Economy

To be sustainable, our economic models will need to evolve from extractive to regenerative, from linear to circular, encouraging cooperation rather than competition in support of the long-term well-being of people, planet and business.

Our economic system was developed, from Smith to Keynes, when we were still a ‘small world on a big planet’, whereas today we are a big world on a small planet. The pursuit of wealth and the desire to see immediate economic returns have left behind a trail of degraded ecosystems. The most pressing economic challenges are food security, inclusive growth, unemployment, climate change, the future of the internet and the 4th industrial revolution, gender equality, regulatory networks for global trade and the future of healthcare.

Economic and human development has always been linked to the control and production of materials. The continued growth of the global economy has placed continued pressure on natural resources such as fossil fuels, metals and minerals, and biomass from agriculture, forestry, fishery – causing environmental damage not just through the extraction process, but transport distances to processing plants, to final consumption and to waste disposal.

As we approach the limits of our planet’s productive capacities, we are beginning to fully understand not just the finite nature of the Earth’s resources, but the value that natural capital brings to economic development and livelihoods. To evolve from unmanaged technological change and an outdated economic ideology, we need to direct innovation towards adaptable, regenerative and restorative systems focused on renewable energy, green architecture, sustainable transport, water, waste and land management. There is a growing interest in looking to Nature’s own genius, as emerging models explore design through biomimicry, closed-loop systems and circular economies.

Sustainability in the economic context means many things: eco-efficiency and eco-effectiveness; innovation, adaptability and resilience; the integration of cyclic, solar, safe, efficient and social features; goods that move up the value chain in their country of resource; consumer responsibility; financial incentives and disincentives that reduce inequality and support socially inclusive practices. Essentially, the Fourth Industrial Revolution must be launched within social and environmental boundaries.

These considerations must be built into the way we produce, consume, organise as communities and educate our children. Bridging the knowledge gaps between science, governments, cultures, communities and consumers is a challenge. Information silos need to be broken down so that the consumer citizen reign in overconsumption and stimulate demand for products that are grown or produced sustainably, incorporating the true costs of environmental and social resources, such as full cost accounting which trace costs externalised onto society back to the entity to account for these as liabilities.

In relation to economic impact, our focus is on conscious production and consumption, as well as the revival of local value-added, through artisanal skills and moving materials from former commodity-driven economies up the value chain.

Some challenges in the economy

The present GDP-based growth model will lead to the fast depletion of natural wealth and resources
Sustainable capacity has been surpassed by demand and will lead to the eventual loss of natural resource bases, alongside related effects of pollution and global warming
Land degradation affects almost 2 billion hectares worldwide, home to 1.5 billion people. Every year 75 billion tons of fertile soil is lost to land degradation, impacting global warming and posing the threat of a food security crisis as well as ongoing migration
Developed nations currently consume almost 32x more resources than the developing world who make up most of the human population of 7.6 billion (up from 7.2 billion in 2015)
Poor countries are not producing quality human resource capital and do not have gross savings to compensate for their fast-depreciating wealth
The UN estimates that urbanised populations overtook rural ones in 2007, and that 2/3 of a global population projected at 9.8 billion by 2050 will be living in cities (6.7 billion) over rural settings (3.1 billion).
The developing world is gaining more purchasing power and the Global South cities in Asia, America and Africa are expected to account for 56% of consumption growth by 2030

Each industry is a lens through which the interconnection and extent of problems can be gaged. Taking the clothing industry as an example:

The global business in apparel market was estimated at 545 billion in 2019
Clothing production doubled from 2000 to 2014, fuelled by globalisation, industry competition, technology and a mentality of instant gratification
Apparel overconsumption is stimulated through weekly collections and even new daily stock
In the past 15 years, the average number of times a garment is worn before it ceases to be used has decreased by 36%

2,720 litres of water are needed to produce just one cotton shirt – equivalent to what an average person drinks over three years
An avg. 10,000 litres of water are needed to produce 1 kg of cotton – just enough to make a pair of jeans
The volume of water consumed by the global fashion industry is 79 billion cubic meters equivalent to the content of 32 million Olympic-size swimming pools
Garment manufacturing accounts for 20% of global industrial water pollution
Over 1’900 synthetic microfibers are released per garment during washing and enter the oceans as the wastewater treatment cannot catch them due to their size
The industry’s water consumption is anticipated to increase by 50% by 2030, while cotton producers are in countries suffering water stress, such as China and India
Of the 2,400 substances used in clothing manufacturing, researchers found that approximately 30% of the identified substances posed a risk to human health
Making one kilogram of fabric generates an average of 23 kilograms of greenhouse gases
The global apparel and footwear industry account for 8% of the world’s greenhouse gas emissions releasing four metric gigatons of CO2 into the atmosphere
The fashion industry’s CO2 emissions are projected to increase to nearly 2.8 billion tons per year by 2030 – equivalent to the emissions of 230 million passenger vehicles driven for a year
If the industry doesn’t change, the apparel industry’s climate impact is expected to increase 49% by 2030
By 2030, the fashion industry is predicted to use 35% more land for cotton, forest for cellulose fibres, and grassland for livestock

Sources: World Bank, WWF, FAO, World Economic Forum, UNEP, Wef, Mc Kinsey 2016, Ellen MacArthur Foundation, Global Fashion Agenda, WRAP, EJF, Browne et al 2011, Quantis, World Resources Forum