We are the first generation to know we are destroying our planet and the last one that can do anything about it. John Elkington needs very little introduction. The man behind the triple bottom line. The first-ever management concept that had a “product recall”. “Green Swans: The Coming Boom In Regenerative Capitalism” is a book about exponential effects and how they will hopefully help us tackle climate change or the opposite.
The title is inspired by Nassim Tales “The Black Swan”. Black Swans are dramatic events that are outliers—beyond the realm of normal expectations—have a major impact and yet are often “inappropriately rationalised after the fact with the benefit of hindsight.”
Elkington added Geen Swans, and apparently, there are also “Grey Swans,” which are predictable and may have been predicted, but which, when ignored for too long, erupt in ways that can rock the world on its heels. Climate change is a grey swan. The levels of climate-induced societal collapse that are likely to follow our crossing of the two degrees of warming threshold will likely be black swans.
An Ugly Duckling is an early-stage concept, mindset, technology, or venture with the potential to become either a Black Swan (often driven by “bad” exponentials) or Green Swan (driven by “good” exponentials).
Green Swans are systemic solutions to global challenges, solutions that tap into positive exponentials. A profound market shift, generally catalysed by some combination of Black or Gray Swan challenges and changing paradigms, values, mindsets, politics, policies, technologies, business models, and other key factors. A Green Swan delivers exponential progress in the form of economic, social, and environmental wealth creation. In the sense of out-of-the-ordinary forms of progress, Green Swans are extraordinary in the sense of progress, driven and shaped by positive exponentials. Think of next-generation concepts like carbon productivity, the sharing economy, the circular economy, and biomimicry.
Green Swan breakthroughs have included the rapid spread of cell phone technology and the internet, linking us in new ways and massively boosting the prospects for self-education, and the staggering cost reductions for solar and wind power systems.
The author uses exponential sustainability as a terminology. The world of the XPRIZE Foundation, Google’s X, and the Singularity University. 10X thinking, meaning, targets aiming for at least a tenfold improvement. From a future of scarcity to one increasingly characterised, at least in some areas, by abundance.
The central characteristic of the Chrysalis Economy is metamorphosis, where an old order melts down, and another emerges. The butterfly as described in “Undisputable“. The evidence suggests that, at least in some places, our economic chrysalis is beginning to crack open—a process that can only accelerate. At least some parts of the world are now heading toward some sort of breakthrough future, and that more could soon follow in their wake. Pockets of the future embedded in the present.
I love the book. Particularly after reading “Ministry of the future”. The message is the same. In recent years climate-induced societal collapse has moved sharply from the realms of sci-fi to everyday reality. We are heading into a hellish world of systemic breakdowns. Our species has built many great civilisations, but so far, it has failed to learn the hard lessons from the fact that every single one eventually crashed.
Key elements of our climate, our biosphere, our economies, and our societies will come apart at an accelerating rate. The science now shows that climate-induced societal collapse is imminent—and that, at times, it will impact rich nations as brutally as it does poorer nations. With some great thinking on stranded assets. A carbon budget consistent with a 2°C target “would render the vast majority of [fossil fuel] reserves’ stranded’—oil, gas and coal that will be literally unburnable without expensive carbon capture. Wait for the carbon coin.
Gradually then suddenly
Climate chaos will rush headlong toward its own “suddenly” moment. The Anthropocene epoch, coupled with burgeoning human populations, particularly in Africa, will trigger a growing number of “gradually, then suddenly” breaches and cascades in what we take for granted as normality.
The transformations of the sort we now need will be characterised as miracles. A miracle is something impossible from one’s current understanding of reality and truth, but that becomes possible from a new understanding. Moving from the tactical to the transformational, expanding their horizons to embrace an exponentially mutating “future quo.”
Capitalism is broken
Capitalism is in crisis and maybe even broken. Fundamentally, we have a hardwired cultural problem in business, finance, and markets. The “software” controlling capitalism today includes the millions of algorithms that churn away constantly, out of sight and out of mind. Still, it also includes the values and assumptions of generations of the wrong economics. The net result is that capitalist algorithms have increasingly driven yawning wealth divides and helped wipe something like 60% off the Living Planet Index. It is time for new economics. To ensure our assumptions, our flawed technologies, and market myopia do not crash our civilisation, we need very different values and priorities.
