Zero Waste: The Environmental Dichotomy

Back in the sixties, there was a literary movement known as post-structuralism. It sought to suggest a serious flaw in the way we portray the world in words; identifying dichotomies such as black/white, up/down, male/female, sophistry/philosophy simply elevated one argument against another when in fact, they were opposites, not a comparable truth. Binary oppositions and yet, deeply political. We may, for lack of a better description, be faced with an environmental dichotomy where the differences are often reduced to heightened consciousness surrounding our environment or blissful ignorance about the impact of today’s decisions on the future. It may now seem as if the argument for/against doing something/doing nothing is simply the environment versus the economy. Is this an impasse that can be overcome?

The Growth Argument

The discussion surrounding the interaction between the way we grow our economies and the finite resources we use to propel that growth is not a new conversation. I have alluded to this in previous posts suggesting that the give and take, or more aptly, the take and the deliriously hopeful give is at the root of the problem – from the environmental side. Arguments have been and could be further made that the change most people want for the environment is conditional. We task our governments with the responsibility of protecting the environment. There is a caveat for this activity and not necessarily a bad outcome. It seem, the more active a role the government takes in promoting this kind of stewardship, the greater the chance jobs will increase as a result, essential costs will be reduced and the economy will slow.

We should unpack that last thought. Jobs, it has been widely suggested, would triple in number as the effort to save the environment replaces the current type of energy generation. Costs will be reduced significantly as haulers who historically have a contractual hold on how our waste is removed operate in a more open competitive market, possibly dominated by smaller, regional participants focused on closing the point A to point B conundrum facing most of our recycling efforts.

However, it is the last consequence of this sort of action that would create the largest impact: the possibility that our system could exist on a lower economic growth. It will require seeing our current resource generation from a different set of coordinates. Call it a relativity problem. If you were born on a train the thought experiment asks, you will think the world is in motion and that you are stationary. Stand outside the train and your experience and the perception of what is moving is different.

Managing Without Growth

The current thinking: the more the economy grows and it should always be bettering the previous quarter, year, decade, the better we all are. I disagree.

Growth in the economy

  • does not create more jobs or lead to full employment – it creates different types of employment and attempting to predict job growth depends on knowing what jobs will be available and to whom five, ten or even twenty years from now – an impossible predictive exercise;
  • will not eliminate poverty in first world countries and may instead, in less robust economies suggest that economic success comes from imitating our flawed environmental journey by discarding any current effort and;
  • lastly, will not make us significantly happier.

The concept of measuring the economic growth of a country is a relatively new statistic. And if you consider the aforementioned losers in economic growth, the measurement of it might not follow good ergodic processes. I am not suggesting the these growth metrics numbers are necessarily bad. However, the measurement itself is used to support the ongoing system built focused on filling the vacuum of need before examining the future consequences of those efforts. Growth expressed in reports as year-over-year, quarter-over-quarter focuses on short-term performance instead of long-term consequences.

As Peter A. Victor, Professor in Environmental Studies, York University, Canada and author of “Managing Without Growth: Slower by Design, Not Disaster” (Edward Elgar Publishing (October 29, 2008) suggested a dependence on and defense of economic growth creates unnecessary obstacles to improving an economy in ways that improve the welfare of its inhabitants. He does believe in capitalism but the growth in material usage to achieve those expectations should fit nicely into the model of constrained availability of resources which will eventually, by default, test the levels of how high or how long these growth measurements can continue.

Measuring Environmental Growth

Consider the differences between a household and a business. The maximized utility of your house depends on the constraints of the budget, living within the economic means you use to support it. Businesses however are designed to maximize profits. Measuring economic growth as a guide to business decisions is often either exogenous – depending on the savings rate – or endogenous – the result of technological advances. Although the Solow-Swan Model, named after Robert Solow, Presidential Medal of Freedom award winner from MIT and Trevor Swan of the Australian National University was built on the previous economic growth methodology, it included human capital and in doing so, encapsulated the possibility that countries with no growth would benefit and rise to the level of diminishing growth of richer neighbors.

This comes at a price. Richer economies will need to embrace further innovation, which is something businesses suggest they are interested in during shareholder performance calls. What they do in practice is different. Each innovation creates new opportunities and those opportunities create jobs. What happens flies in the face of sustainable goals if those changes create waste.

Three Things

If every business decision was based on holding steady, much the way a mature forest might remain that way for decades, growth would slow but it would not mean the end of the business. To measure environmental growth, three things need to occur. We need to shift away from innovating new ways to exploit finite resources. This may be as simple as recycling old into new at a higher cost in the short-term. We need to spend to innovate on ideas that might not have any short-term benefit but long-term possibilities. And we need to explain to shareholders and stakeholders that it cannot be done without support. No business leader wants to find themselves alone in the decision, creating an us/them dichotomy.

As Mr. King once said: “There are many possible futures out there.  I think that what I see is a huge amount of resources in our economy, both in terms of capital equipment, intellectual effort, finance, being directed towards the growth agenda. A different agenda, a different ambition for our society and our economy away from the pursuit of growth, would automatically free up, at least in principle, a lot of these resources.”

In the Hands of Shareholders

ESG (Environmental, Social, Governance) adoption of investment options in defined contribution plans may be the best, single way to get the attention of how our companies operate. However, the preferences by the youngest investors in 401(k) plans are not being addressed by the plan sponsors – the companies that can make the change. According to National Association of Plan Advisors, “Participants under age 40 display an even stronger preference for investing in environmentally and socially responsible companies than their older counterparts, registering at 63% for that age cohort, compared with only 37% for those ages 60-69. Additionally, the firm notes that 46% of 401(k) plan sponsors describe ESG factors as a “very important” consideration when selecting 401(k) plan investments.”

Is the answer to the environmental impasse in the hands of Wall Street? Possibly. Is it in the hands of the youngest investors? Yes. Can they be the change? Absolutely.

Leave a Reply

Your email address will not be published. Required fields are marked *