We Don’t Live on 1.75 Earths—but We Act Like We Do

29.07.2019 22:32

Fortune.com

Between Jan. 1 and July 29 this year, our resource demand exceeded what the planet can renew.

We live on 1.75 Earths, yet we just have one.

More precisely, humanity’s current demand on Earth is 1.75 times what our planet’s ecosystems regenerate each year. We are depleting our natural capital at a frantic pace.

Symptoms are numerous and well-depicted in stark reports. Think of ecological overuse as you would financial overspending, but with a significant difference: Financial debt can always be wiped away, while ecological resources are borrowed from a system we cannot bargain with. Meanwhile, social pressures also are rising: Real-time transparency enabled by our digitized world can highlight unfair or unethical practices and ruin reputations overnight.

Corporate sustainability efforts that show incremental improvements on all fronts in order to secure a license to operate can suffice no more. Strategic sustainability must become the compass of any business with long-term ambitions, with a value proposition that addresses our one-planet (rather than 1.75 planets) reality.

Its framework is provided by these straightforward questions: Does my business help humanity succeed on this one planet? Is my supply chain helping remediate climate change? Does more of my company benefit the world?

If any of your answers to these questions is no, your markets may shrivel.

While financial analysts have used a handful of key metrics for assessing the health of companies, the time has come to also rely on metrics that evaluate one-planet compatibility along two axes: humanity’s resource security and social progress. The higher a business performs, the more likely it is to sustain growth, resiliency of operations and assets, desirability for employees, and high societal acceptance.

Ecological Footprint accounting (conducted by Mathis’s organization, the Global Footprint Network) is central to evaluating one-planet compatibility. It allows for the comparison of material demand against nature’s regeneration. Those assessments, based on UN data, reveal that humanity started running an ecological deficit in the early 1970s and has been digging it deeper almost every year since. Between Jan. 1 and July 29 this year, humanity’s demand for biological resources exceeded what Earth’s ecosystems can renew in the entire year. This makes July 29 this year’s Earth Overshoot Day, almost two months earlier than it was in 2000.

The implication is clear: To preserve peace and sustain human achievements, humanity needs to reverse the trend and push that date back to Dec. 31 and beyond. This is the minimum condition for one-planet prosperity. The only alternative is one-planet misery, where resource insecurity undermines whole economies and pits nation against nation, accelerating inequalities.

The good news is that reversing the trend is possible. One-planet compatibility is not only within reach, but it is the strategic compass that will significantly enhance a business’s chance at long-term success. As the impacts of the ecological deficit grow worse, markets for goods and services that are steeped in the old paradigm of limitless resource abundance are bound to shrink; meanwhile, those companies whose frugal business models align with resource security will see their markets expand.

Granted, successfully implementing one-planet compatibility is no easy feat. But inaction is not a viable option.

The market is moving. Awareness of environmental and resource risks is growing. Over the last five years, the top five global risks identified each year by the World Economic Forum have included resource or environmental threats. Companies whose strategies are informed by those physical realities will have a much higher likelihood to withstand the storms of market volatility when those risks become manifest.

Bringing human activity back in balance with the regenerative rhythm of the Earth is an outstanding design challenge that is going to require bold imagination, creative ingenuity, and free-spirited venturing off the beaten track. We already have two essential navigation points to guide us on that adventure: seeking biological resource resilience and security, while improving well-being for all. Solutions already abound in sectors as diverse as energy, mobility, food and farming, urban planning and development, education, and women’s empowerment.

Through the appropriate strategy, the brilliance of engineering minds, designers, and business experts can be unleashed to bring to market the technologies, products, and services that are aligned with our one-planet context. These are the ones that are bound to enhance the long-term success of businesses.

Jean-Pascal Tricoire is the CEO and chairman of the multinational electricity company Schneider Electric. Mathis Wackernagel is the founder and president of the sustainability organization Global Footprint Network.