The Great Disruption (31 page)

CHAPTER 19

The Future Is Here, It's Just Not Widely Distributed Yet
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We now need to get to work on designing the future. There's a lot to do, but millions of people have turned up to work, excited, committed, and, most important, active and engaged. Every day, many more are joining them.

They're not waiting for permission to get on with it. They're inventing technologies, transforming companies, changing behavior, starting campaigns, and building new organizations—all designed to flourish in and beyond the Great Disruption.

One of the joys of our connected world is that these actions can take off and spread virally, globally, and quickly, being leveraged to build a new way of living and working.

What if the Freecycle Network had seven hundred million rather than seven million members and meant that most of our consumer products doubled their life span, effectively halving the environmental impact of their manufacture while connecting people across communities in conversations about the joy of sharing and not buying so much new stuff?

What if a movement was started to make living for a year with no shopping, like the Compact, become voluntary “planetary service”? It could be the entry ticket to the new economy, just as national “military service” used to be the entry ticket into adulthood and the workforce. After a year of not shopping, the lessons of the ineffectiveness of consumerism would be well ingrained.

What if we started a global movement to buy from local farmers, creating enough market demand to encourage a move back to family farming? This is the dominant way food gets to market in many developing countries, and it's now making a comeback in the developed world, driven by the desire for fresh food, picked when it's ripe and bought from the people who grew it. Even in the United States, a world leader in industrialized agriculture, the number of farmers' markets grew 300 percent from 1994 to 2009, with 5,275 of them now operating across the country.
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So the trend is under way and could easily be boosted.

What if governments decided to launch a mass mobilization of the public to slash global energy consumption? As well as being a great way to motivate a sense of shared achievement, there are mind-boggling savings on offer. The International Energy Agency modeling shows more than $100 trillion could be saved by 2050 through a focused effort on energy efficiency.
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I had my own experience of this market as CEO of a business called Easy Being Green, which was owned by my consulting business, Ecos Corporation. Easy Being Green installed energy-saving equipment like lightbulbs and water saving devices into houses. We had over two hundred mainly young people employed going into thousands of homes every week, saving energy and spreading the message of climate change. We generated and sold carbon credits, reflecting the energy saved, which meant we could provide and install the equipment to householders for free.

There were many things we learned in the process. One was how incredibly motivated and passionate our people were. We had highly skilled university graduates happily employed changing lightbulbs. It might have appeared to be mundane work, but they knew they were acting every day to slow down climate change and doing so for a business that had a clear and positive social purpose—a purpose that was reflected in the culture every day. Another lesson was just how enormous the opportunities are to take simple, cost-effective actions to scale when good policy rewards business innovation. In a little over a year, this amazing team of people installed more than five million lightbulbs and other equipment that would prevent over four million tons of CO
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pollution from entering the atmosphere—and had fun doing it!

There are many more possibilities. What if large progressive corporations really got mobilized to demand government take urgent action on climate change? There are many strong initiatives already, like the U.S. Climate Action Partnership, with companies as diverse as DuPont, Ford, GE, General Motors, Rio Tinto, and Pepsi. Another one is the Corporate Leaders Group on Climate Change, which produced the Copenhagen Communiqué, in which over five hundred companies called for government action to limit warming to two degrees. These are all good initiatives, but what if these companies behaved as if the economy and their future prosperity and survival were at risk? What if they organized a global market coalition of pension funds, companies, and consumers that was so powerful, it overwhelmed the opposition from other corporations resisting change and forced government to act?

In the future economy, providing new, nonfinancial incentives to employees will be key to attracting and retaining the best people. How about a global movement to have employers agree to cut working hours and income by 10 percent for those employees who want to join a program helping them to cut their consumption by 10 percent? In return, they could get an extra five weeks' holiday or have their weekends start at lunchtime on Fridays. This would boost the number of people with jobs and the number of people smiling on Fridays!

All the key characteristics of the new economy give us opportunities like this today. We can't wait until the crisis is full-blown before we act, or we won't have enough time to build these kinds of solutions, prove they are viable, and generate support for them. As we saw with the interest in initiatives like the Compact and the Freecycle Network, the number of people who understand the scale of the problem we face is growing exponentially, and those people are ready to be engaged with practical actions they can take.

Of all the drivers to change our approach, perhaps in the end we will change mostly because it is just a more intelligent and more rational approach and we are, in the end, intelligent and rational beings.

As the respected and influential economist E. F. Schumacher argued in his seminal book
Small Is Beautiful
, describing what he called Buddhist economics: “A Buddhist economist would consider this approach excessively irrational: since consumption is merely a means to human well-being, the aim should be to obtain the maximum of well-being with the minimum of consumption.… The less toil there is, the more time and strength is left for artistic creativity. Modern economics, on the other hand, considers consumption to be the sole end and purpose of all economic activity.”

Are we ready for such a radical shift? I think so.

When I first raised these issues among my network in 2005, with my letter “Scream Crash Boom,” most people (even those closely involved in the issues) thought I was being extreme with my forecasts of ecosystem breakdown. Now just five years later, system collapse has become a normal part of the conversation as an accepted possibility. So things are moving quickly now. We need to move with them and scale up our expectations of what's possible.

