“There is an emerging consensus among government and business leaders that all is not well with the market-centric economic model that dominates today’s world,” says Pavan Sukhdev, founder-director of Corporation 2020.1 There is no question businesses have delivered wealth in most economies and lifted millions out of poverty. However, the fact that businesses are recession-prone leaves too many people unemployed, widens the gap between rich and poor, creates ecological scarcities that affect water and food, and generates environmental problems like climate change.
Today’s global economy is nearly five times the size it was just 50 years ago and is set to triple again by mid-century. Urban growth is skyrocketing with more than 400 cities around the globe with a population above one million and about that same number of people are swelling urban centres every week.2 Billions of people are expected to enter the ‘consumer society’ in the next few decades.3
The limits of the planet are being seriously pushed and, in some cases, breached. Cases in point include greenhouse gas emissions, the nitrogen cycle, freshwater availability and use, food security, land use, ocean fisheries and coral reefs. According to the World Wildlife Fund, society is consuming resources at a rate that requires 1.5 planets. “Within the next decade, significant changes are needed in the way we deal with Earth’s resources. The failure of intergovernmental efforts points to the need to recognize the vital role of the private sector in determining economic direction and resource use globally. The corporate world must be brought to the table as planetary stewards rather than value-neutral agents that are free-riding their way to global resource depletion.”4
The private sector produces virtually everything we consume generating some 60 percent of global gross domestic product (GDP). The way they have been operating, however, threatens the economic system’s very survival. Externalities – the unaccounted costs to society of doing ‘business as usual’– by just the top 3,000 public corporations cost an estimated US$2.15 trillion, or 3.5 percent of GDP, every year. Corporate lobbying frequently influences national policies and politics to the detriment of the public good. We are now living by consuming Earth’s capital, not its interest.5
“To break free of this system, the rules of the game need to be changed, so that corporations are enabled to truly compete on the basis of innovation, resource conservation, and the multiple stakeholder demands – rather than on the basis of who can best influence government regulation, avoid taxes, and obtain subsidies for harmful activities in order to optimize shareholder returns,” continues Sukhdev. “These rules of the game include policies regarding accounting practices, taxation, financial leverage, and advertising that can result in a new corporate model, an agent for tomorrow’s green economy.
This new model can be called Corporation 2020 because the pace at which we are approaching planetary boundaries suggests that 2020 is the date by which it needs to be in place in order for us not to cross these boundaries. Like a biological species that evolves in response to its environment, and in turn influences it, today’s corporation can evolve into Corporation 2020 in response to a changed environment of prices, institutions, and regulations. Its success can lead to a green economy.”6
A sustainable world is possible according to a leading international home living and lifestyle provider:7
We can provide economic opportunities and empower people so they are able to better provide for themselves and their families. We can utilise the massive potential of renewable energy; we can develop exciting new products and services that help people live a more sustainable life at home; we can transform waste into resources; and protect our forests, farmlands, seas and rivers for future generations.
There are also many other new opportunities ahead of us. Over the coming decades hundreds of millions homes around the world will shift to smart home energy management and will produce their own power. The market for solar electric power is set to be worth $130 billion per year for the next decade, close to the value of the global furniture industry. The global recycling industry is growing rapidly with even greater revenues of $160 billion per year. Tens of billions of incandescent light bulbs and hundreds of millions of out-dated appliances exist in homes around the world today, wasting money and energy, and should be replaced with highly efficient, modern solutions that benefit customers and the environment.
IKEA can grow in a way that creates opportunities and improves lives. As IKEA grows, we want to strengthen our positive impact and help meet the needs and aspirations of more families and households around the world. By 2020, around 500 IKEA Group stores will welcome an estimated 1.5 billion visitors per year, employ more than 200,000 co-workers, potentially generating 45-50 billion euro in turnover. However, while that growth brings many great opportunities, if we continue with a business as usual approach, our use of wood will almost double and our carbon emissions will increase from today’s 30 million tons to 50-60 million tons.
Simply put, to be able to fulfill future customer needs, address the higher price of raw materials and energy, while driving down emissions and maintaining our low-prices, we need to transform our business. We can no longer use 20th century approaches to meet 21st century demands. Simply working towards being less bad will not get us where we need to be – we need transformational change – which means challenging old ways and embracing the new, being bold, innovative and committed to taking action. It means taking many steps, both large and small, that, together, will have transformational impact.
Complex problems merit complex solutions. There are no easy or stylish ways to transform corporate purpose and behaviour to create a sustainable economy. Nor can the urgency, extent, and complexity of the challenges ahead be overstated. No single institution, be it government or civil society or the market or the corporation itself, can prevail on its own. The challenge is not only about the environment, or social justice, or economics – it’s about survival for the corporation, for the world’s economies that corporations build and operate, and for human civilization as we know it.
1 Sukhdev, P. “Transforming the Corporation into a Driver of Sustainability.” Worldwatch Institute. State of the World 2013-Is Sustainability Still Possible? Washington, DC: Island Press, 2013
2 “Prosperity without growth? The transition to a sustainable economy.” Sustainable Development Commission (2011)
3 “Vision 2050: The new agenda for business-in brief.” World Business Council for Sustainable Development (WBCSD) (2010): 18
4 Rockström, J. “Planetary Boundaries: Exploring the Safe Operating Space for Humanity,” Ecology and Society, vol. 14, no. 2 (2009)
5 Principles for Responsible Investment and U.N. Environment Programme Finance Initiative, Universal Ownership: Why Environmental Externalities Matter to Institutional Investors. London and Geneva: (2010)
6 Sukhdev, P. “Transforming the Corporation into a Driver of Sustainability.” Worldwatch Institute. State of the World 2013-Is Sustainability Still Possible? Washington, DC: Island Press, 2013
7 IKEA. “People & Planet Positive. IKEA Group Sustainability Strategy for 2020.” https://www.ikea.com/.../People_planet_positive.pdf
