Can the private sector save the world? Q&A with the 'godfather of sustainability'

LONDON — John Elkington has been described as the “godfather of sustainability,” having made a career of advocating for businesses to take as much care of people and planet as they do profit margins. His new book, “Green Swans,” is a more optimistic take on the disastrous “black swan” — unpredictable events, such as the 2008 financial crash, that have severe consequences — described by scholar Nassim Nicholas Taleb in 2007. Development campaigners frequently refer to the billions to trillions of dollars needed to achieve the Sustainable Development Goals, and the need to engage the private sector to do this. But Elkington — who has been directly involved with the private sector for much of his career — believes this is impossible under the current configuration of capitalism, and that new economic thinking is required to achieve the SDGs. “The challenges that capitalism has currently configured cannot deliver the Sustainable Development Goals, there's no way that it can. Not by 2030, not by 2040, not by 2050.” --— John Elkington, corporate responsibility and sustainable capitalism expert He told Devex about his thoughts on how “Green Swans” might affect development, and how he views the role of the private sector and impact investment in creating a better future for all. This conversation has been edited for length and clarity. What is a ‘green swan’? If I can characterize black swans mainly [as events] ... taking us exponentially where we don't want to go, then the question I asked myself with the book “Green Swans” was could there be circumstances in which we could drive ourselves exponentially in directions that we did want to go ... The more I looked into it, the more I realized examples were all around us. The difference with black swans is very often we get ourselves into those circumstances accidentally. People don't plan to fill the oceans with plastic, they don't plan to drive up antibiotic resistance and ... they certainly don't plan to drive the climate emergency, but that's exactly what we've been doing for quite some time, and the private sector has been absolutely central. It's been an engine [for] a lot of those, in a sense, unintended consequences. So with “Green Swans,” it has to be much more conscious, it has to be directed, it has to be managed. It has to be invested in, and very often for quite long periods of time. Can you give any examples of green swans that might be relevant to global development? There are actually quite a number … Take an example from China. The Han people originally came from the Loess Plateau, and they wrecked it, they exhausted it completely over hundreds and thousands of years. And for decades now there's been a government-directed program to revegetate the Loess plateau, which is a vast area of the country. And now if you fly over it, you can actually see that happening, and see the trees coming back, you can see the grazing lands coming back. And it's beginning to affect in a positive way, the rainfall patterns in the area … It's actually very difficult for many countries in the developing world to effectively address, because it needs a relative freedom from bribery and corruption. It needs effective governance sustained over time. It needs effective and efficient relationships between the different sectors of society, public, citizen, private, and so on. And in many cases ... those sorts of conditions are not effectively met ... One of the things that's happened in my world, the private sector, is that there was a period about 15 years ago where companies really got the bit between the teeth — really thought sustainable development, “we like the sound of that” — because it's about development, and therefore, there are commercial gains to be made. And when the Sustainable Development Goals came out, a lot of these companies signed up through the Global Compact and other platforms. But I watched those companies go through the process of thinking about what this meant for them. And very often, at least to start with, what you saw was almost like a party game. They would stand around a whiteboard and say, “What are we already doing? And how does that map onto the Sustainable Development Goals … Well, we work in partnership, so we can tick off number 17.” And if they got to five or six of these goals ticked, that was sort of job done for a while. “I think the old system is coming apart. A new one is beginning to stumble to its feet.” --— One of the things we've been trying to remind these people is that the global goals, regardless of what the U.N. intended, are exponential goals, they're not incremental goals. So if you just take the first two — no poverty and zero hunger by 2030 — those are super-exponential goals, even if you push them out to 2050 or 2060, you're still talking exponential. But most [business] people are thinking, we’ll just do a little bit more of what we're currently doing ... Unfortunately, the nature of the challenges that capitalism has currently configured cannot deliver the Sustainable Development Goals, there's no way that it can. Not by 2030, not by 2040, not by 2050 … We need something like the Marshall Plan on a global basis. We need something with the architecture, and the momentum, and the legitimacy and almost the effectiveness of what we saw in the aftermath of the Second World War. But we're nowhere near that at the moment. In effect, everything seems to be going in the reverse direction, which I think is inevitable. I think the old system is coming apart. A new one is beginning to stumble to its feet. You’ve spoken before about the importance of impact investing. Could you speak about that for achieving green swans and positive growth? In many ways, I think the impact investment industry is itself, at least potentially, a green swan, because it's a market shaper, it puts capital behind a lot of things that the global goals are calling for. We have to remember, though, that it's a very small amount … [around] $500 billion. It sounds like a lot of money. But when you look at the scale of the trillions [needed to achieve the SDGs] ... it's still relatively small. But two things have happened in recent years, which I think are immensely exciting, and do speak to the potential green swan dynamics. The first is the impact industry … was entirely about [identifying] negative impact. Now, what you have, is people thinking about positive impacts, not only how you create them, but how you measure them, and how you value them, and how you reward them. And that's really quite complicated. If you'd done that 10 years ago, you would have had this largely driven by the PR people, or the sustainability department. Now it's shifted, where the people who run the businesses in places like Turkey or South Africa are saying, “this is really useful, we want more of this.” So I think that's important in the corporate world, that accelerating shift. Then in the investment world, ESG — environmental, social, and governance — investment has done surprisingly well during the pandemic, for all sorts of reasons. But my sense is that even if the whole financial world switched to ESG overnight, that would not solve the problems articulated by the global goals or by the Paris climate agreement. Because there is such confusion between the methodologies being used, lots of rival brandings, and so on. And the assessment is sometimes rather suspect ... There is still an element of people picking up on the latest environmentally or society-friendly company and backing it. But they don't always seem to really understand the deep dynamics of the company's markets, or of its management and so on. Do you think development finance institutions could play a role in creating those methodologies [for assessing ESG and positive impact]? They're fundamentally important but I don't think they can do it all themselves. It's quite a big challenge. And you’ve just seen the four big accounting agencies, for example, committing to pool their resources and develop the sustainability reporting framework. Now, I think it's competitive for them, but they're still pooling, and doing a sort of market development exercise, and I totally trust their instincts. I think the development agencies also need to pool their resources in the field of the Sustainable Development Goals, or at least the social challenges and the market opportunities that are covered by the global goals, because at the moment what we have is far too much fragmentation. Everyone doing their own little piece, wanting it to own it as far as they possibly can, to claim leadership. And this is a big part of the reason why the Marshall Plan or the Bretton Woods institutions worked for quite a long time, because they forced people to surrender a degree of sovereignty and pool their activities to a considerable degree. And I think we [need that] again. Does the private sector have a role in preventing climate chaos? I think what's just beginning to happen now in the C-Suite for major corporations, is that they're realizing that, for example, the climate emergency is not simply a citizenship or public relations issue. It's actually a security issue. It's about the security of the future of capitalism. And these companies are waking up. The insurance and reinsurance companies, for example, are waking up to the fact that ... a 3 degree [Celsius warmer] world is not insurable. There's no way the insurance industry can adapt to that. And if you suddenly remove insurance from the picture, capitalism is going to look very, very different. So there’s this “Oh Christ” moment going through business where all of these … [climate protests] are becoming the emergent reality and they are realizing that they've got to act but they can't do it on their own, which is a difficult wake-up moment.