| Let’s
talk honestly about markets and sustainability. Many, myself included,
argue the power of markets to drive change—that the only method
powerful enough to drive sustainability globally and quickly is
to unleash market forces. We give these mystical forces the potential
to alleviate poverty, reduce population growth, solve climate change
and save biodiversity, and that’s just for a start.
I still buy the argument. However, if we’re honest we’d
have to concede performance to date has actually been abysmal.
Sure, there are some impressive examples of individual companies
doing things unimaginable a few decades ago. However, the reality
from the point of view of the planet and its people is that the
income gap is widening, climate change is upon us and getting worse,
China and India are gobbling up the world’s coal (and will
soon be emitting the consequences). Then when forecasts in global
economic growth are combined with the forecast consequences of what
is, in reality, largely business as usual, the situation starts
to look very ugly, very quickly.
So is market driven sustainability, like Marxism, something that
will in hindsight be a case of “oh well, it seemed like a good
idea at the time”?
Despite its failure to date, I would still say no—it is a sound
idea, we just haven’t applied it yet. And given the state of
the world’s ecosystem, we’d better get moving. Because
while it’s easy to mount a well argued case that markets don’t
work for sustainability (because currently that is a fact), I still
don’t hear a viable alternative to deliver lots of sustainability
quickly and globally.
What do we need to do? For a start, we have to move beyond the blame
game. Consumers, disguised as members of the public in opinion polls,
blame corporations for plundering the earth. The precious minority
of corporations who are producing the products we need to move us
forward, blame the consumer for not buying them. However, it is
too convenient to just lay blame.
By the way, don’t you love the way companies expect consumers
to behave differently than the companies themselves ever would?
As if companies are going to do the right thing environmentally
without a reasonable financial return, yet they somehow expect customers
en masse to pay more for products that don’t deliver any additional
benefit beyond the feel-good factor!
So we need to fix markets and make them work for sustainability,
by focusing less on prescribing outcomes, and more on the mechanisms
to get us there. The obvious and much discussed one is to get in
place a global carbon trading system, one designed around absolute
CO2 reductions in the range of 60% by 2050.
Another way we could start to fix markets is to put in place a series
of environmental deposits on virtually all products and packaging.
This would provide an incentive for consumers to return them after
use and would give markets a rationale for developing the infrastructure
to collect this material and recycle it. Governments can then leave
the market to work out the details, while focusing regulatory power
on the lever of deposits to gain the desired environmental outcome.
For example, with drink bottles we now have very strong data from
around the world that gives clear evidence that deposit systems
can double recovery rates. They also create jobs and finance infrastructure
while shifting public attitudes. So let’s start by rolling
that out globally. But why stop at drink bottles? Why not put a
deposit on all containers and while we’re at it, on mobile
phones, on computers and on cars. Our research strongly suggests
that corporate opposition to such schemes is overwhelmingly ideological—a
genetic fear of regulation—rather than a rational position
based on what’s good for business. As the corporate sector
pleads for environmentalists to abandon ideology in progress toward
sustainability, so too must they.
Markets do work, but they work according to how they’re designed.
They have not been designed to achieve sustainability and until
we redesign them they won’t, despite the good intentions of
many market players—companies and consumers. So let’s
start by designing the market to have our materials flow back into
the market rather than having them dumped into the environment.
Of course some very big corporate players would fight this, as the
big drinks companies have been doing for many years—resisting
what has clearly been proven as the most effective way to increase
recovery and recycling rates: putting a deposit on drink bottles.
But big entrenched players will always resist change. They either
need to get on board with the new world and be part of the solution,
or we’ll have to let a bit of creative destruction deal with
them—something markets are definitely very good at.
Paul Gilding (paul.gilding@ecoscorp.com) is the founder and CEO of
Ecos Corporation, which provides strategic advice to corporations
on how to create value
through sustainability. |
