More than 100 world leaders promised at a historic U.N. Earth Summit a generation ago to "strive for economic growth, environmental protection and social progress at the same time," Christine Lagarde said in a speech in Washington.
The leaders, supported by about 2,400 non-governmental organization representatives, said they subscribed to "the idea that different economic, environmental and social objectives can be seen as distinct aspects of a single vision, essential parts of a connected whole," she said.
But far too little progress came from their Rio de Janeiro promises, she told an event sponsored by the Center for Global Development think tank.
Now, 20 years later and a week before a follow-up U.N. Conference on Sustainable Development, the escalating European economic crisis and stalling economic growth worldwide -- coupled with the growing threat from climate change and social tensions -- could wreck leaders' efforts to chart a sustainable world future, she said.
The summit in Brazil June 20-21 -- also known as Rio+20 or the Rio Earth Summit 2012 -- is to follow immediately a Group of 20 summit in Mexico Monday and Tuesday, where U.S. President Barack Obama and other world leaders are widely expected to press top European officials for concrete and decisive steps to solve the euro crisis.
"Over the past four years, we have been mired in the worst economic crisis since the Great Depression -- and we are not out of it yet," Lagarde said.
"In fact, tensions are on the rise again, and financial-stability risks have once more moved front and center," she said. "Great uncertainty hangs over global prospects.
"Too many regions today are still stuck in a trap of low growth and high unemployment," she said.
"Right now, 200 million people worldwide cannot find work, including 75 million young people trying to take their first step on the ladder of success.
"So we need a strategy that is good for stability and good for growth -- where stability is conducive to growth and growth facilitates stability," Lagarde said.
Taxes on hydrocarbon fuels such as coal, oil and natural gas could raise billions of dollars a year that could support green projects, said Lagarde, a right-wing former French finance minister.
Taxing polluters "is basically a variation of the old mantra, 'You break it, you buy it,'" she said.
If the United States were to adopt a $25 carbon tax on every ton of carbon dioxide created from burning hydrocarbon fuels, the government would reap more than $1 trillion over 10 years, she said.
The tax would raise the price of a gallon of gasoline about 22 cents, she said.
Despite broad awareness of the need for responsible management of resource use, "many countries continue to subsidize polluting energy systems," rather than imposing higher costs on them, she said.
"These subsidies are costly for the budget and costly for the planet," she said.
"Countries should reduce them. But in doing so, they must protect vulnerable groups by tightly focusing subsidies on products used by poorer people, and by strengthening social safety nets," she said.
Furthermore, economic policies must ensure growth is spread equally among the social classes, Lagarde said.
"Decent and steady employment is the sure foundation of human dignity, the best avenue to rewarding and fulfilling lives," she said.
Neither Washington nor any other government had an immediate comment on her remarks.