By Tamsin Woolley-Barker, Ph.D
Last month, the first ever Biomimicry 3.8 Global Conference at the University of Massachusetts in Boston brought together over 350 future-minded professionals, all asking, "How can humans create conditions conducive to Life?" They meant something more than just sustainable economies, cities, and manufacturing, but a new kind of regenerative human system that creates abundance for all species on Earth.
After discussing generative cities and sustainable materials, the conference's final day turned to the question of how nature might redesign our entire economy to encourage the regeneration we envision.
Amy Larkin, the straight-talking, clear-eyed author of Environmental Debt: The Hidden Costs of a Changing Global Economy, took the podium. Ms. Larkin is the former Director of Greenpeace Solutions, and is equally comfortable on both sides of the "environment-or-economy" fence. She brought the conference full cycle, connecting our current financial and environmental crises, and pointing to practical solutions that can (and must) be implemented by a wide range of influential stakeholders.
Larkin showed how neither manufacturers, retailers, nor consumers pay the true cost of the goods they make, sell, or buy. As anyone who has walked into a Walmart knows, prices do not reflect the true cost of the workers, long-term exposure of children to environmental toxins, the disposal of waste material, the clean-up of rivers, or so many other "externalities." The products we buy are artificially cheap. This unpaid "environmental debt" is passed on to taxpayers and investors in the form of ad hoc crisis management, said Larkin. This is far more expensive and risk-intensive, essentially wastes our human and environmental capital and is running our "business" of humanity into the ground. No CEO would run a company this way if they had to answer to shareholders for it.
Off-the-books environmental debt is standard operating procedure, and plenty of old guard industrialists work to hold on to this government giveaway. KPMG estimated that $2.15 trillion of environmental damage was passed on to taxpayers and investors by the 3,000 largest public companies in 2008. And that doesn't even take into account more abstract damages, like those from extreme weather events caused by climate change, or emotional damage from the loss of loved ones in factory disasters.
But, what is perhaps most surprising, said Larkin, is the growing schism within the U.S. Chamber of Commerce. Many companies want more accountability. They prefer a level playing field, one that rewards the sustainability efforts that their customers and employees wish to see. In the end, companies are made up of people, and people derive a sense of meaning from the long-term value they create through their work. Corporate Sustainability Reporting (through The Global Reporting Initiative and Carbon Disclosure Project, among others) is becoming the norm. With a Bloomberg terminal on every desk, Wall Street sees the unknown metrics as risk and uncertainty. Investor beware.
Puma is one brave company that voluntarily chose to take stock of their products' true costs. With the help of Big Four accountants PriceWaterhouseCoopers and boutique accounting firm Trucost, Puma put together an Environmental Profit and Loss Statement. What they found was shocking: $193 million in downstream environmental costs were paid by neither the company nor the consumer, but were instead passed on to taxpayers and investors in disaster-management expenses. If Puma had paid these costs, 72 percent of their profit would have been erased. And yet, they stepped forward of their own accord to put a number on the externalities, in part because it represents real risk and uncertainty in their system.
Larkin went on to summarize today's business as usual: 1) pollution is free for the polluter; 2) earning statements don't include long-term impact; and 3) governments subsidize business without concern for either, on the backs of taxpayers and investors.
The solution, she said, is to build long-term costs into the price of goods (through regulation), with less regard for short-term quarterly earnings. Paul Polman, CEO of Unilever, for instance, simply decided not to give quarterly earnings guidance, and the result has been runaway success in producing real value and reducing uncertainty.
As this kind of thinking spreads, Larkin warns, it will be like a wildfire, burning wide swaths of business as usual. Goods will become expensive, and companies will avoid environmental damage in order to bring consumer costs down. Consumer spending will decrease (or shift to services), and many businesses will fail. But after the fire, said Larkin, regeneration will allow the seedlings of a new, sustainable, and abundant economy to emerge. One in which our children are not saddled with environmental debt, but enjoy the abundance that comes from carefully tending living things.
Dr. Tamsin Woolley-Barker is an evolutionary biologist, writer, and Biomimicry 3.8-trained sustainability and biomimicry consultant. She blogs at BioInspired Ink and serves as Content Developer for the California Association of Museums' Green Museums Initiative. She is working on a book about organizational transformation and resilience inspired by living systems.