Organizational sustainability under degrowth

Citation

Shrivastava, P. (2015), "Organizational sustainability under degrowth", Management Research Review, Vol. 38 No. 6. https://doi.org/10.1108/MRR-07-2014-0157

Organizational sustainability under degrowth

Article Type: Viewpoint From: Management Research Review, Volume 38, Issue 6

Nearly 25 years ago, the Brundtland Report Our Common Future, proposed the concept of “sustainable development” (World Commission on Environment and Development (WCED), 1987), as a solution to the growing imbalance between ever-growing demands of human populations and nature’s capacity to provide for them. The response suggested by the WCED was “sustainable” development that meets our needs without jeopardizing the ability of future generations to meet their needs. The challenge of sustainability is a mix of problems, including degradation of Earth ecosystems, declining biodiversity, global climate change, increasing environmental pollution and the transgression of several natural boundaries (Rockström et al., 2009).

The idea of sustainability has been studied from many perspectives and has spawned a virtual industry of researchers elaborating the concept at personal, organizational, national and global levels. In the management studies field too, this concept has been translated, conceptually elaborated and empirically tested (>Hoffman and Bansal, 2011; Jermier, 2013; Shrivastava and Kennelly, 2013). Numerous academic organizations (e.g. ONE and SIM Divisions of the Academy of Management, GRONEN, International Society of Ecological Economics, Greening of Industry Network, UN Global Compact along with PRME -Principles for Responsible Management Education, PRI – Principles of Responsible Investing) continue to draw out the implications of sustainability for organizations (Aragon-Correa, 2013).

Despite all this new knowledge, key indicators of global sustainability have continued to deteriorate. A key measure of unsustainability of Earth systems and the root of the global climate crisis is the accumulation of carbon in the Earth’s atmosphere. It was measured at 354 ppm (parts-per-million) in 1990, had grown to 394.45 ppm by March 2012 and briefly surpassed 400 ppm in May 2013 (Kunzig, 2013). We are heading toward an ecologically dangerous territory if we surpass the 425 ppm threshold in coming decades (IPCC, 2007).

One reason for this paradoxical situation is that we have not yet understood the links between sustainable development and economic growth. We continue to labor under the false assumption that ecologically and socially sustainable development, and economic growth measured in conventional terms by gross domestic product (GDP) (at national level) and profits (at corporate level) are compatible. In this brief essay, I suggest that sustainability is not compatible with limitless growth and that it is possible to live sustainably under conditions of “degrowth”.

By degrowth, I do not mean what traditional economics calls recession or stagnation. It is not just temporary or even medium-term shrinkage of the conventional economy. The degrowth movement begins with the realization that due to ecological limits and social and intergenerational considerations, conventional economic growth as currently measured will generally slowdown, and economies will have to fit within socially and ecologically acceptable parameters (Brown and Garver, 2009).

Degrowth is both an empirical reality and a response to our current economic and ecological crises. Empirical evidence of degrowth is manifested in the slowing growth rates in the post-2008 global financial crisis. US and European economies are struggling to maintain even a 2 per cent to 3 per cent growth. India and China, which grew for a decade at double digits (10 to 14 per cent), have cut their growth estimates to less than half those numbers. Japanese growth has meandered between −2 per cent to +2 per cent for over a decade. Virtually, all national governments around the world, and many state and municipal governments as well, are running deficit budgets at historically high levels. This is not just a temporary recession for a quarter or two, but rather a sustained trend reflecting natural limits to economic growth (Meadows et al., 2004; Stiglitz, 2012).

At the Montreal International Conference on Degrowth for the Americas (http://www.montreal.degrowth.org) held in May 2012, we examined degrowth solutions as a response to the global financial economic crisis. These included collaborative consumption, shared economy, hybrid organizations, alternative currencies and population control, among others. Degrowth is a call for a radical break from traditional growth-based models of economy and society. It seeks to move away from the production – consumption-dominated models of the past. It seeks to invent new ways of living together in a true democracy and embodying values of equality and freedom. It is based on sharing and cooperation, and with sufficiently moderate consumption so as to achieve personal and collective fulfillment. Schumacher’s (1973) notion of “small is beautiful” was a precursor of this type of degrowth thinking. Now, the degrowth paradigm has emerged with great vitality in English, German, French and Spanish worlds (Brown and Garver, 2009; Daly, 1996; Georgescu-Roegen, 1971; Jackson, 2011; (Latouche, 2009; Alier, 2009; Victor, 2010).

