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Agenda 2020: The Edge of Sanity

We need very different business models to avoid environmental calamity.


At a public forum recently I heard two eminent scientists speak about climate change. Using neutral scientific language, they painted an informed picture of impending ecological disaster due to global warming. Afterward I asked one of the speakers: "How do you personally live with your knowledge of where we are headed?" He pulled back his shirt sleeve and revealed a narrow band around his wrist. On it was written one word: "hope".

As I walked away, I experienced a sudden, unexpected anger. For some time, I had been struggling to maintain hope in the face of the potential demise of civilisation under the impact of climate change. I felt that my colleague was in denial - how could he maintain hope in the face of the fate he had described so convincingly?

Today humankind faces two major challenges: the first is the aftermath of the near meltdown of the global financial system; the other is the ecological metldown, particularly climate change.

The financial crisis showed that the governments of the world can co-operate in making concerted interventions in their economies. This was challenging for our political leaders because they had put aside economic rationalism.

The good news is that we now seem to be pulling out of the financial crisis. The bad news is the aim seems to be to bring the world economy back to business as usual - and business as usual will exacerbate ecological meltdown. We are wasting a crisis that could have provided an opportunity to revise how we live on this planet. We are instead moving back to continually accelerating material consumption to support a growing world population. A belief in ever-expanding economic growth is the ideology of the cancer cell.

Ecological meltdown threatens the viability of civilisation and the health of the biosphere. Some months ago most world leaders appeared to realise that this crisis is even more threatening than the financial crisis. To quote three of many leaders who spoke out in the lead-up to Copenhagen: UN Secretary-General Ban Ki-Moon said: "Our foot is on the accelerate and we are haded toward an abyss." French President Nicolas Sarkozy said: "This is a question of the survival of the human race." Then-prime minister Rudd said it was a "moral imperative" to act but later changed his mind.

The UN Climate Change Conference in Copenhagen was a fizzer. Many people hoped that the world's political leaders would forge solutions to climate issues, as they did to financial issues, but instead we witnessed a failure of political leadership.

Why is it so difficult to get action on climate change internationally, nationally and at state and local levels? One reason is the concerted campaign of disinformation mounted and funded by political lobby groups representing the old economy, particularly the heavy polluters and miners.

However, attempts to confuse us would fail if we were not trapped in a paradigm built up over the 200 years of industrialisation, unable to envisage a world outside industrial era assumptions. Our leaders and indeed almost all of us draw back from a fundamental re-examination of the cultural paradigm that is the basis of our civilisation. Most people are now convinced that we must create a more sustainable world but our imagination does not extend to understanding how radically we must change the way we live on this planet and with each other.

We are creating an insane world. It is insance for politicians to advocate reducing emissions and then announce they will open new coal mines, build new coal or gas-fired power stations, give massive subsidies to the country's major polluters and invest millions in infrastructure to double our export of coal. It is an insane world when there is a systemic disconnect between what we say and what we do.

The culture of the industrial revolution is so ingrained, so much the world taken for granted, that we cannot see how it shapes the way we work, the way we live and consume. Last year, I was asked to speak to an MBA class on corporate sustainability. As I walked into the class with the lecturer he told me that they had completed an exercise where they worked out their personal resources footprint and then multiplied it by the number of people in the world. The idea was to see how sustainable the world would be if everyone used resources as they did.

So I asked individual students in the class to tell us how many worlds would be needed if everyone lived like them. The answers ranged from 2.3 worlds to nine worlds. I looked at the class and said: "You know, we don't have nine worlds. We don't even have 2.3 worlds. We only have one world and we are going to have to work out how to live within its capacity for self-renewal."

We face the inevitable collapse of our culture's core beliefs, starting with the notions that the earth's resources are inexhaustible and that everyone in the world can share in our wasteful level of resource consumption.

