Designing a Life-Sustaining Industry and Economy with First-Order Principles of Sustainability and Backcasting

Life-Degrading Industry and Economy

How can ecology and economy be merged together into one strategy that makes sense in the short term as well as in the long term, and from a business perspective as well as for the common good?

The need to identify business strategies for sustainable development, that are based on systems thinking, is based on a number of observations:

• Ever larger parts of nature are manipulated to meet the demands of society, and ever-smaller parts can be said to be untouched by human activities.
• Environmental problems have changed character towards a situation with: environmental effects on larger scales, more diffuse emissions, longer time lags from cause to effect, and with more actors involved. The environmental problems have thus expanded towards larger complexity. At the same time, Earth’s population is increasing and is not expected to level off until around 10 billion people. Furthermore, the global per capita demand on energy increases, and the same is true for many other resources.
• The scientific uncertainty is huge for many environmental problems. As a consequence, the debate in society often deals with one problem at a time in a fragmented fashion. The result is often confusion and sub-optimized measures that are not integrated in a large enough system perspective.
• There is often a lack of logical rationales to deal with trade-offs. Most measures are such that they lead to positive effects in certain aspects and negative in others. For instance, a belt-way around a city that may decrease emissions in the city center, but decrease ecologically fertile areas and increase the risks for an unwanted expansion of the number of cars. Or, an investment in a process that will decrease emissions but that will use more energy.
• The costs for certain proactive investments are relatively simple to estimate, but the costs for maintaining business as usual (for instance costs from deprivation of future ecological values, or consequences of the polluter pays principle) is an even more complex issue. The imbalance of reliability in estimates of marginal costs and marginal profits for proactivity favors business as usual on the account of proactivity.

Industrial Ecology (IE) can be perceived as merging the aspects of economy and ecology into one. IE is system analysis of the societal industrial metabolism from a sustainability perspective. The design processes within the field of IE is full of uncertainty and it is therefore a need to see the system as a whole to consider the big picture. The designer must learn to strip away all that is irrelevant.

Backcasting in Planning for Sustainability

The future is often viewed through the mirror of the past. This can be risky, if past trends are allowed to influence or even determine what is considered a realistic strategy. This is particularly true if such factors are part, or even the main drivers, of the present problems. If we look at the problem of non-sustainability, such factors could be today’s use of fossil fuels, today’s accounting systems for economic performance (GNP), today’s traffic systems, and today’s public knowledge about environmental issues. If those factors are allowed to be the main determinants of what is taken to be relevant and realistic in the planning process, the strategy is likely to transfer the problems that are due to these factors into the future. When backcasting is used in planning, realism should only be allowed to determine the pace by which transition can occur, not the direction.

Backcasting stands out as a complement and an alternative to traditional forecast. It is a method in which the future desired conditions are envisioned and steps are then defined to attain those conditions, rather than to take steps that are merely a continuum of present methods extrapolated into the future.

In the context of sustainable development, backcasting means to start planning from a description of the requirements that have to be met when society has successfully become sustainable, a future vision of a desirable outcome of the planning. Then the planning process proceeds by linking today with tomorrow in a strategic way: what shall we do today to get there? What are the economically most effective investments to make the society ecologically and socially attractive?

Backcasting is a methodology for planning under uncertain circumstances. Backcasting is particularly useful when:

• The problem to be studied is complex.
• There is a need for major change.
• Dominant trends are part of the problem.
• The problem to a great extent is a matter of externalities.
• The scope is wide enough and the time horizon long enough to leave considerable room for deliberate choice.

Thus, it is also a method to get early warning signals for when long-term investments based on today’s structure can lead to dead ends and when marginal changes are not enough, i.e., when technological leaps are required. Marginal changes can be counter productive, even if they are reducing today’s impact on nature. Marginal changes of an old system can lock up resources that could be used in a strategically smarter way.

A Framework of First-Order Principles – a Prerequisite for Backcasting

Since backcasting takes its starting point from a future situation, to find flexible strategies for the transition it is important not to try to view the future situation in detail, but rather to find guiding principles, which can act as a frame for many possible futures.

How can such principles be defined regarding sustainability?

Experience tells us that individuals are generally very clever in discovering guiding principles even in complex problems, and then in aligning the details of the planning with the principles. Let’s say that a family is going to move from Chicago into a new house in Miami, because the family members have got new jobs there. The house-moving-project is in fact a complex project, with many details that must be aligned with a set of guiding principles of this project:

• the house must be located in a way that makes it possible for the family members to make it in time to their jobs and back,
• they must be able to afford the new living,
• it must meet certain individual minimal requirements of the family (e.g., number of bedrooms) and
• it must meet certain overall demands on the house itself (decent enough indoor climate).

Those principles are functionally different and cover aspects that are relevant. This means that the planning proceeds from a backcasting perspective, where all these principles are met.

