Zero Net Impact Growth – Radical Oxymoron or Critical Survival Strategy for Business

It is a paradox.  You can’t have infinite growth on a finite planet.  Yet, we’re stuck in a  global economic model that continuously drives us toward growth.

Donella Meadows, Jorgen Randers, Dennis Meadows told us this 40 years ago in “Limits

to Growth”.   And yes, it is that serious (WWF 2012 Living Planet Report).

The Sustainable Development Community has been struggling with the next global sustainable business model.  If not capitalism – then what?  There was much discussion at Rio + 20 about Green Growth.  There was also talk about moving beyond Gross Domestic Product (GDP) as a measure of success.  Others are working on conceptualizing Strongly Sustainable Business Models.

Ray Anderson always talked about Interface’s ability to be “restorative” once it reached the top of Mount Sustainability.

Yet, it appears that the last twenty years of sustainability has not brought about the real change we need toward a more stable global economic model.  Instead, there is an increased sense of urgency that our way of capitalism is on a path of slow demise.  We need a new bold vision.

Minimizing (Negative) Societal and Natural Impact to Zero

In 2011, Deloitte Innovation and John Elkington (through his organization Volans) started to collaborate on what Elkington calls ‘the Zeronauts’, individuals and/or organizations that try to minimize their natural and societal impact to a zero level.

Elkington’s book, “The Zeronauts” highlights a collection of 50 companies and individuals who are pursuing a new way of doing business.  Deloitte and Elkington call it Zero Net Impact Growth.

According to Deloitte’s recent report: Towards Zero Impact Growth – Strategies of leading companies in 10 industries; thinking about ‘Zero Impact Growth’ triggered a renewed quest for clarity about several basic questions for corporations as the basis of finding a commonly shared direction.  These questions strike at the heart of whether a company has a right to exist in an era of sustainability.

• Intention:

Companies need to ponder on the societal purpose of their existence beyond a simple license to operate. In a 1-Earth Economy, only those players would stay in business that clearly define their intention to give back at least as much as they take from planet earth and society, and possibly even more in the future (already referred to as ‘regenerative growth’ by some).

• Ambition:

In the understanding that Zero Impact Growth would only be a viable concept if there is a clear understanding about achievement levels required in different industries, companies are tasked to think about their roadmap towards achieving Zero Impact Growth, defining their long-term targets, timelines and areas to get there. A joint adaptation plan on how to get there would have to be the basis for that alignment.

• Bottom line:

In a Zero Impact Growth economy, a new bottom line would arise, not allowing economic success on the back of nature and society. It would be challenging to define the ‘Zeronautics’ of this new paradigm, but some steps in the monetization of ecosystem services already show signs towards a new consolidation. The internalization of all possible external effects into the profit and loss accounts of companies is one foreseeable way, but others could be explored as well.

• Progress & success:

In a Zero Impact Growth world, progress can only be made in global value cycles, factoring in the thinking of a circular economy and zero tolerance towards social injustice. A new definition of success would be needed, enlarging today’s one-dimensional financial success thinking through additional aspects, especially looking at ‘synchronized, joint and balanced’ success measures that show how a company adds to the success of others (assuming a joint adaptation plan exists) or how the company has been affected by others; both figures could show positive and negative values.

• Effectiveness:

At this moment most industry sectors, through the discussion and negotiation processes they are used to, interpret sustainability from their respective perspectives. This has led to increasing efficiency or better reputation (proving the basic business case for sustainability), but often these successes are neutralized or even overshadowed globally by rebound effects (demography, more resource use per capita, etc.) and steered by an existing economic growth model that simply sees ‘more’ as success. Until now, we are not able to measure whether what has altogether been achieved in the different industries is actually ‘good’. The only thing we can state so far is that we became ‘less bad’, so the question Zero Impact Growth tries to answer is: what, as a minimum, constitutes ‘enough’?

