Sustainable capitalism for a better future

- Advertisement -

ecolytiq – Business Reporter Client

- Advertisement -

Growth is usually good. In the business world, this means more prosperity and opportunity. Speaking of the environment, growth conjures up images of lush rainforests and rich habitats.

- Advertisement -

However, the relationship between business growth and environmental well-being is devastatingly one-sided. Economic growth under capitalism is usually based on unsustainable resource extraction in pursuit of only one thing: monetary wealth.

Capitalism has proven to be one of the most stable and prosperous economic systems in human history. He introduced the principles of progress and competition into free markets that encouraged trade and cooperation, and continues to be the driving force behind our modern society, leading to innovative solutions to many serious problems. However, it also contributed to the creation of new ones.

- Advertisement -

Climate change is a direct example of a system that has been thrown out of balance by capitalism’s enormous need for growth. The idea of ​​a self-regulating market as the solution to all our problems has a big flaw. It’s on the road to disaster.

What does growth really mean?

The problem with capitalism is that endless growth is an illusion. As the name suggests, capitalism is all about capital: how to manage it and how to create more. Once one threshold of profitability is reached, the focus is on the next one, and with it the increased environmental impact of this expansion.

If we continued the humble way 3% global economic growth every year offered by institutions such as the IMF and the World Bank, we are likely to double our impact on the environment at 24 years old. The desire for endless growth does not correspond to the reality of planetary boundaries and is often out of touch with reality.

A recent climate stress test by the European Central Bank found that 60% of the 104 largest banks in the eurozone have limited understanding of climate risks. And many underestimate the true risk and externalities of climate change, with interest income share being linked to the 22 most industry is more than 60 percent of the total non-financial corporate interest income on average for member banks.

Left to its own devices, capitalism cannot provide the best balance between the planet and profit. The latter has been and will continue to come out on top until our ecosystem collapses. Capitalism depends on environmental resources to sustain itself, not the other way around. For the longevity of both systems, sustainability must be a top priority.

Sustainability is increasingly making its way into boardrooms and revenue calls — in many cases in name only. Corporations tend to capitalize on the marketing benefits of sustainability without a deep commitment to real values. Many well-intentioned corporate sustainability efforts fail because there is no direct link to the bottom line. Greenwashing is becoming an all-too-common marketing by-product, ESG is a confusing mix of beautiful-sounding principles, and Net Zero is a sacred promise of a far too distant future. Any change in public opinion will only be used if it has to do with increasing sales, reputation, or both.

Introducing stable variables into capitalist thinking

This does not mean that capitalism must be destroyed. In fact, with a few tweaks, it can be turned into a more robust system that runs on long term prosperity instead of increasing myopia. It begins with the conceptualization of the natural world not as a bottomless fountain, but as a subtle system worth preserving. Without it, we will all lose. The environment provides us with valuable resources that form the basis of our modern society. Further unsustainable exploitation will end up with bare rainforests and empty oceans, with nothing left to profit from.

We must work better. This starts by adding new variables to performance metrics. Environmental well-being is essential to business success and should be at the center of all corporate management decisions. Nature is capital. If we started managing the environment the way we manage money, we would be much less risky when it came to polluting rivers or drilling new oil wells.

Once the private sector begins to view nature as a resource to be managed rather than exploited, capitalism begins to work better for both people and the planet. It also promotes sustainable growth by ensuring that the resources we rely on today are available tomorrow.

Transparency is a powerful tool for this task. The UN recently stated that a healthy planet is a human right. To make this a reality for all of humanity, we now have the power to be more transparent about the impact of business on the environment. This calls for regulation as an essential cornerstone of sustainable economic and environmental transformation. Regulation requires corporations and financial institutions to disclose the climate impacts and risks of their operations and investments, going a long way in identifying market blind spots that have been neglected for too long. Once we become visible, we can rely on the powerful forces of the free market to eliminate weaknesses, make sustainability more effective, and make sustainable growth a priority according to planetary boundaries.

A strong commitment is needed to ensure that sustainability is at the heart of the conversations among decision makers, and this requires their full commitment. The same system that has brought so much prosperity can be even better, but only if it reverses course and integrates new variables and measures of success. Otherwise, when planet Earth ceases to bear fruit, we will be the least of our worries about spreadsheets and totals.

The transition to a more sustainable world requires more transparency from powerful stakeholders. Transparency acts as a key differentiator in helping companies win consumer trust. We need to accelerate sustainable economic transformation and provide more transparency of climate change impacts.

An increasing number of consumers place more importance on environmental transparency and accountability than brand loyalty. Existing climate change infrastructure providers such as ecolytiq are providing banks and financial institutions with software solutions that enable them to push consumers towards smarter shopping and lifestyle decisions. These experts specialize in equipping financial service providers with transparency tools. The transition has begun – find out more at contacting ecolytic today or view our resources here.

Related Stories