A commercial bank arguing for a post-growth economy? Triodos are doing exactly that with their new report
Startling commitment from Triodos, the sustainability-oriented bank, in its new Economic Outlook report for 2024 - that they won’t be committed to economic growth at all costs. Indeed, they seek to promote a “post-growth economy.” From their long-term investment paper:
Global economies are growing. The average individual is estimated to now be 1.5 times wealthier than they were in 2000. In this long-term outlook we discuss that growth is a fundamental characteristic of market economies as we know them.
Market economies in their current set-up require growth to be stable. But, even if advanced economies would pursue growth at all costs, the long-term growth outlook is meagre.
We argue that growth constitutes an ecological problem. We are currently exceeding 6 out of 9 planetary boundaries, which is driven by economic activity. Ecological crises are deepening. Socially, growth has not delivered either.
Progress on sustainable development is stalling, and poverty has risen globally. We show that counting on innovation to completely decouple economic activity from ecological impacts is not evidence- based.
We then discuss three pathways along which an economy that provides wellbeing for all within planetary boundaries might be built.
We discuss 1) a more sustainable way of producing, 2) a more sustainable way of consuming and 3) a collective decision to have more free time. Although we separate them theoretically, these pathways could be mixed in practice.
After briefly discussing the dynamics these pathways imply, we provide a tentative forecast for their impact on both economic growth and ecological impact. All pathways successfully reduce ecological impact and decrease the size of the economy in the process.
After demonstrating that we should move to a post-growth economy, we discuss how to make it happen. We first discuss some of the policy and mindset changes required to free our economies of the growth imperative.
These entail an institutional reconfiguration enabling governments to function without growth and a reorientation of companies towards all stakeholder interests and the common good.
We then turn towards implications for the financial sector and investors. A deep overhaul of the sector is required, including more diversity and an end of ‘too big to fail’ thinking.
We conclude that investors can make financial returns in a post- growth transition, but only if they put impact first.
Through investing actively in the real economy and committing for the long-term, investors can enable the post-growth transformation we need.
More here. And from their press release:
For affluent countries, Triodos Bank believes it is important to acknowledge that additional material prosperity does not necessarily contribute to overall well-being. At the same time no growth or even a decline of economic activity in affluent countries will allow less affluent countries to progress, because there higher inclusive growth can positively impact living conditions.
The pathways towards post-growth require radical shifts. Some sectors need to phase out, while others must thrive. Sectors with high pollution levels, such as fossil fuels, fast fashion, and industrial agriculture, may generate financial value, but they erode ecological and social values, subtracting from (future) wealth.
In a post-growth economy, there is room for restorative businesses that create net-positive value to flourish. Facilitating this transformation requires significant changes, spanning from policies to behaviours. Triodos Bank believes this is a plausible undertaking.
For more on post-growth, read Tim Jackson on “imagining post-growth” from May this year. An extract:
We should be in no doubt that we are confronted with a difficult dilemma. Perhaps the most profound dilemma of our times. Growth is unsustainable. But the world beyond growth is frightening. We have built an economy that is dependent on growth.
We must learn anew how society works, when the economy is not growing. How welfare systems work. How financial systems work. How government works.
And we need to confront the impossibility theorems presented to us by those who resist change.
If you think you are looking at a dysfunctional system that benefits noone, then you are probably not looking hard enough. The fine words and supportive gestures of those who cling to power hide vested interests intent on sabotaging progress.
And this is where our allegiance to care must be tempered with realism. Our compassion for each other toughened with an iron resolve. Our infinite creativity grounded in a sense of struggle.
To wake up each day to a sense of security and comfort is a beguiling vision for our lives. To wake up to a sense of struggle can take our breath away. And yet, that struggle provides another kind of answer to the challenging question posed to me last night (by that young woman). How can a postgrowth economy help a generation of young people face a future filled with anxiety and doubt?
Not through a rose-tinted sense of blind hope. Not through a false promise of more and more. Not by vague assurances that everything will be ok. But through a commitment to the struggle.
The antidote to despair lies not in hope but in action. In agency. In engaging with all our creative energy in the task ahead. A path through the limits towards the limitless. A prosperity based not on wealth but on health.
A struggle to unravel the systematic distortion of values that lies at the core of a broken capitalism. And to construct in its place an economy of care and craft and creativity, fit for purpose on a finite planet.