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The transformation toward a more sustainable form of enterprise and development began in the 1990’s with the “eco-efficiency” revolution when, for the first time, it became clear that reducing waste, emissions, and pollution could actually save money and lower risk. Eco-efficiency was complemented by the Millennium Development Goals (MDGs) and corporate initiatives in “social responsibility” aimed at addressing some of the more obvious and egregious social inequalities resulting from globalization. But as important and groundbreaking as these innovations have been, they have succeeded only in slowing the inevitable arrival of the Reckoning…

In 1997, I published an article in Harvard Business Review entitled “Beyond Greening: Strategies for a Sustainable World.” The piece was among the first published by the journal on the topic of “sustainable business;” and much to my surprise, it won the McKinsey Award that year as the best article in the journal. The article stressed that while corporate “greening” strategies aimed at incrementally reducing negative environmental impacts and building social legitimacy (e.g. eco-efficiency, CSR projects) were important, they would not be nearly adequate to the challenge (and opportunity) of global sustainability in the decades ahead. Even then, it was clear that “beyond greening” strategies—innovative new clean technologies, and more inclusive business models that included and lifted the four plus billion poor at the base of the income pyramid—would be essential if we were to fundamentally change the course of the global economy, and set it on a path to sustainability.

Now, twenty years later, I write with some good news and some bad news. 

 First the good news: A growing number of corporations, entrepreneurs, multilaterals and NGOs have launched “beyond greening” business initiatives. Indeed, “clean technology” has become a large and growing investment category with more than a quarter billion dollars of investment each year. And, my 2002 article with C.K. Prahalad entitled “The Fortune at the Bottom of the Pyramid” helped to ignite a new business-led movement described variously as “social entrepreneurship,” “inclusive business,” “sustainable livelihoods,” “opportunities for the majority,” and most recently, “shared value.” And, most recently, the advent of the Sustainable Development Goals (SDGs) has served to reinforce the scale and scope of the social and environmental challenges we continue to face.

Now for the bad news: We have not yet begun to fundamentally change the unsustainable trajectory of the global economy. Instead, over the past twenty years, we have added nearly two billion more people to the global population and further intensified our ecological footprint on the planet. By 2030, the global “middle class” is expected to grow from the current 2 billion to more than 5 billion people, with the attendant increases in material consumption, waste generation, and greenhouse gas emissions. And while the quest to eradicate extreme poverty is necessary and important, the science is also clear: we have overshot the carrying capacity of the planet and serious repercussions are now inevitable.

To make matters worse, over the past twenty years we have added two new and foreboding crosscurrents to the global sustainability challenge: First, a growing number of people in the developed world that have been left behind by globalization have realized their plight and flexed their political muscles—witness BREXIT in Europe, the rise of Donald Trump in the US, and a growing hostility toward global trade pacts. And second, the global spread of information technology and social media has inadvertently helped to fuel extremist movements, information warfare, election hacking, and misinformation campaigns around the world. The result? Nativism, atavism, protectionism and isolationism are now on the rise at precisely the time that we need more cooperation and multilateralism to address the mounting transboundary challenges that we face—climate change, loss of natural capital, rising inequality, mass migration, and terrorism.

We have thus arrived at the Day of Reckoning for business—and the World. As recent missives from the likes of Larry Fink at BlackRock implore, the time has come for business to finally step up to the plate. With governments in retreat and civil society overburdened, the world is turning to the private sector to address the monumental challenges we now face. The time is now to move beyond “sustainability” as a set of separate but important company initiatives to one of core purpose. We are now past the point where even aggressive clean tech and inclusive, base of the pyramid “initiatives” enable us to change course rapidly enough. Business cannot long thrive within deteriorating environments and failing societies. This means nothing less than refocusing corporate mission and purpose on solving the world’s problems, and building the capabilities and partnership ecosystems to make it happen.

The world is stuck in a prolonged downturn--growing inequity and a spiral toward environmental meltdown--and we can't seem to find a way to turn the corner.  Not surprisingly, there is much talk these days about job creators--in US politics as well as geopolitics. 

Two camps seem to dominate this debate.  The first camp advocates cutting taxes for the rich, under the assumption that their investment and spending will "trickle down" to everyone else.  The second camp wants to focus attention on the little guy--the small and medium enterprise (SME) sector, under the assumption that assistance for "mom and pop" enterprises will enable them to grow and flourish from the "bottom up." 

The reality, in my view, is that neither the "trickle down" nor the "bottom up" perspectives will get us out of the hole that we are in.