Anyone tracking the largest companies would have seen major shifts in the rankings between 2009 and 2018. ExxonMobil, which had topped the chart in 2009, fell to ninth place by 2018. About half of the top 10% of companies dropped out of the top tier every business cycle, with 40% of these dropouts falling all the way down to the bottom 10%.
But perhaps the most powerful factor behind the inability to see what lies ahead is the very different nature and scale of what is now coming at us. Business leaders are being told that the global economy is heading for the mother of all downturns as the carbon bubble bursts. Recall that the financial crisis of 2008 was triggered by the loss of $0.25 trillion, then imagine what might happen when this coming energy transition wipes somewhere between 1 and 4 trillion dollars from the global economy.
Winners take all
We are also still generously rewarding our elites or allowing them to reward themselves for turning our civilisation into a slow-moving but now accelerating cataclysm. The planet is regarded as a free resource and a limitless litter bin. In short, we have a giant Ponzi scheme for the planet—taking from the future in favour [of] some of those alive today.
The prevailing “move fast and break things” philosophy in Silicon Valley has proved problematic as new technologies undermine fundamental things like democracy. Let’s take into account the unintended consequences of current forms of wealth creation. We must also now consider the unintentional cascading of intergenerational debt via climate breakdown and similar trends, something most banks have yet to properly consider in their carefully honed and polished statements of purpose.
Globally, seven in ten (70%) agreed that their economy is rigged in favour of the rich and powerful (little change at up one point from 2016), with a majority saying this in every single country except for Sweden (50%). When the bubbles collapse, the reality of the rich getting richer while the poor get poorer is fully revealed, and the victims of the transformation become easy prey to extremists, as in the 1930s and now. Viewed in this way, much of the recent political confusion and enraged populism can be seen as an existential swan song, a lament for the certainties of older, ailing forms of capitalism, democracy, and, yes, sustainability.
Corporations are psychopaths. CEOs are criminals or activists. Organisations operate in poorly regulated environments where failures are often swept under boardroom or faculty carpets. Inadequate management systems jeopardise lives in the air, at sea, on roads, or in hospitals. The wealthy are using philanthropy to pretend they are changing the world while maintaining the status quo. But while current definitions of profit have served economists, accountants, and many investors well, they are clearly not fit for purpose in the Anthropocene or even Novacene.
Businesses are suffering from “the Titanic Syndrome,” defining it as follows: A corporate disease in which organisations facing disruption create their own downfall through arrogance, excessive attachment to the past, or an inability to recognise the new and emerging reality.
Soon existing business models, organisational cultures, teams, and mindsets will no longer be fit for purpose. Containing and then radically redesigning capitalism is now our central challenge. It must now become radically more economically inclusive, socially just, and crucially environmentally restorative. Companies would be far better off focusing on resilience than on efficiency. It is the end of business as usual. In this future, every company “must be willing to disrupt the status quo—or wait to be disrupted.
The sheer pace of change now demands that each of us, and every organisation, go through a process of profound reinvention—not once a century, not even once a decade, but every three and a half years.
Merging business with social
We are in need of new definitions. The merging of business with social.
- As the world becomes more transparent and however profitable their activities may be, will business leaders be able to turn blind eyes to such huge negative impacts? Groups such as Client Earth are paving the way for very different liability regimes by suing on behalf of the planet and those most dependent on its health. You are going to get sued.
- Profit should not itself be a business purpose. Profit is a condition of—and result of—achieving a purpose. We need a culture shift to redefine success in business and build a more inclusive and sustainable economy. Tomorrow’s business leaders understand that truly sustainable development is becoming a mainstream priority.
- Social purpose is now inextricably linked with a company’s longer-term profitability and wider success.
