Can we turn the tide towards sustainable economy?

SDG indicators

Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.
Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities.
Indicator 9.4.1: CO2 emission per unit of value added.


Goal 12: Ensure sustainable consumption and production patterns.
Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse.
Indicator 12.5.1: National recycling rate, tons of material recycled.
Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
Indicator 12.6.1: Number of companies publishing sustainability reports.


Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
Target 15.1: By 2020, ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international agreements.
Indicator 15.1.1: Forest area as a proportion of total land area.
Target 15.5: Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent the extinction of threatened species.
Indicator 15.5.1: Red List Index.

Over the last decades, the world economy has grown with rising greenhouse gas emissions, the consequences of which hit the most vulnerable hardest, see Resilience at risk. The Bridgetown Covenant -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
calls for greater emphasis on decoupling economic growth from environmental degradation and greenhouse gas emissions, promoting sustainable energy and access to environmentally sound technologies by developing countries, as important means for implementing the 2030 Agenda and achieving a sustainable economy.

Large regional differences in carbon intensity remain

While emissions do continue to rise, reductions in carbon intensity are increasingly offsetting population growth and rising consumption. However, regional differences in carbon dioxide emissions intensity are huge with the most carbon intensive economies in Asia (Figure 1). In Eastern and South-Eastern Asia carbon intensity was 562 grams of CO2 per US$ of GDP in 2021. It amounted to 600 g/US$ in Western Asia and Northern Africa, and over 825 g/US$ in Southern and Central Asia, the most carbon intensive region. From 2020 to 2021, carbon intensity of GDP reduced by four per cent globally. The reduction was more than five per cent in all regions, except in Central and Southern Asia where carbon intensity fell by only 2.3 per cent from the already highest regional level. While Eastern and Southern Asia saw a reduction of 7 per cent from 2020 to 2021, still three times more CO2 was emitted in these regions than in Europe or Northern America.

Figure 1. Regional differences in carbon dioxide emission intensity are high, 2021
(GDP at current prices, trillions of US$, carbon intensity g/US$, SDG 9.4.1)

Source: UNCTAD calculations based on UNCTADstat -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
and EDGAR Community database version 7.0 -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
for CO2 emissions.

Notes: The area of bars measure carbon dioxide emissions. Regions are arranged in the order of the amount of emissions. CO2 emissions from fossil fuel use (combustion, flaring), industrial processes (cement, steel, chemicals and urea) and product use are included. Emissions from fuels burned on ships and aircrafts in international transport are not included. Central and Southern Asia includes developing economies in Oceania.

Global carbon intensity reduced by 38 per cent from 1990 (631 g/US$) to 2021 (392 g/US$). That means that CO2 emissions have grown at a slower pace than GDP. Decoupling of CO2 emissions from GDP was most significant in Europe, where carbon intensity fell by over 60 per cent between 1990 and 2021, and in Northern America, where almost the same reduction was recorded. Europe was the only region where total annual fossil CO2 emissions were lower in 2021 than in 1990, by 27 per cent -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. Some previous top emitter countries were also below 1990 levels, including the United States of America and Japan, by 6.2 per cent and 7.4 per cent, respectively. Fossil CO2 emissions of China and India remained well above the 1990 levels. They turned out 5.1 and 4.4 times higher in 2021 than in 1990, respectively.

If all regions were able to reduce carbon intensity of GDP to levels around 200 g/US$, global annual emissions would be cut by nearly a half. The regional concentration of high carbon intensity rates in some developing regions underlines the need to support developing countries in building sustainable infrastructure and skills and adopt lower-carbon technologies that enhance the energy efficiency of production and enable phasing out of polluting energy generation methods -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. It is worth recognizing that the higher carbon intensity of GDP in developing than developed regions is partly driven by other regions’ demand for carbon-intensive final products. Demand-based CO2 emissions of developed economies are generally higher than their production-based emissions. They were thus seen as implicit net importers of CO2 emissions embodied in final products, while most developing economies were net exporters -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. As the stringency of environmental policy varies by country, companies have an incentive to relocate carbon intensive production processes globally, a process described as "carbon leakage" -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. To avoid that effect, efforts to set global environmental standards will be critical.

