Let’s not reboot the economy with a floppy disk.

Our social fibre pulls between the way things were, and the way things will be. As we pull on our ‘back-to-work’ uniforms and hop in our cars to absorb morning talk-back radio doused in caffeine while wading through peak hour, many of us are uncomfortably aware that our economy is tethered to past assumptions.

Will we return to an economy fuelled by fossils?

David Hetherington, of thinktank Per Capita, predicts a return to BAU. One in which “privileged groups will continue to prosper; little progress will be made on climate change; ordinary citizens will continue to feel they have little say in how the country is really run” (May 2020). This month Australia is officially entering into a recession. The economy shrunk by 0.3% in the March quarter. June results are expected to show further decline. It’s our first acknowledged recession in 29 years. Yet this news has a silver lining, for when everything is ticking along nicely, there is no window through which to interrogate the architecture of power.

The head of green growth at OECD, Kumi Kitamori, stated this month, "We need to build a more resilient, inclusive and sustainable economic model that prioritises green and low-carbon policies" (Organisation for Economic Co-operation and Development, June 2020). This week at CEDA’s State of the Nation forum, Prime Minister Scott Morrison spoke of a “need to return [to] the growth that will support real and sustainable jobs” however put forward a plan to invest $180billion in infrastructure with little reference to the green economy or to addressing jobs for women and youth – those hardest hit. The Federal Leader of the Opposition, Anthony Albanese, on the other hand, proposed to “adopt the carbon-neutral target of zero net emissions by the year 2050” which CSIRO estimates “would result in higher wages, higher growth and lower energy costs” (CEDA, June 2020).

Globally, we are seeing the largest ever UN-backed, CEO-led climate advocacy effort with 150 powerful corporations, including Carlsberg, H&M, Coca-Cola European Partners, JLL, Sky and Pernod Ricard, with a combined market capitalisation of more than $2.4trn, having signed a joint statement urging governments to focus on a green recovery by aligning COVID-19 economic responses with the latest climate science (EURACTIV, May 2020). In Australia, 

CEO of Unilever Australia, Nicky Sparshott, calls for similar action here. "[Corporate Australia] needs to be way more ambitious," she said. "The coronavirus has been a really stark reminder of the fragility of our current economic system… With climate change posing a similar threat, here is our opportunity to be much more future-focused" (Powell, SMH, 2020). Many leaders believe the current inflection point is our make or break moment to become a global green economy superpower. Now is the time to speak up.

Robyn Denholm, chair of Tesla, spoke to me as part of the City of Sydney #VEP (Visiting Entrepreneurs Program) last week. She strongly advocated the need to rethink the building blocks of the Australian economy. “I think in rebuilding the economy post bushfires and COVID, it's a unique point in time when business leaders, consumers and political leaders can really change the fabric as we go forward,” Denholm said. “We've had 29 years of good growth as a country. I think we should be using this pause that's happened in the economy to really change the trajectory and the vector of the economy towards more sustainable energy solutions” (Robyn Denholm, June 2020).

We do not need a restart we need a reset.

The building blocks of the old economy reflect old power structures that were already teetering. With unemployment growing and youth underemployment rocketing to three times any other demographic group, (among the highest within the OECD) the inclusivity of our economy has been at stake for a decade (Per Capita, May 2020). Australia ranked dead-last in the 2020 Climate Change Performance Index reflecting the regressive nature of our climate policies (MacroBusiness, May 2020). And we continue to slip down the Global Innovation Index, now placed 22nd behind countries like Austria and Iceland. While productivity appears to be our strength, calls to move beyond GDPR are amplifying. Robert Kennedy’s rousing speech from 1968 is ricocheting through the world today:

“National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armoured cars for the police to fight the riots in our cities. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.” (Robert Kennedy, Kansas State University speech, 1968).

The green economy comes hand in hand with growth (naturally).

Solvency and sustainability need not necessarily be pitted against each other. The economic model that sees many of us commuting in peak hour, consuming without regard for supply chain waste and pollution, or investing dollars in companies that profit from inequality, is unsustainable. Uncertainty forces us to flounder in fear, or dare to dream. As a leader which do you choose?

