Stockholm (NordSIP) – Many investors would rather shy away from the controversial topics of degrowth and post-growth. For Dutch impact asset manager Triodos Investment Management, however, discussing the issue appears to be a moral imperative. Tuning in to a presentation of Triodos IM’s 2024 Economic Outlook on 27 November, NordSIP is duly impressed by the strategists’ earnest attempt to look at the big picture and discuss the dysfunctionality of the current global economic structure in philosophical terms. Even more impressive is that they do not stop there. Rather than simply outlining an alternative post-growth world order as a distant vision, Triodos endeavours to offer a concrete pathway to a post-growth society.
The backdrop to the presentation is stated plainly from the very start: “Our economy and our financial sector are built on the assumption of unrestricted growth. However, if we are to achieve an equitable world economy within planetary boundaries, an end to economic growth seems inevitable.” Yet such a limit to growth does not have to be a problem, argues Triodos, as economic growth is not an obligatory prerequisite for improved human well-being. According to Hans Stegeman, Triodos’s Chief Economist, it is as vital to change our intrinsic mental structures, the way we think about economic growth, as it is to devise ways to break out of the growth-dependent economic structures themselves.
Trapped in a growth-addicted system
Discussing the firm’s outlook for developed markets, investment strategist Joeri de Wilde sounds concerned. According to him, the threat of recession in many Western economies means governments will be facing increasingly more difficult choices. To support growth and alleviate the suffering of the people who have elected them, they could choose to abandon some long-term sustainability targets. “This is an example of how low growth in a growth-addicted system leads to trade-offs,” says de Wilde. He worries that the short-term support of economic growth might come at the expense of climate action.
Although the debate about post-growth often focuses on developed economies, emerging markets are far from immune to its effects, explains de Wilde’s colleague, Maritza Cabezas, who gives a brief overview of Triodos IM’s emerging markets outlook. She points out that financing the necessary growth in many developing economies has led to high debt levels. Rising interest rates have not only made additional investments more challenging but also mean that an increasing portion of the revenues will now be earmarked for servicing the existing loans. This will inevitably lead to less money to finance the energy transition, education, and other social projects, fears the investment strategist.
Cabezas is also critical of the notion that faster growth will automatically solve emerging markets’ huge inequality challenge. She points out the example of India, one of the fastest-growing economies in the world, which has not been successful in tackling the income distribution problem. Systematic change is what is needed to improve equality while keeping within the planetary boundaries, according to her.
Mapping the pathways
Given this rather bleak outlook for a post-growth world stuck in its growth dependency, Triodos’s ambition is to provide investors with some guidance on how to act accordingly. According to Stegeman, there are at least five areas that investors should focus on, namely security & resilience, sufficiency, institutions, finance, and business. Time does not allow for him to discuss all of these in detail, yet it is evident that each area contains a number of concrete steps that an investor can take.
Continuing with business as usual is not a sustainable option, asserts Stegeman. As to alternative pathways, he points out three different ones, each of which is better than preserving the status quo. A supply shift would lead to a more circular, local, and sustainable production. A shift in demand, on the other hand, means moving from material consumption to experiences and changing habits and behaviours. A third intriguing alternative is a potential leisure shift, i.e., working less and enjoying more free time.
“Post-growth world is not a utopia,” says Stegeman. According to him, we need a mind shift away from the fairy tale that tells us we can keep growing forever. It is time to change the narrative and redefine prosperity beyond the material.
As investment outlooks go, the one Triodos offers is somewhat different and original. It also adds credibility to the firm’s overall impact profile.