Executive summary

Current global economic systems are facing multiple crises: ecological, social, and geoeconomic. Key issues that are highlighted in this report includes unsustainable growth, overconsumption, short-termism, linear economy, financial capital myopia and siloed thinking. Transitioning to a new economy requires principles like sufficiency, circularity, systems thinking, and equity which has been reflected in several economic models such as the Doughnut Economics and Beyond GDP). Policy, technology, citizen action, finance, and business are critical forces in this transition.

A global economic system in polycrisis

Despite advancements in health, education rates and others, the world faces significant environmental and social tipping points. Six of the nine planetary boundaries have been transgressed. Inequality is rising, and geopolitical tensions are increasing. The interconnectedness of these crises exacerbates their impacts.

Unsustainable growth

The relentless pursuit of GDP growth has led to environmental degradation and rising inequality. Current economic models prioritise financial gains over ecological and social wellbeing. Decoupling economic growth from environmental harm is insufficient at the current pace and scale. Economic incentives often undermine environmental protection.

Overconsumption

High-income communities are consuming well beyond their ecological means, leading to resource depletion and waste. The gap between the rich and poor continues to widen, with the affluent contributing significantly to environmental degradation through excessive consumption. For example, the richest citizens in Cape Town use 50 times more water than the poorest, exacerbating water scarcity.

Linear economy

The traditional “take-make-waste” model dominates, resulting in significant resource wastage and environmental harm. Only 7.2% of materials are reused, highlighting the inefficiency of current systems. Global resource extraction has more than tripled since the 1970s and is expected to double again by 2060. A shift to circular economy practices is essential to address resource scarcity and environmental impacts.

Short-termism

Political and business cycles prioritise short-term gains, neglecting long-term sustainability. Cognitive biases, such as present bias and optimism bias, reinforce this short-term focus, undermining efforts to address systemic issues effectively. Despite climate investment needing to increase sevenfold by 2030, many financial managers are reluctant due to perceived high costs and uncertain returns.

Siloed Thinking

Compartmentalised approaches to complex issues lead to inefficiencies and missed opportunities for systemic change. Integrating sustainability into core business strategies and addressing interconnected challenges holistically are necessary for meaningful progress. Siloed thinking also exists at the international level, where efforts often focus on individual issues rather than their interdependencies.

Recommendations

• Policy: Strengthen international cooperation and regional leadership in sustainability by creating comprehensive policies that align with environmental goals and support long-term strategies over short-term political cycles.
• Technology: Promote and govern technological innovations with sustainability at their core, ensuring new technologies contribute to reducing environmental impacts and enhancing resource efficiency.
• Citizens: Encourage the adoption of lower-impact lifestyles and societal value shifts through education, incentives, and policies that promote sustainable consumption and reduce waste.
• Finance: Boost investment in sustainable finance and carbon markets by creating incentives for long-term investments and developing robust frameworks that enhance the credibility and scalability of these markets.
• Business: Drive business model transformation and innovation by embedding sustainability into core strategies, setting ambitious but achievable sustainability targets, and fostering a culture of continuous improvement and accountability.

Conclusion

Transitioning to a new economy requires collective action and a fundamental rethinking of value creation, focusing on human and planetary flourishing. This generational effort necessitates collaboration across all sectors to achieve a sustainable future.