What shall we do today, to make all details in the planning coherent with those principles?

For instance, the first principle can be met either with public transport (which often creates restrictions as regards possible areas to live in), or with one or more cars (which expands the possible area, but negatively influence the second condition, which in turn may influence the options as regards details to meet the third and fourth principles). If the family was not aware of the principles of the project, and clever enough to organize the details in a dynamic way so that they fit all principles, they might end up in a castle in New Jersey they couldn’t afford, trying to figure out what went wrong. This generally doesn’t happen when individuals are planning their own lives, because individuals are clever in systems-planning, the consequences of failure are often very direct, and there is no one else to blame.

The challenge is to make a group of individuals, like a business corporation, municipality, or country, operate with a shared mental framework based on principles so that they can function as teams. What are the principles for a successful planning, and who is responsible for that those are taken into account? This is an important challenge, because when the project boundaries are even larger than in the house moving example, like in the project “moving into a sustainable company”, the need for principles to coordinate it all are at least as large. How does the company align its tools for this purpose (e.g., Life Cycle Analysis, ISO 14000, and indicators for environmental auditing) with a future perspective in which the principles for sustainability are met?

To harvest as much as possible of the potential economic and ecological benefit of backcasting, it should be performed from a framework set by principles for sustainability of the whole ecosphere. The future cannot be foreseen, but its principles can. To fit the methodology of backcasting, they should be (first-order) principles of the outcome (sustainability), not the transition (sustainable development). By first-order principles of a system, we mean the core principles that provide the overall description of the system.

Parts of the system and other principles of the system can be related to the first-order principles. Soccer or chess, for instance, are defined by the first-order principles of these games–the objectives and the rules of the games–not by various exercises, strategies, and skills to become a good player. But, in order to become a good player, the starting point is to learn about the objectives and rules. This is the easy part. Once people understand these, they can interpret details, understand strategies, and anticipate changes. After that, the more advanced and demanding training to become a good player begins. The strategies and skills are then elaborated in line with the first-order principles. They can interpret details, understand strategies, and anticipate changes. The principles offer unifying ideas, shared by all, that when adhered to improve the teams’ or players’ effectiveness within the system.

For these reasons, we have developed the system conditions to be used in backcasting and the aim is that these first-order principles shall support the following aspects:

• simplicity without reduction – In complex systems it is impossible to keep every detail in mind at the same time. But to efficiently handle complex systems it is helpful to first look for the principles that define the system and then, if necessary, move to higher levels of detail without neglecting these firstorder principles. The analysis begins at a level where complexity is naturally low, rather than at a level of detail where links to the principles of the system can be vague and difficult to discern. They aim at making it simpler to deal with complexity, yet don’t simplify in the sense of disregarding any of the complexity.
• valid at various scales – this makes it easier to coordinate various parts and details to meet the first-order principles.
• shared mental framework – it is easier to make teams or groups of people share the firstorder principles of a vision, than to make them share detailed pictures of the vision.
• non-prescriptive – creativity is supported if experts in various fields share the framework for planning on a principle level, but are allowed to be free to handle the concrete details within that framework.
• thinking upstream in causal chains – upstream causes of any problem can often more easily be properly understood and addressed than the complexity downstream. Analyses of detailed downstream problems can then flow more logically.
• they can make more sense of tools like ISO 14000 and Life Cycle Analysis (LCA) – such tools do not in themselves contain a framework for successful planning, or a vision.

System Conditions – First-Order Principles of Sustainability

Since there is probably no limit to the number of possible designs of sustainable societies, the definition must be searched for on the principle level – any sustainable society would meet such principles. Since sustainability was a non-relevant expression until non-sustainability started to exist due to human activities, it is logical to design the system conditions as restrictions, i.e., principles that determine what human activities must not do. In what principle ways could we destroy the ecosphere’s ability to sustain us?

Humans can destroy the functions and biodiversity of the ecosphere by:

1. A systematic increase in concentration of matter that is net-introduced into the ecosphere from the earth’s crust.
2. A systematic increase in concentration of matter that is produced by society within the ecosphere.
3. A systematic physical deterioration (physical manipulation and over-harvesting) of the ecosphere’s ability to utilize waste as building blocks for primary production, and to provide other essential functions.

All ecological sustainability problems that we face today can be attributed to one or more of these three
mechanisms. Thus, the system conditions are phrased as not allowing the destruction of the ecosphere, by adding a negation to these principles for destruction:

In order for a society to be sustainable, nature’s functions and diversity are not systematically:

1. subject to increasing concentrations of substances extracted from the Earth’s crust;

2. subject to increasing concentrations of substances produced by society;

3. impoverished by over-harvesting or other forms of ecosystem manipulation

“Systematically” can be interpreted in two ways: (i) the deviation from the natural state must not increase more and more due to the influences from society. (ii) the society must not be organized in such a way that it makes itself more and more dependant on activities that cause such effects.

