Scaling up Solutions for a Sustainability Transition

Abstract

The main challenge for a sustainability transition is to scale up successful solutions. Upscaling requires coalitions of public, private, and civil society actors who align their motivations. Pathways to upscaling may involve leveraging a dominant player's market power, integrating successful initiatives into public policy, or reinforcing government-led change with private efforts. Various actors agree to collaborate to take advantage of their complementary capabilities, e.g., government policies facilitate private action, market incentives reward progressive actors while government sanctions punish laggards, actors take up different tasks of the policy cycle, and large players absorb and disseminate pioneer efforts. To achieve durable impacts, the upscaling of solutions to reach sustainability must continually maintain a balance of incentives among key actors. We identify general lessons for successful upscaling that provide insights on the importance of motivating actors, designing collaborations for lasting success, and incorporating concerns of developing countries. The main challenge for a sustainability transition is to scale up successful solutions. Upscaling requires coalitions of public, private, and civil society actors who align their motivations. Pathways to upscaling may involve leveraging a dominant player's market power, integrating successful initiatives into public policy, or reinforcing government-led change with private efforts. Various actors agree to collaborate to take advantage of their complementary capabilities, e.g., government policies facilitate private action, market incentives reward progressive actors while government sanctions punish laggards, actors take up different tasks of the policy cycle, and large players absorb and disseminate pioneer efforts. To achieve durable impacts, the upscaling of solutions to reach sustainability must continually maintain a balance of incentives among key actors. We identify general lessons for successful upscaling that provide insights on the importance of motivating actors, designing collaborations for lasting success, and incorporating concerns of developing countries. Humanity is on a dangerous trajectory. Climate change and environmentally destructive practices have increased the risk of extreme weather events, food system failures, biodiversity loss, and geopolitical instability. Humanity must change its practices, quickly and strategically. A sustainability transition leveraging the efforts of private companies, governments, and civil society actors—i.e., non-governmental organizations (NGOs), community organizations, philanthropic foundations, academia, trade unions, etc.—is required. Many solutions for a sustainability transition are already known, adopted, and tested by some pioneer actors, or are in advanced stages of development. We know that improved fertilizer management can reduce agricultural emissions and improve water quality; that keeping fish catch within sustainable levels can prevent fishery collapse; that paying for vital ecosystem services can reduce infrastructure costs while preserving natural ecosystems; and so on. But only a small fraction of market players have voluntarily adopted sustainability solutions, and resistant actors often stall progress. For example, payments for ecosystem services represent less than 0.1% of the value of international trade globally.1Salzman J. Bennett G. Carroll N. Goldstein A. Jenkins M. The global status and trends of payments for ecosystem services.Nat. Sustain. 2018; 1: 136-144Crossref Scopus (233) Google Scholar Market shares of eco-certified and fair-trade products rarely exceed 20%.2Potts J. Lynch M. Wilkings A. Huppe G. Cunningham M. Voora V. The State of Sustainability Initiatives Review: Standards and the Green Economy. International Institute for Sustainable Development and International Institute for Environment and Development, 2014Google Scholar Among the 80,000 multinational companies operating in the world, only 250–300 have played an active role investing in sustainable development over the past two decades.3Nelson J. Partnerships for Sustainable Development: Collective Action by Business, Governments and Civil Society to Achieve Scale and Transform Markets. Business and Sustainable Development Commission, and Corporate Responsibility Initiative. Harvard Kennedy School, 2017Google Scholar Only 12% of firms in agricultural supply chains have adopted a zero or zero net deforestation commitment for all their sourced commodities.4Schatz B. Jenkins M.B. Deforestation Can't Be Stopped by Voluntary Action Alone. Global Risks Report 2020. World Economic Forum, 