Sustainability Models

New day, same setting. Airplanes queuing for landing and take off. An infinite queue of trucks and cars slowly moving forward, releasing tons of CO2 into the atmosphere. An hour later I stand in the city, waiting at the bus station. There is all this exhaust pollution from a never ending flow of cars, which is so disgusting, but which we are obliged to breath each day as evidence of politics failing over environmental questions. Poor babies in their baby strollers, exposed to breath this heavily polluted air.

Back at work. Today, in the corporate world, shareholder value is the most prominent topic. Thousands of employees are laid off, taking in charge by the state and social security. While firms on their websites and reports show evidence of taking social and environmental responsibility seriously, the bottom line is efficiency, profit maximizing and shareholder value creation. Competition is fierce. Businesses have to be economically sound, and that is what counts, otherwise they will disappear, and the workforce and people, too.

Why can’t we transform our economy and society to become sustainable? Politics is about politics and parties competing for power, with a bottom line to securing economy and stability. Sustainability and clean technology is somewhere on the agenda, but for the sake of the economy, CO2 emissions correlates with economic growth, globally.

Corporations and other organizations function like highly efficient machines. Where they are not efficient enough, reorganization and lay-off of workforce takes place, causing more social victims. In the global economy, these highly efficient organizations are all interlinked. If your organization is not part of it, your organization will be soon gone. “Go with the flow” for survival. Humans as elements of these highly efficient and tuned machinery must never ask creative or challenging questions in a world of competitive machines. Technological innovation helps to substitute the human workforce and the machinery becoming even more efficient, producing more output with less input.

Efficiency, division of labor and specialization are among the major theoretical developments of Adam Smith. Frederick Taylor implemented these concepts adding structure, organizational hierarchy, separating the roles and functions between management and the specialized workforce, responsible for maximizing productivity.

Efficiency can be considered as the main driver for technological innovation in all sectors, leading to today’s consumer societies and society of the plenty, requiring more than one planet Earth: up to 9 planets Earth if emerging economies reach the standard of living and consumption levels of our developed western societies.

While John Maynard Keynes introduced Keynesian theory or consumption-driven economy, assuming that states supply money to secure consumption of the entire and growing produce, Hannah Arendt comes to the conclusion that today’s society cannot keep up in consuming all the products which brings us economical growth in the neoclassical sense. The result is increasing layoff of the workforce, leading to global economic and social crisis, increasing poverty and a growing gap between poor and rich.

This is one reason of a deadlock situation, where we cannot change the current course of our society anymore. Another reason might be that resources have become scarce, and large multinationals have become part of global geopolitical players, economy is turning into wars over global scarcity of resources.

This course will be difficult to be changed in the near future, since we are living the largest economic crisis since The Great Depression in the 1930ies.

Good news is that rather using arms and eventually arms of mass destruction, geopolitically and strategically important nations talk to each other to find solutions for a common economic future. Still the current global situation is unsustainable and our society is in a deadlock situation, where all needed resources are consumed and change and transformation does not happen.

“Trust” has become a mainstream fashion word. I am also confronted with the question. My answer is always the same: “can I trust you?” Basically you cannot trust anyone, unless you get a strong understanding and evidence, what the other person’s agenda, roles and values are in and for our society.

And it needs more than trust. It needs courage, integrity and transparency. It needs true grit and the courage to cultural change, even if such endeavor can turn into difficult and unpleasant experiences. Complacent attitudes of the conformists will lead us to situations where we will be left on our own, where we need to take leadership and adopt a role model with strong personal sacrifice for what we value as important for today’s and future generations and societies.

To reflect on the Schumpeterian destructive creativity: we need to go against the flow, act in a non-conformist way, challenge legacy, lead and convince our opposition and our supporters in creatively destroying neoclassic economical values, norms and standards with a completely new set of values and ways for our society, economy and environment.

