So You Want to Change the World? (Part 2)

12/14/2016 09:15 am ET

How do you order people to consumer less, in a free market society, where consumption is the norm, and it is even something to chase?

According to most research, governments and customers tend to follow, not lead. So we need leadership from social movements (led by scientists, activists, consultants, progressive mayors, pioneering businesses, etc.) to change the norms of society, after which governments and customers will follow. My other observation is that we should not try too hard to convince people to consume less (although that would be a good thing), but rather to consume differently, i.e. choose products and services that are regenerative - to their wellbeing, communities and the planet.

Could raising awareness about different types of business models that embed more of a commitment to sustainable development have a significant impact on the short-sightedness of shareholder capitalism?

You are right that awareness of these alternatives is low and poorly understood. When I did my business degree many years ago, we were taught about traditional institutional forms of business, so there is a good rationale for teaching this. And now that there are viable alternatives - like community interest companies (UK), benefit corporations (mainly USA) and others (low profit, limited liability companies, social purpose corporations, social businesses) - they should absolutely be included in the curricula.

A key message should be that these needn't be fringe companies or "mom-and-pop shops". Mondragon is a co-operative that started in Spain and now has revenues in excess of €12 billion and employs more than 74,000 people around that world. And big companies like Ben & Jerry's and Patagonia are now registered B-Corps. Another key debate that should be had is on "fiduciary duty" in traditional corporations - what it means and more especially what it doesn't mean. You may be interested in my interview with Joel Bakan, Canadian author of The Corporation, who explores this.

Should companies abandon the misleading intensity approach to reporting of environmental performance?

You've touched on something very important here. Reporting can be skewed in favour of companies - especially using the intensity emissions/unit produced approach. So, yes, the requirement to report absolute numbers is critical. However, even this can be misleading. Even if I report the absolute emissions or waste, this is usually annual rather than cumulative. So if this goes down a bit, my company looks good, but the environment still has to absorb that additional waste.

This is why I am strongly promoting a Regenerative Economy (or Syndustrial Revolution) approach. Unless we can view production and consumption as part of a living system that is either improving or deteriorating based on our actions, we will never be truly sustainable. To continue with the waste example, if I am producing waste that is biodegradable at levels that nature can deal with, no problem. However, if it's toxic, or non-biodegradable, that waste is part of the problem no matter what the volume.

You may be interested in the New Syndustrial Model presented in my recent Huffington Post article. The challenge therefore is measuring and reporting against the 8 sub-components of this new model of Borrow > Create > Benefit > Return, rather than against the Old Industrial Model of Take > Make > Consume > Waste. This is the subject of a documentary called "Closing the Loop" that I have been filming with Emmy Award winning director, Graham Sheldon.

Are there any countries that have been successful in using fiscal incentives to create change for sustainability?

Taxing "bads" and subsidising "goods" would definitely speed our transition to a sustainable society. There are examples of this. Most renewable energy technologies are subsidised (although often cancelled out by even larger fossil fuel subsidies). In Sweden, they now give tax breaks for repaired goods (rather than new products). Norway has more than 50% of the world's Tesla electric cars, simply because there is a 100% import duty on all other cars and 0% on Teslas. In the UK, there is a landfill tax. In many countries, water quality charges apply to companies' effluent disposal.

These all help, but the key is to get the pricing right. We have to internalise the externalities - and if the price on resources or pollution or poor labour practices is too low, companies have very little incentive to change. For example, the EU Emissions Trading Scheme has a collapsed carbon price of €5-10, whereas research in Cambridge suggests that we need around €100 per tonne to get the reductions of the Paris Agreement. Increased prices are always unpopular, so politicians have to offset them with reducing other taxes (e.g. on income), while having some public support (usually through NGOs).

I am hopeful that - at a certain point - innovation takes over. Government fiscal incentives help to put pressure, so that companies invest in R&D for sustainable solutions. And when the technology starts to mature and the markets start to grow, we no longer have to "nudge" companies or people to choose sustainable options. Solar energy is at this point now (with prices down 98% since the 1970s). As soon as we can show that sustainable is simply better - in quality, performance, coolness, etc. - as Elon Musk has done with the electric car and will soon do with solar roofs, then sustainability becomes the new norm.

Aren’t most companies just engaging in a few initiatives that are a small piece of the puzzle and don't entirely solve the problem despite seeming like a solution?

My guide to the issues you are speaking of is Paul Hawken, who says: never expect the beneficiaries of the status quo to lead the revolution. So, the chances are that the "solutions" Shell and others are promoting are smart, defensive initiatives that will allow them to continue to milk the cash-cow of fossil fuels for as long as possible. Their sunk costs cause technological lock-in. Carbon Capture and Storage may become a viable solution in future, but even at current prices, solar and wind are the more obvious and sustainable solutions.

So my advice is always to focus on the innovators, the disruptors, which are unlikely to come from within the industry they are trying to disrupt. It's no co-incidence that Tesla emerged from Silicon Valley, not Detroit - and was led by a software engineer (who disrupted another industry, banking, through Paypal), rather than a traditional engineer who has incrementally improved cars their whole life. Healthcare is being disrupted by tech companies like G.E. and Google, rather than Big Pharma, which has vested interests. Walk away from the incumbents. Follow the radicals!

Source

Extracted from a dialogue with Masters students from the University of Waterloo, Canada, on the topics of sustainable business and transformational change.

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