2020https://www.weforum.org/agenda/2020/01/deforestation-voluntary-action-regulation/Google Scholar In 2019, socially and environmentally responsible funds represented only 0.8% of the portfolio of BlackRock, the largest investment firm in the world. Despite broad enthusiasm for market-based regulatory instruments, carbon prices cover only 20% of global emissions and mostly fall under $25/ton, although the global social cost of carbon is estimated to be much higher.5World BankState and Trends of Carbon Pricing 2018. The World Bank, 2018Google Scholar The upscaling of these and other successful solutions is therefore a key challenge for a sustainability transition. Obstacles confront all stakeholders. Short-term, profit-seeking imperatives from market competition and financial markets constrain the private sector's ability to adopt more sustainable practices at scale. Governments can impose regulatory limits only within their jurisdictions, and those restrictions may create domestic social discontent as well as the loss of economic activities to other jurisdictions with less stringent environmental regulations. Environmental NGOs are constrained by the expectations of their supporters and face challenges in influencing governments and companies who are indifferent to sustainability concerns. Powerful vested interests defend the status quo and reinforce the intrinsic inertia of social and technological systems. We need to better understand the pathways to overcome these obstacles and upscale innovations for sustainability. While specific prescriptions are context dependent, we identify generic approaches to achieve sustainability transitions at scale. We have focused on efforts that take the world mostly as it is—leveraging corporate consolidation, for example, rather than advocating for entirely new market conditions—but the efforts we describe ultimately have shaped and will influence culture and institutions, not just practices. To understand these efforts and pathways, we examine a few illustrative cases of upscaling initiatives, mostly in commodity sectors. We draw from interviews with key experts to distill guidance for potential leaders of transitions. These narratives should help leaders diagnose potential opportunities for upscaling and avoid common pitfalls. In what follows, we describe the upscaling challenge, illustrate the main upscaling pathways, then draw lessons on the importance of creating synergies among multiple actors and on conditions for upscaling. Our key insights are, first, that upscaling almost always involves collaboration among public, private, and civil society actors. Second, the alignment of incentives and motivations of all relevant actors is critical to success. These motivations and incentives are neither static nor exogenous, as actors influence each other’s incentives. Third, actors' roles and stakeholder interactions are dynamic and evolve as the sustainability issue(s) of a specific sector change, partly in response to their activities. Success is not an end state; it is a continuing process. For change that matters, sustainable practices must scale up within sectors and scale out across geographies and industries. Upscaling increases the impact of environmental change for obvious reasons. The more broadly sustainability measures are applied, the greater their impact. Having McDonald's and Costco both agreeing to purchase only eco-certified fish increases demand for sustainable seafood more than if just one had made the commitment. Moreover, if only the most progressive actors adopt sustainability commitments, two-tier markets arise, with committed buyers supplied by crops grown on land cleared long ago or by well-managed fisheries, and uncommitted buyers continuing to purchase commodities produced in ways that contribute to deforestation and overfishing. Upscaling is also necessary to reduce leakage or displacement of negative impacts. The few countries that managed the difficult shift from deforestation to forest conservation simultaneously imported more products that caused deforestation elsewhere.6Meyfroidt P. Rudel T.K. Lambin E.F. Forest transitions, trade, and the global displacement of land use.Proc. Natl. Acad. Sci. U S A. 2010; 107: 20917-20922Crossref PubMed Scopus (364) Google Scholar If more countries or companies commit to reducing deforestation, the potential for such leakage will diminish. Promoting adoption at scale of existing solutions requires three elements: (1) improving understanding and raising awareness for a critical mass of stakeholders; (2) creating motivation and incentives for new practices by embedding the practices into institutional and policy standards or by modifying taxes and subsidies; and (3) developing capabilities to implement new practices at a socially acceptable cost.7Lambin E.F. Conditions for sustainability of human-environment systems: information, motivation, and capacity.Glob. Environ. Change. 