- Economic growth rate and GDP will become things of the past. Read “Buddhist economics“ or “Doughnut economics“. Meeting the United Nations’ Sustainable Development Goals will be a trillion dollar-per-year market opportunities by 2030? Sustainable Development Goals forecast to generate market opportunities of over $12 trillion a year by 2030
- Companies should adopt creating shared value (CSV). CSV conveys the idea that a business must do two things simultaneously to be successful in the long term: create economic value for both the company and society. Preferably regenerative.
- The future of sustainability is regeneration: replenishing and restoring what we have lost and building economies and communities that thrive while allowing the planet to thrive too.
- Extra-financial accounting moves us into the area of ethical, social, environmental, and governance, accounting and reporting. The ultimate goal is to achieve new, more integrated forms of accounting.
Climate is a wicked problem
Wicked problems often crop up when organisations have to face constant change or unprecedented challenges. Such problems occur in a social context; the greater the disagreement among stakeholders, the more wicked the problem. It’s the social complexity of wicked problems as much as the technical difficulties that make them tough to manage. Environmental degradation, terrorism, and poverty—these are classic examples of wicked problems.
- Wicked problems have no definitive formulation.
- It’s hard, perhaps impossible, to measure or claim success with wicked problems because they bleed into one another. There are hugely complex linkages between global warming and other challenges such as water security, human migrations, ocean acidification, the bleaching of coral reefs, and the spread of tropical diseases like malaria to former temperate zones.
- Because of complex interdependencies, efforts to solve a wicked problem can reveal or even create other problems.
- Solutions to wicked problems can be only good or bad, not true or false.
- There is no template to follow when tackling a wicked problem, although history may provide a guide.
- There is always more than one explanation for a wicked problem.
- Every wicked problem is a symptom of another problem.
- No mitigation strategy for a wicked problem has a definitive scientific test.
- Offering a “solution” to a wicked problem frequently is a “one-shot” effort.
- Every wicked problem is unique.
Elkington maps four other wicked problems.
- Plastic. By 2015 we humans had generated 8.3 billion metric tons of plastics, 6.3 billion tons of which had already become waste. Of that waste total, only 9% was recycled, 12% was incinerated, and 79% accumulated in landfills or the natural environment. If current trends continue, we are told, a further 12 billion metric tons of plastic waste will end up in landfills or in the natural environment by 2050.
- The food we are eating (read up on Ayurveda). The calories in modern diets are now triggering a global health crisis. The globalisation of Western diets—with a small group of food and agriculture companies now having quite disproportionate power to decide what they produce and we consume—is partially to blame for this shift to unhealthy eating. Overall, 13% of the world’s adult population was obese in 2016.15 The worldwide prevalence of obesity nearly tripled between 1975 and 2016. In Africa, the number of overweight children under five has increased by nearly 50% since 2000. The accelerating global spread of obesity and diabetes could potentially collapse public healthcare systems in some countries.
- Antibiotics. Antibiotics have been highly profitable, including—controversially—in farming. Farmers have helped drive growing antibiotic resistance in microbes and other organisms.
- Space junk (I did not see that one coming either). There are more than 20,000 pieces of debris larger than a softball orbiting the Earth. They travel at speeds up to 17,500 mph, fast enough for a relatively small piece of orbital debris to damage a satellite or a spacecraft.
Climate is a super wicked problem
Another way to think of a wicked problem is “a problem whose social complexity means that it has no determinable stopping point.” In the case of climate, time is running out.
- There is no central authority.
- Those seeking to solve the problem are also causing it.
- Current policies discount the future irrationally. Behind our policies lie not just our politics and priorities but also the immense power of the so-called invisible hand of economics and the discipline of discounting the future.
The book is full of interesting concepts:
- Zero footprint: providing the same environmental benefits as high-performing ecosystems.
- Factory-as-a-forest: any facility would produce the same environmental services as its site would if occupied by a forest.
- Regenerative Capitalism
- a planetary “break-even point.”
- Three Rs: Responsibility, Resilience, and Regeneration. Responsibility (where most current practice clusters), Resilience (where too little effort yet focuses), and Regeneration (where the spotlight must now shift).
