that the risks
associated with crossing key life supporting bio-physical boundaries on a planetary level are so high
that they cannot be really accepted, but that mitigating threshold passing needs to be given
overriding concern. Our environment defines the operating space for our daily interactions. As Karl
Polanyi has shown a long time ago in his seminal book on the “great transformation”17 (1944), the
advent of modern industrial society and market forces led to ruptures in the fabric of social life that
had been embedded in the natural environment up to that moment. Economy, which had been
defined among others by the conditions of the natural environment, was released from that link.
Green economy offers the potential for a mainstream discussion to create political commitment to
recreate that link.
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References
1
Our Common Future, Report of the World Commission on Environment and Development, World
Commission on Environment and Development, 1987.
2
Meadows, Donella, J. Randers and D. Meadows. Limits to Growth. New York: Universe Books, 1972.
3
Ed. by Daly, Herman E., Economics, Ecology, Ethics, Essays toward a Steady State Economy; W. H. Freeman &
Co., San Francisco, 1980.
4
IUCN, UNEP, WWF; World Conservation Strategy :Living Resource Conservation for Sustainable Development;
5
Declaration on the Environment, Annex I, par.1.
6
Ibid, par.2.
7
For Presidency Conclusions of Dublin European Council 1990, see
http://www.europarl.europa.eu/summits/dublin/du1_en.pdf and
http://www.europarl.europa.eu/summits/dublin/du2_en.pdf.
8
Pallemaerts 2009
9
For text on the Treaty of Amsterdam, see
http://europa.eu/legislation_summaries/institutional_affairs/treaties/amsterdam_treaty/index_en.htm.
10
For more details on the Cardiff Process of environmental policy integration, see
http://europa.eu/legislation_summaries/environment/sustainable_development/l28075_en.htm.
11
For more information on the EU Sustainable Development Strategy, see
http://ec.europa.eu/environment/eussd/.
12
Millennium Ecosystem Assessment (2005) Ecosystem and Human Well-Being: Biodiversity Synthesis, World
Resource Institute, Washington DB. www.milleniumassessment.org
13
Add ref
14
Add ref: re UNEP …
TEEB (2011) The Economics of Ecosystems and Biodiversity in National and International Policy Making. Edited
by Patrick ten Brink. Earthscan, London. See also www.teebweb.org
15
www.beyond-gdp.eu
16
Carter, Neil ‘The politics of the environment: ideas, activism, policy’, Cambridge University Press, p.202.
17
Polanyi, Karl. The Great Transformation. Beacon Press, Boston, 1944.
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