2005; 15: 177-180Crossref Scopus (78) Google Scholar Achieving these upscaling conditions is inherently challenging, however, because of the diversity of parties and interests involved. Relevant stakeholders include private market players (e.g., producers, supply chain actors, retailers), governmental actors (policy makers, regulators, and managers at federal and local levels), and civil society (e.g., nonprofit organizations and foundations dedicated to encouraging sustainable practices, as well as others, such as community groups and unions). These parties all have an interest in the practices targeted for change, but they pursue different short-term objectives: seeking profits and rewarding their shareholders for companies; serving public and constituency interests within their jurisdiction for governments; and promoting specific social and environmental values for civil society. A standard paradigm conceives of these actors in static roles with opposing interests: private profit-maximizing firms create externalities (e.g., farmers apply too much fertilizer); civil society lobbies for regulations (e.g., NGOs push for non-point source water quality regulations); and government negotiates across interest groups to set and enforce the policies that emerge (e.g., governments create limits on water pollutant loads). In recent years, however, many of these actors have begun to recognize a broader and more dynamic set of interests and possibilities. Firms have found that they can reduce systemic risks to their businesses and reap reputational rewards when they act to internalize externalities. Civil society has seen that it can increase its influence and impact through engagement with the private sector. And governments have sometimes recognized that they can achieve more social impact at lower cost when working in collaboration with affected industries and interested NGOs. The recognition by each of these actors that they have a broader set of interests that partially overlap has opened the way for creative collaborations to tackle sustainability challenges. Those collaborations have depended on finding opportunities to align interests and have required recognition that interests and therefore opportunities evolve over time. There are still significant challenges. Firms must take on operational and financial risks to embark on new sustainability initiatives. Governments have competing priorities, particularly with economic development—forest conservation goals, for example, may impede an agricultural development push. And NGOs, responsible to their supporters, can compromise only so much in collaborations with firms and governments. Here, we discuss three upscaling pathways: leveraging a dominant private actor's market power; integrating civil society or private sector initiatives into public policy; and reinforcing government-led change with private efforts. These pathways have demonstrated promise, but success has been elusive. We discuss proposed solutions in the section that follows. Corporate consolidation has created firms with market dominance. Five trading firms control 90% of the global palm oil market; five companies are responsible for almost half of all global farmed Atlantic salmon; Home Depot and Lowe's account for more than a third of the US home improvement and hardware retail market; and so on.8Folke C. Österblom H. Jouffray J.-B. Lambin E.F. Adger N. Scheffer M. Crona B. Nytröm M. Levin S.A. Carpenter S.R. et al.Transnational corporations and the challenge of biosphere stewardship.Nat. Ecol. Evol. 2019; 3: 1396-1403Crossref PubMed Scopus (121) Google Scholar,9Vandenbergh M.P. The new Wal-Mart effect: the role of private contracting in global governance.UCLA L. Rev. 2007; 54: 913-970Google Scholar Such consolidation makes it easier for civil society and governments to collaborate with private actors—there are fewer market participants to coordinate with. More importantly, these private actors often wield significant power over their supply chains, allowing them to impose voluntary standards on a large share of the market.10Lambin E.F. Gibbs H.K. Heilmayr R. Carlson K.M. Fleck L. Garrett R. le Polain de Waroux Y. McDermott C.L. McLaughlin D. Newton P. et al.The role of supply-chain initiatives in reducing deforestation.Nat. Clim. Change. 