Positive, but diverging trends in the clean energy transition

The clean energy economy is emerging faster than many thought possible. Global renewable power capacity grew by 10 per cent in 2022, 14 per cent faster than between 2014 and 2019 on average. Electric car sales increased by 55 per cent in 2022, to over 10 million -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. In 2022, electric cars, including both battery electric vehicles and plug-in hybrids, accounted for 14 per cent of global new car sales, up from 4 per cent in 2020, and are forecast to increase to 18 per cent in 2023 -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Despite positive developments in renewable energy investment, further efforts are needed. In 2022, investment in clean energy technologies reached a record high of US$1.4 trillion -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. By 2030, this amount is forecast to grow to more than US$2 trillion. However, to achieve the 1.5°C target, it is estimated that an annual investment amount of US$4 trillion is required, leaving us with barely half of the required levels.

Renewable energy investments are highly unequally distributed across regions. Of the 295 GW of additional renewable capacity installed in 2022, only 2.7 GW was installed in Africa, less than one per cent of world total investment. Investments are strongly concentrated in China, Europe, and the United States of America -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
, accounting for two thirds of installed renewable capacity in 2022, a share which has grown every year since 2013. Annual growth in renewable energy capacity in the three markets has accelerated, averaging almost 12 per cent since 2020, compared to 9 per cent between 2014 and 2019. The situation is the reverse in Africa, where growth has decelerated since 2019, averaging only five per cent between 2019 and 2022 (Figure 2). This highlights challenges related to immature financial markets, high costs of capital, and lack of pricing benchmarks which impede investment in renewable energy and a just energy transition.

Figure 2. After a boost in 2017 and 2018, growth in renewable energy capacity in Africa has remained slower than in China, Europe and the United States of America
(MW percentage increase)

Source: UNCTAD calculations based on -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

While developing countries as a whole are making progress with renewable energy capacity, LDCs and LLDCs are lagging far behind. The capacity of developing countries to generate electricity from renewable sources has increased from 109.7W per capita in 2011 to 268W in 2021. From 2015 to 2020, the compound annual growth rate of renewable energy capacity in developing countries was 9.5 per cent, while it was 5.2 per cent and only 2.4 per cent in LDCs and LLDCs, respectively -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

The share of renewable energy in total final energy consumption amounted to 19.1 per cent globally in 2020, 2.4 percentage points higher than in 2015 -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. Thanks to the high potential, new hydropower capacity was installed in some LLDCs, and the share of renewables in the total final energy consumption in LLDCs reached 44 per cent in 2020, up from 37 per cent in 2000. However, according to -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
, LLDCs are likely to take over 40 years to achieve the 2020 global share of renewables in energy consumption.

The trend of environmental degradation and biodiversity loss continues

Global warming, caused by increasing CO2 and other greenhouse gas emissions, is modifying habitats and forcing species to migrate for survival, while human presence limits the availability of suitable habitats. Changes in precipitation and extreme weather events, like droughts, floods, and wildfires -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
, have devastating effects on ecosystems and reduce biodiversity. Target 15.5 of the 2030 Agenda calls for “urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent the extinction of threatened species.” The related SDG indicator 15.5.1, the Red List Index, recorded a decrease by about 4 per cent from 2015 to 2023, indicating a growing extinction risk globally for mammals, birds, amphibians, corals, and cycads. Over the last three decades, since 1993, the Index has deteriorated by 10 per cent, at an increasing pace each decade. Around 40 000 species are estimated to be at risk of extinction in the coming decades -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Figure 3. Risk of extinction increasing in all regions, with highest extinction risk in Asia
(IUCN Red List Index, SDG 15.5.1)

Source. UNCTAD calculations based on -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
Red List Index, derived from the SDG Global Database -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Note: A value of 1 equates to all species qualifying as least concern, i.e., not expected to become extinct in the near future. A value of 0 equates to all species having gone extinct.

