Does ecological modernisation work only when it delivers profit?

A discussion on how ecological modernisation, or ‘sustainable development’, is beneficial in tackling ecological crises insofar as it promises capital gains.

This essay has been published on Res Publica Politics. Article available here.

The planet, ecologically, is facing a catastrophe. Climate change has engendered adverse impacts on ecosystems, weather systems, and even urban life. Currently, a dominant approach to solving the environmental crisis would be ecological modernisation (EM), which tackles environmental issues by making capitalism less wasteful and more sustainable, whilst maintaining the current capitalist modes of production and consumption. Herein, EM reconciles the priorities of environmentalists, enterprises and the state, with environmental issues ‘being increasingly reflected in…[the] economic domain’ (Prell and Sun, 2015: 257). EM’s success depends on achieving long-term, sustainable fixes to environmental issues through technological advancement in the free market. I will discuss how EM only works when it delivers profit since the goal of tackling environmental issues is embedded within capitalism, wherein profit is still prioritised. However, EM is likely to fail despite profitability, since it strives towards a modest change rather than a complete overhaul of capitalism, allowing overconsumption and exploitation of resources — some origins of environmental issues — to still thrive.

EM succeeds only when the profit motive aligns with environmental issues, incentivising corporations to take environmental action in their economic interest. Under EM, capitalism aims to ‘induce…economic reorganization’ within firms to maintain or increase profits through minimising ecological harms (Baxter, 1999: 201). These include increases in energy and resource efficiency, or sustainable supply chain management — both requiring radical innovations that impact emissions and resource use. Cradle-to-cradle design (C2C) is one such approach that strives to ‘eliminate the concept of waste’ (McDonough & Braungart, 2009: 104), through creating a circular economy that incorporates waste from consumption as raw materials in production (Fig 1). Numerous corporations have achieved C2C certification for their products (Luther, 2014), showing how for-profit firms can successfully integrate C2C into production. One of these is Shaw Industries, reported by The Guardian to have C2C certifications for its carpet product, the EcoWorx tile. Recovering nylon from recycled carpet tile costs less than virgin material, and switching to renewables has halved its environmental footprint; both total $4m of savings (ibid). This shifts the production process from linear to cyclical C2C (Fig 1), reducing resource inputs, waste, and expenditure on both. Costs saved by C2C heightens firms’ profit margins, delivering a larger revenue through meeting environmental goals.

Fig 1. A linear cradle-to-grave model (left) vs. a closed-loop C2C model (Zanzanaini, 2011)

Further, the greening of a product through C2C or other mechanisms opens up marketing opportunities to a new demographic: the green consumer. Green marketing, referring to promoting a product based on their environmentally-friendly qualities, can sustain a loyal customer base of socially-conscious consumers and boost the firm’s reputation. Increased demand for green products translates into higher profit margins: Nielsen (2018) reports how 90% of millennials will pay more for sustainable products, with green marketed eco-friendly brands experiencing a 5% sales increase. Green policies, processes and marketing in the supply chain can simultaneously save money and increase revenue. Businesses can use EM to maximise profits through increasing cost savings in resource procurement and production, and green marketing to a larger environmentally-conscious audience. Hence, EM succeeds in tackling environmental issues by promising a profit to firms.

However, EM conforms excessively to current capitalist ideology (Hajer, 1997). This relentless pursuit for profit incentivises profit-making even at the expense of the environment, contravening its goal of solving environmental issues with innovation. In green marketing efforts, corporations may seemingly comply with EM practices as a facade without actually reducing environmental harm, in a process of greenwashing. Greenwashing arises from environmental action being often overlooked by corporations in favour of profit, effectively incentivising firms to appear environmentally-responsible ‘while avoiding the costs of actually doing so’ (Alves, 2009: 15); here emerges a proclivity towards greenwashing. A greenwashed product is Coca-Cola’s PlantBottle, reported by Time to comprise entirely of plant materials — enabling marketing to green consumers using the word ‘plant’, green colours to represent eco-friendliness, and a circular-arrow logo to imply recyclability. PlantBottles use sugarcane instead of petroleum, purportedly leaving a much smaller environmental footprint. However, growing crops for plastic is not free from upstream environmental harm: it leads to massive land conversion and demands excessive fertiliser use. The Guardian reports that the PlantBottle’s plastic remains non-compostable and non-recyclable, whilst being marketed as if it were — deluding well-meaning consumers into buying and attempting unsuccessfully to recycle them.