2018; 8: 109-116Crossref Scopus (179) Google Scholar Suppliers must meet these standards for market access.11Steering Committee of the State-of-Knowledge Assessment of Standards and CertificationToward Sustainability: The Roles and Limitations of Certification. RESOLVE, 2012Google Scholar In 2015, more than half of a random sample of 449 companies listed on the largest OECD stock exchanges in the food, wood products, and textile sectors had adopted sustainable sourcing practices.12Thorlakson T. de Zegher J. Lambin E.F. Companies’ contribution to sustainability through global supply chains.Proc. Natl. Acad. Sci. U S A. 2018; 115: 2072-2077Crossref PubMed Scopus (74) Google Scholar Dominant players primarily impose standards to control quality and address competition, but they can also advance their sustainability goals through standards, often to decrease reputational risk, among other motives. This pathway is most effective when a private actor with market power is willing to engage with civil society and/or governments.13van der Ven H. Correlates of rigorous and credible transnational governance: a cross-sectoral analysis of best practice compliance in ecolabeling.Regul. Governance. 2015; 9: 276-293Crossref Scopus (44) Google Scholar The private actor motivates and educates its supply chain. Civil society and governments help provide information, support, incentives, and legitimacy. Two examples of this pathway illustrate both its potential and challenges: eco-certification in the global whitefish sector and private deforestation commitments. The movement of the global whitefish sector to Marine Stewardship Council (MSC) certification through Unilever's early leadership has overall been a success. In the 1990s, Unilever was the world's largest seller of frozen seafood and a dominant player in the market for whitefish in particular. After the 1992 collapse of the Northern cod fishery and threats to other fisheries, Unilever managers raised concerns about the depletion of fish stocks critical to their brands. In addition, Greenpeace and other NGOs campaigned for Unilever and others to act, using a naming-and-shaming approach.14Auld G. Constructing Private Governance: The Rise and Evolution of Forest, Coffee, and Fisheries Certification. Yale University Press, 2014Crossref Google Scholar,15Auld G. Transforming markets? Activists’ strategic orientations and engagement with private governance.Organ. Environ. 2020; 33: 31-55Crossref Scopus (6) Google Scholar Unilever thus committed to buy only sustainably sourced fish and asked its suppliers to get on board, even dropping those who could not confirm legal catches. In 1996, Unilever began working with the World Wide Fund for Nature (WWF) to develop the MSC as an eco-certification program for seafood generally.16The Press AssociationSustainable seafood: the first 20 years. A history of the Marine Stewardship Council.http://20-years.msc.orgDate: 2017Google Scholar Once the MSC standards were established, whitefish fisheries, including New Zealand hoki and Alaska pollock, were among the first large fisheries to get certified. Smaller, progressive retailers such as Migros, Sainsbury's, and Whole Foods were the first to join Unilever in shifting purchases. As the market built, other much larger buyers demanded MSC-certified fish, too; e.g., Lidl and Walmart in 2006 and McDonald's in 2011. In response, additional whitefish fisheries, such as Russian pollock, stepped up to the MSC standard. By 2018, more than 60% of the global whitefish market was MSC certified. MSC has adopted changes over time to strengthen its standards and to improve the reliability of third-party certifications.17Agnew D.J. Gutiérrez N.L. Stern-Pirlot A. Hoggarth D.D. The MSC experience: developing an operational certification standard and a market incentive to improve fishery sustainability.ICES J. Mar. Sci. 2014; 71: 216-225Crossref Scopus (43) Google Scholar The whitefish market was in some ways primed for success given the high market concentration in this sector. Two Arctic fisheries are responsible for almost a quarter of the global whitefish catch,18WWFWhitefish.https://www.worldwildlife.org/industries/whitefishDate: 2019Google Scholar reducing the number of producers to corral. Moreover, many whitefish fisheries were already well managed. As a second example, private deforestation commitments illustrate the challenges of upscaling through the market power pathway. In 2010, the Consumer Goods Forum, representing 400 companies, set a goal of zero net deforestation by 2020. Working with NGO partners, Consumer Goods Forum companies enlisted traders and producers in a joint effort to ensure that commodities are produced without deforestation. Companies have been slow to translate their aspirational goals into effective, on-the-ground implementation, however.10Lambin E.F. Gibbs H.K. Heilmayr R. Carlson K.M. Fleck L. Garrett R. le Polain de Waroux Y. McDermott C.L. McLaughlin D. Newton P. et al.The role of supply-chain initiatives in reducing deforestation.Nat. Clim. Change. 