Together, the three first system conditions give a framework for ecological sustainability. It implies a set of restrictions within which the sustainable societal activities must be incorporated. Based on that reasoning, a first-order principle for the society’s internal turnover of resources is formulated – which is the fourth principle:

4. resources are used fairly and efficiently in order to meet basic human needs world wide. For society to be sustainable, resources must be used efficiently and fairly to meet basic human needs worldwide.

Taken together, these system conditions define a frame for any sustainable society. System conditions 1 through 3 are based on a scientific analysis and are true-bottom-line system conditions in that they do not overlap, they all must be fulfilled, and their violations explain all relevant environmental problems that concern sustainability. Furthermore, if we violate them, we loose time needed to tackle other important questions in society.

System condition 4, to which actions such as recycling, reuse, reduction, and so forth, are related, is as important but takes on a special role. Many organizations are (without their knowledge) working with this system condition without connecting it to the other three. This means they neglect system conditions 1 through 3 although their fulfillment is the primary objective, seen from a sustainability perspective, of working with system condition 4. This condition does not deal so much with physics, but rather with people and societies. The overall goal of our society is of course to satisfy human needs. To be able to do so in the long run, fulfillment of all system conditions is necessary. Consequently, system condition 4 is relative to system conditions 1 through 3 and cannot be described in absolute terms. But if we are not good enough on system condition 4, we cannot meet the first three conditions either. It is therefore logical to include it with the other system conditions.

To avoid degrading the ecosphere through any of the three mechanisms, society must satisfy more human needs per resource throughput than it does today. Otherwise, it will be difficult (if not impossible) to avoid systematically increasing concentrations of natural and synthetic waste (system condition 1 and 2), and it will be difficult to live on the “interest” of the ecosphere (nature’s production of resources and services) rather than living on its capital (system condition 3).

To meet the principles in the future, the whole civilization must–step by step–decrease its economical dependence on:

1. Mining to cover dissipative use of fossil fuels and scarce metals, particularly such metals that are already increasing in concentration in the ecosphere (system condition 1).
2. Dissipative use, as well as unintentional production of persistent compounds foreign to nature, and of naturally occurring compounds that are already increasing in concentration in the ecosphere (system condition 2).
3. Manipulation and over-harvesting of the ecosphere, causing reduced long term production capacity and biodiversity (system condition 3).
4. Wasting of resources in relation to meeting human needs (system condition 4).

Thus, first-order principles give a frame for the goal (the wanted outcome) of a plan. To know the frame is a prerequisite for effective envisioning of the goal. Furthermore, the frame is a prerequisite to determine which sub-goals actually bring us closer to the goal – and, conversely, to determine which sub-goals are only providing short-term benefits without bringing us closer to the goal, or which may even hinder a further development towards the goal. To exclude mistakes of this kind is particularly important when sub-goals are expensive to reach. High investments tie us to a certain course, and will prove fatal to business in the long run if they obstruct a viable course in relation to the first-order principles. To elaborate first-order principles for “upstream thinking”, rather than “quick fix solutions” downstream, is a sound way of avoiding serious economical problems in business (and even civilization collapse).

With these four conditions, the framework is general enough to be valid for all imaginable scenarios of a future sustainable society, in any culture of the world. At the same time, it is concrete enough to be useful for strategic planning in all kinds of activities, regardless of scale.

Descriptions of the First-Order Principles of Sustainability

(1) For society to be sustainable, the ecosphere must not be systematically subject to increasing concentrations of substances from the earth’s crust.

This condition implies that the flows of substances from the lithosphere to the ecosphere must not be continuously larger than the flows back into the lithosphere. During (primarily) the industrial age the human society has produced, and is still producing, a net input of substances from the lithosphere to the ecosphere (for example fossil fuels and metals). These flows are often large compared to the natural flows from the lithosphere. Furthermore, for some substances (for example mercury and lead) the amounts presently accumulated in society may cause much greater concentrations in the ecosphere than exist today, if these amounts are allowed to disperse from society into the ecosphere.