Peoplehave faced cultural collapse before. Australian aborigines faced it, as did other indigenous peoples when Western civilisation moved out across the world. Culture is the accumulated community wisdom about how to survive. If it works well enough, a culture is reinforced by its own success. Cultural collapse typically occurs when a people's culture is no longer a valid guide to survival. Sustainability is something we must attemp on a large scale now if civilsiation is to survive but it is counter cultural. It involves a shift in our mindset and way of life as great as the transformation of the Industrial Revolution. Of course, we do have a choice. We can continue to ignore this century's imperative to change: survival is not compulsory.

Our industrial age is coming to an end. We cannot continue to conduct business as usual and live beyond the earth's ability to replace resources. As Tim Flannery has written, we have become the future eaters. So we face the end of the world as we know it and the collapse of our sense of meaning. We are in the early stages of that dilemma and we would do well to reflect on how we can handle this communal crisis before we are fully there.

One increasingly popular response is to see the collapse of our meaning system as a failure of will, a failure to heed the central precepts of our cultural tradition, which for Christians, Muslims and Jews is a religious tradition. So we see the rise of sects with leaders ferocious in their belief that the solution to those problems is to return to the faith of their fathers. There is great appeal for many people in these authoritative, simplistic creeds, which are often tough, macho and power-oriented. Fundamentalism correctly identifies the core of the problem - the decay of spirituality, of collective belief and purpose - but its answer is to look backwards rather than to the future. This is leadership of a sort, but not what we need to survive.

We need leaders who do not reject history but see it as a transformational trajectory; who can create a realistic and appealilng design for a new world that sustains the biosphere. This can be no exact blueprint; we have to invent the new world as we go, stumbling forward, sensing what may work, trying it, testing it, changing the formula until we reach a new understanding of our relationship to the Earth and to each other.

The Fuji Way

There are leaders in our communities and in our organisations who are breaking out of the past and transforing parts of the world in ways that take us to a more sustainable future. Some, for example, are creating waste-free factories that re-manufacture and take "cradle-to-cradle" responsibility for products.

An example? The leaders at Fuji Xerox's Eco-Manufacturing Plant in Zetland, Sydney. Around the turn of this century, the Japanese government passed legislation excluding from landfill any whitegoods or IT equipment. Fuji Xerox senior executivies realise that similar legislation was also being considered in Europe. If this change was taking place, the company could resist and fight the changes or take interantional leadership in solving the waste problem created cby companies such as theirs. So they built several new plants around the world dedicated to changing the way their equipment was manufactured and disposed of. One was the Sydney plant whose managers created the most innovative Fuji Xerox factory in the world.

The critical breakthrough, creating a whole new mindset, was to take cradle-to-cradle responsibility for their products. Fuji Xerox Australia now leases rather than sells its office equipment and maintains and renews it when components wear out or break down. What was once thrown into landfill is now remanufactured, often to a higher standard, so that 'second-hand' is actually better than new. All waste is re-used. Even the carbon dust accumulated in used printers is sucked out in a dry-cleaning process, stored in sealed containers, and sold to BHP for use in making high-grade steel. Waste is simply evidence of bad management, for all waste is a potential resource. The change to re-manufacturing has been a financial success for the Australian company and the company worldwide.

Similarly, there are companies whose leaders are working with their suppliers to ensure that toxic chemicals are eliminated and sustainable materials favoured. One such company is IKEA, which from its inception has incorporated sustainability principles into the business. IKEA executives recently launched a renewed commitment to sustainability worldwide, including Australia; they promise to offer a range of products that are more sustainable, play a leading role in the move to a low-carbon society, turn waste into resources and take increased social responsibility initiatives. Their products will increasingly meet enhanced sustainability criteria, which include low or zero chemical content, recyclability and energy efficiency in the production process.

The IKEA group's sustainability manager, Stefano Brown, said in SYdney recently that the failure of the COP15 summit "gives even more urgency to the need to keep the rise of the temperature of the planet to under 2 degrees, to avoid exploiting natural resources above the capacity of the Earth to regenerate them and to secure that many people have a place to live a good everyday life."

