This paper describes two important transformations of the past century: industrialisation and urbanisation. These transformations will continue in the new century and create policy challenges because the use of land, materials and energy will increasingly meet natural limits or be constrained by intergenerational equity arguments. New local and international institutional arrangements will be needed to meet these challenges. Increased public participation and involvement of private companies will be needed in order to balance the different perspectives on sustainable development. The UN can show leadership because of the global character of many environmental problems and the growing need for environmental and social minimum requirements in the global liberalised market.