Double trouble
The crux of the sustainability challenge, is that everybody, every year, wants more for less, and 'less' includes negative impacts on ecosystems and environments – not just financials. That creates a perennial pressure on enterprises to further cut costs and make room for sustainability while maintaining profit. The pressure further increases with new regulations requiring the disclosure of double materiality i.e. the adverse impact of a business on the society and environment, and the financial impact on the business from sustainability-related issues. Given how global and hyper-linked our industries are, every enterprise will sooner or later will suffer economic stress. The pressure will propagate through daisy chains of demand and supply, as organisations end up implicating each other in materiality assessments (like when reportingVAT), and the regulations extend to smaller enterprises.
The problem is, too many enterprises are already running lean, while relying on overstretched supply chains. In many businesses, buffers and margins are already thin. The pandemic showed us. Decades of cost-cutting, financial engineering, and outsourcing have left little room for manoeuvre, let alone the extraordinary and open-ended costs of sustainability. In the past, if customers or suppliers would not absorb a cost, enterprises could simply 'dump it' into an ecosystem or environment and get away with it. But today, societies are more alert because of climate change. Regulators and ESG investors and forcing negative externalities back into annual reports and financial statements.
So, if the ideas of simply reducing production and consumption, and everybody paying more for less, don't grab our societies. And, if shareholders and citizens aren't hesitant to vote out those who promise less for less. Then, whether promising demand, or promising supply, how will everybody continue to promise more for less?