Georgia Fendley ponders how we can reconcile our desire for growth as a measure of success when faced with a climate crisis we can no longer ignore.
This article was originally published in Luxury Briefing issue 216.
We are faced with a global, multi-faceted crisis. While the vast majority of us are now united in recognition of this fact and a real desire to act, those we look to for leadership are missing in action.
Politicians seem to be phenomenally out of touch. They rarely discuss this pressing issue with any sense of understanding and, all too often, revert to the old solution to the world’s problems and the salve to keep business leaders quiet – more economic growth.
In 2017, a leaked Home Office memo was published in The Independent confirming what we had all suspected. Planning for a post-Brexit trade crisis, the government had implemented a change in strategy without any public consultation or communication.
‘Trade and growth are now priorities for all posts … work like climate change and illegal wildlife trade will be scaled down’.
Our leaders are attempting to solve the world’s biggest problems by assuming business as usual, accelerating the rate at which we turn natural wealth into cash; a short-sighted response to a long-term problem and one that will only make matters worse.
Make no mistake, I am pro-business. I am not advocating we all step away from our laptops and go back to the land. I also recognise the complexity of this dilemma; the questions we face demand we challenge our traditional worldview, re-frame the problem and think laterally to find solutions.
In business and in life, the 20th Century-view taught us to measure our success through growth alone. Growth became the be-all and end-all, the first question anyone asked you about your professional life and the measure by which you ascribed your personal value. If we look to the history of economics it’s startling to note that we knew the problem with this approach all along.
Simon Kuznets, the Nobel Memorial Prize-winning (1971) economist, noted: ‘The welfare of a nation can scarcely be inferred from a measure of national income’. In a nutshell, the exponential growth we have all been enthralled with creates opportunity and inequality. As an economy matures, inequality reduces but growth cannot be sustained because our resources are finite.
This vast simplification of a complex problem is reflected at every scale, from the global economy to national wealth and the performance of an individual business. The race for growth is neither sustainable nor desirable; we need to find a new perspective, model and method for measuring success in order to change our behaviour.
The leaders of luxury brands have been some of the most prominent figures in business highlighting this issue. Marco Bizzarri, CEO of Gucci, stated: ‘We need to recognise the fact that at a certain point we’re going to slow down, we cannot keep on growing 50, 60 per cent per month, it’s impossible’.
At some point, growth damages long-term value, as well as sustainability and equality. Is it possible to find the sweet spot, to create businesses capable of sustainable success by a broader framework of measurement?
A thought leader on the macro-economics of this subject is Kate Raworth, author of Doughnut Economics. The aim of economic activity, she argues, should be ‘meeting the needs of all within the means of the planet’. Instead of economies that need to grow, whether or not they make us thrive, we need economies that ‘make us thrive, whether or not they grow’. This means changing our picture of what the economy is and how it works.
Ultimately, what she is advocating for is a more human economy, where companies see themselves as vital contributors to society, rather than a means of extracting value from it. It’s reassuring to reflect on this and recognise themes recurring. Last year’s Davos Conference was focused on responsible and responsive leadership.
In the luxury sector, our leaders have been more responsive than most, championing the highest ethical standards, taking real steps towards sustainability, and investing in cultural and social wealth. And where they lead, others follow. These subtle changes cascade down through the market as what starts as a new standard in luxury quickly becomes a hygiene factor for the mainstream.
Stepping back from everything we thought we knew, we need to re-imagine success. What does it look like for each of us personally, for our businesses, for our society, our nations and the planet? How do we create a new understanding which will allow us to innovate, succeed and create value within the limits of sustainability? This will be the new benchmark for luxury businesses and one the rest of the world can aspire to.