Sustainable investment funds and some major financial insurance companies are now insisting that, where they lend funds for large-scale building projects such as major retail centres and city office buildings, the buildings meet sustainability standards such as "six-star energy efficiency." Not to insist on this could mean that they face extensive retrofitting costs in future as governments raise minimum compliance standards.

The move is made easier by the leadership shown by executives at companies like Bovis Lend Lease, which some years ago decided to make sustainability a core business strategy for the company. At the time, this was controversial both within the company and outside, but seems a no-brainer now. The company has built a reputation for creating sustainable buildings as well as jobs within the localities where projects take place. This has won the company large, prestigious projects worldwide, including the athletes' village for the London Olympics.

Similarly, there are executives who are initiating the transformation of traditional corporate cultures to increase employee engagement, stimulate innovation and challenge fixed "industrial" mindsets. One such organisation is the Melbourne water authority Yarra Valley Water. Due to global warming, Melbourne has experienced significant water crises. A few years ago, Yarra Valley Water was a traditional water engineering organisation collecting rainwater falling on the Dandenongs, storing it in centralised reservoirs, bringing it all up to drinking standard and pumping it through pipes, sometimes uphill back to near where it fell. Centralised and standardised was seen as better, and that is also the way the organisation itself functioned.

A major cultural renewal program encouraged widespread communication, particularly upward communication, and a new model of 'constructive' behaviour replaced the dominant aggressive and defensive behaviour that had prevailed in the organisation. This allowed change champions to emerge, who challenged the old 'one pipe fits all' and 'all water must be fit to drink' models. Now Yarra Valley Water has adopted life-cycle analysis techniques to accurately assess the costs of alternative methods of water collection and delivery in different localities. As a result, the organisation has adopted a much more diverse and efficient range of solutions to conserving water.

Zero-Emission Economy

The future that such innovators are creating by their actions is becoming clearer. The future economy must have net zero emissions, which can only be achieved by switching our energy sources from coal and oil. It will be an economy with a marked reduction in the material intensity of the entire production, distribution and consumption cycle. We will abandon the current emphasis on accumulating stuff and instead concentrate on improving our quality of life. This will be achieved through eliminating the massive inefficiencies and waste of our current economic system and moving to a virtuous circle of re-manufacturing and recycling.

Most organisations that consider adoptiong more sustainable business practices start by asking 'What will this cost us?' They end up discovering that the costs are far exceeded by the economies achieved through waste reduction, the increased performance emerging from switched-on employees and the new strategic business opportunities. These days I encounter widespread impatience at all levels in the workforce with the lack of clear signals and leadership from government.

Recently, I heard a senior executive of a multinational company speak confidentially to associates. He said: "If you wait for governments to legislate, you won't have a competitive edge. I believe that in five to 10 years, we will be unable to sell our products if they are unsustainable." As this perception becomes more widely shared, more companies are making moves to position themselves for the market opportunities in the emerging sustainable economy of the future.

Exercising leadership of this kind demands that we be open to the creation of new possibilities.

The impending  death of our current culture clears the ground for the possibility of a rebirth. When the old ways no longer sustain us, it is rebirth or nothing. But such a rebirth stretches the limits of our imagination for no culture prepares us for its own destruction.

We need a new positive vision of community that redefines a new sustainable set of social relationships based on a form of justice and equity for all inhabitatns of this Earth. We also need viable technologies that enable a renewed relationship to the Earth and its ecology. The Earth is the basis of all economies, a fact most economists ignore.

The emergence of a new vision for an equitable and productive society, coupled with a transformed technology that respects nature, represent the grounds for a realistic hope; not a hope based on denial of reality but rather on acceptance that our current way of life must and can be transformed. Maybe we can dare to write the word hope on our wristband if we resolutely participate in re-forming our world to create a sane and sustainable future.

Originally published in AFR Boss July 2010 Edition, pp.32-35 http://www.afrboss.com.au

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