The ecosphere has a limited capacity for assimilating the intentional and unintentional flows of these substances. Sedimentation and dilution operate slowly relative to today’s flows. For sustainability, the balance of these flows must be such that concentrations of substances from the lithosphere do not systematically increase in the whole ecosphere or in parts of it, such as the atmosphere or different ecosystems. This balance can be influenced primarily upstream by choices regarding the amounts of mining and the selection of mined minerals, and secondly by for example the societal competence in safeguarding the minerals. Recycling and other measures to minimize losses, and the quality of final deposits of waste minerals, affect the amounts that will reach the ecosphere. The concentrations of substances in the ecosphere that can be accepted without jeopardizing our health and economy in the long run depend on such properties as ecotoxicity, defined broadly to include effects on the geophysical systems, and bio-accumulation. (Ecotoxicity is the negative influence of a substance on ecosystems. The substance must not necessarily be directly toxic to humans. Bio-accumulation is a measure of the extent to which a substance is taken up by living organisms and concentrated in the food chain.) Depending on the characteristics of the substance and the recipients, the critical concentrations differ. In some recipients, increasing concentration of some substances can have positive effects before further increases in concentrations will be problematic. Due to the complexity and delay mechanisms in the ecosphere, it is often very difficult to foresee what concentrations will lead to unacceptable consequences. Therefore, what we must achieve at least is a stop to systematic increases of concentrations.

In practical terms in today’s situation, this means decreased use of fossil fuels and mining, particularly of minerals that are scarce in nature and whose continued extraction consequently will lead to relatively rapid increases in concentrations. To guide their companies in a more sustainable direction with regard to this first system condition, the key question for business managers is; Does your organization systematically decrease its economical dependence on fossil fuels and mining to cover for losses of minerals, particularly of scarce elements that are currently accumulating in parts of the ecosphere or in the whole ecosphere?

(2) For society to be sustainable, the ecosphere must not be systematically subject to increasing concentrations of substances produced by society.

This condition implies that the flows of societally produced molecules and nuclides to the ecosphere must not be so large that they can neither be degraded and integrated into the natural cycles within the ecosphere nor be deposited into the lithosphere. The balance of flows must be such that concentrations of substances produced by society do not systematically increase in the whole ecosphere or in parts of it, such as the atmosphere or different ecosystems. This balance can be influenced primarily upstream by choices regarding design (such as degradability) and production volumes, and secondly by for example the societal competence in safeguarding the substances. Recycling and other measures to minimize losses, and the quality of final deposits of waste substances, affect the amounts that will reach the ecosphere. Persistent substances foreign to nature require special attention since the use of such substances poses to significant risks for increased concentrations in the ecosphere. What concentrations that can be accepted without jeopardizing our health and economy in the long run depend on such properties as ecotoxicity and bio-accumulation. As with the previous system condition, the critical concentrations differ by substance and recipient, and it is often very difficult to foresee what concentration will lead to unacceptable consequences. Therefore, what must be achieved at least is a stop to systematic increases of concentrations.

In practical terms in today’s situation, this means decreased turnover of such natural substances that are increasing in ecosystems today (for example nitrogen oxides) and a phase out of persistent substances foreign to nature (for example PCBs). To guide their companies in a more sustainable direction with regard to this second system condition, the key question for business managers is; Does your organization systematically decrease its economic dependence on persistent substances foreign to nature, and on dissipative use, or emissions, of such natural substances that are currently accumulating in parts of the ecosphere or in the whole ecosphere?

(3) For society to be sustainable, the ecosphere must not be systematically subject to impoverishing physical manipulation or over-harvesting.

This condition implies that the resource basis for productivity in the ecosphere, such as fertile areas, thickness and quality of soils, availability of fresh water, and biodiversity, is not systematically deteriorated by over-harvesting, mismanagement, displacement, or other forms of physical manipulation.

In practical terms in today’s situation, this means changes in our practices within such areas as agriculture, forestry, fishing, and urban planning. To guide their companies in a more sustainable direction with regard to this third system condition, the key question for business managers is; Does your organization systematically decrease its economic dependence on activities that physically encroach on productive parts of the ecosphere?

(4) For society to be sustainable, resources must be used efficiently and fairly to meet basic human needs worldwide.

The production of services for the human sphere is covered by this fourth condition. It implies that if the societal ambition is to meet basic human needs everywhere today and in the future, while conforming to the first three system conditions as a prerequisite for being able to doing so in the long run, then the use of resources must be efficient in meeting human needs. If we are more efficient technically, organizationally, and socially, we can provide more services, with the possibility of meeting more human needs, for a given level of influence on nature.

In practical terms in today’s situation, this means increased technical and organizational efficiency worldwide, including establishing a more resource-economical lifestyle in wealthier nations. To guide their companies in a more sustainable direction with regard to this fourth system condition, the key question for business managers is; Does your organization systematically decrease its economic dependence on using a large amount of resources compared to the human value they add?

Backcasting from First-Order Principles of Sustainability

When applying the methodology of planning suggested in this paper, it is essential to distinguish principles of sustainability (the system conditions), from principles of sustainable development (e.g., precautionary principle and flexible platforms that are low hanging fruits) and from means of sustainable development (e.g., renewable energy and recycling).

