Trustworthy Governance Series: Preparing for the possibility of 'degrowth'
I'm yet to hear one corporation talk about the possibility of degrowth. Is this - the idea that growth will continue - their riskiest assumption? Let's begin exploring together.
Before getting into it, let me start by saying this is the first of many posts that will explore the risks (by this I mean downside risks, even though risk is really just a spectrum of uncertainty), issues and opportunties facing modern corporations. I’ll always bring this back to my core focus, which is the work that’s required to ‘design’ trustworthy organisations that are most capable of contribute positively to society.
I’m writing this series because I believe that corporate governance - meaning the people and structures that help set strategy and identify / mitigate corporate risk - could do a far better job of meeting the emergent needs of society, culture and ecology. I’m exploring ways in which I, and many others, might be able to contribute ‘non-traditionally’ via NED (Non-Executive Director) appointments that bring something new and unique into organisational settings.
Let me also offer some caveats for those who, likely without curiosity fuelled and compassionately driven critical thinking, might jump down my throat and start the name calling:
I don’t ascribe to any label. So if you want to call me a “god damn communist!”, do so. Just know that’s not part of my identity. It’s a meaningless contribution to a discussion that ought to gain prominence as it impacts each and every one of us living on this planet today (along with those beings that are likely to live in the future).
I do not study earth, climate and / or ecological sciences professionally on a daily basis. This (due to the state of humanity) features heavily in my work, so I rely on collaboration with experts in their respective fields in the projects I undertake.
I am not a trained economist, although that may in some cases be helpful. By this I simply mean that I can come at stuff like this from a different angle, which may open the floor to different types of questions that can be pondered, explored and progressively answered together.
I am not taking a particular side. In fact, the notion of sides here is utter BS. Irrespective of the ideology you align to, questions about how we can live healthy and dignified lives within the constraints of the biosphere are fundamental.
I approach this with curiosity, openness and epistemic humility. This is a conversation, not an assertion. Let’s treat it as such.
Now let’s take a look at something. Sit with it for a moment. Once you have, we can begin.
The current trajectory won’t cut it
This is an important starting point. It’s something both ‘green growth’ and ‘degrowth’ scholars agree on.
This debate will offer some insight into the starting point and how perspectives differ from there.
In the simplest of terms this, “the current trajectory won’t cut it”, suggests that a lot has to change for humanity to have a really great future. This has been written about so frequently I won’t go into it any further. Let’s take it as it is for now and mode forward.
What is degrowth?
“Degrowth is a planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being.”
This definition comes Jason Hickel in 2021.
To have a little fun, I used a generative model that actually offers up its sources (what a novel idea… A topic for another time).
Not too bad.
Moving on.
The way I see it, degrowth has two pretty simple ideas:
We should try to design a society where as meany people as possible live healthy and dignified lives.
We have to find ways to do that within the constraints of the biosphere.
Degrowth scholars argue that these two things are incompatible, empirically speaking, with our current economic paradigm. Green growth scholars basically argue that these two things are compatible with the current paradigm, it’s just that we need to innovate better, continue realising huge efficiency gains etc. etc.
This is grossly oversimplified (and also skips over some of the more ideological divides), but offers a good enough gist for now.
Go back to watch the debate above if you want to get slightly deeper into the weeds.
Oh, and please note that there’s a lot of reactivity on ‘both sides’ of this equation. Sitting with each other, deeply considering our starting position, the evidence we call upon and the way we interpret it, the concrete policies we propose to tackle big challenges etc. is crucial. An us versus them mentality will not produce the outcomes we need.
Human’s can celebrate real, meaningful differences, whilst realising that we’re in this crazy and turbulent journey of life together.
So how might this impact corporations?
Well, it’ll come as no surprise that the primary goal of any corporation, legally and otherwise, is to ‘maximise shareholder value’. Of course we’ve had recent narratives discussing stakeholder capitalism, of which the natural world (we are a part of the natural world, so this is an odd categorisation…) is included. We have folks talking about purpose driven business and all that. Much of this will likely fall victim to the intent-action gap, aligning to the current reality that corporation’s stated values don’t map particularly closely to their real world behaviour.
There’s lot of stuff happening. Some may prove to be useful, effective and aligned to stated intent. Some might not. This article isn’t the time or place to carefully interrogate each of these narratives or initiatives.
But let’s just say that it becomes empirically clearer that green growth proposals are too speculative and that degrowth policies are more likely to achieve critical societal level goals within tighter timeframes. This puts corporations in a tricky spot. Where will growth and the expectation of future value - one of the key variables that impacts shareholder confidence, and thus ‘value’ - come from?
Perhaps answers are found in ‘virtual’ realities. David Chalmers has much to say about this in Reality+.
Perhaps answers will be found elsewhere (many proposals exist).
Or, and this is a big or, perhaps the “planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being” will shrink the world’s biggest corporations.
For many this sounds utterly blasphemous. Even to me it feels weird, given the sum total of exerpience in my life, to think that this really could happen.
But part of good leadership is getting out in front and exploring the what ifs. Part of good leadership is about finding ways to bring disparate information together into a coherent view that can be acted upon in alignment to your purpose, values and principles. Part of trustworthy leadership - and trustworthy governance - is consistently demonstrating intent, integrity, respect, fairness, openness, inclusion and competence.
It’s hard to imagine corporate governance that exhibits qualities of trustworthiness on a daily basis falling victim to the Ostrich Effect (burying our heads in the sand in the face of something deeply confronting). Instead, I’d envisage the people and systems responsible for trustworthy corporate governance courageously exploring the boundaries and edges of possibility. Doing this feels like an opportunity to be better prepared to effectively respond. Not doing this feels like the opposite.
Am I being too altruistic or unrealistic? Maybe.
So, let’s wrap up this very brief foray into what I imagine is newish territory by suggesting the following:
Degrowth is a possibility. It should be taken seriously by the people and systems governing modern corporations.
Corporations not currently exploring this possibility - even if only as a fringe potential - are missing an opportunity to become more adaptively resilient in the face of big, macro level shifts in society and culture (it’s likely that some of the deep thinking in degrowth scholarship, irrespective of possible directions, will offer inspiration for leaders now and into the future).
If you are a board member today, an exploration of, and conversation surrounding this possibility, feels more than merited. Why wait?
Let’s stop assuming things will grow forever (limits to growth called that into question in the early 70’s!) and accept the possibility that this may not be the case. As we do this, however, we should do so from a place of care and compassion, curiosity, openness and epistemic humility.
We are in this together.