Sustainable Capitalism? – 2

02/02/2012 / Kaj

There is a systemic crisis affecting most countries on the planet. It is not restricted to capitalism and in fact extends far beyond it. It is a crisis that has been in the making for decades and one that results from our disregard for nature and one another.

The crisis is one of unsustainable business and it is most easily explained by the systemic thinking of Karl-Henrik Robert, Founder of The Natural Step. Twenty years ago, Robert defined four basic rules of engagement with mother earth:

1. Substances from the Earth’s crust cannot systematically increase in the biosphere.

This means that fossil fuels, metals, and other minerals can not be extracted at a faster rate than their re-deposit back into the Earth’s crust.

2. Substances produced by society can not systematically increase in the biosphere.

This means that substances must not be produced at a faster rate than they can be broken down in nature. This requires a greatly decreased production of naturally occurring substances that are systematically accumulating beyond natural levels, and a phase-out of persistent human-made substances not found in nature.

3. The physical basis for the productivity and diversity of nature must not be systematically deteriorated.

This means that we cannot harvest or manipulate ecosystems in such a way as to diminish their productive capacity, or threaten the natural diversity of life forms (biodiversity). This requires that we critically examine how we harvest renewable resources, and adjust our consumption and land-use practices to fall well within the regenerative capacities of ecosystems.

4. In order to meet the previous three system conditions, there must be a fair and efficient use of resources to meet human needs.

This means that basic human needs must be met with the most resource-efficient methods possible, including a just resource distribution.

Today, huge sectors of commerce and industry completely ignore these fundamental principles. However, some progressive CEOs embraced these four rules and successfully redesigned their businesses to be sustainable and profit-making. In 1990 for instance, Leif Johansson at Electrolux started the process of completely removing CFC gas (1993) from his fridges. This was ten years before this greenhouse gas was prohibited for its damaging effect on the Earth’s atmosphere. In a similar feat, the late Ray Anderson at Interface reduced the company’s greenhouse gas emissions by 35% and ensured that the company use 30% of renewable energy in its energy mix.

These examples, and my own experiences working closely with The Natural Step, showed me that Robert’s four principles were entirely achievable in business. I was inspired to set up a values-based consultancy that could expand on his thinking and encourage long-term change. I founded RESPECT in 2000 and its mission is to promote the much-needed dialogue between business leaders, politicians and the environmental sector.

Such conversations are imperative if we are to prevent systemic failure from becoming systemic collapse. But whilst impending crisis may seem like a cause for pessimism, the work of Respect and the various initiatives that it spawned give me great hope. With the right guidance and motivation, even the largest companies can obey Robert’s basic rules and build sustainable corporations.

Upon formation, our team was made of some leading figures in the field including Tom Cannon, who previously led the British government initiative on sustainability issues and wrote the first long-term sustainability strategy for a government, Per Uno Alm, who worked closely with business leaders during his time as a Secretary General of The Natural Step, and John Morrison who developed the Body Shop’s global human rights agenda. They helped Respect establish programs that addressed the three pillars of a new economic paradigm: sustainability, low carbon economy and human rights. Most notably they launched Business Leaders’ Initiative on Climate Change (BLICC) and Business Leaders’ Initiative on Human Rights (BLIHR), two groundbreaking programs that encourage stakeholder dialogue between CEOs, politicians and NGOs and define how they can together implement this new approach to business.

BLICC focused on creating sustainable company models. Its first program worked with CEOs of companies including Ikea, Interface, Birka Energy, DHL, Inveco, McDonalds and Stora Enso, as well as politicians such as the EU’s Environmental Commissioner, Margot Wallstrom. They met, found a common agenda and collaborated to develop it. The results have been remarkable (see here for yearly reports). Through a variety of pioneering schemes, from transporting waste by rail to manufacturing plastic bottles with shorter neck rings, BLICC companies reduced emissions by approximately 30% between 2004 and 2009.

Organizations in the initiative also reported increased efficiency and reduced costs as a result of the program, demonstrating that profitability and sustainability can go hand in hand. This is a view that has gained increased traction in business and is perhaps best articulated by Michael Porter, a leading academic at Harvard Business School who said: “For thirty years, I have been preaching to corporations that what is good for business is good for society. However, times have changed and so has the logic. What we need to understand is today is that what is good for society is good for business.”

But as well as encouraging sustainability and a low carbon economy, there is a third pillar of our new economic paradigm. It is the responsibility of our other initiative, BLIHR, which concentrated on the human factor. It counted amongst its patrons the former UN’s High Commissioner in Human Rights Mary Robinson and it too has worked with leading CEOs from companies including ABB, Barclays, GE, Ericsson, Gap, Coca Cola, MTV. Again, the results have been hugely impressive (see full reports here). By incorporating human rights responsibilities into their business agendas, from improving workplace safety to guaranteeing maternity leave, our partners significantly improved conditions for their global workforces and their communities.