According to Figure 3, the Red List Index was lowest in Central and Southern Asia (0.66 in 2023). Eastern and South-Eastern Asia recorded the highest reduction of the index, indicating the largest increase of extinction risk between 2009 and 2023. Among SIDS, the highest risk is recorded in African SIDS (0.73), while for LDCs the highest risks are recorded in Asia and Oceania (0.8).

Unsustainable agriculture and the over-harvest of wild species are the main drivers of extinction. Almost 90 per cent of global deforestation is due to agricultural expansion -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. The proportion of forests in total land area fell from 31.9 per cent in 2000 to 31.2 per cent in 2020 (SDG 15.1.1), representing a net loss of almost 100 million hectares. LDCs experienced major losses in forest coverage, from 29.7 per cent to 26.2 per cent, thus a reduction by 11.8 per cent. In Latin America and the Caribbean, the decline was over 8 per cent (from 50.8 to 46.7 per cent coverage) and in Africa over 10 per cent (from 23.7 to 21.3 per cent coverage). By contrast, in Asia, Europe, and Northern America the forest area increased by 1.3 per cent (from 45.3 to 46.0), thanks to afforestation, landscape restoration, and natural expansion of forests -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Enterprises more aware of and more transparent about sustainability impacts

The business sector is a significant player in the financing of sustainable development and development and application of sustainable practices -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
, and contributing to the attainment of all SDGs. Businesses are increasingly taking up the challenge, but there is a long way to go to increase transparency on their contribution. Sustainability reporting is key to allow investors and customers to recognise and reward firms that protect communities and the planet, while making businesses economically sustainable -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Comprehensive global official statistics are not yet available on enterprise uptake of SDG-aligned reporting as companies are still setting up the new mechanisms. Preliminary analysis of nearly 10 000 companies finds that 70 per cent of companies in the sample published a sustainability report in 2021 -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. The number had more than doubled in five years. Especially large and listed companies were found to advance fast, driven by new stock exchange rules, national regulations, and other factors. According to a report by -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
, globally, 96 per cent of the 250 largest businesses reported some sustainability-related information of their activities, and in a survey of 100 largest businesses in 58 countries (5 800 companies), this was the case for 71 per cent reported sustainability-related information. The latter share matches the preliminary findings of UNCTAD and UN Environment.1

Figure 4. Enterprise sustainability reporting increasing in all regions
(Number of company reports, SDG 12.6.1)

Source: UNCTAD calculations based on -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Note: Preliminary data from a sample of 9 654 companies included in the above-mentioned database.

While the preliminary results should be interpreted with caution, they indicate considerable regional differences (Figure 4). In North America, the number of reports almost tripled, and it doubled in Europe and Asia from 2017 to 2021. Smaller increases were recorded for Africa and Latin America. Companies in manufacturing and the financial and insurance sectors feature the highest number of sustainability reports in 2021. Almost all sectors have seen a twofold increase since 2016 in the number of sustainability reports. Two thirds of large companies included in the sample publish sustainability reports. Although the share was less than one third for medium-sized companies, it has also increased fast.

The majority of enterprises disclosed information on water and energy efficiency and on CO2 emissions -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. Less attention is paid to recycled water and ozone-depleting substances. In general, environmental risks are examined more frequently than social and governance issues. Regarding the social dimension, almost 90 per cent of the reports discuss diversity, health and safety, and human rights. Fewer include employee training hours. In the area of corporate governance, all reports deal with board diversity, while data on gender pay gap is rarely reported.

Standardization efforts are under way, as ISSB’s new sustainability-related disclosure requirements -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
will enter into force after January 2024. This will allow for a common denominator on corporate and investor sustainability reporting, starting with general and climate requirements, expanding into other SDGs. UNCTAD will support capacity building and adoption of the ISSB standard, including through the ISAR initiative and regional partnership on promoting sustainability reporting in Latin America, Africa and Asia, with key partners including the UN-supported Principles for Responsible Investment.

Governments are stepping up efforts to request transparency and sustainability information from companies as a basis of financing. -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
continues to engage with member States and the private sector on the development of accounting standards that integrate sustainability into business reporting, as a means to support the transformation towards a sustainable and resilient economy.