The first three system conditions constitute a definition of the goal of ecological sustainability. This distinguishes them from the kind of principles that are formulated as means for reaching sustainability. This point can be exemplified by the following: sometimes renewable energy is claimed to be a principle of sustainability. However, transformation into renewable energy is a measure to meet the four system conditions. The rationale for renewable energy is that:

• Compounds from the Earth’s crust such as fossil carbon forming carbon dioxide and radioactive elements must not accumulate in the ecosphere (system condition 1).
• Compounds that are produced in the energy conversion such as nitrogen oxides or plutonium should not accumulate in the ecosphere (system condition 2).
• The exploitation of energy sources must not destabilize the conditions which support the life processes of Earth such as degradation of ecosystems in the sea due to drilling for, and transportation of, oil, or degradation of ecosystems on land due to mining for uranium (system condition 3).
• We must not waste resources and eventually run out of our potential to meet human needs further ahead (system condition 4).

Thus the system conditions underlie the idea of renewable energy.

How these guidelines apply at the individual level can vary depending on agreements and negotiations between actors within the society, but as a first approximation these guidelines are also valid for each individual firm. Combined with the strategy of giving priority of such investments that are flexible platforms and low hanging fruits, this creates a strategy for systematic sustainable development that makes sense also from a business point of view, not only for the common good.

Those who want to apply this framework should be made aware of the difference between the system conditions for sustainability on the one hand, and the consequences of the system conditions as regards permitted flows of matter on the other. The total sustainable flows of matter still remain to be calculated.

However, one does not have to await detailed analysis of those issues to apply the framework. Sometimes the permitted flows per capita are so close to zero, e.g., concerning the dissipative use of mercury (system condition 1), that the lack of concrete data is no problem for strategic planning. And, when the total permitted flows are much higher, for instance concerning emissions of N2O (system condition 2), the relevant questions can at least be raised: Is it possible that we–in our business corporation or municipality–are investing ourselves into a dependence on N2O emissions that may exceed our “permitted” share of the total assimilation capacity of N2O? And even more intriguing: If today’s total emissions of N2O cause accumulation of this gas in the atmosphere, what is the guarantee that the margins to severe problems related to further accumulation of N2O gives us a secure life-span for this investment?

In this way, the framework allows that the requirements for proof are shifted from the public to the polluters and their investments. A clear and stringent framework is helpful, even if it does not immediately lead you to very concrete consequences regarding figures and measures. And conversely: the lack of very precise figures does not justify ill-defined frameworks.

People at a large chemical company thought that system condition two was defined as “phased-out production of persistent compounds foreign to nature”. However, this phrasing is not system condition two, but an interpretation of system condition two. System condition two reads: In order for the society to be sustainable, natures functions and diversity are not systematically subject to increasing concentrations of substances produced by society. Thereafter the intellectual and economic consequences must be drawn. The technical problems and costs linked to a safeguarding of persistent compounds foreign to nature must be compared with alternative compounds that fulfill the same function, but without requiring technically difficult and costly solutions. To phase out persistent compounds foreign to nature then often seems to be a wise strategy.

Together, the system conditions, and the presented backcasting strategy, provide a framework, that can be applied for:

1. Problem analyzing and designing of investment strategies.
The long-term environmental problems can be discussed in a systematic way, system condition by system condition for various problems areas such as agriculture, forestry, the use of metals, the use of energy, and political and economical measures to support sustainable development. The result is often more challenging than when the discussion is focused on what experts disagree upon. Firstly, the area of agreement is often larger than expected and, secondly, often the dispute turns out to be about the different means to handle certain requirements for sustainability rather than about the requirements themselves.

2. Dialogue and as a shared mental model for community building.
It is essential for groups of people to have a shared mental framework of principles, if they want to function as an effective team. The ability of our framework to reach out in organizations, to trigger creativity, and to make individual efforts aligned in a coordinated and effective way, is described in a doctoral dissertation on the implementation process in five corporations (Scandic Hotel, Interface, IKEA, Collins Pine, and Sanga Saby Conference hotel) (Nattrass & Altomare 1999). The general conclusion from this study was the framework’s capacity of creating a shared mental model–a language–that enabled a more effective and creative dialogue between management and employees within the firm, and that a prerequisite for this was the teaching of the framework to all employees. At Scandic Hotel, after the framework had been explained to all employees, 1500 measures to bring the company closer to be aligned with the system conditions were launched within one year. They were all a result of suggestions given to the management team from the employees. The investments were all low hanging flexible fruits. The suggestions that were too costly were listed and communicated back to the employees as being on line for the future. One year after, 500 of these higher hanging fruits, were launched.

Once a firm has decided to go for a certain vision where its impact on ecosystems are minimal in relation to its efficiency in providing services to the market, the overall strategy to link short term with long term follows from plain logic. Two qualities of all investments should be combined, particularly when large resources are bound:

1. Investments should be technically and ecologically as flexible as possible platforms for further investments in line with the vision of sustainability, and
2. amongst the various flexible alternatives, the low hanging fruits should be picked first, i.e., measures that give early return on investment. It relates to the need of aligning the long-term goal with the short-term economic reality.

