Beyond Growth: How to Unveil the Path to Sustainable Business in a Post-Growth Era?
The relentless pursuit of economic growth is clashing with the finite limits of our planet. In this article, Thomas B. Long, EDHEC Associate Professor, and Giacomo Buzzao, Ca’Foscari University of Venice post-doctoral Researcher, explore the emerging topic of post-growth and the implications, challenges and opportunities for businesses.
Economic growth has been a defining feature of recent centuries, and particularly in the latter half of the 20th century. According to orthodox economists, this model has been remarkably successful in many aspects. Together with welfare and technological advancements, growth has pulled millions of people out of poverty (1), and raised the standard of living of countless others to levels that could only have been dreamt of a generation or two ago (2).
Yet, as we continue through the 21st century, doubts about the sustainability of this growth model are becoming more pronounced. Our reality is stark: our relentless pursuit of economic growth is clashing with the finite limits of our planet. Indeed, the most recent analysis finds we are transgressing 6 out of 9 of what have been defined as “safe and just Earth system boundaries” (3). This threatens key ecosystem services, the production of food, the provision of clean water, biodiversity, and ultimately humankind’s ability to thrive on planet Earth (4).
In this article, together with my co-author Giacomo Buzzao, PhD (Ca’Foscari University of Venice), we explore the emerging topic of post-growth, what it means for the overall economy, and consider the implications, challenges and opportunities for businesses.
From a growth dilemma to the green growth promises
Economic growth has been the cornerstone of business success, shaping strategies and goals across industries. But this growth has come at a significant environmental (and social) cost. We're now facing a critical juncture where the health of our planet demands a re-evaluation of our growth-centric model. It's not just an environmental issue; it's an economic one too. As resources dwindle and environmental regulations tighten, businesses that rely on traditional growth models may struggle to adapt.
Businesses and policymakers are pursuing various approaches in response to these sustainability challenges, such as circular economy, corporate social responsibility, and sustainable entrepreneurship (5). These approaches aim to decouple resource consumption from economic growth and are consistent with the ‘green growth’ paradigm: trying to maintain a growing economy while simultaneously achieving environmental and social sustainability targets. While these efforts are essential, they are increasingly recognised as insufficient.
Recent studies on the feasibility of green growth suggest that worldwide decoupling of growth from resource use cannot be achieved while maintaining the current pace of economic growth, nor is it likely to happen in the future (6). As such, a future without growth may be necessary from a sustainability point of view. However, as the core strategic goal of most governments, businesses, and entrepreneurs is still the pursuit of economic growth, this presents tension and challenge.
Could post-growth be the right alternative?
A post-growth economy focuses on decoupling growth from societal prosperity, helping to achieve environmental sustainability and wider well-being (7). While there is no widely agreed definition, the Post Growth Institute asserts that “[a] post-growth economy puts life and everything needed to maintain it at the centre of economic and social activity as opposed to the never-ending accumulation of money, and the pursuit of growth of all kinds without regard for its consequences.”
A post-growth transition means not only radical changes to socio-technical systems (8) but also to economic policy, moving away from economic growth as the central policy goal. This is especially true for the global north (9), where many social needs are already met, but at high environmental cost. In a post-growth economy, the success of a business isn't solely measured by its size or revenue growth but by the quality (and longevity) of its products or services, its ability to reduce, rather than increase consumption levels, its contribution to the community, and its ability to regenerate ecosystems.
In this new paradigm, businesses of all sizes will need to adapt. It's about rethinking how we define success. A small local business, focused on community needs and sustainable practices, could be seen as more successful than a multinational corporation with high revenues but a large carbon footprint and destructive growth strategies. The focus shifts to creating value in broader terms, incorporating social responsibility and ecological balance into the core of business models.
The Practical Shift and the role of (non) profit
What does this shift look like in practice? For starters, businesses might prioritise the longevity and durability of their products over rapid obsolescence. They could invest in circular economy models, where waste is minimised, and resources are reused. Renewable energy sources might replace fossil fuels, and supply chains could become more localised to reduce carbon footprints. These would be the low-hanging fruit. Ultimately, it is thought that governance and ownership models may need to change (10), with implications for how and why profit is generated.
Scholars argue that business growth is mainly driven by the private profit motive, often pursued through short-term financial returns (11). Profit, the financial surplus remaining after all business expenses are paid, has two different meanings in the English language. What makes a great difference is how this surplus is generated and whether it is available or not for distribution to owners as dividends.
In the ‘for-profit’ world, profit is also viewed as a reward for investment risk, encouraging further investment and growth, fuelling a cycle of wealth accumulation, but potentially exacerbating economic disparities and environmental impacts.
Conversely, the not-for-profit framework, characterised by a core social benefit mission and constraints on private financial gains and investment returns, presents an alternative that could foster a more equitable and ecologically sustainable economic system. These principles limit the pursuit of profit in favour of social benefits, aiming to mitigate the negative systemic dynamics associated with for-profit economies, such as inequality and environmental degradation. The question is whether these two paradigms can find common ground.
The Challenges and Opportunities of this inevitable adaptation
Adapting to a post-growth model won't be without its challenges. It requires a fundamental shift in mindset and operations. Companies will face pressures from shareholders used to traditional growth metrics, and transitioning to sustainable practices might require significant upfront investments. However, businesses that embrace this change could tap into a growing consumer base that values sustainability, potentially opening new markets and building brand loyalty in ways that weren't possible before.
As we stand at the crossroads of economic history, the shift towards a post-growth economy represents more than an environmental imperative; it's a new frontier for business innovation and responsibility. By redefining success, businesses have the opportunity to not just survive but thrive in a world where sustainability is not just a buzzword, but a foundation for lasting prosperity.
The example of Patagonia
Patagonia is a prime example of what is possible with the shift towards a post-growth strategy. Its innovative approach to business goes beyond its well-known environmental initiatives. Patagonia recently changed its ownership structure, making headlines in the process, by transferring ownership to a trust and a nonprofit organisation dedicated to combating climate change and preserving the planet's natural environment. This means the profits generated by Patagonia are reinvested in environmental conservation efforts, rather than being distributed to private shareholders. This restructuring not only cements Patagonia's commitment to sustainability but also positions it as a pioneering force in the corporate world, demonstrating that businesses can thrive while prioritising the planet and its future over traditional profit-driven models.
References
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(2) Max Roser (2022) - “The history of the end of poverty has just begun” Published online at OurWorldInData.org. Retrieved from: 'https://ourworldindata.org/history-of-poverty-has-just-begun' [Online Resource]
(3) Rockström, J., Gupta, J., Qin, D. et al. (2023) "Safe and just Earth system boundaries". Nature 619, 102–111.
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Long, T. B. (2024) "By forgetting the social dimension, is the Circular Economy missing an opportunity?". EDHEC Vox
(6) Hickel, J., & Kallis, G. (2020). "Is green growth possible?". New political economy, 25(4), 469-486.
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(8) Geels, F. W. (2010). "Ontologies, socio-technical transitions (to sustainability), and the multi-level perspective". Research policy, 39(4), 495-510.
(9) Khmara, Y., & Kronenberg, J. (2020). "Degrowth in the context of sustainability transitions: In search of a common ground". Journal of Cleaner Production, 267, 122072.
(10) Hinton, J. B. (2021) "Five key dimensions of post-growth business: Putting the pieces together", Futures, Volume 131, 102761, ISSN 0016-3287
(11) Hinton, J. B. (2020) “Fit for purpose? Clarifying the critical role of profit for sustainability”, Journal of Political Ecology 27(1), 236-262.
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