Analysis: Climate change, scarcity shakes the taboo of degrowth

  • Fifty years after the advent of the theory of degrowth
  • Long shunned, gets new attention
  • Climate change focuses the debate on reducing consumption

Aug 8 (Reuters) – Degrowth – the idea that a finite planet cannot support ever-increasing consumption – is about the closest thing to heresy in economics, where growth is widely seen as the best path to prosperity.

But, as climate change accelerates and supply chain disruptions offer rich-world consumers an unusual taste of scarcity, the theory is becoming less taboo and some have begun to wonder what a world could look like. of decrease.

After the UN climate science agency this year called for reducing consumer demand – a fundamental premise of degrowth – the think tank that runs the Davos forum released a primer on degrowth in June and the issue even began to appear in investment notes.

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“It’s a provocative term,” Aniket Shah, global head of ESG strategy and sustainability at Jefferies, said of the New York-based bank’s June 13 memo on “the opportunity for degrowth.” .

“But it’s not about going to a low-income country saying ‘you can’t grow any more,'” he said. “That said: we need to look at the whole system and see how, over time, we reduce total consumption and production overall.”

First coined in its French guise of “décroissance” in 1972, the theory gained supporters after the “Limits To Growth” report of the same year described a computer simulation by MIT scientists of a destabilized world. by an increasing consumption of materials.

Controversial from the start, this simulation has been attacked as flawed by some and applauded by others as oddly prescient in its prediction of accelerating planetary stress.

Over the past few decades, the global economy has grown faster than the carbon emissions it generates. But this partial decoupling has been far from sufficient to stop or reverse these emissions, allowing them to further aggravate global warming.

In April, the Intergovernmental Panel on Climate Change (IPCC) concluded that outright reductions in consumer demand were needed to reduce carbon emissions, a shift from previous emphasis. on the promise of sustainable fuel technology.

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Last month, the IPCC’s biodiversity counterpart, IPBES, included degrowth among a number of alternative economic models with ideas that could help halt environmental degradation.

“In plenary, even the word ‘degrowth’ was unchallenged. It’s very interesting,” IPBES report co-chair Unai Pascual told Reuters of the findings which were endorsed by 139 member countries. , including China, India, Russia and the United States. .

The article on degrowth published in June by the Davos organizer of the World Economic Forum alluded to the impacts of degrowth, suggesting that “it could mean that people in rich countries change their diets, live in smaller houses and drive and travel less”.


For Shah de Jefferies, it is such changes in behavior that could inspire a degrowth-aligned investment portfolio.

“Zoom, for example, would it ever want to be called a decay stock? I doubt it. But I can definitely see how a world that uses more web conferencing… means less travel, which is a very intensive way transport carbon,” Shah said.

It is easy to see how other products and services, such as fashion mobility and sharing, technologies allowing the transition from fossil fuels to renewable energies, or even the simple bicycle, could find their place in a hypothetical fund. of decrease.

But the extent to which ESG funds and the companies they invest in are willing to align with degrowth is a debatable question given that the theory explicitly prioritizes societal, environmental and other non-financial values ​​over the pursuit of profit.

“Degrowth is really about real sustainability,” Jennifer Wilkins, a researcher on emerging corporate sustainability issues whose work was featured in Jefferies’ note, told Reuters.

“It’s about providing what is necessary in terms of meeting human needs, within planetary boundaries. And today’s ESG investors don’t really understand planetary boundaries,” she said, adding that their focus remains “what has an impact on the company”.

This is perhaps not surprising.

Some countries have tried to measure economic performance differently – the tiny Himalayan kingdom of Bhutan has devised an index of “gross national happiness” and Japan is considering developing a measure of “green GDP”.

Yet economic policy and markets operate overwhelmingly on the twin tracks of increasing consumption and production.

Tim Jackson, an economist who has long criticized this model, said the current growth debate is “very, very muddled”, with different schools of thought vying for supremacy.

He cited Britain’s Conservative Party leadership race – a race that will decide who will replace Boris Johnson as prime minister – as an example of what he called a “gung-ho” focus on economic growth as a than undisputed priority.

On the other hand, he said, more eco-conscious politicians across Europe and beyond were privately receptive to arguments about limits to growth, but “want to find other ways of talking about it that don’t frighten the horses”.

Jackson, author of the 2009 book Prosperity Without Growth, said the 2020 pandemic lockdowns and this year’s Western sanctions on Russia had both challenged consumption with other priorities, namely health security. or geopolitical objectives.

At the same time, some countries – for a variety of reasons ranging from aging populations to trade protectionism or lack of reform – could enter into something akin to a “post-growth” state where their economies show little or no expansion.

It’s a fate that Japan has met with its “lost decades” and that some analysts see as a risk for Germany unless it quickly revamps its decades-old export-driven economic model and strengthens its vulnerability to energy shocks.

“Particularly in advanced economies, we’re entering a situation where, for all intents and purposes, we’re hardly looking at continued growth yet,” Jackson said.

“If we don’t have an economy that will take care of this… then we have very little chance of managing it successfully.”

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Additional reporting by Gloria Dickie and Vincent Flasseur in London; Kantaro Komiya and Daniel Leussink in Tokyo; edited by Barbara Lewis

Our standards: The Thomson Reuters Trust Principles.

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