The rationale lies in the combining of the two qualities, i.e., in the same time as each measure is designed to fit a path towards sustainability, the measures must also pay off soon enough. In this way, chances of optimizing future progress get fueled by a relatively stronger economy in a positive spiral. If the qualities are not combined, the actor might run out of money, find their competitive position diminished, or pick low hanging fruits in a sub-optimized way.

Thus, in practical terms, the strategy is followed by posing questions of the following kind:

• Will this measure bring us closer to sustainability and is our perspective broad enough socially and ecologically to determine this? For instance, will it reduce our dependence on emitting such compounds that are today accumulating in the ecosphere? Is our focus local, or do we have a global perspective? Is our focus on human services, or on traditional commodities to provide those services? There are numerous companies that have already emerged from the danger of traditional thinking, companies that sell preservation of food at home rather than refrigerators, fast and nutritious food at a low price rather than hamburgers, and light and indoor climate rather than kilowatt-hours. This is to get rid of such restrictions to creativity that are due to traditional thinking, and to open up avenues for creative measures and strategies in a market that gets more and more globalized.
• Is this measure taken a platform for the next? Will it be possible to go from there to the next step, and reduce our impact on nature even more? For instance, applying this more efficient technology on renewable resources? There are car-companies that are planning to introduce cars with an efficient fuel cell that can utilize the existing structure of petrol stations because petrol can be reformed into hydrogen aboard the vehicle. In this way, the market for hydrogen, or hydrogen-rich renewable fuels, can be created.
• Is the measure a low hanging fruit? Can it save resources and money? Will it give early return on investment? Can today’s structure – infrastructure or other examples of technical design – be utilized? Does the demand already exist somewhere in the market?

The Funnel Effect of Nonsustainable Activities

Since today society is violating the system conditions, waste is steadily accumulating and resources are diminishing. We can visualize nonsustainable development as entering deeper and deeper into a funnel in which the space (options) for operating becomes increasingly narrow (see figure below). The funnelwalls tapering inward are a metaphor for the decrease of resources and the decrease in capacities for selfrenewal in the ecosphere. The world’s population is rapidly approaching 6 billion people. According to conservative projections, global population will within 50 years rise to near 10 billion, on an earth that is not growing [UNDP 1997]. Thus, per capita, the tapering of the walls is even more pronounced.

This funnel will have a major impact on the future regulatory and general operating environment of the world?fs business market. The individual company, municipality, or country wanting to make skillful investments must direct investments towards the opening of the funnel, rather than into the wall. This means that the smart manager must make his or her company less economically dependent on contributing to society’s violation of the system conditions. The walls of the funnel will increasingly constrict economic activity through environmentally concerned customers, stricter legislation, higher costs and fees for resources and for pollution, and tougher competition from competitors who direct themselves skillfully towards the opening of the funnel guided by the system conditions. Forwardlooking corporations and other organizations therefore have started to search for, and implement, strategies and production methods that align with principles for sustainability.

The Natural Step (TNS) – Steps in Backcasting from First-Order Principles of Sustainability

In summary, backcasting from first-order principles of sustainability consists of four steps. We call this The Natural Step (TNS), consisting of:

1. The first step: to understand and discuss the system conditions for sustainability.
2. The second step: to describe and discuss how the company/society/civilization relates to the system conditions in today?fs situation.
3. The third step: to create a vision of how the company/society/civilization fulfills its customers/citizens needs in the future while complying with the system conditions.
4. The fourth step: to specify a program of actions that will link the present situation, both technically and economically, with the future sustainable situation.

It is important that the specific actions in the program are flexible platforms for further investments in the right direction. Just an improvement from today’s situation is not good enough if it turns out to be a dead end.

The TNS Framework as Compass in the Real World

The TNS framework serves as such a compass, a practical tool firms use to set strategic directions and analyze decision options. The TNS framework does not specify particular steps for firms. It is used for leading education and dialogue processes, for setting decision-making criteria, and for screening investment strategies. Decision makers faced with complex choices can more easily identify “true north” because the compass gives them a clear understanding of the constraining forces at work on companies (captured by the “funnel”). Furthermore, the TNS framework can guide and improve the company’s strategic use of more detail oriented tools such as the environmental management systems ISO 14000 or EMAS and various life cycle assessment (LCA) methods.

The TNS framework is being used for strategic thinking in over 100 organizations, many of which are global corporations operating in Europe and North America. Below we describe two cases to exemplify how the framework has been used in practice to promote sustainable development and good business.