Maintaining or increasing profits necessitates sustained exploitation of environmental externalities (Whitehead, 2009). Free-market mechanisms, rather than minimising adverse impacts, merely displace them to other spatial scales. Recyclable waste is often outsourced to poorer nations, acting as a ‘distorting factor’ that enables richer nations to reduce environmental ills at the expense of receiving states (Prell & Sun, 2015: 258). This process is financially sensible due to how local recycling costs outstrip transboundary shipment costs. In reality, outsourcing preserves the richer nations’ illusion of recycling and compliance with environmental agendas whilst most outsourced waste is simply dumped in landfills. A Newsweek piece pointed out that in 2017, Southeast Asian countries saw plastic waste burgeoning to unprecedented levels as richer nations such as Germany and Japan exported plastic waste there. Such efforts render the visible dimensions of pollution unseen, encouraging us to embrace ecological modernisation for its seen benefits. This hegemonic approach of EM — pollute first, clean up later — can jeopardise the environmental conditions of aforementioned industrialising countries. The capitalistic reality that underpins EM causes the pursuit of profit to outstrip all else, including environmental goals. Environmental issues are hence treated as an aside, a dispensable means to an end, and a reality to be outsourced to poorer nations; therefore, environmental modernisation does not work even when profit is promised.

EM overly conforming to capitalism also prevents the systemic reform of capitalism. The very strengths of EM, namely its emphasis on free-market innovation and confidence in regulatory capitalism, are what jeopardises its success. Regardless of profit, EM does not work because the free-market cannot be depended upon to reliably and consistently deliver environmental solutions. Approaches like C2C do not decouple consumption from economic growth, since a crucial step of its cyclical system is still ‘use’ (Fig 1). It is impossible to seamlessly close loops, leading to a metabolic rift, since used materials cannot return their original source (Zanzanaini, 2011); the resource’s ecological base thus faces inevitable decline. Fundamentally, C2C is rooted in weak sustainability, which still ‘focuses on increasing…environmental efficiency of industrial development and resource exploitation’ (Christoff, 1996: 486), rather than a reform of the production and consumption cycles. Further, C2C excuses firms’ continued environmental destruction under the facade of innovation for environmental protection. Similarly, an industry-wide trend reported by The Guardian is how, despite increased acquisitions of green energy corporations, big oil’s core operations remain centered around hydrocarbons; the main rationale for BP’s $200m investment in solar development was to diversify operations to minimise risk from oil price volatility rather than true environmental goals. Fundamentally, capitalism operates business-as-usual under EM, since consuming green means consumption is still occuring (Klein, 2014). The very act of EM generating profit under capitalism is what hinders its success, since profit distracts from environmental aims and prevents systemic reform.

However, regulatory measures by the state or international organisations, under strong EM principles, can help reinstill faith in markets. Appropriately-framed reflexive, flexible policies under smart regulation can encourage constant modification of corporate behaviour towards environmental means. The European Eco-Management and Auditing Scheme is an eco-management instrument that allows firms to regularly review and improve their environmental performance through key performance indicators. This voluntary systemic framework holds firms accountable to their environmental goals while delivering numerous economic benefits to these firms directly from meeting these goals, such as fewer fines paid for pollution and reduced consumption of raw materials that reduced costs, or indirectly through strengthening supply-chain and consumer networks (Myszczyszyn, 2017). A governing framework, with regulations from international organisations, can incentivise firms to work towards common environmental goals. Only when EM operates under regulatory — rather than free-market — capitalism, does it work while delivering profits.

EM proponents concede that modernity and economic growth requiring environmental destruction is a design fault that needs a correction through economic reorganisation. In this vein, EM can meet sustainability goals by offering reduced costs and higher profit margins, effectively ‘making business sense out of sustainability’ (Whitehead, 2007). However, win-win from EM is unachievable, since EM changes nothing about free-market capitalism; profit accumulation still eclipses environmental goals. Firms too often masquerade as green for public relations purposes, and disregard environmental destruction as soon as sustainability impedes profit accumulation. While EM favours a pro-capitalism ideology, it does recognise the importance of the state’s role in providing the foundation for far-reaching societal transformation. An actor constellation involving international coalitions, states, non-governmental organisations, and even individuals can continue to pressure firms towards addressing environmental concerns, with the state playing a critical role in regulating these actions, especially in cases of market failure. Nevertheless, businesses blazing the trail towards environmental sustainability in the unregulated free market remains a pipe dream, as long as profit maximisation remains their modus operandi.

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References

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Hajer, A.M. (1997). The Politics of Environmental Discourse: Ecological Modernization and the Policy Process. UK: Oxford University Press.

Luther, B. (2014) ‘Study looks at business benefits from cradle to cradle certification’ (WWW) UK: The Guardian (Retrieved 4 May 2020 https://www.theguardian.com/sustainable-business/cradle-to-cradle-certification-benefit-business-study)

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Zanzanaini, C. (2011) Exploring the dynamics of Cradle-to-Cradle — An analysis of the sociopolitical obstacles to eliminating the concept of waste. In Lodder, M. den Held, D. and Braungart, M. (eds.) Cradle to Cradle (C2C) inspired master theses: Adding pieces to the puzzle. Rotterdam: Rotterdam School of Management.