Being mindful of overconsumption and bad business practices will help to stem our planet’s degradation. But for the real answer, we need to look inside, writes David Rogers.
Seen from the point of view of a biologist, the success of Homo sapiens as a species is at the expense of many of the other species that share the planet. The key concepts here are “compression” and “competitive exclusion”: relative to other species, humans are omnicompetent omnivores that eat virtually every other edible animal on the planet and eliminate those animals that compete for resources in their evolutionary niche.
Seen from the point of view of an ecologist, the competitive success of humans threatens to be self-defeating. Humanity has co-evolved with a wide range of other species, and exists in a web of co- dependencies. The most vivid example of this in recent years is its reliance on insects for pollination, but in the future the area at greatest risk is probably the oceans: Lisa-ann Gershwin, an American marine ecologist, says in her book on jellyfish blooms: “We are increasingly fishing out their predators and competitors, and we are altering the physical properties of the seabed and the chemical properties of the oceans to favour jellyfish… and you don’t need a PhD to take a punt that the ideal conditions for mayhem might result in mayhem.”
Seen from the point of view of an economist, the conflict between human and non-human species is real enough, and there is a long Malthusian tradition that points out that growth is ultimately curbed by our finite biosphere, and this is borne out by the fact that animals may become victims of resource depletion, for example through overfishing, as Gershwin says, or they may suffer from the “externalities” of economic growth, through habitat depletion. However, whereas the biologist has a somewhat deterministic stance, and the ecologist a largely political one, the economist is free to argue that the technology that created the imbalance between people and animals can also end the problem of compression and competitive exclusion.
More growth, better world?
The key concept here is what is called the “economic Kuznets curve”: that is the hypothesis that the conflict between humans and other species can be resolved by more growth, not less. The argument is that as per capita income increases, societies gain the breathing room to focus their energies on ecological matters.
It must be acknowledged that a number of “pro-business” groups, such as Americans for Prosperity, have fashioned the Kuznets curve as a stick to beat ecological lobby groups with, on the grounds that it proves that any kind of economic growth will ultimately be good for the environment. Nevertheless, there is some empirical evidence to support the contention, but it has to be the right kind of growth. One obvious example is the shift to renewable energy: as Europe has become more prosperous so it has shifted to renewable energy: according to a European Commission consultation paper published last month, it will be producing half its power from wind, solar and hydro by 2030 (if member states meet their targets). And as China’s per capita wealth and its pollution have increased, so it has begun spending as much as the EU and the US together on wind and solar.
Chris Laszlo, a former Deloitte consultant, now professor of organisational behaviour at The Weatherhead School of Management at Case Western University, has published a number of books on how business can prosper by following the sustainability agenda. He told Salt that he has spent the past 15 years demonstrating to sceptical businesspeople that paying attention to environment and social issues would help them to lower their costs and reduce their environmental liability risks.
He said: “Reducing energy, reducing waste, reducing materials intensity cut costs all down the supply chain. That was a relatively easy argument to make, but the next step is to show them that sustainability can also drive innovation and top-line growth.”
Laszlo says that leading companies are starting to develop business models and product designs that don’t add costs but do add environmental and social ‘attributes’ to their services. “One example that’s vivid for Americans is the car company Tesla – those are expensive cars, but people buy it rather than a BMW or a Mercedes because it’s a better car [in every sense of the word]. Then there’s the reputational advantage. Unilever and Paul Polman are examples that are known worldwide for their efforts to decouple their growth from resource use. Without requiring consumers to compromise, they get a product that has the right performance, the right price, the right aesthetic and it also has environmental and social enhancements.”
As well as improving production and driving sales, Laszlo argues that the “good” company finds it easier to engage and motivate employees. “There is a huge level of disengagement in the workforce, and we argue that environmental awareness is the best way to make staff more loyal.”
Additional support for this argument can be gained by the qualitatively different nature of high-tech economic growth. Visible on the horizon is the combination of sophisticated automation with advanced in other disciplines, such as material science and 3D printing. One form this is taking is the circular economy, which uses information instead of raw materials to make physical objects, and which has become the official policy of the Chinese Communist Party.
The transformative effect that this can have on a conventional industry is illustrated by the plastic car created by UK designer Gordon Murray. The chassis of his T25 model can be moulded in 52 seconds in a single piece of plastic with no bolts (the average car has 1,500). Drop in an engine and it is possible to drive off five-and-a-half minutes after the vehicle entered the production process.
The complement to digitally optimised production is the sharing economy. The fact that every house in a suburban street has its own lawn mower for a tiny area of grass is a vivid illustration of just how much overcapacity is built into the system. The sharing economy is predicated on exploiting that overcapacity, and it works by simply altering the means of accessing it.
The sharing economy is most naturally suited to the digital world. Take the example of streamed media. The freeing of digital information from the physical medium of the optical disk has made movies and music available to an immensely greater number of people than was previously the case. More than 50 million people rent or stream media and 60 million stream music because the content has no marginal cost: 100 people can be supplied for the same price as one.
The marginal cost factor has created two kinds of economy, the virtual and the real, and despite the many areas of overlap, each operates according to its own laws. Or at least, they have up until the past few years. What we are now seeing in a number of industrial sectors is the gradual encroachment of the virtual on the real worlds.
One of these is hospitality: Airbnb is the big success story here. In the past seven years it has grown from a start-up in San Francisco to a US$10 billion business with more than 800,000 properties available to rent in 192 countries. Another is transportation, where the Uber application has achieved an even steeper trajectory, achieving a value of US$40 billion in five years.
What has made these sectors vulnerable to disruptive technology is the gross inefficiency of private ownership. For example, seen as a productive asset, a privately owned car offers a derisory return for the considerable investment required to buy, run, insure and tax it: on average it is used about five per cent of the time yet halves in value every three years.
On top of that, almost all rely on petrol or diesel for locomotion, and of all the things that can be done with the chemical treasure trove that is a barrel of oil, burning it to produce heat is surely the least intelligent.
The spiritual dimension
These are all powerful examples of how economic principles are changing in the “right” way, but is it enough to give us reason to believe that the Kuznets curve will come to our rescue?
Laszlo says no. He says that after making the business case for sustainability for all those years, it dawned on him that it was not enough to really make a difference.He says: “If we look at what sustainability means in practice, it’s about doing less harm. Someone said to me recently, it’s like saying I’m only going to hit my child twice instead of three times. If you look at climate change, biodiversity, the disruption of the nitrogen and phosphorous cycle, at best business is slowing the rate of unsustainability.”
Laszlo argues that this led him to a radical and deeply controversial conclusion: that business leaders have to change what they are being, not just what they are doing. Ultimately it is individuals, not systems or technological processes that have to change. What he means by this that they have to “authentically care” for issues such as biodiversity, and not just be driven by a logical return on investment type of approach. He says: “In the past environmentalists have focused on moral injunction: shaming or finger-wagging, and that doesn’t work – it pushes business in the wrong direction. I believe the only approach that is likely to be effective is if business leaders change from the inside out. They have to feel personally deeply connected to their life purpose, to nature, to others, to future generations. This is where compassion, mindfulness and reflective practices come in. It doesn’t have to be eastern meditation – it has to be anything you do outside of normal business, outside of constantly checking your smart phone. You have to pause and quiet the sensory overload so you can reconnect to what’s important for you in your life: that what’s we need more of in business.
Press link for more: David Rogers | wearesalt.org