not on something minor but on a deeper
belief
did you ever shake your head over a
belief that you’ve had in the past say
that the moon is made out of cheese or
that the market can solve all problems
of society can you still remember what
it felt like when you saw the world was
completely different eyes
for the first time and how did it come
to you did come very slowly did it grow
over years or was it an Erica moment and
you ran through town like Archimedes did
at this time over the last 20 years I
changed my mind
step by step and I came to the
conviction that our collective next 20
years have to be about a disruption
about a good disruption from an economic
system that destroys natural systems to
one where natural systems rive it’s over
20 years ago that I left business school
it was quite a change for me when I
arrived because I had been working at a
geologists before in a world of very
complex geological systems and all of a
sudden I was in a world where everything
that was outside the model was called
non-linearity
well my professional life the last 20
years have very much spent in the world
of nonlinearities of very complex
systems a lot is happening in 20 years
this is Fidelis she is the secret CEO of
many of those 20 years I spent in one of
the world’s leading consultancies
helping companies to become more
efficient and I enjoyed it to the utmost
I enjoyed the firm I enjoyed the work I
enjoyed the freedom that I got to build
the global sustainability practice of
McKinsey but it also opened my eyes and
it started to form a view
that the economy can work differently no
it must marked differently according to
an utterly different paradigm who of you
has read Thomas Kuhn structure of a
scientific revolution he was the first
one to talk about paradigm shift we do
have explanatory models that help us to
understand our reality and then all of a
sudden we are making observations that
don’t seem to be congruent to that model
to that paradigm and so we call it an
inert anomaly and then there are more of
those anomalies and all of a sudden the
paradigm is getting into crisis we are
finding a new paradigm and the old one
dies
I think the point I was wanted to make
today is that we need to find a new
paradigm in the way we think about
economic growth all the way towards the
mid 80s all the major lead indicators of
the economy were developing in sync and
since then we are seeing a major
divergence a great divergence and that
is starting to hit our life today two of
the dynamic gaps on this chart are in
fact doing that the one is the
difference between labour productivity
and median family income and it could be
that the eruptive power of some of the
political changes that we have seen over
the last today two years have in fact to
do with that and the second dynamic gap
is that between GDP growth and any
reasonable measure of society’s progress
like the genuine progress indicators
which is stagnating or it’s even
declining and that has to do with the
massive costs of growth we are growing
poor and that’s different when
externalities get bigger than the
benefits that is a new paradigm that is
a rubber rabbit and no more a duck so
let’s talk about growth we can’t talk
about growth without celebrating it was
in the 20th century our global GDP grew
from 1.2 trillion to 47 trillion 40
times and even in the last 20 years it’s
rippled it took a billion people out of
poverty and today we are commanding
materials and goods and possibilities
that even Emperor’s could only dream of
a hundred years ago not to celebrate
that would be cynical at best
but particularly because Rose is so
important we need to understand what are
the deeper drivers that takes us into
the territory of growth theory or better
neoclassical growth here Robert Solow he
taught us it’s all about capital
accumulation and labor however it’s only
describing 30 to 50 percent of growth
and the rest we very politely called the
solo residual very few series get away
with that by the way there’s a new
generation of economists which is asking
themselves what could be alternative
explanations Exedy that’s their answer
they said that is natural resources put
to work put to useful work in other
words we have over the last 200 years
since the beginning of the Industrial
Revolution just put many natural
resource and energy to work in our
economy a resource for an answer and
that sounds very intuitive in a way and
that’s very important to know at a
moment where we want to have more growth
because we are growing less less decade
after decade over the last years we have
seen less growth in our cities economies
and if we want to accelerate growth and
if we do that with the old natural
resource intensive way of growing there
is a risk that we are running almost a
combustion engine hotter and hotter and
that we are countering the positive
benefits of growth and that we are
growing poor and that’s exactly what we
see once we have 2% of growth over the
last 20 decades if you go with a more
modern definition of what wealth really
could be which is the sum of the wealth
that we have in terms of social capital
natural capital and manufactured capital
then in fact we have been declining 0.2
percent every year so that is the
massive cost that’s accounted for in
those numbers that comes with climate
change that comes with water scarcity
with ocean pollution all the loss of
