3. The global economic system is locked into a pattern of environmental damage


Earth Overshoot Day – the day on which a group of NGOs estimate humanity’s demand for ecological resources and services in a given year exceeds what the planet can regenerate in that year – fell on 22 August 2020, only 24 days later than overshoot day in 2019. [16]


This means that, even with the


reduced resource use during the early stages of the COVID-19 pandemic, the pattern of environmental damage is still hardwired into the global economic system. Economic systems keep the world locked into a development pathway where positive changes and innovations are offset by continued growth of material consumption and pollution.[17]


Avoiding this environmental damage and its dramatic consequences requires something fundamentally different from incremental reductions in emissions and biodiversity loss. It requires new ways of thinking and models of production and consumption that reduce pressures on the environment while increasing human well- being, social and economic value [18] (Figure 3).


as shown in


Moving the economy out of this locked-in pathway requires deep transformative changes in how the economy has been collectively organized. This is not a new insight, but acting upon it is extremely complex, contested and challenging. For example, the internal combustion engine, the foundation of personal transportation systems, shows how ‘path dependency’ in economic sectors and organizations prevents deliberate ‘sustainability transitions.’ Because of its centrality, virtually all


vehicle manufacturers, at least until very recently, considered it rational to keep investing in the gradual improvement of the engine’s effectiveness and efficiency. [19]


The result is gentle progress


in ‘resource decoupling’ that reduces the use of resources to build vehicles and makes engines more fuel efficient, but which doesn’t match the growing size, features, number and usage of vehicles. The ultimate effect is that all efforts focused on innovation and efficiency are investments in the dominant technology and economic model: they reinforce the status quo, continue to produce more pollution and strengthen this lock-in. [20]


At a certain point efficiency gains through innovation reach their limits: a fossil-fuel powered engine is dependent on fossil fuels and will always produce some emissions. Even worse: at some point complexity and lock-in will make it increasingly difficult and expensive to achieve further improvements. [21]


For businesses operating


in such end-of-life contexts, shifting to completely new business models that are based on different types of resources, technologies, value propositions and market structures is further complicated by ‘sunk’ investments in equipment, personnel and assets, as well legal and collaborative commitments towards providers, partners or buyers. But as will be shown, businesses in such contexts are vulnerable and will be potentially outcompeted soon by better alternatives. Add to this the pressure of policy and markets to address this environmental damage and we have a recipe for transformative change.


Figure 3: How to protect the environment, reduce poverty and maintain economic growth


How can we protect the environment, reduce poverty and maintain economic growth?


By Decoupling: breaking the link between resource use and economic growth


Resource decoupling


Human well-being Economic Activity


Resource Use


Using less land, water, energy and materials to maintain economic growth is: Resource decoupling


Using resources wisely over their lifetime to reduce environmental impact is: Impact decoupling


12 Adapt to Survive: Business transformation in a time of uncertainty Impact decoupling Time Environmental Activity


INNOVATIV E SOLUTION


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