• Roles & responsibilities:

Thinking in terms of Zero Impact Growth helps to redefine roles and responsibilities that certain industries need to take over, or hand over to other industries. For example, is it necessary that companies in consumer business, an industry that would have a negative EBITDA if all external effects they cause were to be internalized (see Trucost study in KPMG – ‘Expect the unexpected’), shrink their direct ecological footprint to zero if other industries could achieve more, more effectively?

 Best Practice – Internalization of Externalities

In 2011, Puma  released the first environmental profit and loss account. Supported by Pricewaterhouse Coopers LLP and Trucost PLC, they developed a methodology to use well-known ecological and economic techniques to monetize their environmental impact for the key areas of greenhouse gas emissions (GHG), water use, land use, air pollution and waste, generated through the Puma operations and supply chain.

Thereby, the overall environmental impact of Puma is valued at € 145 million in 2010, with the majority (94%/€ 137m) occuring within its supply chain of external partners. This radical method of internalization of externalities clearly reveals the necessity for building sustainable business ecosystems by taking collaborative actions. For more information visit: http://safe.puma.com

Is your Company Ready for Zero Net Impact Growth?

Many might regard  Zero Net Impact Growth and the questions above as pretty unrealistic.  If so, it might be the stage of your company’s development.  Here is the Pathway to emergence – where does your company fit?

Maturity Level

Definition from ‘The Zeronauts’

Analogy: Characteristics of a company on that level

No strategy and goals No definition The company barely understands the relevance of restructuring its actions towards sustainable solutions and hardly reports on sustainability. Furthermore, no strategy has been defined and no targets have been set.
Eureka Opportunity is revealed via the growing dysfunction of the existing order. The company understands the relevance of restructuring its actions towards sustainable solutions. No considerable actions have been taken yet and almost no strategies and targets have been set. The company does already understand the relevance of the topic though, has started reporting and communicates plans to ameliorate its sustainability performance in the future.
Experiment Innovators and entrepreneurs begin to experiment, a period of trial and error. Although the company has started its first innovation efforts and internal programs in certain sustainability areas and has developed initial policies and strategies, no concrete milestones and an overarching future vision have been defined yet.
Enterprise Investors and managers build new business models creating new forms of value. The company has developed a short- to mid-term strategy ( ≤ 2020) for specific areas and has set measureable targets. Nevertheless, almost no long-term milestones have been defined. Furthermore, they do not communicate an overarching future vision.
Ecosystem Critical mass and partnerships create new markets and institutional arrangements. Measureable, ambitious (zero) targets based on a mid- to long-term vision (≥2020) are set. Nevertheless, a conjoint approach and some collaborative aspects are still missing since the holistic zero impact growth vision has not been (fully) adapted.
Economy The economic system flips to a more sustainable state, supported by cultural change. The company has fully adapted the zero impact growth vision. Measureable zero targets that have been adapted jointly are set out for each field of action. A clearly defined strategy is in place on how to achieve these targets, with defined short- and long-term milestones. The underlying benchmarks are clearly defined

There is much packed into Deloitte’s Towards Zero Impact Growth report.  It discusses the Zero Net Impact Monitor, rankings and recommendations for moving forward.  It deserves a closer look.  With Elkington’s Zeronauts in the lead, Zero Net Impact Growth is more a critical survival strategy than a silly oxymoron.  It’s a notion whose time has come.

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About Kathryn Cooper

Kathryn Cooper is a committed sustainability practitioner and educator moving companies toward “green” profitability and sustainable competitive advantage by unlocking human creativity and technical innovation. Over the last two years she has had the privilege to work with companies like Dupont, Zerofootprint, WWF Canada, and Partners in Project Green on sustainability issues, best practices and renewable energy. Kathryn is a graduate of York University with a Master of Education specializing on Sustainability and the Environment. She holds an MBA from Wilfrid Laurier University, and a Bachelor of Science from the University of Guelph.
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