2018; 8: 109-116Crossref Scopus (179) Google Scholar Of the Consumer Goods Forum companies pledging to reduce deforestation, only about a quarter had concrete action plans to reduce deforestation in place by 2016.10Lambin E.F. Gibbs H.K. Heilmayr R. Carlson K.M. Fleck L. Garrett R. le Polain de Waroux Y. McDermott C.L. McLaughlin D. Newton P. et al.The role of supply-chain initiatives in reducing deforestation.Nat. Clim. Change. 2018; 8: 109-116Crossref Scopus (179) Google Scholar Implementation challenges stymied both planning and action. Traceability along full supply chains is difficult to create for commodities such as palm oil. Sustainable sourcing also often disadvantages small producers, who lack the resources to comply or to demonstrate compliance with environmental and social standards. Private companies thus fell far short of their goals, and, after these commitments were made, rates of deforestation have increased overall.19New York Declaration on Forests Assessment PartnersProtecting and Restoring Forests: A Story of Large Commitments yet Limited Progress. New York Declaration on Forests Five-Year Assessment Report (Climate Focus).2019https://forestdeclaration.org/images/uploads/resource/2019NYDFReport.pdfGoogle Scholar To transform the entire industry, a larger fraction of companies would have to make zero-deforestation commitments, and all those with commitments would have to develop and implement action plans. Supportive public policies are required to overcome these challenges.10Lambin E.F. Gibbs H.K. Heilmayr R. Carlson K.M. Fleck L. Garrett R. le Polain de Waroux Y. McDermott C.L. McLaughlin D. Newton P. et al.The role of supply-chain initiatives in reducing deforestation.Nat. Clim. Change. 2018; 8: 109-116Crossref Scopus (179) Google Scholar The threat of formal regulation can motivate further action; disclosure requirements can help create transparency; public policy initiatives can reduce demand for products grown on deforested land, therefore reducing the threat of leakage; and information sharing, technical support, and subsidies can help smallholders adopt more sustainable practices. These two cases illustrate the need for broad collaborations among local producers, transnational companies, governments, and NGOs where sustainability improvements are challenging. Whitefish has proven a more tractable issue for sustainability than deforestation, which requires efforts by many actors across an array of commodity sectors (beef, soy, palm oil, pulp). In this pathway, after civil society organizations or progressive actors from the private sector design and pilot voluntary sustainability initiatives, government adopts elements of successful initiatives into legal mandates. Such public policy integration means that these initiatives apply to all actors in a jurisdiction, considerably scaling up their application.20Gulbrandsen L.H. Dynamic governance interactions: evolutionary effects of state responses to non-state certification programs.Regul. Governance. 2014; 8: 74-92Crossref Scopus (189) Google Scholar This pathway requires private actors to first demonstrate economic and technical feasibility. With such success, progressive business leaders may encourage public policy integration to avoid being subject to costs not borne by competitors and ensure a level playing field. The demonstration of feasibility can also reduce policy opposition. The pathway then requires willing and motivated policy makers to enact a policy and enforce its requirements. Mozambique's collaboration with the Better Cotton Initiative and Bolivia's 1996 revision of its forestry law illustrate the promise and pitfalls of this pathway. The Better Cotton Initiative (BCI) grew out of a roundtable on cotton convened by WWF in 2005. In 2010, the roundtable produced principles and criteria for more sustainable cotton production. Supported by a collaboration among major global brands, including Ikea, H&M, Levi's, Adidas, and Nike, BCI aimed to enlist 30% of the global market by 2020. By the 2017–2018 cotton season, about 19% of global production was Better Cotton certified. A few years ago, Mozambique sought to revitalize its cotton sector, which accounts for 20% of its exports. The country turned to BCI as a source of standards for better management and as a brand that could improve access to global markets. In 2014, the Government of Mozambique entered a partnership with BCI, embedding the BCI principles and criteria into national regulations and setting a goal of becoming the first country to produce 100% Better