Sustainability:
which industries first?
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Philip Sutton
Director, Policy and Strategy
Green Innovations Inc.
Tel & fax: +61 3 9486 4799
Philip.Sutton@green-innovations.asn.au

Revised 4th August 1998 - Version 1.b.w:i

Paper marked up in HTML format
by Philip Sutton.

People often ask "which industries should we start our sustainability work with?". One person nominated the aluminium industry because it had played a very negative role in the recent climate change negotiations and because it is possible to envisage a restructured aluminium industry playing a continuing role in a sustainable economy. Are these sufficient reasons to focus our sustainability-promoting efforts on this industry?

I think we need to have a multi-pronged approach to transforming industry based on the following three strategies of:

  • engaging the potentially big winners in the new paradigm of the sustainable economy
  • encouraging strategic defections
  • providing structural adjustment support to the losers.

    In Australia at least, we spend almost all our time trying to talk environmental destroyers into being green. This makes sense when the only approach to greening is to encourage companies to reduce their own negative impacts. But we also want companies to to think more widely and to do whatever is needed to help society to be sustainable.

    The 'reduce-negative-impacts' approach runs the risk of leaving the industrial structure relatively unchanged. To achieve ecological and social sustainability however we need to seriously pursue the creation of:

  • a dematerialised economy
  • a closed-cycle economy
  • an ultra-land-efficient economy (to create space for major habitat restoration
  • a lower population economy.

    This involves a big paradigm shift and the future dominant industries will almost certainly be very different from the current ones. Since we want to encourage the structural shift of the economy to the new pattern we should be spending a lot of time identifying the winners and the new opportunities. We then need to activate the elements in the current economy that can take on the new opportunities most effectively. Then, to quote Peter Ellyard, we can create vested interests in the 'sustainable future' that can do battle with the vested interests in the 'unsustainable present'.

    If we follow this strategy we should be spending a lot of time talking to service industries and the information industries, even more so than the remedial industries like pollution control, recycling and bush restoration. That is not to say the remedial industries are not important. They are important. But they, like the mining and agricultural industries, will never be more than a small percent of the economy. The mega-winners of the future will be the service and info companies that deliver high (and growing?) living standards for all while creating the dematerialised, closed-cycle, land-efficient economy.

    The next strategy is to work with industries where strategic defections from the camp of the vested interests in the unsustainable present are possible. The work by the Rocky Mountain Institute to get the hypercar onto the market, and to get first BP and then Shell to defect from the 'climate change is no problem' lobby group are powerful examples of this strategy in action. The advantage of this sort of shift is that it shakes up and significantly erodes the political power of the group of vested interests in the 'unsustainable present'.

    However, because the defectors come from the dominant industries in the old industrial structure they will most often be reluctant to shift paradigms altogether and so if we rely upon this strategy alone there is a big risk that the needed industrial restructuring will get stuck halfway. I think the problems with Monsanto illustrate this phenomenon very graphically.

    It is therefore essential to complement the "encourage strategic defections" strategy with big efforts to "engage the potentially big winners in the new paradigm of the sustainable economy".

    The final strategy is to "provide structural adjustment support to the losers". The rise of 'surly politics', exemplified in Australia by the Hanson phenomenon, shows what happens if major change is not accompanied by consideration for the losers. This sort of structural adjustment usually requires significant expenditures and government involvement is essential. It is also essential to keep in mind that the key requirement of structural adjustment is to look after the affected people. The interests of the affected firms should come second. It is not necessarily a disaster if an obsolete firm that cannot find a future in the sustainable economy goes into liquidation, but it is a calamity if people dependent on obsolete firms suffer. Care needs to be taken to avoid obsolete firms creating an effective political coalition to fight the needed changes. Structural adjustment assistance can play a very important role here too including assistance to firms to help them find a transformation path into the new economy.

    So what does that mean in relation to the aluminium industry? I think this industry falls into the category of those theoretically capable of being strategic defectors. So they are worth working with provided we put in enough effort, early enough, to "engage the potentially big winners in the new paradigm of the sustainable economy".

    But before we can do the latter we have to imagine what the winning areas will be on the way to and in a sustainable economy.



    Last modified: 4 August 1998

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