A recent McKinsey report estimates that €28 trillion will need to be invested in “clean” technologies over the next 30 years to decarbonize Europe – money that would otherwise largely go into carbon-intensive technologies.
While redirecting capital in the interest of environmental protection is a supportable approach, McKinsey’s report continues to advocate the logic of green growth, according to which today’s most pressing problems can and must be solved primarily through ever new investments.
But what if this underlying logic systematically leads to ever new crises? Perhaps it is time to redirect and rethink: to consider degrowth for the UN’s 2030 Agenda for Sustainable Development.
An embedded perspective on the SDGs
In 2015, all UN member states adopted the seventeen Sustainable Development Goals (SDGs). Since then, major companies around the world have linked their sustainability efforts to selected SDGs.
Of the 17 SDGs, companies’ business models are most clearly and directly linked to SDGs number 8 – Decent Work and Economic Growth -, 9 – Industry, Innovation and Infrastructure -, and 12 – Responsible Consumption and Production.
Let’s call these the “economic SDGs”. By contrast, SDGs 13 to 15 cover important aspects of our natural environment, such as climatic conditions and life below and above water. SDGs 1 to 5, in turn, highlight social aspects such as good health, education, and equality. Therefore, let’s call these the ecological and societal SDGs, respectively.
Building on the different conceptions of the relationship between business, society, and nature, these three groups of SDGs relate to embedded systems: The economy is completely embedded in and dependent on society – and so is society, in and on nature. While nature could easily do without a human economy, business is essentially dependent on a balanced global ecosystem and the good functioning of other social institutions such as health care and education.
Consequently, the impacts of business and commercialization can extend far beyond a healthy role for natural ecosystems, society, and ultimately the economy itself.
Corporate sustainability is no longer about creating ever new business cases for sustainability, but about recognizing the vital yet limited socio-ecological cases for business.
The economic SDGs, however, rest on the assumption that continued economic growth is required for reaching societal SDGs such as poverty alleviation. And while the targets of the economic SDGs place a different emphasis on affluent versus economically poor countries, they still set economic growth as a general goal for all countries worldwide.
To give an example, target 8.1 reads as follows: “Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.”
In a world that is leaving the “safe operating space for humanity” while evidence is lacking that growing global economic activity can be fully decoupled from further environmental and social upheavals, such targets run the risk of being downright counterproductive.
The idea of the trickle-down effect, which is reflected in target 8.1, does not work to alleviate poverty when the return on capital tends to exceed economic growth rates while the worsening climate crisis hits hardest those people who live in poor countries of the Global South.
That is, people who have contributed the least to climate change while, by contrast, 100 fossil fuel companies “account for 71% of global industrial GHG emissions.”
Today’s global, complex, and pressing challenges require integrative strategies that overcome the institutionalized tensions which manifest themselves in contradictions between individual SDGs. Taking the embedded view seriously, the development and realization of integrative strategies must start from a fundamental shift in perspective: There are boundaries to healthy economic growth and the pursuit of profit.
Moreover, the relative value of the three groups of SDGs can be ranked according to their existential relevance: Nature first, society second, business last. In other words, business plays a vital but limited role in achieving human flourishing, societal well-being, and environmental protection.
A glimpse at business strategies for degrowth
Consistent with the above, advocates of degrowth call for economic innovations that democratize economic relations and seek to integrate, rather than suppress, the social and environmental limits of economic growth. Building on recent research, degrowth implies that corporate sustainability is no longer about creating ever new business cases for sustainability, but about recognizing the vital yet limited socio-ecological cases for business.
Truly sustainable business begins with a holistic perspective on nature, society, and business – a perspective that in many ways turns business logics upside down and highlights the vital but limited role of business in society.
In many cases, this means that classic corporate strategies and the business models used to implement them must be turned upside down. Let’s look at some illustrative examples:
In markets increasingly dominated by only a few powerful companies, why not support decentralization and democratization?
Beverage company Premium not only refrains from offering bulk discounts, but it has introduced an anti-volume discount: The larger the order, the higher the price per unit. This anti-volume discount supports new entrants and small distributors to counteract vendor concentration in the beverage market. To give another example, the tariffs of energy provider EWS Schönau include a subsidy component which is used to help customers become renewable energy producers themselves. In short, they are turning customers into non-customers to promote the decentralization and democratization of the renewable energy market.
In an economy fixated on creating ever new sources of revenue, why not try to better redistribute existing revenues?
Companies such as Allsafe and organic bakery BioKaiser refrain from profit-seeking growth and at the same time have profit-sharing systems that, depending on the company, distribute the profits generated fairly to employees, suppliers, and/or environmental and social projects. Another example is Viva con Agua Wasser GmbH. On behalf of the Viva con Agua association, which carries out charitable water projects, this company concludes license agreements with manufacturers of products such as mineral water and toilet paper. The company’s profits are then donated for Viva con Agua’s charitable activities and to fund new social business ideas.
In a society increasingly based on consumerism, why not help people to share and repair what they already have?
Smartphone manufacturers such as SHIFT or Fairphone design their smartphones to last as long as possible and offer their customers spare parts and repair guides. Such approaches fit well with the growing movement of repair cafés, where people help each other fix their broken products. Furthermore, Peerby is a peer-to-peer sharing platform that enables people from the same neighbourhood to connect and borrow things they occasionally need.
True corporate sustainability is not cherry-picking.
Truly sustainable business begins with a holistic perspective on nature, society, and business – a perspective that in many ways turns business logics upside down and highlights the vital but limited role of business in society.
Thus, without denying the positive contributions of business to society, true corporate sustainability is not cherry-picking. Companies’ business models eventually impact all 17 SDGs in one way or another.
As argued in this article, therefore, business and research must step up their efforts to explore how companies can contribute to sustainable degrowth – that is, a transformation that reduces the scale of environmentally destructive industries such as coal mining, meat production, car-making, and aviation while supporting new, more sustainable forms of business; a transformation counteracting the rampant commodification of all aspects of life; a transformation built on cooperation rather than competition; a transformation guided by values such as global solidarity and environmental protection; a transformation that begins by making bold new choices…