ICA/Electrolux

As the pressure from environmental organizations and concerned customers increased due to more and more frequent reports of ozone layer depletion, the Swedish food retailer chain ICA felt that they were running into the walls of the funnel due to their use of CFCs in their refrigerators. They planned to solve the problem by investing approximately 150 million USD in a new refrigeration technology produced by the Swedish white goods manufacturer Electrolux. This technology was based entirely on HCFCs, both for cooling agent and for the insulation material. This was a typical ?gquick fix solution?h among the “leaves”. While HCFCs are certainly less damaging to the ozone layer they never the less, like CFCs, require special attention according to system condition 2. Both substances are relatively persistent and foreign to nature and will thus accumulate in the ecosphere if they are used in large scale without rigorous control. To safeguard them through the entire life-cycle of all refrigerators would be difficult and costly.

A series of seminars on the TNS framework made both ICA and Electrolux change perspective from traditional forecasting and marginal improvement of today’s situation, to backcasting based on the system conditions. For ICA it led to an action program aiming at a phase out of all cooling agents based on persistent substances foreign to nature. Among other things they arranged an international conference and established a network within the food retailing sector to stay abreast of the latest technological advances. Electrolux decided to pass over the HCFCs technology, which they now saw as a dead end. Instead they went for R134a for the cooling agent and pentane in the insulation material. This solved the acute problem of Electrolux contributing to ozone layer depletion. However, R134a is also a relatively persistent substance foreign to nature (known to have influence on the greenhouse effect). Consequently it was not the final solution, but with the compass at hand Electrolux found this investment to be a good platform for the next step, which is isobutane mixtures for cooling agents and pentane in the insulation material. With the production volumes currently being projected there will be no build-up of isobutane or pentane in the ecosphere. The reason for not choosing isobutane mixtures directly was, among other things, that it is explosive and that the refrigeration technology was not safe for this agent at that time. Introducing such a potentially harmful product on the market could not only risk the entire company but could also give a severe backlash of the development of sustainable refrigeration technology. Again, with the compass at hand, Electrolux made the production technology for refrigerators linked with R134a as far as possible compatible with the future probable cooling agent. This is an example where the best was not allowed to become the enemy of the good, but where the good was an intelligent step towards the best. Electrolux became the first large white goods manufacturer to market entirely CFC-free refrigerators and in their 1994 environmental report they presented an ambitious vision, using one chapter for each system condition to describe business ideas and strategies.

IKEA

The global home furnishing company IKEA, with annual revenues of approximately 7 billion USD, began working with the TNS framework in 1992. Most of its 40 000 employees worldwide have been trained in the basic concept. IKEA is now using the TNS framework as a guide for all their product development. Their campaign for compact fluorescent lamps (CFL), starting in Sweden in 1997, is a good example of one company changing practices for a whole market.

CFLs had been sold for several years at very high prices in Sweden, typically 15 USD for an 11 W CFL, corresponding to a 60 W incandescent lamp. The high price had been an obstacle for a breakthrough among private households. IKEA therefore decided to try to give a real boost to CFLs by cutting the price to one third of the previous. They also started a cooperation with the largest Swedish environmental organization, The Swedish Society for Nature Conservation (SSNC), around a public information campaign about energy (and cost) savings for the households. IKEA advertised in all major daily newspapers, offering households to collect one free of charge CFL from IKEA stores during a period of two weeks. Somewhere between 500 – 600,000 lamps were given away. The number of private households in Sweden is approximately 4 million.

Before launching the campaign IKEA made a thorough review, together with SSNC technical expertise, of their CFL supplier in China. They made clear that they wanted a good reliable CFL with maximum 3 milligrams of mercury per lamp, which can be compared to the requirements of the European Union environmental labeling system, which is 10 milligrams mercury per lamp. They also discussed possibilities for further reducing the mercury content and other potential environmental improvements with the supplier.

During the campaign IKEA informed customers about the environmental dangers with mercury and offered to take back, free of charge, all used light sources containing mercury. They contracted a major Swedish recycling company to take care of all such returned light sources. Through a German specialist company 98-99 per cent of the mercury in returned light sources is recovered. Together with SSNC IKEA made a thorough review also of that company.

As a result of the campaign the sales of CFLs in Sweden increased considerably. Competitors also had to decrease their prices and with increased production volumes CFL suppliers could reduce prizes further. CFL suppliers have also become aware of that a mercury free low energy light source would be a real hit on the market.

Replacing an incandescent lamp with a CFL gives savings in electricity consumption by roughly a factor five and an increase in product life by a factor 8 to 10, implying improvements on system condition 4. On the other hand, CFLs contain mercury, which requires attention on system condition 1. So, is a breakthrough for CFLs really desirable? IKEA’s thorough understanding of the TNS framework together with some facts helped them sort out the question.