Some years ago (1978 to be exact) Filley and Aldag published a wonderful piece in the Academy of Management Journal entitled "Characteristics and measurement of an organizational typology."  In this article they empirically classified organizations into one of three types:  Administrative, Craft, and Promotional.

Administrative organizations are established enterprises that are run by professional managers using formal systems of reward and incentives.  At best, they generate slow, linear growth since they typically compete in established industries where unsustainable practices and bureaucracy reign supreme among incumbents.  And they produce few jobs, since their focus is on increasing labor productivity rather than employment.  Indeed, the corporate sector (the largest of the administrative organizations) makes up fewer than one percent of the world's enterprises and has actually shed jobs over the past decade, at least in the developed world.

Craft organizations comprise the vast majority of the world's enterprises which are created by their owners for the purposes of convenience or survival.  Most "mom and pops" fit into this category and their defining characteristics are informality and a desire for stability.  It should come as little surprise that the small shops and microenterprises of the world produce little in the way of job or employment growth since they are seldom started or run by real entrepreneurs.  Indeed, those at the low end of the income scale are typically entrepreneurs by necessity rather than choice:  Given the option, most would prefer a good job for a decent wage. Expecting the world's craft enterprises to somehow rescue us from our current malaise is therefore a false hope a best and a shibboleth at worst.

That leaves us with Promotional organizations, which constitute only a small fraction of the world's SMEs.  Promotional enterprises are started by entrepreneurs whose intention is to get big.  They are driven by a passion for achievement and will stop at nothing to realize this dream.  Most fail.  But the few (less than 10%) that succeed are the real job creators and growth engines for the future.

The good news is that promotional enterprises can come from anywhere in the world and need not be focused exclusively on the development and commercialization of new technology.  In fact, entrepreneurs focused on solving social and environmental problems through enterprise are some of the most passionate and driven people on the planet.  Our challenge (and the leverage point for the future) is therefore to devise ways to multiply the number and success rate of this new breed of promotional enterprise.  

As a co-founder of the new Indian Institute for Sustainable Enterprise, I aim to do just that--dramatically increase the number and success of entrepreneurs and intrapreneurs focused on socially inclusive and environmentally sustainable business development for the 21st century. 

To realize this vision, IISE has assembled a complete innovation ecosystem to foster the creation of tomorrow's distributed and sustainable infrastructure, including an education platform, incubator, investment fund, technology bank, cluster (social) network, learning laboratory, and field support system.

The flagship offering is the Post-Graduate Certificate Program in Sustainable Enterprise which aims to create nothing less than a new model of business and entrepreneurial development appropriate to the challenges we face in the 21st century.

Twenty years ago, in 1992, the first Rio Earth Summit took place in Brazil.  While it was convened amid great fanfare and high expectation, the only really lasting legacy was the creation of the World Business Council of Sustainable Development (WBCSD) and the christening of "eco-efficiency"--doing more with less--as a key private-sector based strategy for sustainable development.  The governmental negotiations produced a massive volume--"Agenda 21" but little concrete action.

Next week, the Rio + 20 Summit will convene, again in Brazil.  The past twenty years has produced some good news and some bad news.  First the good news: Eco-efficiency has become standard practice in large corporations everywhere and is now spreading to the world's small and medium sized enterprises as well. This is a major accomplishment and has significantly reduced the impact per unit of output in economic activity. 

Now for the bad news: we have not yet begun to actually slow or reverse the level of human impact on the planet.  Indeed, over the past twenty years, we have tripled the size of the global economy, added nearly two billion people to the world's population, and further intensified our ecological footprint on the planet.  Growth swamped eco-efficiency.  Today, the science is clear: we have overshot the carrying capacity of the planet and serious repercussions are now inevitable.

In 1997, I wrote an article that appeared in the Harvard Business Review entitled Beyond Greening: Strategies for a Sustainable World. The piece won the McKinsey Award in 1997 as the best article in HBR.   The article stressed that corporate eco-efficiency (greening) strategies aimed at incrementally reducing negative social and environmental impacts, while important, would not be nearly adequate to the challenge of global sustainability in the decades ahead.  Even then, it was clear that "beyond greening" strategies--leapfrog clean technologies, and business models that included and lifted the four plus billion poor in the developing world--would be essential if we were to fundamentally change the course of the global economy, and set it on a course to sustainability.

In the 1990s, people spoke in terms of the need for fundamental change over the next decade or two.  Indeed, the title of the WBCSD's inaugural book was "Changing Course."  Unfortunately, all we got was continuous improvement through eco-efficiency. 

