A major first response to our sustainability challenges has been to try and turn profit to more sustainable ends. Alas, even ‘purposeful profit’ seems unable to overcome the deeper momentum of what might be termed ‘externality-denying capitalism’ – ‘externality-denying’ in that billions of daily investment and consumption decisions ignore certain of their social and environmental consequences.
As just one example, the World Bank reports that less than 4 percent of global carbon emissions are currently priced at levels consistent with the Paris Agreement’s temperature goals, endorsed by 194 nations. Hence, hardly any of today’s market transactions are fully costed, in terms of reflecting their contribution to climate change. The same neglect repeats to varying degrees for certain other environmental and social problems.
We don’t call our predominant socio-economic system ‘externality-denying capitalism’, but possibly we should, to constantly remind ourselves of what we are doing.
Caught in this embracing dynamic, first-response market-led sustainability strategies – such as SRI, CSR, ESG, sustainable investing, etc. – are showing signs of exhaustion. While these strategies have helpfully accelerated awareness of sustainability challenges and have catalysed fresh innovation paths and business models, they are being overpowered by the externality-denying capitalism that remains the larger force shaping our social and natural worlds.
Hence, there is a pressing need to step out of the day-to-day frame to appraise this bigger system…
Download full PDF (22 pages including 18 illustrations): “The Towering Problem of Externality-Denying Capitalism“