Degrowth paradigm assumes that in a physically limited world, working under the laws of thermodynamics, it is impossible to grow endlessly (Daly, 1996; Georgescu-Roegen, 1971). If we do not plan for it, degrowth will be forced upon us through inflation, increased work, reduced leisure hours and other forms of immiseration of living standards (poorer education, health care, infrastructure, quality of air and water, etc.). It is better to deliberately face degrowth scenarios earlier on and then intentionally choose our paths forward instead of facing dire circumstances where we might be left with little choice.

An essential insight of degrowth thinking is that natural capital cannot be entirely substituted with money or artificial capital. We cannot replace potable water, clean air, fertile soil and beautiful landscapes in our current linear economic model of “take, make, dump”. To replenish natural capital stocks, we need to create circular economic loops. It acknowledges the need to limit consumption and pollution to maintain healthy ecosystems for the long-term future. In a growth-based world, market solutions and technological innovations that are ostensibly eco-friendly still contribute to an increase in overall consumption. The efforts at dematerializing consumption remain marginally effective. The relocation of polluting industries away from the Western industrial nations was not accompanied by a reduction of our global ecological footprint – there is no decoupling between our economy and ecological impact (Costanza, 1991).

Degrowth is necessary because conventional economic growth (measured in terms of GDP) has not kept its promise to improve our collective well-being (Stiglitz, 2012). GDP growth no longer guarantees us better material living conditions. It is no longer associated with well-paying stable jobs. As GDP increases, we have also seen pollution, obesity, depression, crime and high-risk technologies on the rise. GDP growth also does not guarantee increased economic or social equality. In fact, growth in recent decades has been accompanied by the significant widening of our societal inequalities.

The idea of degrowth has many implications for management studies and organizations. At the organizational level, degrowth implies developing and distributing healthy and environmentally safe products and services to meet the needs of all people, and not just who can afford them. It implies moderating the use of Earth’s natural capital to levels that do not destroy ecosystem’s productive capacities for future generations. Degrowth implies investing in projects that have positive social and ecological impacts that alleviate inequalities.

In the past, management research has unquestioningly accepted the idea of economic growth as progress. Much of our research and analysis seeks to promote economic growth. Management researchers are still deeply embedded within the ideology of economic growth.

Starting to question this growth ideology is a major challenge facing management research. However, we need to remind ourselves that we can and we must shake some of these basic assumptions which are making us go around in circles. We need to be a hot bed for innovation. We can do this by observing organizations and restructuring business models that are not proving to be environmentally, socially and economically satisfying. We need to ask and answer new questions. What kind of businesses and business models can be sustained over the long-term without the need for eternal growth? What type of leadership is needed to manage in an era of degrowth? How should human resources recruitment, hiring and training occur in a degrowth environment? With nearly 400 million unemployed worldwide, should we continue to promote labor-saving processes and technologies, or is society better served by promoting labor-absorbing artisanal production? How can organizations promote conviviality and social well-being, and sustainable lifestyles? How can consumers’ needs be satisfied without turning them into hyper-consumptive robots? I hope this essay prompts management scholars to question their own assumptions about economic growth, investigate degrowth opportunities and help move organizations toward having more synchronized relationships with their environments.

Paul Shrivastava -John Molson School of Business, Concordia University, Montréal, Canada and IRCASE, ICN Business School, Nancy, France

References

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Further reading

Georgescu-Roegen, N. (1976), Energy and Economic Myths: Institutional and Analytical Economic Essays, Pergamon Press, New York, NY.

Jackson, T. (2009), Prosperity without Growth: Economics for a Finite Planet, Routledge, London.

Mauna Loa Observatory (2012), “What the world needs to watch – Scripps CO2 data”, available at: http://co2now.org/Current-CO2/CO2-Now/ (accessed 10 June 2013).