Globally much electricity is produced from fossil fuel fired power plants. A decreased use of fossil fuels is an improvement (primarily) on system condition 1 for several reasons. (This is an example of how an improvement on system condition 4 imposes itself as an improvement on system condition 1 for an actual case.) One reason is in fact that fossil fuels (especially coal) contain mercury. Burning these fuels gives emissions of mercury into the ecosphere. Currently, this is the major way in which society produces mercury flows from the lithosphere to the ecosphere. Furthermore, mercury in CFLs is easier to recycle than mercury form fossil fuels emitted into the ecosphere. Thus, IKEA concluded that in today’s situation it would be favorable with a breakthrough for CFLs. Of course it would be even better with low energy light sources completely without mercury. To promote a breakthrough of CFLs having the lowest mercury content possible today, to assure that this mercury is recycled in controlled technical systems, and to push suppliers to make further reductions of mercury content in the future, seam to be good steps in the right direction.

Conclusions

• It is easier to think upstream in cause-effect chains and deal with causes of problems rather than symptoms. Complexity is kept low as far as possible without losing comprehension of the whole system.
• It is easier to make groups of people share first-order principles of a vision than to make them share detailed pictures of a vision. And a common mental model is important to make all members of a group pull in the same direction.
• Professional people have detailed knowledge within their own fields, but often lack the overview necessary for an understanding of the whole system within which they are active. The system conditions offers a frame in which this knowledge can be structured and given an overall meaning, and through which the connection to other fields becomes clearer.
• By stimulating professionals to interpret the information on the first-order principles into concrete measures, instead of telling them what to do on a detailed level, one creates engagement and mutual respect instead of opposition.
• Since the framework is constituted by principles, it is only useful for the overall structuring of relevant questions, thoughts and measures. There will always be a need for more knowledge to make the framework function efficiently during the transition towards sustainability, for instance in order to make appropriate priorities.
• Sometimes we don’t know if the principles are met or not, and sometimes we have to violate the principles for a certain time period because other aspects of social life, such as economy, make anything else impossible. However, all the problems connected to violation of the system conditions exist whether we are aware of them or not, or want to handle them in a structured way or not. Our experience is that if the framework is applied in a nonprescriptive way to structure problems at hand, it is helpful in problem analyzing, to design investment strategies, to facilitate dialog and to recruit engagement, creativity and shared responsibility into the problem solving process.

The TNS framework takes on the role of a compass pointing individuals and teams in the direction of sustainability. Experience shows that the resulting shared perspective, common language, and guiding principles changes existing practices. Specific outcomes are improved communication, clear goals shared by all, development of new technologies, and improved strategic planning.

The TNS framework proceeds from the whole system of the earth, not just the technical cycles of our society. This makes it valid at the individual level, at the corporate level, or even at the national level. Seeing the whole system, one easier discovers both the obstacles and the possibilities. Otherwise it is all too easy to get lost among details. Combined with such an overview existing environmental management systems and life-cycle assessment methods are excellent tools. Without it, they can even be hazardous, for they may lull managers into a false sense of control.

The TNS framework can be used to guide investments and gain greater control over future development. The global society is living outside the frame of sustainability by violating the system conditions. If a company’s investments carry it into an even deeper economic dependence on society’s continued violation of the system conditions, the enterprise and its investors will sooner or later lose money. The framework also helps managers see short-term subgoals in relation to the overall goal, where the subgoals must not undermine future improvements. Sticking to this procedure saves them from making major investment errors, such as investing heavily in technology that may decrease an environmental impact today, but will be wholly irrelevant tomorrow. Linking subgoals to the overall goal also functions as a psychological shock absorber. It can be disturbing to see the gap between today’s reality and the overall goal. Yet every journey begins with a single step. This strategy of gradual improvement ensures that the best does not become an enemy of the good.

First-order principles, upstream thinking, and alignment of short-term goals with long-term goals (backcasting) are important to managers. The TNS framework helps the CEO, otherwise often isolated from the environment division, to become personally engaged and a member of the environmental team, sharing the language of those working in the environmental division. This usually leads to improved long-term planning and increased participation in sustainable practices throughout the organization.

This article is a summary and reconfiguration of the following papers :

1. “Backcasting from non-overlapping sustainability principles – a framework for strategic planning” by John Holmberga and Karl-Henrik Roberta (2000) in the International Journal of Sustainable Development and World Ecology 7:291-308.

2. “Simplicity without Reduction: Thinking Upstream Towards the Sustainable Society” by Goran Broman, John Holmberg & Karl-Henrik Robert (2000) in Interfaces: International Journal of the Institute for Operations Research and the Management Sciences. 30(3).

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Keywords : ecosocial crisis, life-sustaining civilization design, first-order principles of sustainability, backcasting, the natural step, natural capitalism, planning, simplicity without reduction, complex theory, complex systems, industrial ecology, man-nature partnership, zero waste, closed-loop system, product service system, resource productivity.
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