Degrowth: It's not a dirty word for business

Christine Chang
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Degrowth is a concept that’s rapidly gaining traction, but it doesn't mean your business needs to go backwards. It’s a planned reduction and change in the way we use natural materials and energy to preserve the planet's dwindling resources.

In our recent research report titled, The Circular Revolution: A call to action for Aotearoa New Zealand, we said: “We are at a critical juncture in history. A place and time where we look extinction in the eye and see our own reflection staring back … The simple truth is we live on a planet with finite resources. Yet our consumption of these resources is growing exponentially. We have a choice to make: invest in our planet or forfeit our lives and the lives of generations to come. But when the task of saving the planet is so immense, how do we begin, and what action can each of us take?”

So, how do we begin? Enter degrowth. 

Fear not, degrowth isn't a dirty word for businesses. Degrowth is a concept that’s rapidly gaining traction, and put simply, it’s a planned reduction and change in the way we use materials and energy. Degrowth doesn’t mean your business needs to go backwards, but to focus on ways of becoming more resilient and sustainable, and less vulnerable at the core of your organisation through heavy reliance on diminishing natural resources. 

On a macro-economic level, degrowth ensures resources are shared more equitability and used to only create things people need. Currently, financial growth is the central pillar of our global economy and is used as a measure of how humans progress. But should an unrelenting focus on wealth generation be used as a proxy for the advancement of humanity?  No. And we shouldn’t be afraid of focusing on new goals as we transition to a sustainable future.

What action can your business take? 

For companies, degrowth starts with evaluating your business model and presents an opportunity to think about how your organisation can evolve as our natural environment changes. A degrowth mindset embraces a circular economy instead of our current linear system of take, make and waste – taking from the environment to make products that eventually end up in landfill as waste. You can design waste out of your operations by adopting circular business models:  

Product as a service (PaaS)

The PaaS business model sells the use of a service or product, but not the product itself. The core function and benefit of the product is provided to the customer, but the manufacturer or distributor retains ownership of the product and its materials. They take responsibility for maintaining the product and keeping its materials at their highest value use – and out of landfill. Examples of PaaS products and services include leasing of equipment or transport solutions, hiring tools or renting apparel.

Circular materials

These materials are renewable or recycled resources that are kinder to humans, animals and the environment. Certain plastics and metals can be repurposed for their next lifecycle in a new product; for example, the rare earth elements and metals Apple removes from old phones to make new ones, and Citizen Collective’s process of turning bread into beer and then back into bread again.

Product life extension

As the name suggests, this model maximises the life of a product for as long as possible before repurposing or disposing of it, ie, it’s built to last. This is achieved by designing products to last as long as possible, using robust materials and making repairs easily accessible to users. Extending the life of a product can involve refurbishing or rebuilding existing equipment instead of buying new parts or machines. Second hand stores and websites, and donating goods are also excellent examples of how we can extend the life of our products – if you no longer have a use for a certain item, someone else will.

Product loops

This involves circulating products back through the business or its allied organisations to retain or recapture the value of materials through re-use, remanufacturing and/or recycling. For example, Interface Inc has implemented a take back system for millions of kilogrammes of used carpet and carpet tiles. These would otherwise end up in landfill. They are turned into yarn for new products or granules for the backing of newly produced tiles.

Use optimisation

Use optimisation maximises the utilisation of a product or service more efficiently. This model often comes in the form of sharing platforms which match and connect buyers and vendors seeking things like second hand goods or spaces to rent for various purposes. Trade Me, Sharedspace and Mutu’s exchange platform are good examples of this.

Many existing business models won’t adapt to a natural environment that can no longer support them. By embracing degrowth and new possibilities, whole new industries will develop in a more circular and sustainable economy. Companies that play an important role in a circular society - such as resource sharing platforms, repair and reuse services, and organisations that champion employee and environmental welfare will see success in the future. Is it time for your business to consider some strategic repositioning? How can your organisation add value to society without increasing waste year on year? How can your organisation degrow and still survive? 

But wait, there’s more value for your business beyond saving the planet … 

Catering to the rise of the conscious consumer market

Our research revealed consumer sentiment is moving in the right direction for the planet. Planned obsolescence is no longer a viable offering to consumers who are becoming increasingly conscious of their purchasing behaviour. Businesses that produce high quality goods with a minimal amount of by-product waste, longer lifespans and the ability to be reused, repurposed or recycled have a distinct competitive advantage over those that don’t. 

Eliminating unnecessary costs

Degrowth can be a tool to increase efficiencies in businesses. Businesses can reduce unnecessary costs by eliminating waste and streamlining their processes at every step of the supply chain. Take product packaging for example; reducing the packaging for products means less packaging materials are purchased, faster production times are achieved, and less machinery – and energy – is used in the process. 

Recruiting and retaining talent

Employees are expecting more from the brands they work for, and they leave organisations that don’t align with their values. They want to work for companies that strive to do better for people, communities and the environment. COVID-19 was a major catalyst for change as it forced people to consider what truly mattered to them and the world around them, and whether the companies they worked for aligned with these values. In October 2022, according to the U.S Bureau of Labour Statistics, 2.6% of the workforce quit their jobs. This is around 4 million people dissatisfied with their roles and leaving their jobs to seek opportunities elsewhere.

In China, ‘tang ping’ (lying flat) is becoming more popular throughout society. It is a social movement where young people are choosing to reject materialism, long working hours, and high costs of living. Instead, by ‘lying flat’, people are focusing on personal happiness, minimalism, and sustainability. 

Reducing risk by remaining resilient

With the price of gas and natural resources increasing due to depleting resources, now is the time for businesses to plan for the inevitable. Degrowth can be incorporated into your risk management strategy to build resilience; it encourages businesses to think about how supply chains can be kept as lean as possible. This can be achieved through shared ownership or shared use of logistics and materials. An example of this can be seen in our very own kiwi startup Mutu. It has developed an online resource management platform where organisations can list, sell, and re-use assets to reduce procurement costs, and more importantly – decrease landfill waste. You can find a multitude of items on the site from office furniture and laptops, to 3D printers and cars.

Embrace degrowth or risk being left behind

As we continuously grapple with disruptions caused by climate change, it’s vital we build develop capabilities that will prepare us for the future. To degrow will build resilience into our businesses to benefit our environment, communities, and a more circular economy. It ensures that we are not reliant on unsustainable fossil fuels and destructive natural extraction to support our lives and livelihoods. Degrowth brings the focus back to people and our natural living environment.