André Reichel | Sustainability Research

I am just returning from the 11th conference of the International Society for Ecological Economics, held this time in Oldenburg and Bremen in Germany. As always after conferences, my mind is swirling with ideas, images and notions of what I heard and with whom I talked. This blog entry is just a very raw and weakly reflected summary.

In general, the science of ecological economics had its successes as many of its concepts and reasoning found their way into mainstream economics and politics – e.g. the evaluation of ecosystem services, the notion of limits to economic activity on a finite planet, the need for alternative welfare measures beyond GDP – but at the same time lacks wider recognition in both science being acknowledged by mainstream economics as well as with policy makers as source of economic policy advice. The reasons for that may be multifold, but I see a significant “guilt” – if you want to frame it that way – within the community of ecological economists themselves. Sabine O’Hara was giving a talk today in Oldenburg, arguing that we need “lobbyists” or at least “representatives” at advisory tables in politics and business. Otherwise all the important and timely ideas of ecological economics will be promoted by others and maybe promoted in such a way as to protect vested interest instead of changing economic practice. The self-image of being “radical”, maybe even “revolutionary” and surely not mainstream, appears to me to be the biggest blockade, almost like a self-censorship – and any identity construction always involves that. If ecological economics wants to play a part not only in its field and not only in science, but transgressing the boundary to practice and see its concepts applied on the ground, it needs to get its hands dirty. The revolutionary posture might be nice and reassuring and at times even “cool”, but we need much more irony and humility in order to avoid becoming the mad prophets some might wish to be. I thank Fred Luks for introducing the notion of irony as one important aspect of ecological economics and in fact sustainability.

In particular, I (again!) noticed a certain non-interest in matters of business and the business enterprise – unless used as a scapegoat or in the form of green cooperatives not earning any money. (I am over-exaggerating a bit, please bear with me) The most crowded sessions where the ones on degrowth, a late arrival at the conference program. However, when the focus moved away from beyond growth research on a macro-level or on new welfare measures – away from the economics, if you like – and turned towards business, 80% of the audience left. Now, I know that we are all very limited experts and this is the way any science, maybe even ecological economics, organizes itself and thus progresses. But if on a macro-level the analysis is so overwhelmingly clear, that there is no possibility for production and consumption growth in the future – in the short-term in the North, in the long-term also in the South – why lose interest as soon as we focus on the level on which production and consumption takes place? Businesses play a vital role in the growth game; they create needs and co-evolve with consumption, thus pushing society ever deeper into the growth spiral. To break out of that without focusing on business is the most stupid thing to do – both from a scientific viewpoint and even more from common sense. Up until now, it seems I am the only researcher in the degrowth “movement” who explicitly focuses on degrowth and business… That may sound overly egocentric, but I haven’t seen any other, neither at this conference that had it as one focus, or at this year’s Academy of Management Meeting in Montreal, where thousands of management scholars, although involved in issues of organizations and the natural environment, gathered.

The reasons for this, at least from my point of view, are twofold. First, within degrowth there is a certain reluctance to business and business issues, up to the point of rejection of the possibility that business could play any positive role in degrowth. On the other side, turning to management science and the field we call in German “Betriebswirtschaftslehre” (business administration, literally “firm economy studies”), you are also at the unfriendly end of a cul-de-sac when raising the issue of degrowth and business. This runs smack into the boundaries of a discipline that focuses almost entirely on efficiency increase and optimal decisions on the firm level. However, I have to admit that you probably should distinguish management and business administration. Management, in my view, has a much wider notion and for me there is no reason not to develop a management for degrowth businesses. Anyway, both reasons are first and foremost ideological reasons, not substantiated by any piece of empirical research or theoretical reasoning.

For me, the implications are clear: I want to set up the field of degrowth and business within the degrowth movement, but also beyond it, in the general field of management science. If you are also either working on issues that are connected to degrowth – alternative legal forms for organizing business, developing absolute corporate sustainability measures with limits on business activities, new business models focusing on producer-consumer networks, access over ownership and open innovation for sustainability – or have a genuine interest from a different scientific discipline, please contact me and start another revolution… this time with humility and a hint of irony to prevent us from becoming just as mad as the players of the growth game.

The other day I was teaching an introductory course on Sustainaibility Management to PhD students (mostly Engineers, some MBAs, some Computer Scientists). This is always an exciting experience, many different rationalities and perspectives on the issue. We discussed a case study, the sustainability report of BMW, and some important realities of corporate sustainability became clear to me.

First, for some companies, sustainability provokes some kind of “organizational schizophrenia” i.e. they refer, in the same paragraph, to sustainability and ecological awareness as well as to the overarching goal of earning profits with even the most unsustainable products. The schizophrenia is only resolved on operational levels, where a first-order logic of observed systems is employed i.e. how to reduce waste, safe energy, substitute harmful input materials and the likes. On the strategic level, however, where a second-order logic of (self-)observing systems is needed, the schizophrenia with sustainability shows. How can this be solved or better: dealt and lived with? Maybe a polyphonic organization (Kornberger et al. 2006; Andersen 2003; Hazen 1993) is needed for standing this schizophrenia. A polyphonic organization is able to cope with and react to demands from different parts of society, not only from those it primarily deals with (e.g. a company with the economy). See also my papers on the Next Organization.

Second, one student remarked, that at the end of the day BMW would need to be able to pay off all costs. (At the end of days we are all dead, paraphrasing Keynes, and if we cannot make the turn for sustainability no one will be able to pay for anything anymore!) The funny thing with sustainability is that people seem to think that in order to take it serious companies would have to become charities and give away sustainable poducts for free (or at least for less than they cost to produce). This is of course rubbish! In a sustainable economy, the minimum condititon for economic well-being of a company still holds: to maintain its ability to pay off all capital costs at all times i.e. maintain its liquidity. But not necessarily more! That is the whole issue: earning decent money to stay in businss is in line with sustainability. To have more than that is only sustainable if corporate activities stay within ecological limits. Any profit beyond that is excess profit and no one was able to tell me up until now why a return rate of 18 (the desired rate of Volkswagen by 2020) or 25% (the present target rate of Deutsche Bank) is needed to stay economically well. This really is only excess, fueled by institutionalized greed as could be exhibited in the recent financial crisis. For sustainable economics, Ghandi’s insight holds: there is enough for anyone’s need but not for anyone’s greed.