biodiversity we have 60 years of topsoil
left now what’s the way out of that let
me start with what is not the way out of
it we won’t grow ourselves green
at least we won’t grow ourselves green
automatically the shorthand for that
discussion is the cut net curve and the
observation that as we grow richer our
resource intensity actually decreases
but you can see it immediately it’s
visually evident that the peak is just
far too high and this is plastic we
could have shown it for cement for
aluminium for power the peak is by far
too high it comes by far too late it’s
by far too flat post peak and that
they’re by far too many large economies
on this side of the curve so that can’t
be the answer what could be the answer
he could be in the architecture of an
answer and one of the pillars on the
left-hand side should in fact fill us
with confidence it’s abundant clean
energy and who would have thought five
to ten years ago that this for the first
time is a thinkable future that we do
have a default alized
energy sector for the first time it’s
not close let’s face it
but it’s thinkable that by mid-century
we will have a default life energy
sector but that’s not good enough on the
right hand side we need in the same way
as we are d fossilize in our energy
sector we need to dematerialize or
decouple our industrial sector and we
have to make all the natural resources
we are taking to use an asset and a
material backbone and to use it over and
over again but even that is not good
enough out of those we need to build the
new systems the high-performing economic
system mobility system food system
housing systems that create prosperity
and only if we see that those systems
generate prosperity we will have we will
change our norm we will see the rabbit
over the duck and we will we believe
that there is something like decoupled
gross and that there is something like
in that positive system is this a dream
or is this a political reality a
political option two years ago the
European Union asked exactly that
question and we had the chance a friend
of mine Ellen MacArthur a world record’
yachts woman who started the Ellen
MacArthur Foundation and myself to put a
lock in the fire in front of the
European Commission and we didn’t start
to talk about the environment
and we didn’t start to talk about
resource dependency and we could because
Europe is hugely resource dependent 760
billion of resource imports every year
we talked about the economic opportunity
and we talked about the structural waste
which is sitting in our system which we
could relieve and we have taken the
three most efficient and matura systems
of the European economy the mobility
mobility system the food system and the
housing system and let’s just see what
it what it does the mobility system
where scars are so efficient that we
have to start cheating as we all know
the system is full of inefficiencies a
car’s parked 92% of its time out of 5
seats only 1.2 or 1.5 are typically used
out of the energy that we put into a car
only 20% actually makes it to the wheel
and only a surgeon’s of that is used to
transport us 50% of our cities is used
for traffic space although even during
rush hour only 10% of that is covered
let’s look at the food system only 5% of
the nutrients that we apply to the field
are actually making it into the human
body not always to our best health by
the way and go for the housing system
where even on a Tuesday morning only 40
percent utilization is marked so if you
look at it all together a European good
only has a lifetime of typically 9 years
at the end of those nine years only 5%
of the energy or material value that
sits in it is actually recovered and we
started to accept that it’s a social
norm that’s the duck during those nine
years of lifespan only 50% it’s utilized
for the reason that I just did I just
spoke about so by all intents and
purposes even in Europe and even in a
very efficient economy we are still very
resource intensive and very inefficient
when it comes on a system level the
second point that we made is technology
can change that because we have it at
our fingertips the iPhone the smartphone
allows us to share the massive cost
degradation that we have seen in
renewable energies allows us to build
distributed generation or the Internet
of Things is allowing us to track
materials and put them back to use
exponential technology we’ve seen how
technology is different can disrupt
information sector such as banking such
as retail such as the media sector for
the first time now it’s hitting the
physical sectors and we ask ourselves
what could technology actually do to
transform these sectors a mobility
system which for the first time is
autonomous it’s shared it’s connected
it’s electrified and it’s designed for
reuse and the answer is by 2050 we could
in fact have the same service for only
20% of the cost not less resources but
less cost for the user this is a major
wage increase to the European family
similar for food the building var or the
build environment and many of those
levers we generate share optimize loop
virtualized exchanged those levers that
actually massively decouple us from
resource use are in fact in the money
and some of those businesses are that
are taking advantage of those drivers
amongst the fastest growing that at
least I am aware of the third point we
made is technology doesn’t take us there
alone we do know historically that on
