This article, first published in Sept. 2020, is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.
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The swan has long been a symbol of transformation. Think of the tale of the Ugly Duckling by Hans Christian Anderson. In the same spirit, the title of my most recent book is Green Swans: The Coming Boom in Regenerative Capitalism (Fast Company Press, 2020). It is the tale of the accelerating transformation of capitalism, markets and business—a process likely to reach a critical inflection point in the 2020s.
And just in case this seems far-fetched, consider this. In September, Walmart, the world’s largest retailing company, committed itself to becoming a regenerative company. It is now targeting zero carbon emissions by 2040—and aims to protect, manage or restore at least 50 million acres of land and one million square miles of ocean by 2030 to help “combat the cascading loss of nature threatening the planet”.
The 2020s will either produce a world of “Black Swan” breakdowns, among them the climate emergency and species extinction, or of breakthrough Green Swan solutions. More likely, of course, it will produce a shifting mix of both, continuously challenging us to move the needle from black to green.
Readers may spot that the Green Swans metaphor inverts the one Nassim Nicholas Taleb used in his 2007 book, The Black Swan. Its subtitle? The Impact of the Highly Improbable. A professor, risk analyst and former hedge fund manager, Taleb explained how Black Swan events typically come as a complete surprise and can have massive impact, generally for the worse. Then, often, they are poorly analysed, using selective hindsight. As a result, time and again we fail to understand what has just happened, setting ourselves up to be blindsided once again.
Green Swans, in contrast, are positive market developments once deemed highly unlikely—if not actually impossible. For most people, they also arrive more or less out of the blue. And they can have a profound positive impact across the “triple bottom line” of economic, social and environmental value creation. At their best, they are simultaneously environmentally restorative, socially just and economically inclusive.
But you cannot simply wish resilience into existence. It must be invested in, at pace, at scale and often over extended time periods.
Early on, many Green Swan innovators and entrepreneurs tend to be dismissed out of hand, very much like the Ugly Duckling in the fairy tale. Only later do critics and sceptics see what their eyes—their minds—have been blind to. The ungainly cygnets (or start-ups) morph into something else entirely.
Happily, Green Swan solutions—including new mindsets, technologies, business models and policy frameworks—are already at work solving at least some apparently impossible challenges. But they need help to reach the necessary pace and scale. We must also ponder how to help some of the world’s “lame duck” industries, which otherwise will exert every sinew to slow down the necessary changes to transform their mindsets and business models.
When we announced the first-ever product recall for a management concept in 2018, through the Harvard Business Review, we soon after launched the Tomorrow’s Capitalism Inquiry. That, in turn, gave rise to the “3Rs”: Responsibility, Resilience and Regeneration.
As we dug deeper, however, it became clear that almost all business effort in pursuit of sustainability to date had focused on the Responsibility agenda. Typical platforms in this area have acronyms like GRI (Global Reporting Initiative), IIRC (International Integrated Reporting Council), SASB (Sustainability Assounting Standards Board) and WBCSD (World Business Council for Sustainable Development). And key activities have focused on voluntary standards encouraging greater transparency and accountability, stakeholder engagement, supply chain management and investor engagement.
Unfortunately, however, all this effort has signally failed to head off a growing number of “wicked problems”, at the outer edge of which we see the Black Swans flagged by Taleb. The COVID-19 outbreak is one, though Taleb insists it wasn’t a Black Swan because we should have seen—and some did see—it coming. Resilience is now on many leaders’ lips, with growing numbers of commentators belatedly noting that the intense drive for efficiency through the most recent period of globalisation severely dented many forms of resiliency—economic, social, environmental and political.
But you cannot simply wish resilience into existence. It must be invested in, at pace, at scale and often over extended time periods. Indeed, the Green Swans change agenda requires a massive shift in thinking and investment towards the regeneration of our economies, societies and environment.
The exponential increase in complexity as business moves between the three stages is illustrated below:
That’s why I am now focusing on developing the first Green Swans Observatory—to scan for, identify, analyse and, over time, support Ugly Ducklings that promise to advance Green Swan market trajectories. The solutions to most of our greatest challenges already exist and can turn our economies around, if we can work out how to replicate and scale them while driving system change around social inclusion and deep decarbonisation.
|Tackling COVID-19||Sustainable Development Goals||Entrepreneurship||Climate|
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