Redefining Business Growth within Planetary Boundaries

March 16, 2023
Authors
  • Giulio Berruti portrait

    Giulio Berruti

    Director, Climate Change, BSR

  • Julie Dugard portrait

    Julie Dugard

    Manager, Climate, BSR

Key Points

  • The planetary boundaries framework presents a set of nine limits within which humanity can continue to develop and thrive for generations to come. Five out of nine of these limits have crossed into high-risk territory.
  • It is time to move beyond incremental change, and build long-term solutions through business model innovation and credible action.
  • A thriving business will have to innovate and explore new strategies to address the tension between traditional growth-based models and sustainability goals.

The Environmental Crisis Is the Defining Issue of Our Time

Economic, equitable progress and wider prosperity that is limited to planetary boundaries are the greatest challenges that business faces–but current environmental trends are alarming.

Despite increasing commitments to reduce our global environmental impacts, already, five of the nine planetary boundaries have crossed into the high-risk area. Consequently, surpassing such boundaries greatly increases risks to our planet, people, and the economy.

Making matters worse, nine out of sixteen tipping points that regulate the state of the entire climate system are showing signs of instability—which could bring unpredictable damage to Earth, making it extremely difficult to achieve the Sustainable Development Goals. On climate, for example, the 1.5°C goal is slipping out of reach, emissions increased in the 2010s, and several climate impacts are now considered irreversible.

All of these events are occurring against the backdrop of a polycrisis, with increasing economic pressure and social inequality across the globe. The latest IPCC report confirmed that every fraction of a degree escalates further risks for people, the planet, and business.

Credible Business Action to Meet the Moment

The private sector has a key role to play in accelerating the global response to the polycrisis. Business will face increasing stakeholder scrutiny to deliver holistic solutions that truly address the environmental and social crisis and to move from commitment to delivery.

Beyond incremental change, a new phase of credible business action is required to meet the moment. In the last decades, business focused action on “low-hanging fruit” efforts to deliver efficiency (energy savings, switching to renewable energy, leaner production processes, etc.), aiming to “do less harm” and decouple environmental impacts, and GHG emissions specifically, from business growth without fundamentally shifting their traditional business model.

This has led to several examples of relative decoupling, where impacts (resource use, emissions) are reduced compared to business-as-usual. Nevertheless, overall impact continues to increase while business activity (e.g., sales) grows.

Increasingly, businesses are facing questions on whether their existing models are sustainable and resilient in the face of these challenges. Traditional growth-based business models, even ones with substantial sustainability strategies, can be at odds with long-term, transformational environmental goals necessary to deliver against the current crisis. As a result, many businesses will be forced to make compromises between their business objectives and their ambitious environmental targets (e.g., net zero, nature-positive).

Designing Alternative Business Models

While many businesses understand the need to transform their models in the face of these macro challenges, few solutions have emerged beyond experiments and pilot projects. A thriving business within planetary boundaries will need to innovate and explore new strategies, addressing the current tension between traditional growth-based models and the pursuit of environmental and societal goals.

BSR believes that exploring alternative models can improve business resilience and achieve key environmental objectives within the planetary boundaries while also ensuring long-term value. Alternative strategies can include scaling up circular approaches that remain peripheral for many businesses, but also exploring the business implications of theories such as sufficiency and degrowth, which so far remain macroeconomic concepts with limited business applications.

There are no simple, ready-made solutions to address the current challenge, but we believe business model innovation holds strong potential to deliver within planetary boundaries. BSR is ready to partner with members and explore what alternative models would look like and the role of business in this transformation to deliver our vision of a just and sustainable world.

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.

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