To support this, Respect worked with the Global Compact, Global Reporting Initiative and the World Resource Institute to develop the principles, policies and tools to be reported on and addressed by both programs.

The success of these initiatives came about because they value the distinction between actors in the political and market arenas. They also recognize the genuine desire for collaboration between the two, and most of the companies we have worked with strongly favor close relations with policy makers. They see them as a way to foster what is often termed as “smart” legislation that promotes sustainable community development. Contrary to what one might expect, green tax has also always had strong support in our discussions with businesses as well as heavier penalties for those who do not do enough.

The call for incentives that promote greener development and procurement actually has broad support within the corporate sector. Respect’s experience suggests that the business community is progressing down the road to change. With the right guidance, companies are beginning to realize that unless Robert’s four systemic conditions of engagement are fulfilled, they cannot build a sustainable businesses or create lasting wealth, peace or prosperity for the communities they operate in.

I believe that the BLICC and BLIHR models have a great deal to offer to the world at this moment in time, especially in the emerging world where rapid growth often comes at the expense of long-term solutions. The initiatives promote environmental and social sustainability, offering examples that can and should be replicated.

Kaj Embrén

Comments
  1. SUSTAINABLE CAPITALISM IS A CONTRADICTION IN TERM!!

    Let me first state THE EXISTING GOVERNANCE SYSTEM HAS FAILED!

    To make this obvious I present this quite, ecologically fragile, very beautiful blue planet that is our home.

    The Earth is the Mother of all life on this planet, the Earth as a living entity the one who provides the resources and nourishes us.

    So how have we handled our affairs with our mother?

    The answers are “not very impressive or to be proud off ”; in fact we have generated a system that is most disrespectful to Mother Earth.

    Environmental problems that do not seem locally important, are threatening a climatic change through Global warming, that challenges the sustainability of life on this planet, as we know it today.

    The consumer culture and the need for economic growth have not considered the time needed for Mother Earth to replenish the Resources.

    We are now facing critical issues of resource depletion, deforestation, soil erosion and more and more importantly our food and fresh water systems.

    The population growth is continuing, even if the growth rate is slightly down, we are 7 billion people now and in 2050 population is projected to be 9 or 10 billion.

    The problems will not diminish, they will increase unless substantial changes are made in the Industrial, Commercial and Social thinking and action about these problems.

    Now many ordinary citizens around the world feel doubt and even hatred towards the political and economic system for pandering to a minority elite to the detriment of the people and planet.

    This system will have to change. And perhaps change profoundly or crumble.

    There is historical evidence that “No economic and political system can continue to thrive without the outspoken or silent consent of the people.”

    And this consent seems apparently not to exist, people are apathetic, disenfranchised or in worst case dying due to this failure to see the “World as an interdependent whole in its multiple unique Diversity”

    Billions of people live under very restricted economic circumstances: poor housing, poor health services, poor educational opportunities and probably not even enough to eat.

    The gap between the rich and the poor is widening.

    At present a minority on Earth is consuming majority of the Earths resources while the poorest majority has to do with the daily struggle of survival, subsistent farming or depending on subsidised foods and aid. And this ridiculous state of affairs is the cause of dissatisfaction with the majority of the world population.

    So whatever merits our economic system may have, the production of a reasonable degree of care, consideration or equality is not in the equation.

    The fact of the matter is that the economic system and of course individual countries are beginning to be seen as in part responsible for very many societal, environmental and economic disparities.

    The governance system does not follow a sustainable strategy or a just policy.
    Theoretical discussions about capitalism or what Adam Smith may have meant will not change this. Only substantial solutions to actual problems will do.

    We actually are in need of a profound visionary renewal concerning what is really desirable, a visionary renewal that we can translate into economic and political rules that makes it possible for us to manage our affairs with justice and equality.

    Global Shared Resource vision is a long termed process that maps out a path to empower the INDIVIDUAL to share and participate in the governance of the global community for a value change for peace and harmony a Unity in Diversity.

    We need to rebuild credibility in our Public affairs and institute a value change at the top of the Globalisation agenda.

    Globalisation Agenda
    CONFLICT – CONTAMINATION – CORRUPTION
    CORPORATISM – CONSUMERISM – CAPITALISM

  2. Glenn Fleetwood

    Global Issues + Piecemeal Local Action = A Need For Something Different

    To point out the ‘elephant in the room’, the paradigm shift necessary in dealing with the true sustainability problem has to be truly global.