What else is already under way that we can support and expand? One of the key drivers of change will be the financial sector and the role of money. For decades, people have supported investment funds that screen the companies they invest in for various environmental and social criteria. The Social Investment Forum reports that in 2007 in the United States, a total of $2,700 billion was invested using one or more of the three core socially responsible investing strategies—environmental or social screening, shareholder advocacy, and community investing.
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These kinds of active investing are now firmly in the mainstream. Where we need to be, though, and will certainly get to, is where there are no special screened funds because all investors consider environmental and social criteria when making decisions, because they realize that these issues are core business questions with significant financial impacts.

Many investors, like David Blood and his team at Generation Investment Management, are already taking this fully integrated approach. They see these issues as normal investment criteria rather than as a special screen—that any good management team would recognize the need to align their strategy and operations with sustainability. As co-founder Al Gore said at their launch:

Transparency, innovation, eco-efficiency, investing in the community, nurturing and motivating employees, managing long-term risks, and embracing long-term opportunities are integral parts of a company's enduring capability to create value. Business leaders who align their business strategy and technical development with sustainability and social accountability will deliver superior long-term results to shareholders.

It is courageous for people like David Blood to pursue these issues with such vigor. Most people with his kind of background—he was previously CEO of Goldman Sachs Global Asset Management—avoid taking them on too deeply, because doing so can challenge the fundamental beliefs that have defined their careers to that point.

Generation Investment Management is no longer accepting new investors, as they already have around $6 billion of client commitments. This money is invested, through their Global Equity Strategy, into listed companies where Generation believes the company's management and strategy is ready for the trends we have been discussing. It's interesting to note that these investments did significantly better than the market overall during the recent financial crisis. Generation also has around $650 million at work in its second strategy, the Climate Solutions Fund, investing in businesses that can help address climate change. When I met with the head of this fund, Colin le Duc, he was excited about some of the ideas they were investing in and said that the market is well and truly ready, with the business models and people ready to address climate. The portfolio includes larger, more established businesses as well as some younger and more innovative companies.

One of these is RecycleBank, a business that sees reducing the ridiculous amount of waste in our consumer economy as a profit opportunity and is using market principles to remove some of the distortions of the current system. In a few short years, RecycleBank has involved over one million people in twenty-six U.S. states and now in the United Kingdom, saving millions of dollars, trees, and gallons of oil by dramatically increasing recycling rates in the areas it serves. The business model is simple but ingenious—RecycleBank encourages recycling by providing reward points to households based on how much they recycle, then allowing them to trade in their points for rewards at local and national businesses. It acts like a frequent recycler loyalty program. By attaching an electronic tag to the bins, the company measures the amount the house is recycling and automatically credits their account on collection.

The result is a massive increase in recycling rates—for example, Montgomery, Ohio, saw a 39 percent increase in recycling rates when the program was launched in late 2008. Local governments pay RecycleBank to install the program thanks to the millions of dollars in landfill charges they can save. The authorities save money and environmental impact, the company creates jobs and profit, recyclers get raw material, and the households feel good and get rewarded for their behavior. The reason I love this example is that it recognizes that technology alone is not a solution—but technology coupled with behavior change, and designed to promote the latter, can deliver real and lasting results. This is also a fine example of the power of markets to deliver.

Another of Generation's investments is in Ocado, a new supermarket model based in the United Kingdom. This is a potentially disruptive business that exemplifies what we discussed in chapters 11 and 12 about Schumpeter's creative destruction. Based entirely online without any retail stores, Ocado claims their home delivery shopping service has a lower carbon footprint than walking to the supermarket! How's that? Today's “megamarts,” with so much retail display space, open refrigerators, and the like, have huge physical and environmental footprints. They are designed to encourage you to purchase more, not for operational efficiency.

By basing their entire operation out of a centralized, automated warehouse, Ocado has completely eliminated this impact. Given that most people don't walk to the supermarkets anyway because such stores tend to lie on the edge of town surrounded by huge parking lots, a single delivery van can take countless cars off the road. Aside from their green credibility, their state-of-the-art logistical system will do some neat things, too, like allowing you to choose a delivery time down to the hour and then sending you a reminder on your phone a couple of hours before with the driver's name and license plate number.

If this model took off, it could drive a significant and positive market disruption with surprising and diverse social and economic impacts. People would no longer have numerous large shopping bags to carry home, and this could tip the scales for many people to get rid of their car or second car altogether. It would destroy the value of the huge investments made in drive-to shopping centers on the edge of town and change the economics of town centers. Given that there's a lot to be said for shopping locally for the environmental and community benefits it brings, this model might rekindle the competitiveness of small, specialist shops close to town that people can walk or cycle to for their small daily items. If people bought online, it would enable far more efficiency in packaging, with function rather than marketing as the main criterion. We should welcome Ocado and business models like it as exciting experiments in new ways of running our economy.

If we want the mainstream investment markets to divert trillions of dollars into these issues, as we'll need them to, we need trailblazers like David, Colin, and their colleagues to show how it can be done successfully. The amorality of money has long been a source of criticism. It cuts both ways, however, because the same tendency that sees big money happily flowing into destructive behavior will see it flood into the transition to sustainability if there's a buck to be made!

Most sustainability-focused investors sit at one end of the sustainable finance spectrum. They have making money as their core objective, with a focus on the social and environmental questions as sources of risk and value. Companies like Generation then sit in the middle of the range, still very mainstream and focused on delivering high returns, but with a clear social purpose agenda and focus. They have something to prove, and making money is how they do it, although it's not an end in itself.