If you haven’t come across Mike Townsend (CEO of Earthshine), before, then look him up (@mike_earthshine on Twitter). Recently, I’ve read a couple of great pieces by him, which have inspired me to write this post – an attempt to get to the nub of whether there is such a thing as ‘sustainable growth’?
We all know the problem, right? In our bones, we know that continuous, conspicuous consumption and the economists’ nirvana of infinite growth just isn’t possible in a world of real physical limits. On our current trajectory, reports estimate that not even two planets’ worth of natural resources would be sufficient to meet our material needs by 2030.
As Mike suggests, there can only really be two answers to this dilemma: either to make growth sustainable, or to make de-growth stable. For business, the preferred answer is naturally the former. But what exactly does that entail?
For starters, it has to mean distinguishing between good and harmful growth and, in my book, growth that pays no heed to the people and resources impacted by its generation is harmful growth. In this scenario, business is the enemy, continuing to exploit and deplete those resources in the narrow pursuit of maximising short-term shareholder returns.
By contrast, growth that focuses on real, life-enhancing and truly value-adding goods and services – conceived and delivered in recognition of finite ecological limits – is good growth. In this scenario, business views acceptable, long-term returns as the by-product of serving a higher purpose and, rather than being the enemy, is potentially the saviour – the only institution pervasive enough to be capable of concerted, cross-border action to deliver social progress and preserve the environment.
Only good growth, IMHO, can create long-term value for all stakeholders. Only good growth is socially meaningful. And only good growth is capable of being supported by natural systems.
So how do we get more businesses to cotton on to this and change the way they operate?
Show them the size of the pot of gold at the end of the good growth rainbow!
Show them the mounting evidence from multiple studies, like Havas Media’s Meaningful Brand Index and the Stengel 50, for example, which correlate the pursuit of shared value with superior financial performance (superior to the tune of 120-400% versus the general market, depending on which study you look at). Regale them with real-life case studies that demonstrate, as Jim Stengel brilliantly puts it, that “maximum growth and high ideals are not incompatible, they’re inseparable.”
Show them, too, the research conducted by McKinsey and the Ellen MacArthur Foundation, which calculates that there’s more than US$1tn of value (and 100,000 new jobs) to be created by 2025 by adopting the principles of the circular economy. Regale them with real-life examples of these principles in practice – for example how the combination of biomimicry-inspired innovation and reverse logistics developed over the first decade of Interface’s Mission Zero strategy not only cut greenhouse gas emissions by 94% but, over the same time period, helped to increase sales by two-thirds and double profits.
Companies like Interface – well on the way to eliminating any negative impact on the environment by 2020, while substantially growing their business and increasing its resilience (through decoupling that growth from the wellhead) – clearly show that sustainable growth needn’t be a contradiction in terms. But they also show that the activities of the vast majority of companies still falls woefully short of what is required to achieve it.
As ever, it’s worthwhile remembering the sage words of Paul Polman with which he launched Unilever’s Sustainable Living Plan, explicitly framing it, “not as a project to celebrate, but a new business model to implement.”
Sustainable growth is possible. It just won’t be achieved by tinkering with existing business models to make them a little bit less bad. It requires businesses to do more and, if research into the potential of the circular economy is accurate, there are more than a trillion reasons for them to want to.