Robyn Denholm says "'We should be planting the seeds now for the next 30 years of growth”. She focuses on the need for a “fair, green and just economy” in which technology, clean energy and green manufacturing play a central role. Denholm points to Australia’s strong financial markets, world-class education systems and abundance of high calibre talent as the ideal breeding ground to innovate and commercialise globally disruptive technologies. Denholm places our competitive advantage on the diversity of minds we have working on the world’s toughest problems. “It’s the coming together of creative people that transforms industries”, she says. “Diversity of thought is key to taking advantage of opportunities.” But, she says, we cannot underestimate the importance of ‘now’.

What if ‘now’ is lagging in terms of fiscal policy, innovative tax schemes and industry regulation? Speaking to Sydney’s entrepreneur community, Denholm argues the role of the innovator is to educate and not to wait for a right time. “To really make step-function changes, you will push up against regulations that are not ready… You get to a point where you can only push for the change if you already have the technology available. You have to take that to the regulators and show them. She speaks of the need to frame innovation hand-in-hand with well thought out delivery and economic outcomes. “No one will change policy on aspiration. You need to prove your position. You can point to a better way".

In May 2018, the International Labour Organization released a report that estimated 24 million new jobs would be created by 2030 in the move to a green economy. In Australia, we need to create a policy environment that makes it genuinely viable for low-emission, low-cost technologies to thrive. The federal government’s Technology Investment Roadmap discussion paper, published in May illustrates why it’s important for the role of public funding to be well defined. The road map argues that “government has an important role to play in supporting innovation to overcome a range of market failures”. A host of senior public figures support this stance. The green economy will be cut off at its roots without the legislation that places a value on lower emissions, either through market incentives or penalties.

The new capitalism favours invested (rather than vested) interests.

The new wave of reimagined capitalism breaking on the world today demands we find solutions to social issues, collaborate across sectors and innovate for new business models as part of our day-to-day decision-making. Fundamental to the new currency are the ‘shared value’ and ‘sustainable return on impact’ movements.  Gillian Tett, Edior-at-large and Chair of the Editorial Board, Financial Times last month noted, "If there is one thing that COVID has taught, it's the importance of lateral thinking, of peripheral vision, of holistic thinking...you have to think about the consequences of what you’re doing to a company or an investor or a government" (WEF, June 2020). 

Rebecca Henderson, in her recently released book, ‘Reimagining Capitalism in a World on Fire’, outlines the levers we need to pull to coordinate strategic change as a society. Inequality, climate change and a lack of trust in the political system require capitalism to be reclaimed. She agrees that COVID-19 has shown up the flaws in Old Capitalism particularly its inability to deliver value, justice and sustainability to the broader population. Henderson suggests that the private sector could play a significant role in driving systemic change. She speaks about the persistent ‘low road employment model’ whereby leaders run their companies by treating people as interchangeable units, managing them by numbers and driving them with fear. The ‘high-road system’ on the other hand, optimises outcomes by treating people with dignity and respect, designing a work system that is about incremental improvements and empowering, trusting and supporting our frontline people. This model though, requires an emotional investment from senior leaders.

Robyn Denholm echoes this sentiment, pointing to the boardroom as the scene of ongoing crimes against sustainability due to closed-mindedness, fear and tech-illiteracy. She tells us that the green economy will rely on each of us individually and collectively to drive social change from a grass-roots level. Using the example of Australia’s slow adoption of electric vehicles, Denholm says we lag due to a lack of understanding of the product itself. The handicap, it seems, lies not in the range of the Tesla battery, but rather in the range and robustness of our own imaginations.

“Audacious visions must be anchored in the day-to-day” Denholm tells us. “We need moonshots to disrupt industries…It does not matter whether we’re at the board room table or the kitchen table. We each need to get educated, understand new technologies and above all, retain an open mind.”

As we emerge from our hibernation and dust off our suits, our routines and our expectations, can we throw the old floppy disk in the (recycled) trash? It seems the time is upon us to place our heads firmly in the cloud.