As I prepare to leave for Rio next week, my hope is that this Summit can plant a new stake in the ground--the Beyond Greening Stake.  I will do everything I can to drive this agenda.

We are running out of time.

We accept it almost without question—prognostications about the future which begin with the phrae: “if present trends continue…”  Extrapolating present trends into the future has become a stock technique for both those on the political left (e.g. “if present trends continue, the gap between rich and poor will continue to widen”) and on the right (e.g. if present trends continue, GDP will double again within the decade”).

Consider the following trend:  China consumed more energy in the past ten years than it did in its entire history, spanning thousands of years.  The vast majority of this energy was in the form of fossil fuels.  If this trend in energy consumption continues, then by 2020, China would consume virtually all of the oil currently produced for export in the world today.  And, by 2030, China’s oil consumption would exceed today’s total global production of petroleum.  What is the likelihood that this trend continues? 

Even if we set aside the obvious implications of this trend for climate change and assume that the world embarks on the all-out development of unconventional oil reserves (in the form of shale oil and tight oil), to compensate for the now declining world production of conventional oil, it is not clear that production could be ramped up at a sufficient pace to meet this exponentially rising demand.

It is important to note that similar projections of current trends into the future are commonplace in virtually every domain, including the production of food, consumption of water, and emission of greenhouse gases into the atmosphere.  The reality, however, is this:  it is highly unlikely that any of the current trends in the world can or will continue into the future for very long.

Nor should we expect them to.  History is filled with game-changing discoveries and events that fundamentally alter the trajectory of society and civilization.  Consider for a moment how future projections for energy and food production appeared in the 1890s, just prior to the explosive growth of the oil industry, automobile industry, and the rise of mechanized agriculture.  No one could have anticipated how radically the world would change in a relatively short period of time.

So expect a very bumpy and exciting ride over the next decade or two.  Nothing will stay the same.  We are approaching a time of unprecedented turbulence, change…and opportunity. 

Schumpetarian creative destruction will reign supreme.  Many incumbents will fall, and entirely new industries will be born.  An age of entrepreneurship on a scale that we cannot yet imagine is about to be unleased.

There is only one trend that we can really count on:  Present trends will not continue.

Since the dawn of the Industrial Revolution, economies of scale have ruled the day, with massive investments in power plants, pipelines, factories, transmission lines, dams, and highways to more efficiently serve the burgeoning consumption needs of the rising consumer classes. Industrial-era technologies (such as electricity, petrochemicals, and automobiles) were also closely associated with mass production, the assembly line, and centralized, bureaucratic organization, resulting in the rise of organized labor, worker alienation, and growing social stratification.

As we enter the second decade of the new century, however, the "dark satanic mills" of the Industrial Revolution are giving way to a new generation of technologies that promise to change dramatically the societal, economic, and environmental landscape. The information economy powered by the microchip has already begun to revolutionize society by democratizing access to information and empowering the repressed. Indeed, You-Tube, Twitter, and the rapid emergence of the "blogosphere" have spawned a bottom-up revolution in user-generated content.



Increasingly, the technologies of tomorrow will be decentralized, distributed in character and disruptive to incumbent firms and institutions. It is much cheaper and more energy efficient, for example, to treat drinking water at the point of use, rather than transporting massive quantities of clean water through pipes from treatment plants only to have much of it leak out or be re-contaminated before it reaches its final destination.

Indeed, we are witnessing a dramatic reversal of the logic of scale--the new diseconomies of scale.

Think about it: Over the past decade or so, we have witnessed the rise of: distributed generation of energy, point of use water treatment, community supported agriculture, microbreweries, point of care healthcare, microfinance, and sustainable construction, to name just a few. Indeed, the term "nano" has become de rigeur.

Because existing players in the utility, energy, transport, food, water, and material sectors have so much to lose, however, it is enormously difficult for the entrepreneurs developing such distributed solutions to gain traction in established markets. Yet given their small scale and distributed nature, such clean technologies hold the potential to creatively destroy existing hierarchies, bypass corrupt governments and regimes, and usher in an entirely new age of capitalism that brings widely distributed benefits to the entire human community.

And rather than depending on national governments or paternalistic social engineers to design the future for the aspiring masses, these disruptive new technologies may be best brought forward through the power of capitalism--not the capitalism of the Industrial Revolution, which enriched a few at the expense of many, but rather a new, more dynamic form of global capitalism that will uproot established elites and unseat incumbents by creating opportunity at the base of the economic pyramid on a previously unimagined scale.