Business must be the engine that drives sustainable development. It has the human and intellectual capital necessary to develop new and innovative ways to meet our economic, environmental and social goals -- if the incentives are there. Given the shift from foreign aid to private capital described in this book, it also has to access much of the financial capital necessary for sustainable human progress.
Private capital is the engine that drives businesses. The new services, products, production methods, and markets necessary for a sustainable future all require investment. Traditionally, business has relied primarily on private sources for this investment. This will be even more true in the future, given the decline in foreign aid and in government spending.
Understanding the links between private capital and business' environmental performance is critical to achieving a sustainable future. If the sources of private investment are not convinced that their interests are best met by attention to environmental issues, business efforts to improve performance still further will be starved for resources. Alternatively, if the pursuit of investor interests is consistent with a sustainable future, powerful new incentives will be created for companies.
This book is an important contribution to our efforts to harness the power of private capital to improve environmental performance. It grows out of a multi-disciplinary, multi-country effort in Latin America -- the second most popular destination for international private investors in the 1990s. It compliments and builds on our initial efforts to make the investment/environment link, as described in the book Financing Change ( MIT Press, 1996). It provides valuable insights into the workings of international private capital flows and key leverage points.
The taxonomy of different types of private investment and the influence of environmental considerations on them provide essential information for many environmental advocates. Much of the work on investment and the environment in developing countries to date has focused on public sector investment -- whether it be lending by the World Bank or Official