In today’s economy lecture, models presented are still from the neoclassical, mono-dimensional and reductionist economic theories. We are aware that we live in a complex world, that sustainability since the 1987 Brundtland Report on Our Common Future is a vital and complex paradigm.

Still economy lectures remain the same. If we look at the MBA programs of prominent business schools, they still look the same, for decades. Corporate sustainability is considered as a marginal topic to the neoclassic economic and business administration teaching, since future leaders have to fit into the fine-tuned global machinery of organizations.

Why is this so?

If you read Thomas Princen’s book on “the Logic of Sufficiency” or Economy of Sufficiency you become aware that to understand the current global problem is to understand, how nature and their constituents, ecosystems and last but not least human beings interact and function. Human beings are described as the managers of ecosystems, their resources and services they provide. Referring to Elinor Ostrom and the Tragedy of the Commons, cost-free and uncontrolled consumption of natural resources leads to ecosystem destruction, which we perhaps deny psychologically, but which is taking place globally (rainforest deforestation, ocean overfishing, atmospheric and water pollution, urbanization etc.)

But Economy of Sufficiency is not part of economy lectures. It does not belong to the neoclassical economy, efficiency and productivity driven strategic thinking.

Yes, the risks and impacts of climate and environmental change find their way into the auditoria of managerial lectures, but as a marginal footnote topic. The examples used and presented are marginal, insignificant, because they lack economic theory based on the consideration of climate and environmental change and resource shortage.

Solutions are available. Books like the one of Thomas Princen would be a good entry to a New Economy lecture. Those professors who develop and lecture the new economic theories, must have learned what climate, environmental and ecological sciences is all about. They either do, or they fail and so do the students, who should become the leaders of our future generations.

You might find the following books helpful, still it is a small list of the literature available which I will continue to complete with new references on such topics as Economy of Sustainability, Economy of Sufficiency, Economy of Meaning, Climate Ethics and more https://sites.google.com/site/slow4earth/resources/books .

And there are solutions for the corporate world. Referring to the philosopher Frithjof Bergmann http://newworknewculture.com/ , each person’s activities could be defined by 3 tiers of meaningful time usage: 1/3 at a job to earn money and make a living, 1/3 with family, neighbors and your local community, 1/3 of the time working on one’s dream activity for a better planet Earth. A “slow” way of living, sustainable, local, organic and wholesome, a model on which the Swiss “New Start” Initiative is based upon http://neustartschweiz.ch/ .

New economic theory, changes in economy and management education is needed. There is leadership legacy. Education must change in line with the sustainability mainstream, to bring up young leaders trained in the Economy of Sustainability and Sufficiency who must take over leadership and management to lead and transform our society into a sustainable world.

What about the philosophical and moral aspect? First to start with, I recommend you to read the book of Sogyal Rinpoche, The Tibetan Book on Living and Dying, which I received from my lovely daughter Hannah : http://www.holybooks.com/wp-content/uploads/The-Tibetan-Book-of-Living-and-Dying.pdf

With a sound and well-balanced foundation, you are better armed to confront your daily challenges in turning our planet sustainable.

Let’s look at possible models of sustainability. Clark Wolf in his article on Intergenerational Justice identifies three possible rates of savings for our future generations: a) unsustainable rate that tends towards zero savings: “If we consistently use resources at a rate faster than they are renewed or replaced with substitutes then we make it certain that future generations will eventually be left with nothing at all”; b) positive accumulation in that they leave later generations better off than earlier ones: “If resources grow over time or if they can be replaced by better economic substitutes then it may be possible to increase the size or the value of the total resource set left for future generations; c) the only one rate of saving that is simply ‘sustainable’: “We achieve sustainability when we use resources at exactly the same rate at which we either replace them or develop economic substitutes for them”.

I would propose the following models to be implemented. The models are global in scope. The incentive is based on the principle that unsustainable resource consumption leads to complete resource depletion. For sustainability, the consumption of vital and renewable resources should reach “saturation” to allow a resource to regenerate. “Saturation” is used in opposite of “peak”. The definition of “peak” is that resource stock and supply beyond resource peak has already reached a point of no return as far as natural regeneration is concerned. The resource will not be able anymore to meet demand and deplete towards complete exhaustion.

