“The success of our economy has always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on the ability to extend opportunity to every willing heart — not out of charity, but because it is the surest route to our common good.”
-President Barack Obama, Inaugural Address, January 2009

We were giddy with hope back in November 2008 when Barack Obama won the presidential election. We believed that we stood at the edge of the positive change that we had waited so long for and was so desperately needed. An opportunity we were sure arises only once in a generation.

Today, we are more deeply concerned than ever. More cynical. Not hopeless, but we have lost the boundless excitement and the sense that the future we had hoped for was just around the corner. While we are moving in the right direction under our new leadership, taking positive steps from global climate change to credit card debt, by every measure our progress falls far short of what is needed. The progress we are making as a result of our new political leadership is incremental at a time when revolutionary change is needed.

Our political and economic structures and systems, governed by largely invisible powers, ever more dangerously concentrated, will not change direction willingly. We will have a little less of what is bad, we will be on a slightly more positive trajectory, but it seems abundantly clear that our financial system will not be forced to restructure in a meaningful way. Global climate change will bring devastation upon the planet that may be delayed by a generation, but will come nevertheless. We will not end up with a new educational system that delivers the talent required to lead us toward the world we want to leave to our children.

This is not a condemnation of the new administration, but a sad recognition that the current incremental and highly compartmentalized change that is so pleasing after eight years of a world led by Bush and Cheney, is simply not adequate.

Sadly we have concluded that the new administration, together with the positive influence of NGO’s and those in the business community committed to corporate responsibility will fall far short of generating the change required to create a sustainable future.

Today we truly face,

“A systemic crisis, one in which an old order of political economy has been shown to be both unsustainable and immoral—to be, indeed, fundamentally misaligned with 21st-century realities? Many see evidence that a dangerous imbalance in the relationship between business and government grew gradually over the past thirty years. They insist, as a consequence, that government must take a much more assertive role in ensuring that public good is not sacrificed to private greed.”

So what is to be done? How do we seize this moment in history to make the bold, lasting, and fundamental change that is essential to avoid the profoundly painful events that are certain to unfold if we don’t? This article will provide a series of bold and at times radical solutions.

What if we just stay the course?

Perhaps the worst is over.

We don’t think so. The fundamental problems in our economy will, over the next five to ten years, cause increasing stalemate and decay, under a best-case scenario.

Prolonged levels of high unemployment will increasingly drive consumers out of the consuming system. As much as 70% of consumers will no longer be able to consume at historical levels as they face mounting debt and no growth in their income. Income distribution will increasingly become more concentrated.

If these financial challenges don’t provide enough cause for alarm, potential disasters as we face fresh water shortages, wild fluctuations in commodities prices, climate chaos, new flu epidemics, and regional wars. We need to be shovel-ready for a system wide collapse!

Is there a business case for the transition to a sustainable US economy?

Dozens of studies document the business case for sustainability. That case has strengthened over the last five years and will continue to do so. These studies document that even in an economic environment that is relatively “hostile” to sustainability, sustainable businesses outperform their peers. “Hostile” describes an economy that encourages business to externalize its costs, incentives the use of non-renewable raw materials, provides tax incentives for short-term gains and taxes labor rather than added value.

Three studies in particular best make this point.

  • If you had bought stock in all the public companies in Milton Moskowitz’s survey ranking the 100 best companies to work for in 1998, when it was first published by Fortune magazine, and held it until 2005, you would have made twice the annualized return of the S&P 500 Index, he says. If you had sold each year and reinvested in the new list, you would have made three times the S&P return. 10/27/05 Financial Times
  • A.T. Kearney examined the financial performance over the past three & six months ending 11/08 of 99 companies in 18 industries. Companies that are authentically committed to sustainability outperformed their peers by an average of 15%. The performance differential worked out to an average of $650 million in market capitalization per company.
  • If you compare companies who have appeared on the 100 Best Corporate Citizens List® for the past 9 years (up till 2009), you will find that 100 Best companies have out-paced the rest of their Russell 1000® brethren in three-year total return by 26 percent.

Large companies are already staking out their claim. Morgan Stanley sees a $1 trillion green market by 2030. Procter & Gamble plans to sell at least $50 billion worth of “environmentally improved products” over the next five years. The U.S. LOHAS “Lifestyles Of Health And Sustainability” market passed $400 billion of consumer spending back in 2005. Wal-Mart, GE, and Toyota have included sustainability at the heart of their long term strategic objectives.

What principles should guide this revolution?

Gus Speth in his recent book, “The Bridge at the Edge of the World”

“Capitalism, the Environment, and Crossing From Crisis to Sustainability” succinctly outlines the principles that must guide this game plan. Speth writes:

“We must change the very nature of corporations so they become legally accountable to society at large, not just to themselves and their shareholders.

“We must challenge the current obsession with GDP growth and focus on growth in the areas that truly enhance human well-being: growth in good jobs, in the availability of health care, in education, in the deployment of green technologies, in the incomes of the poor, in security against illness and disability, in infrastructure, and more.

“We must challenge materialism and consumerism as the source of happiness and seek new values about quality of life, social solidarity, and connectedness to nature.

“We must transform the market through government action so that it works for the environment, rather than against it.

“We must transform democracy through deep political reforms that reassert popular control, encouraging locally strong, deliberative democracy and limiting corporate influence.

“We must forge a new environmental politics that recognizes links among environmentalism, social liberalism, human and civil rights, the fight against poverty, and other issues.

To implement these principles we must re-frame the challenges we face, and approach them not from the compartmentalized perspective with which we tend to frame and separate all our many problems—from climate change and declining fresh water resources to the obsessive accumulation of stuff and the twin evils of poverty and hunger—but from a systemic perspective that attempts to identify the common root causes of all of these symptoms of an overarching disease.