- Chaos factory. If you have built a chaos factory, you can’t dodge responsibility for the chaos.
- Cockroach stocks. Businesses that can survive no matter what happens.
Throttled by the Midgley syndrome
For most of the time, inventors and innovators see the future through the proverbial rose-tinted spectacles. Thomas Midgley invented leaded gasoline. But it was a breakthrough that proved to have immense unforeseen consequences in terms of the unintended, unsuspected damage to young people’s nervous systems. Later, Midgley went on to synthesise early Freons, which caused the damage to our ozone layer. Midgley has been described as the single organism in Earth’s history that has inflicted the most damage on the planet. Surely he, and the devastating lessons learned from his life, should now feature alongside the works of such people as Berners-Lee, Dyson, Edison, Gates, Musk, Venter, or Zuckerberg in the syllabuses of all business schools and university technology departments?
The Midgley story suggests that the ways in which such people change the world will very much depend on how Black and Green Swan dynamics come into play in our economies, societies, and, crucially, our politics. It also suggests that we should look tomorrow’s gift horses very carefully in the mouth. But both Gray and Black Swan challenges will erupt, including shocking job losses, scandalously unethical use of data, and pernicious embedded blind spots reflecting blind spots in the minds and experience of those designing such systems.
The big question is, who is making all the decisions about science and technology that are going to determine the type of future that our children are going to live in. It is clear that much of the world is at a market inflexion point.
Green swan future
Our pan-generational task is to help make a Green Swan future appear—and then become—inevitable. The overarching question is: How do we succeed in repurposing capitalism through the 2020s? But think, too, of the political impact of increasingly conservative old people unwilling to take the risks—or to vote for others who plan to do so—needed to pursue Green Swan outcomes.
We didn’t get to the Moon by setting out to climb Everest and putting off thinking about the next step until we got to the summit. We need a Sustainability Revolution at the scale of the Industrial Revolution and the Agricultural Revolution—and at the speed of the Information Revolution. Compared to these three previous revolutions, the Sustainability Revolution is likely to be the most significant event in economic history.
What to do
- Be a leader, not an algorithm. Whether we focus on citizens, corporations, cities, or countries, it is time for us all to become activists ourselves—or to actively support those with the courage to do so.
- For tomorrow’s capitalism to work, business models must become exponentially more social, lean, integrated, and circular.
- At the heart of the process must be what Mariana Mazzucato dubs the “Entrepreneurial State fixing market failures and actively shaping markets to ensure the right outcomes. Her argument is that often the private sector only finds the courage to invest after an entrepreneurial state has de-risked the future. Government need to set policy guidelines and give ‘smart’ and green directions to innovation and investment that can bring employment, profits, growth, and at the same time increasing social wellbeing.
- Exponential leaders need the skills of the Futurist, “imagining new possibilities boldly and optimistically—and understanding they are quite likely to arise sooner than expected.”
- In parallel, and crucially, exponential leaders must grapple with the ethical, moral, and social implications of evolving technologies.
- In previous structural transformations, the financial system will play a significant role in this process: the full potential of the financial system needs to be harnessed to serve as an engine in the global economy’s transition toward sustainable development. The ultimate vision is one of a financial system that integrates sustainability considerations into its operations, including the full costing of positive and negative externalities that sustainability implies, leading to a reorientation of the flow of resources toward more inclusive and sustainable activities.
Clean and renewable ASAP
All the countries around the world should take to plunge into 100% clean, renewable energy by 2050. The low-cost, stable electricity grid solutions outlined could cut world energy needs by 57%, create over 28 million more jobs than are lost, and reduce energy, health, and climate costs by 91% compared with business-as-usual pathways. The initial investment of $73 trillion worldwide may seem impossible, but our challenge now is to make it seem—then become—inevitable.
But we have left ourselves no alternative. The upside is that, for the foreseeable future, this will be by far the biggest opportunity for adventure, growth, and evolution in the tightly coupled stories of humankind, capitalism, and our home planet, Earth.