Joachim Jake Layes
- Oct 14, 2019
- 3 min read

Redefining Economic Value

The most critical challenge of our times is to overcome our dependency on linear consumption patterns: extracting resources and raw materials from nature - often under great efforts - to manufacture and then use products before throwing them away. The focus only on utilitarian and aspirational value has for too long dominated the definition of economic value - ignoring social and environmental impact. Every day, we consume and use, globally, an incredibly large number of products of various forms, shapes, and sizes, from microchips to buildings, infrastructure, entire cities; some of them last for us a lifetime, or longer; some commodity products just mere seconds. We dispose of a product, either because it stopped functioning or because it only has fallen out of fashion, no longer representing any value for us; with a flick of the hand, we toss it into the bin. Plastic bags we receive in the supermarket are used on average for just 12min before they, too, land in the trash. Single-use products made from plastics are like a drug feeding our linear consumption pattern addiction. The convenience and economies of scale are the two reasons why we are seemingly stuck with the linear consumption patterns; and why too few, consumers and businesses are keen to change it.

The Linear Extraction-to-Waste Mindset

We enjoy products for their benefit of utilitarian purposes; or simply because they make us look good and lift our perceived social status - not unlike our ancestor caveman dropping a stone cutting tool for a metal blade. Mass production continued nurturing this behavior of exchanging old for new, at a time when the first industrial revolution kicked off, and the world population was still below 1 billion people. The consumption-society accelerated to dominate, if not dictate, economic development after WWII, becoming a cornerstone of progress; we embraced it wholeheartedly.

Consequences of Ignorant Mass-Consumption

Mass-consumption driven economies-of-scale were influential in covering up the extraction material costs for a long time, making prices low enough for us to not bother. It had never occurred to us to care beyond material costs: manufacturing’s impact on society and environment was kept nicely hidden under the carpets of far-away countries, scattered through invisible air movement, and spread in vast oceans of water. For too long have we taken for granted the extreme efforts and costs needed to extract resources from nature: energy, capital, time, human resources, as well as social and environmental impact. Now we’re paying the consequences of our consumer lifestyle as they have become all-to visible and evident in everybody’s life. Everywhere. Plastic in our food chain doesn’t care about the social status of the eater. Air pollution & haze doesn’t know borders. Non-biodegradable waste doesn’t treasure the land on which it is piling up.

The Tipping Point

We have reached a tipping point. The general public and governments are waking up to the plastic, pollution, and waste problems. China has stopped importing waste, other countries have followed suit or are considering similar waste-import-bans. As everyone and everything worldwide is more and more connected, we uncover the truths behind our linear consumption model addiction. And, the environmental costs are coming back to bite us all. The density of cities further amplifies the problem. What previously was out-of-sight, out-of-mind inconvenience of the past has become the in-your-face challenge of our times.

Nature, too, is a Stakeholder

One essential step to solve this challenge is for the public and private sectors to show accountability to all stakeholders. That means to recognize nature as a stakeholder as well. Younger generations already understand it. Studies show that the Millennial Generation cares more about the environment than their parents. Generation Z is pushing further, initiating Fridays for Future climate strikes and forcing the design of products; hiring workers on the cheap? Manufacturing products under inhuman and unhealthy conditions? Polluting air, land, and oceans? Not acting on the climate crisis? For them, all of this is simply unacceptable. Circular economy is the answer.

Sustainability is not a Cost-Center

When the coming generations of consumers decide with their wallets, it will be with a new set of preferences. It will change the definition of economic value to include considerations of social and environmental impact in addition to the practical and aspirational benefits. It will consist of the prerequisite that ‘waste’ doesn’t exist but represents value, that the circular economy is the way forward. Companies of all sizes, from startups to multinational corporations, have to look beyond sustainability as a ticking-the-box-CSR, philanthropic, or risk-mitigation activity. Instead, sustainability needs to be integral to any business’s core strategy to combine social and environmental with economic top-line and bottom-line focus. It is not a cost center, but an opportunity to innovate, even to build out a competitive advantage in the market place, to raise the productivity of resources while designing for their circularity. Coming generations of consumers will expect nothing less.

Need help in integrating sustainability into your business’ core strategy? Contact me.

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References

Redefining Economic Value

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