Innovation, recycling and circular economy to change the paradigm

The extraction and processing of materials, fuels and food contribute half of total global greenhouse gas emissions and over 90 per cent of biodiversity loss and water stress -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. There is, therefore, a need to find alternative economic models to use natural resources in innovative ways in production processes to reduce greenhouse gas emissions, pollution, and waste. The -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
guidelines propose a definition for circular economy, one such different economic model. They also propose a set of core indicators, such as material consumption, waste generation, the circular material use rate, the recycling rate, greenhouse gas emissions from production activities, pollutant discharges and investment in waste management and research and development on circular economy.

Recycling is a key strategy within the circular economy, as it implies recovering and reusing materials from products that have reached the end of their lifecycle. SDG indicator 12.5.1 on national recycling rate is a key measure in this regard, however, not yet available for all countries. The preliminary analysis of 43 reporting countries shows significant progress on municipal waste recycling rate over time (Figure 5). In almost 40 per cent of reporting countries, the recycling rate has more than doubled between 2006 and 2021. In Eastern European countries recycling rates were more than 4 times higher on average in 2021 compared to 2006, while in Southern European countries, the recycling rates grew by 64 per cent on average during the same period. In reporting countries of Western Europe, the increase has been slower, but the recycling rates reached an average of 56 per cent, while the average was 37.3 per cent for reporting Northern European countries. Outside Europe, national recycling rates were only reported by some economies, such as Algeria, Argentina, Ghana, Malaysia, Nepal, Peru, Thailand, Türkiye, and Uzbekistan.

Figure 5. Recycling rates increasing in reporting European countries
(Percentage, SDG 12.5.1)

Source: UNCTAD calculations based on UNEP, UNSD and UNITAR data as published in the SDG Global Database -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
.

Note: For some years the reported data are national estimates or provisional values, especially for 2020 and 2021.

The use of circular materials, namely of material recycled and fed back into the economy, is increasing, particularly among developed economies. For example, in the European Union, the circular material use rate increased from 8.3 per cent in 2004 to 11.7 per cent in 2021 -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
. The Netherlands, Belgium, France and Italy recycle and reuse more than one sixth of all material in the economy, while one third of the EU countries remain at a rate below 5 per cent.

-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
has identified a list of 124 low carbon technology products. These are products that have been manufactured using a wide range of technologies causing low CO2 emissions including renewable energy technologies, such as solar, wind, hydro and sustainable biofuel power generation systems, as well as the energy storage and transformation sub-systems. Top exporters of low carbon technology products include China, Denmark, the United States of America, Japan, and the United Kingdom. Among the most exported low carbon products, in value terms, are electric vehicles, optical and measurement devices, solar cells and panels, low carbon manufacturing machinery, lithium batteries, and electrical circuit boards. An UNCTAD report -—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
-—
– ‒
- –
—-
finds on the one hand, relative barriers to trade of low carbon technology products, based on an analysis of tariff data, as well as opportunities to enhance that trade through tariff reduction and elimination, and through simplification and harmonization of non-tariff measures, on the other.

Notes

  1. UNCTAD and UN Environment, as co-custodians of SDG indicator 12.6.1 on enterprise sustainability have developed reporting guidelines aligned with multiple current enterprise reporting frameworks -—
    – ‒
    - –
    —-
    -—
    – ‒
    - –
    —-
    -—
    – ‒
    - –
    —-
    -—
    – ‒
    - –
    —-
    . In September 2019, the IAEG-SDGs approved the concepts and methods, and data collection for the indicator began. The framework does not add new reporting requirements, instead it suggests a way to reconcile the existing frameworks.

References

    Lorem ipsum dolor sit amet, consectetur adipiscing elit.
    Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
    Lorem ipsum dolor sit amet, consectetur adipiscing elit.
    Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
    Lorem ipsum dolor sit amet, consectetur adipiscing elit.
    Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
    Lorem ipsum dolor sit amet, consectetur adipiscing elit.
    Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
    Lorem ipsum dolor sit amet, consectetur adipiscing elit.
    Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.