After Rio+20, the world must choose between sustainability and growth (Part 2)


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Jules Peck works with companies on strategic innovation at Flourishing Enterprise, is a trustee at the thinktanks New Economics Foundation and ResPublica and chairs Edelman’s Sustainability Group. Jules is the co-author of Citizen Renaissance and was the director of David Cameron’s Quality of Life Review.

The first part of this essay can be read here

Limits to growth: there is no ‘Planet B’

Rio+20Our macro-economy now exerts a dangerous level of pressure on the planet. As economist Kenneth Boulding quipped:

“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist”.

Or, as Richard Branson put it more succinctly, “there is no Planet B”.

Yet we live as if there were no limits. The last fifty years, the ‘era of pseudo-satisfaction’ and hyper-industrial, growth-obsessed consumerism has driven us to seek to deliver materially to what are known as ‘non-material’ needs.

It’s costing us the earth, whilst failing to satisfy our underlying wellbeing needs.

The scale of the challenge of decoupling this growth from ecological impact is truly enormous.

Scale and intensity are key to decoupling and yet, while material and energy use has been declining around the globe, the scale of the world economy has been far outpacing any of these improvements.

The very best technological improvements tend to sit at around 2% efficiency improvements per annum, or a factor two improvement over 35 years. In many areas, the low hanging fruit has been picked. For example, electric motors are now at 90% efficiency – they can’t go much further.

To keep below a liberal 450ppm emissions target, we would need the carbon intensity of every global dollar of economic output to fall from today’s 768gm of CO2 to 6gm of CO2. That’s an 11% p.a. reduction on every global dollar of output.

To put that in context, the best reductions managed between 1990 and 2007 were 0.7% p.a. Even if growth stopped in developed countries we would still need 5-6% p.a. reductions. As Tullett Prebon, one of the world’s leading inter-dealer money brokers, recently put it, “technology is no seventh cavalry riding to the rescue.”

A consensus is therefore building that, unless we find something akin to a perpetual-motion machine fast, macro-scale growth will need to halt. And if the poor world is to continue to develop, that will mean finding a reverse gear for the rich world.

Outside political circles, there is now a growing and influential consensus that we are reaching the limits of growth. We may now, in fact, be reaching the end of global growth, due to peaking of resources, ecological collapse and the meltdown of our financial systems.

Professor Kevin Anderson of The Tyndale Centre, one of the world’s leading climate scientists, has called for a “planned recession”, arguing in December 2011 that “tackling climate change is not compatible with economic growth.” Echoing this, in January 2012, Tullett Prebon noted that:

We see an impending collision between an economic system which by its nature, must grow, and a finite resource set which, ultimately, cannot grow.”

Ian Cheshire, the CEO of Kingfisher B&Q, agrees:

“Infinite high resource intensity growth is simply not possible, and we are already living off our future capital. It may be gradual, but most businesses will have to adjust to a very different reality.”

Likewise Amanda Sourry, chair of Unilever UK:

“The old business model of growth at any price is broken. We have to find a new way of doing business.”

 


See also:

The economic crisis is no excuse for the G20’s neglect of environmental issues 19 Jun 2012

Jobs and growth would benefit from green economy measures 21 May 2012

Cameron’s downgrading of environment policy bodes ill for the future 26 Apr 2012

Clean energy summit will expose more coalition divisions 23 Apr 2012

Sustainable development in 2012: Learning the lessons of 1987 23 Dec 2011


 

Prosperity without growth

Evidence is now emerging which questions assumptions that ‘more is better’. Professor Jean Gadrey, of the Sarkozy-Stiglitz Commission, recently stated:

“If we abandon quantitative growth, will we be condemned to social regression? The answer is no. There are good quality scenarios that show we can increase prosperity without relying upon traditional economic growth.”

New research from NEF’s Great Transition macro-economic modelling, and from Tim Jackson and Peter Victor, suggests that if we redesign economics correctly, we do not actually need growth to deliver the kinds of things we expect from a successful economy: high employment, fiscal balance, high levels of wellbeing and ecological efficiency.

If economies are forced to cease growing and to focus on new measures of progress such as wellbeing then the implications for commerce will of course be significant. As Professor Jackson has said, we urgently need to tease apart what kinds of economic goods actually contribute to the satisfaction of human needs and promote wellbeing, and which simply serve as pseudo-satisfiers, destroying our the underlying needs.

