What is a Green, Inclusive, and Open Economy? Is it the Future We Want, or the Future We Design?

By Ralph Thurm & Bill Baue

This is part 3 of the Reporting 3.0 series that highlights the ‘burning questions’ of Boards and Sustainability Professionals why we need Reporting 3.0 and what it aims to deliver with its Blueprints on Reporting, Accounting, Data and Integral Business Model Design.

What’s the issue?

In 2012, 20 years after the first global conference on Sustainable Development in Rio de Janeiro (or the Earth Summit), government leaders met again in Rio for what is now called Rio+20. The outcome document, entitled The Future We Want, called for creating a “green economy” that “should contribute to eradicating poverty as well as sustained economic growth, enhancing social inclusion, improving human welfare and creating opportunities for employment and decent work for all, while maintaining the healthy functioning of the Earth’s ecosystems.”

While we applaud this vision, we lament the relative lack of progress over the half-decade since its articulation. According to a progress review of The Future We Want:

“Action through … globally negotiated agreements or voluntary commitments … is not sufficient if we are to address the myriad environmental, social, and economic issues we face today.”

Perhaps the most significant outcome of The Future We Want is the establishment of the Sustainable Development Goals. However, as we point out in the previous article, the SDGs amount to a set of “do no harm” goals in an economic system that inherently creates harm. In order to be truly transformative, the SDGs would need to call for economic system design change. In the absence of such change, waiting for a Future We Want is like Waiting for Godot.

What can you do about it?

At Reporting 3.0, we believe in a more active stance — that desire needs to be accompanied by design; hence, we take the next step beyond The Future We Want to TheFuture We Design. The first step is to get crystal clear on our design parameters, starting with definitions.

Rigorously Define Green, Inclusive, and Open

In order to make sure we get what we “want,” we need to rigorously define what exactly that is, so let’s first start with general definitions of the three terms:

• We define green as ecological sustainability, or the cyclical regenerativity of earth systems and natural capital that serves as the foundation of wellbeing for all species, including humans. In Doughnut Economics, Kate Raworth calls for respect for ‘environmental ceiling’ thresholds, as exemplified by the Stockholm Resilience Center’s notion of Planetary Boundaries.
• We define inclusive as the extension of economic and social empowerment to all humans to achieve wellbeing and pursue flourishing and thriving, which requires systemic parity of access and opportunity for people of all sexes, genders, races, etc.. Kate Raworth calls for the broad achievement of minimum ‘social foundation’ thresholds.
• We define open in the sense of the unfettered flow of information and resources that basic human rights dictate. This notion underpins our definition of ‘rightsholders’ (as compared to shareholders or stakeholders): all humans have the ‘right to know’ about issues that impact them (as well as the right to privacy of information about themselves that doesn’t impact others), and the right to fair distribution of vital capital resources in the Commons needed to support their wellbeing.

The Rise of Positive Mavericks

Transcending the status quo does not happen accidentally, but rather requires the conscious adoption of what we call a ‘positive maverick’ stance, which calls for adherents to:

• work constructively (not destructively) toward positive change;
• think independently, challenging personal & institutional constraints, structural limitations, unconscious biases & shadow agendas;
• backcast from a desired future, building bridge foundations on the far side of the river and spanning backwards to meet the present;
• catalyze transformation from the foundations of incremental change;
• act at the scale and pace dictated by science & ethics;
• think and act at systems levels, making micro / meso / macro links;
• work collaboratively in ne(x)tworks, dispelling the illusion of separation to advance collaborative advantage;
• maintain persistence even in the face of widespread resistance to a transformative agenda & active hope in the face of the existential risk of societal collapse.

From ‘Wanting’ to ‘Designing’ — Desiderata and Principles

With these definitions established, we can turn our attention to design– which Reporting 3.0 pursued by producing Blueprints in four areas fundamental to leveraging the broad realm of disclosure to trigger economic system change: Reporting, Accounting, Data, and New Business Models. In our research reviewing hundreds of reports, we found a need for establishing the foundational desiderata and principles upon which a Green Inclusive and Open Economy rests.

Specifically, Reporting 3.0 identified Six Desiderata, a structured set of preconditions (connected to the vital capitals) for a Green, Inclusive, and Open Economy.

Figure 1: The Six Desiderata of a Green, Inclusive and Open Economy

Reporting 3.0 extrapolated these desiderata into Nine Principles that crystalize insight on what we call the ‘invisible band’ — a value system, the unspoken context that Adam Smith presumed in articulating the ‘invisible hand’ of the economy.

Figure 2: The Nine Principles of a Green, Inclusive and Open Economy

These tools — the Six Desiderata and Nine Principles– serve as a starting point for assessing alignment with the preconditions necessary to spur the emergence of a truly Green, Inclusive, and Open Economy.

• The Six Desiderata provide a comprehensive overview for ensuring strategies and interventions resolve root causes (instead of simply curing symptoms) by backcasting from desired outcomes with specific pathways for managing the multiple capital stocks within their carrying capacities to ensure ongoing capital flows that create system value (not just shareholder value or shared value). All this will support your transition planning.
• The Nine Principles provide the foundations for identifying organizational purpose, and subsequent development of vision, mission and generic strategy of how to design future business models that align with a Green, Inclusive, and Open Economy. The subsequent parts of this series will start to explain these Principles in more depth as they informed the development of all of Reporting 3.0’s Blueprints. We will refer back to the 9 Principles whenever they guided our recommendations. For now they are a representation of the ‘invisible band’ guiding the ‘invisible hand’ to act within real-world constraints.

What do you have achieved afterwards?

The concepts, exercises and tasks recommended in Parts 1–3 of this series focus on creating a transformational mindset, as exemplified by Positive Mavericks, which creates a foundation for applying what Reporting 3.0 calls ‘integral thinking’ (that you will learn more about in subsequent articles.)

What question will we discuss next time?

Economic System Design: what is it really that needs to change? See part 4 of our series here.

Please add your feedback, the authors Ralph Thurm and Bill Baue of Reporting 3.0 will look at all responses. Don’t forget to ‘wave’ if the above resonated with you ;-).

[Context of this series: The sum of these articles form the basis of an Implementation Guide that summarizes the total value of Reporting 3.0 in implementing a future-ready sustainability strategy and disclosure approach, in line with the idea of a Green, Inclusive and Open Economy. By posting these articles here Reporting 3.0 seeks feedback in the writing process of the final document, to be released as Blueprint 5 at the 5th International Reporting 3.0 Conference in Amsterdam, The Netherlands, on June 12/13, hosted by KPMG, see www.2018.reporting.org]