“Growth or Degrowth?” That is the wrong question

Vision

July, 2023

Since the publication of the Limits to Growth study, there have been two camps within the sustainability movement: the “Growth” camp and the “Degrowth” camp, which disagree on whether the economy should continue to grow or shrink. The growth camp (including figures like Barbara Baarsma and Diederik Samsom) sees economic growth as a necessity for the transition to a sustainable economy. Innovation often forms one of the building blocks for a sustainable future in this view. “Degrowth-ers” are primarily of the opinion that the innovations are not sufficient to offset the negative impact of economic growth, and that we are not moving quickly enough towards a sustainable economy. They argue that the changes necessary for society to become sustainable are incompatible with economic growth. Among them are organizations like the European Environmental Bureau. In our view, the question “Growth or Degrowth” is the wrong question. It is better to be “a-growth“: growth agnostic. This means that economic growth does not influence your choices. Below, we explain why we believe this to be the case.

Ecology: Up to Here and No Further

What both ‘growth-ers’ and ‘degrowth-ers’ agree on is that the economy must become more sustainable. We need to respect the planetary boundaries set by the Stockholm Resilience Centre. These are a set of limits within which the Earth can function in a stable manner. The current economy undermines the resilience of our planet by exceeding these boundaries. We have already surpassed multiple boundaries, including the most crucial ones related to climate change, novel entities, and biosphere integrity (the other boundaries are interconnected with these three). This visual representation calls for shrinking, at least if we don’t change our system. However, as Johan Rockström, one of the founders of the model, says: “Within the boundaries, there is room for growth, but this growth requires a more balanced approach.”

Case: The New Economy

The space Johan Rockström refers to could be filled by a circular economy. This circular economy is beautifully visualized by the Ellen MacArthur Foundation in the form of the “butterfly model”. In this model, the circular economy is described through two main streams. On the left side of the model are the biological resources (renewables), and on the right side are the technical resources (finite resources such as metals). In order to keep this circular economy within the boundaries, several criteria need to be added to the model:

  • Preventing potentially hazardous substances from entering the economy (such as PFAS).
  • Waste prevention – ensuring the complete prevention of leakages and negative externalities.
  • Transitioning the right side (finite materials) to 100% renewable, based on renewable energy.
  • The left side focuses on optimizing the functioning of nature, with a healthy carbon (C), phosphorus (P), nitrogen (N), and water (H2O) cycle, and maintaining sufficient biodiversity to remain resilient. Artificial additions should be limited in this regard.

The economy on the right side of the model is limited by the materials we can extract and the available energy. On the left side, growth can continue as long as natural cycles are balanced and the energy provided by the sun can be utilized.

Conclusion: Become Growth Agnostic!

Even if we envision a new economy based on the planetary boundaries, we still cannot determine whether we should shrink or continue to grow. So, if we know that 1) the current economy needs a major overhaul to fit within the boundaries, and 2) we do not know the growth potential, it is much more valuable to become growth agnostic. A great example of this is the farmers on Schiermonnikoog, a Dutch island. Due to ecological considerations, one farm had to disappear. Instead of fighting over it, the farmers collectively started searching for a suitable sustainable model, which led to the emergence of new branches and business models (such as cheese production). The viability of the farmers, the ecology, and the island’s community were central in finding a solution. This requires us to set aside the rule that “growth equals good.” We must dare to work based on values, not reducing organizations and outcomes to a single KPI, but seeing ourselves as participants in a complex and evolving world. Then, ecological impact and value for the organizational context are embedded in all decisions. Value for society, customers, suppliers, and other stakeholders. As a result, we can achieve green growth or meaningful shrinkage.

Interested in discussing this further? Send pieter.vanderboog@elementalstrategy.com a message!

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