Not enough demand for green growth? Ask for it.

If change is slow to come from international agreements or business boardrooms, it could come from interconnected people who measure their success based on the sustainable impact their money and actions have. Aggregate environmental and social impact is the key.

Brindusa Fidanza
10 April 2014
greek farmer.jpg

Greek scheme to deliver produce direct to locals. Demotix / Alexandros Michailidis

The release of the global scientific climate change assessment in Tokyo last week has once more brought environmental gloom and doom to front pages worldwide. There is no more doubt we are facing climate change and the world will need to make a substantial effort to mitigate change, adapt and start managing future risks appropriately. And yet governments are still not dealing with the problem. Just weeks before the report, at the United Nations climate change meetings in Bonn, governments have once again failed to progress negotiations on a global agreement to curb emissions.

As with governments, vision seems also slow to come from big business. A survey made last year by Global Compact in collaboration with Accenture revealed that only roughly a third of CEOs believed the global economy was prepared to cope with growth requirements under environmental constraints. 82% thought that consumers purchasing decisions would be essential to accelerating progress on sustainability. And yet at the same time 46% of CEOs believed consumers would always rank sustainability issues behind price, quality and availability.

So if decision-making is slow in established international negotiations and in boardrooms, could a stronger demand for green growth and sustainability come from small enterprises who make up 95 percent of businesses globally - from the ground up?

Consider these five facts:

First, small and medium enterprises (SMEs) account for 95% of registered businesses in the world, they are drivers of economic growth and employment creation in all economies, whether high-, middle-, or low-income levels. Innovation and green entrepreneurship on the small-scale is a reality: small renewable energy enterprises, eco-tourism operators and service providers, waste management facilities, climate smart agriculture farmers, and other similar companies already have some commercial and growth potential. Their success can be spread fast, especially thanks to information and technology development. In the US, industry analysts are suggesting that small distributed solar farms will grow further because they are supported by "the proliferation of physical assets, installed capacity and new finance mechanisms” which are putting pressure on the established business models of large utilities.

Second, smarter money is increasingly looking to invest in projects that will ‘have an impact’. Investors (established such as JP Morgan or Credit Suisse, niche, institutional, high net-worth individuals such as Bill Gates or Mark Zuckerberg) are designing impact investment strategies and looking for pipelines of deals with an environmental and social impact. Some analysts expect that impact investing will be greater than US$500 billion and even up to US$ 1trillion by 2020. This is also supported by finance facilities established by governments.

Third, about 40% of the world population is connected to the internet and that percentage is growing fast. This opens up new opportunities for smaller, local entrepreneurs who are looking to the internet to develop solutions to local problems. More than 80% of SME owners in Africa expect that the internet will help them grow their business, and 70% of those expect that this will result in new hires. Internet-based solutions focused on service delivery are on the rise.

Fourth, big data and social media are changing the way we interact with global issues and can influence how we allocate resources in a smart way. For example, movements like GetUp, a web-based organization in Australia, mobilizes more people than all political parties in the country combined. In other examples, big (and better) data has helped philanthropists like the Knight Foundation to better target their funding for civic innovation, open government and resident-engagement. There is no doubt that social web engagement is changing the way we do business.

Last though not least, there is growing support for environmental action. Last December, half of all Europeans reported that they had taken some form of action to tackle climate change and four in five (80%) agreed that fighting climate change and using energy more efficiently could boost the economy and jobs in the EU. In the United States, 83% of people said that the US should take action on climate change even if it came at a cost to the economy.

Moreover, a new generation of young professionals is shaping up. Millennials grew up in an interconnected world and were shaped up by global events, including wars, environmental damage and the economic crisis.  By 2020, they will make up three quarters of the global workforce and the overwhelming majority of them want a meaningful job that is globally minded. This means that the number of people who rank sustainability ahead of price, quality and availability in their purchasing decisions will grow.

With these points in mind, and if change is slow to come from international agreements or business boardrooms, then change could come from interconnected people who begin to measure their success based on the sustainable impact their money and actions have. Change will come when sustainabilitybecomes as strong a value as democracy became. While individually small, on aggregate, local individual actions, decentralized technologies, small-scale projects and alike empower individuals, grow entrepreneurship skills, incentivize collaboration and catalyse a development that suits local needs.

Successful business and financing models for the small scale can grow, replicate and connect to others, with a clear measure of their aggregate environmental and social impact. Together, small-scale action could become an important influence by creating the demand for transformation towards a sustainable green economy and healthier, more prosperous living conditions for current and future generations.

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