The “saturation” concept and model is in analogy to the hydrological cycle. Making abstraction from the use and depletion of artesian water resources and water pollution, we can consider the hydrological cycle as continuous and in balance. In contrast, carbon cycle is out of balance through anthropogenic use and depletion of fossil fuel, continuously converting fossil fuel and releasing increasing amounts of CO2 into our atmosphere, where it remains stored over millennia, a trend towards a state of planet Earth at the time, when life was impossible.

The following principles are used in this analogy:

1. flow of resources is considered in analogy of the flow of water
2. in analogy to water, a closed cycle of resources is considered as the sustainability of resources, from consumption to regeneration
3. in analogy to water and water molecules, the simplification is made that vital resources naturally cycle through decomposition and end the cycle again as resources
4. a strong principle is that resources end a cycle, in turning into resource again, with its same biochemical and physical characteristics
5. to reach the level of saturation, resources and resource consumption has to be actively managed. Resource saturation cannot be achieved naturally. Main factors include population growth and its consequences (e.g. increase of urbanization, global increase in ecological footprint per capita, anthropogenic greenhouse gas emission) and climate change (e.g. loss of biodiversity, drought, forest fires, sea level rise)

“Exponential pricing”

Unsustainable consumption of resources is ceased through pricing policy, as a function of the rate of consumption. Rather than a linear progression, prices should increase exponentially, the more you consume of one resource (e.g. water, fossil fuel, electricity).

Through the exponential pricing mechanism, large consumers (resource intensive value chains, industries and the investment sector) have the incentive to reduce their resource consumption significantly.

“Saturation effect”

We have little incentive in reducing the amounts of garbage produced.

This leaves us as a “throw-away” society, where we do not care about our garbage, once it has left our factories, buildings and homes, considering the environment as a free common or zero cost resource. Garbage saturation in front of one’s factory, buildings and homes would occur unless higher collection prices are covered. At the same time, littering will be highly punished, e.g. USD 1,000.

The goal is to generate responsible consumption on the principle of sufficiency. That is we consume only what is necessary for our “survival” and that we recycle widely. The underlying physical and psychological model is that each individual taking a meal, will be very hungry in the beginning, but after a good meal, being saturated. The same applies to any type of consumption.

“Flying”

The cost of flying will be exponential in function of the number of times and kilometers flown for every year. You might fly once a year. After that each additional flight becomes exponentially more expensive.

“Car driving”

In analogy to flying.

“Stopping overconsumption”

Overconsumption of resources can thus be reduced to achieve a sustainable level that is what we consume can be regenerated by nature, keeping our resources in balance.

“What we value under sustainability – our common future”

What we actually have to do economically is to determine the future value of our natural assets.

Referring to sustainability we could start to look at the human-ecological continuum, with the two extremes, a 100% anthropocentric approach on one end, and a 100% ecocentric approach on the other end, where for the latter we would leave out the human component entirely. From a (climate)ethical perspective, every person, independent from her or his economical standpoint, can decide, where she or he wants to be positioned on the continuum, e.g. 40% anthropocentric and 60% ecocentric.

Since scenario-based global temperature and climate change projections are forward-looking in time, I opt for a future values approach in valuating natural assets. The point whether to use future value or net present value depends on what we actually want to value. Let us assume intergenerational justice, i.e. our ethical standpoint is that future generations have the same right for a good life as we have today. If we want to value how well we meet the needs of future generations, taking into account CO2 emissions and climate change projections, it is in my opinion more interesting to open the debate based on the calculation of the future value of natural assets: e.g. ecosystem services obtained from reforestation, nature conservation practices, new environmental standards, measures to prevent air and water pollution, measures to support rural livelihood creation through local, integrated organic agricultural practices, to mention just a few examples.