the one hand there rebounds effect it’s
getting cheaper and we use more of it
and secondly we do know that system
innovation travels much more slowly than
product innovation and there is a risk
that we are introducing those
technologies into the old system and
over the way that does not address the
stress the structural waste that’s built
into the system so we need to look for
principles in the circular economy the
circular regenerative economy is
providing some of those principles it’s
an economy that does not know waste
waste is food and it’s one where finite
resources are in fact controlled
principle number one it’s one where all
the resources that we are taking into
use are maximized in their use principle
number two and where we are avoiding
negative spillovers into other systems
altogether principle number three
and we do that by taking all durables in
a cycle to make sure that can be used
over and over again like my watch or on
the consumable side we are designing
them in such a way that they can safely
reenter the biosphere like my shirt the
fourth point that we made is that this
is an economy where which provides or
that which provides very good
instructions for how to build future
systems and so we modeled them very
concretely with 200 engineers we try to
find out what would this mobility system
the housing system the food system look
like and not only is it providing the
services much cheaper to the European
family it also and brings our resource
requirements massively down as you would
expect and it also allows us to stay
within the 2 degrees centigrade corridor
that we committed to in Paris but more
than that when we modelled the results
we also find strong indications that
this will be a driver of growth across
Europe we think that until 2030 there
will be an extra 7% of girls
that’s half a percentage point a year
that doesn’t sound a lot but just think
back 30 years ago when Europe created
the internal market that was and thank
God it did that was against the promise
of half a percentage point extra growth
so you could look at the circular
regenerative economy for Europe as a
project a political and economic project
of the same order of magnitude and
that’s why politicians like it Finland
Sweden the Netherlands Denmark
China are starting to adopt it eureka
time the Vice President of the European
Commission says that the circle economy
is a mega trend just as globalization
and business leader leaders like it
because they see that this is an economy
the circular economy that will outgrow
global GDP that you want to be invested
into and still we are not investing
ourselves into the circular economy
capital flows are far too slow we are
losing the race and we are continuing to
be into a
viral of natural capital degradation we
are long on the linear economy and we
are short on the circular economy one
linear economy which is very epic
instead of plastic and plastic packaging
globally we are producing 300 million
tons anything between 8 and 12 million
are entering the ocean today my team has
calculated that in 2022 there will be 3
kilograms of fish – 1 kilogram of
plastic in 2040 – it’s 1 kilogram of
plastic – 1 kilogram of flesh that’s a
future that no one can want and it comes
with massive costs to communities –
ecosystems and also to the brand owners
that are operating in the chain and
that’s at the moment where we do know
the answers it’s decoupling ourselves
from virgin feedstock it’s about
designing for reusability recyclability
or bearded degradation and it’s about
setting up the system that stop it from
leaking into the environment so why
doesn’t it happen over 20 years of
McKinsey I came to the conclusion that
this is not technology innovation this
is system innovation we are dealing with
a challenge of systemic change and that
was the reason why two years ago we
started systemic jeremy Oppenheim
another senior partner from McKinsey and
myself and we are deploying our
fantastic team of 80 people and our
capital to incubate to enable to
cultivate and to scale the solutions
these new economic systems that are
currently under invested we want to make
them investable we’re doing that for
land use systems for new urban
sustainable urban systems we do it for
new energy systems and we do it for
circular industrial systems well two
years is too early to tell but as things
are going we might have a case and our
case is very simple we have over the
last 200 years build a global economy of
75 trillion with three and a half
percent growth over the next 20 years we
are going to build a second economy just
the same size doing it in the same way
we built the first economy with the same
amount of resource intensity with the
same amount of Integra Dacian for so
and natural capital we will be off the
charts it’s just not an option being
just a little bit more efficient and
being just a little bit more sustainable
cannot be the answer we need to
transform the existing economy and we
need to rethink and reinvent the new
economy that we are building and that is
something that needs to happen but
currently it’s frankly just unthinkable
so it’s time to change our mind it’s
time to move from management to
leadership it’s time to move from
optimizing existing systems towards
rethinking new systems so who is there
who could heal that I think it’s the
generation of the 20 year olds and
that’s you and Peter thank you [Applause]