    Current political structures are simply not designed to effectively deal with trans-boundary, long term problems of this nature. Democratic governments change too quickly and existing world bodies don’t have the remit.

    Despite the sterling efforts of the likes of the Global Compact, Global Reporting Initiative and the World Resource Institute etc. as well as the solid progress made by the various multinationals engaging with sustainability in a serious in-house fashion, the world is not on track to reach functional sustainability.

    Indeed, far from it.

    In a perfect world, one solution would be to create a powerful regulatory body which had two key capabilities;

    1. A holistic an comprehensive understanding of the scientific definition the key variables

    2. The authority to impose solutions on states and other organisations as required

    This would of course require an unprecedented concerted effort on behalf of the mainstream scientific community and a highly unlikely surrendering of sovereignty from states on policies relevant to the imposed solutions.

    Gaining agreement on the shape of such a body and the unanimous ratification and ongoing support of its powers would represent an even greater achievement than the founding of the United Nations. The UN required devastating world war to come into being, and even then didn’t have any real teeth for decades.

    We do not currently have the luxury of time, nor a short-term, acutely visible and politically ‘saleable’ impending environmental disaster to push this through.

    This makes such a solution a non-starter.

    So we are left with the unenviable task of having to cobble together a hybrid and complex framework to take the place of such a theoretical world-spanning sustainability authority.

    I would suggest that as things stand, the only real hope of achieving anything meaningful with such an approach is for big business to do it.
    With minds hopefully focussed on the real damage short-termism does to the world economy and with governments of any stripe willing to indulge business wherever it wants to put its money, a window of opportunity currently exists to do this.

    With enough support, a ‘World Corporate & Scientific Sustainability’ body could be created to sidestep the mire of geopolitics in this specific regard and put effective money and effort into tackling the most important sustainability issues effectively in a timely and coordinated fashion.

    This body could ‘triage’ the various sustainability issues into a sensible ‘order of engagement’ and ensure nothing was missed simply because no one corporate or other engaged organisation wasn’t focussed on it at the critical time. Moreover, the relative stability of corporate governance and scientific support for such a body would ensure the crippling short-termism of any potential political solution could be sidestepped.

    World governments could then contribute in a way they are equipped for – as tax and policy facilitators for privately funded solutions and as catalysts for parallel uptake in the domestic arena. Momentum could be maintained by investment and jobs being created in states which were good facilitators and this would rapidly bring more resistant countries into the fold as they too sought the economic benefits of this global Scientific/Corporate sustainability initiative.

    World economic rejuvenation coupled with a shift to real sustainability?

    I’d buy that for a dollar….

  3. Argument

    To address “Climate Change and Sustainable Democratic Social Development” issues seems on the face of it impossible; but what was considered impossible is fast becoming a reality as digital technology drives our political, economic and sociological thinking and action. Digital Revolution is here.

    The implementation of the technology requires ethical guidelines.
    Instead of deploying oppressive foreign policies like “STAR WARS” configuration in an aggressive posture, through cooperation we can implement a “GLOBAL SUSTAINABLE TECHNOLOGY NETWORK” which will give each and everyone the opportunity to have active participation in the decision-making, management/distribution of the resources efficiently and economically. Its time for a level playing field.

    Not competition but cooperation, here lies the key decision for the UN, EU to convince its member states that the true level playing field that addresses issues such as, POVERTY, DISEASE, HUNGER, can only manifest if the Global Resources are managed through cooperation, collaboration but not competition. Sharing is Caring.

    Europe has for much of the last century researched and developed technological innovation and has led in its implementation. But now the demographic of the population has changed and more migration from the third world is necessary to support the welfare state and much more. Problems are that it is plagued with xenophobia, the lack of skilled manpower, stagnation in educational reforms, social apathy and lack of long termed Global Vision. Indian and China set the agenda.

    On the other side the so called third world has ample resource of skilled manpower, deep rooted cultural legacy of knowledge and values, a global presence and perspective, and an ethical long termed philosophy that still remains untouched due to the misguided nature of todays leaders, the existing economic social development, governance strategy and thinking. Capitalism has to go.

    In ancient wisdom based thinking of all indigenous communities and tribes, it has been a clearly presented cultural and logical thinking that all things are connected. The modern science recognises this in Newton’s laws of motion “. The entire moving world and indeed every particle is an integrated part of the whole.

    The world today is fragmented and is showing the signs of self-destruction, if not by war then through pollution and resource depletion.

    The true profit is in achieving a sustainable self-governing regenerating global system, with transparency and accountability.

    Social Justice can only manifest when we view the system as a holistic structure and address the issues of conflict, corruption and contamination, as Interdependent problems.

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