From Siloed Interests To Shared Purpose. The economic crisis, the energy crisis, the water crisis, the food crisis, the security crisis, the leadership crisis, the healthcare crisis, the educational crisis, the climate crisis. You name it. The crisis conversation is happening all over the place. What’s interesting is that each of the aforementioned crises has its own discourse, its own NGO group (each working with a single-issue mindset), its own conferences, journals, websites, funding mechanisms, programs, and so forth. While all these single-issue groups of change-makers engage in well-intentioned work by mobilizing action for their respective crisis symptoms, there seem to be, by and large, two missing pieces: one, a discourse across these silos about how all of these issues are interconnected, and two, a discourse about the systemic root causes that continuously reproduce the whole cluster of crises mentioned above. (2)

We must rapidly evolve from a world where millions of single-issue groups and organizations compete for resources and attention to a world that begins to unite them in the common pursuit of a better future for all. One cannot expect each group to let go of its individual concerns, but it is essential that we help groups shift their perspective and begin to view the world though a different lens, a lens that allows us all to see that our only chance of lasting success is through a greater focus on what unites us, rather than what divides us.

We are squandering our passion and willingness to help. In my own world there are dozens of groups representing progressive business, yet they never speak with one voice, agree on priorities or pool their resources. To change this paradigm will require a major shift in consciousness.

 

Such a shift is not impossible to imagine. In some places, groups have already come together in common cause. The Green Group, for example, has united the environmental community on global climate change policy. Multi-stakeholder coalitions have made impressive progress on building a sustainable supply chain for palm oil and coco.

The shift must be guided by four broad concepts:

1. Getting Money out of Politics. One could argue that our political process remains primarily an extension of money and the power it confers into governmental affairs. Until we can separate money and politics, we will never have a political process that acts in the best interest of all stakeholders. Publicly financed elections are a first and essential step.

2. Full Cost Accounting. Our current system of pricing products and services ensures that society perpetually makes poor choices. Until we remove the ability to transfer the cost of externalities from business to society, we will never willingly make choices that are aligned with the best interest of future generations.

By mispricing both risks and consequences, we encourage corporate decisions that are at odds with the long-term interests of society.

The same holds true for the metrics that calculate our progress as a country. By adding the “goods” and the “bads” together on the same side of the ledger (our Gross National Product) and not charging ourselves for the depletion, destruction or diminished value of natural resources, we confuse economic activity with progress.

3. Ownership and the purpose of the Corporation. Business is consistently cited as the most powerful influence on the planet. In the future it will become even more so. We must repurpose the corporation to benefit society and all stakeholders.

Today corporate owners are incentivized to single-mindedly pursue the short-term maximization of financial gains. Whether it is how we tax capital gains or pay CEO’s, we have institutionalized incentives that value the exact wrong type of behavior. There is a total disconnection of purpose between money managers (Wall Street) and capital providers, (pension funds and individual investors.) Professional money managers manage money to maximize their economic interests at the expense of the interests of those that provide them with capital.

Employees create value in which they maintain no ownership, thus concentrating wealth in the hands of stockholders.

4. Shifting Values. This is an unprecedented moment in history. The disruption, uncertainty and reordering of our economic life will lead to new worldviews, marked by an unfolding revolution in social values & behavior. Though greater consciousness of the potential perils and opportunity at our doorstep, we must insure that values shift toward creating real and lasting value for all, rather than a world filled with an abundance of artifacts for the few, ensuring a dismal fate for us all. This shift in “consciousness” leading must ensure the understanding of the essential nature of five values.

Quality vs. Quantity

First and most importantly we must simply buy less stuff, but what we buy must be made to last, leaving the smallest possible footprint behind.

Long term vs. Short term

Driven by concern for our future generations as well as the quality of our own, we must ask, “What are the long-term implications of my every decision?” What are the unintended consequences that only a systems perspective will reveal?

Community vs. Individualism

What’s in it for us, not just what’s in it for me? What is best for the whole? Where are “my” interests aligned with “our” interests?

Meaning vs. Matter

Unable to take anything in life for granted we must decide what really matters and is worth holding on to? Only in meaning will we find lasting value.

Responsibility required

Because greed and selfishness jeopardize our future, we must accept nothing less than institutions that represent real responsibility. Transparency is required as only “you” can judge whether “I” have fulfilled my responsibility.


Solutions

A growing group of organizations have already begun to develop and implement the solutions that will be required for a transition to a sustainable US economy. A partial list includes: American Sustainable Business Council, Green Recovery (Energy); Embrace Obama’s Agenda, National Council on Science and the Environment (biodiversity in a rapidly changing world), AME, UNEP – Green Job, New Economics Institute, NEW (New Economy Working Group), NER (New Economy Round Table), Business Alliance for Local Living Economies, Social Venture Network, Social Enterprise Alliance, B Lab, Fourth Sector Network, and New Voices of Business.

We also have the benefit of a growing number of thought leaders and a growing body of work to guide us. Some of these include: Peter Barnes, “Capitalism 3.0: A Guide to Reclaiming the Commons,” Peter Victor, “Managing Without Growth,” Allan White at the Tellus Institute, Hunter Lovins, “Natural Capital,” Richard Grossman, Robert Bensen at LOYOLA. Gar Alperovitz, “America Beyond Capitalism,” and the Presidential Climate Action Project.

This rapidly growing landscape today lacks a unifying strategy, as well as a clear map that identifies all the players and the issues they are focused on. Moving forward we must ensure that we maximize the collective impact of all interested parties and share knowledge and resources.

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