Whether capitalism can be compatible with a beyond-growth wellbeing economy is as yet unclear. What is called for is a shift away from the comodification of everything and to a market system not based on profit maximisation but the ecological efficiency of the equitable satisfaction of wellbeing-needs.

Whether the entities we call ‘companies’ will prove compatible with such a paradigm, or new enterprises more resembling cooperatives will become the norm, is also unclear. What is clear is that we can’t go on in the same blind fashion we are currently pursuing.

The rise of wellbeing economics

In progressive circles, a new economics is emerging which questions the meaning of prosperity and posits that, rather than focusing on growing wealth, we ought instead to focus on growing wellbeing.. Such thinking comes at a time when a significant segment of society, described as ‘cultural creatives’ and estimated to be 33% of US citizens, are tuning in to Thoreau’s insights in Walden that “a man is rich in proportion to the number of things he can do without.”

Recently, these debates have started to go mainstream. Bodies such as the World Economic Forum, the UN, Harvard Business Review, Oxford, Cambridge and LSE universities and social movements like Happy City, Action for Happiness and Transition Towns are all integrating a wellbeing perspective into their thinking.

Even some politicians are tuning in to these new cultural norms and framing their new politics in terms of wellbeing and community rather than wealth and individualism. Nicolas Sarkozy asked Joseph Stiglitz to lead a high-level policy review on these issues; after his own review, David Cameron has set the UK’s Office of National Statistics the task of measuring and developing policy around wellbeing.

Having delivered numerous speeches on the subject of wellbeing, Cameron recently called on business “to work on improving quality of life and wellbeing.” Echoing this, Sir Gus O’Donnell, whilst head of the civil service and cabinet secretary, opined that within ten years, wellbeing would be the economy’s headline indicator, with GDP as a subsidiary indicator.

Alongside these UK moves, the EU, OECD, France, many US states, China, the World Bank and UN are all committed to rethinking how we measure progress through the addition of a wellbeing perspective.

The corporate world starts to tune in to wellbeing and needs

Ian Cheshire has recently spoken about the need for a new capitalism which prioritizes wellbeing over growth, noting:

‘I am convinced that this approach, bringing a wellbeing lens to strategic and sustainability challenges, is one of the most exciting areas for breakthrough innovation. It can bring a valuable new strategic compass to the journey we are on as a company.”

Cheshire is just one of a number of global CEOs who are working hard behind the scenes at evolving their business models so that their products, services and brands deliver maximum possible wellbeing for society per unit. Such a reorientation may start to show that such an alternative economic precept is both feasible and palatable.

Broadly speaking, there are three main areas where progressive companies can help push the boundaries of thinking and action on these issues.

Firstly, they can push government to radically reframe the market to favor those companies willing to be part of a rapid transition to a new wellbeing economics.

Secondly, they can help take society on a journey from a paradigm of ‘wealth, growth and material as prosperity’ to one of ‘wellbeing as prosperity’.

Thirdly, they can shift their strategic direction to focus not on producing ever more stuff but on the ecological efficiency of delivering to human needs.

The holy-grail for these companies has become the ‘wellbeing dividend’ where sustainability efforts can be shown to increase, rather than damage, customer and societal quality of life and wellbeing. In its Sustainable Living Plan, for example, Unilever committed to “improve the wellbeing of one million people.”

Having made that promise, the company must now work out what it must do to deliver on it. The progressive corporate world seems poised for the next step: turning theories of human needs into practice through experimentation and innovation.

What next? Can the SDGs deliver on wellbeing?

For want of any credible response to the challenges of our time from government, it seems that progress rests on the shoulders of civil society and progressives in the commercial world. Perhaps if civil society and the progressive corporate world can continue to examine questions of human needs, helping to update definitions to progress and prosperity, we can hope for future global action which is truer to Brundtland’s definition than Rio+20 managed to be.

As Saamah Abdallah has written, the Sustainable Development Goals (SDG) process could be the place such progress might be made: you can be sure that NEF will be pushing for such progress. While, as Alex Evans points out, it’s as yet unclear just how the SDGs will be developed, David Cameron – co-chair of the UN Secretary General’s High Level Panel on the post-2015 development agenda – is poised to play a key role.

Cameron has bravely pushed wellbeing over his time in power. Yet of late, he has said less and less on the subject. He ought to recognise that it is now coming to the forefront of progressive debate about sustainable development. He would be risking little in injecting such thinking into the SDG process.

 


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