Cotton.21ISEAL FactsheetUpgrading cotton production in Mozambique: the role of the better cotton initiative.https://bettercotton.org/upgrading-cotton-production-in-mozambique-the-role-of-the-better-cotton-initiative/Date: 2017Google Scholar By 2017, 86% of Mozambique's cotton farmers grew Better Cotton.22Better Cotton InitiativeWho are BCI’s partners in Mozambique?.https://bettercotton.org/where-is-better-cotton-grown/mozambique/Date: 2019Google Scholar As a second example, Bolivia's 1996 revision of its forestry law illustrates the fragility of this pathway. The case initially looked successful. The 1996 law allocated concessions to private firms, authorizing them to undertake long-term management responsibilities. Inspired by the Forest Stewardship Council (FSC) standard, a voluntary certification scheme for forests, Bolivia incorporated FSC forestry management standards into its law.23Ebeling J. Yasue M. The effectiveness of market-based conservation in the tropics: forest certification in Ecuador and Bolivia.J. Environ. Manage. 2009; 90: 1145-1153Crossref PubMed Scopus (117) Google Scholar Bolivia's approach thus combined the incentives of market access and price premiums associated with certification with the requirement to comply with the revised law. USAID supported Bolivia's efforts with financial and technical resources. NGOs also provided significant support. In the decade following the 1996 revision, Bolivia certified an additional 2.2 million hectares of forests and increased timber exports.24Espinoa O. Dockry M.J. Forest certification in Bolivia: a status report and analysis of stakeholder perspectives.For. Prod. J. 2014; 64: 80-89Google Scholar However, since 2008, the forest area under certification in Bolivia has dropped sharply due to a lack of clear land tenure, changes in the global timber market, a construction boom in Bolivia, low or absent price premiums for certified timber products, and a decrease in support from international institutions, NGOs, and the national government after the initial years. These two cases illustrate that public policy integration can take sustainability solutions to scale, but that it alone is not enough. As they design solutions, governments, civil society, and private actors must ensure that these solutions will be implemented for the long run. This includes resolving structural obstacles to implementation, such as lack of clear land tenure and low price premiums in the Bolivian case, and creating mechanisms to buffer against contextual factors such as market or policy fluctuations. In this pathway, governments lead transformations, reinforced by private action. This pathway requires willing and capable policy makers, and coordination with civil society and private actors. The efforts to reduce deforestation in the Brazilian Amazon and to quickly respond to the destruction of the stratospheric ozone layer exemplify this pathway. The successful effort to reduce deforestation in the Brazilian Amazon between 2007 and 2013 illustrates this pathway. Over the course of the 1980s and 1990s, NGO campaigns and media coverage made the Amazon rainforest one of the most iconic ecosystems on Earth and built global concern about increasing deforestation in the region.25Nolte C. le Polain de Waroux Y. Munger J. Lambin E.F. Conditions influencing the adoption of effective anti-deforestation policies in South America’s commodity frontiers.Glob. Environ. Change. 2017; 43: 1-14Crossref Scopus (51) Google Scholar A spike in deforestation and the murder of a nun, Dorothy Stang, in 2005, sparked global outcry. President Lula launched an aggressive effort to control deforestation, with coordinated action on multiple fronts.26Nepstad D. McGrath D. Stickler C. Alencar A. Azevedo A. Swette B. Bezerra T. DiGiano M. Shimada J. Motta R.S.da et al.Slowing Amazon deforestation through public policy and interventions in beef and soy supply chains.Science. 2014; 344: 1118-1123Crossref PubMed Scopus (615) Google Scholar His government set aside large swaths of land in protected areas and indigenous reserves. It deployed federal law enforcement troops, guided by satellite monitoring, to apprehend and prosecute people clearing land illegally. It imposed severe financial sanctions on counties that failed to control deforestation, denying access to credit to all farmers in those counties. It also created a new land registry to formalize land tenure. In support of this government effort, NGO activists launched naming-and-shaming campaigns that led to the Soy Moratorium, a commitment by the major soy traders not to buy soy from properties in the Brazilian Amazon with forest clearing after the date of signature (July 2006). The global trade in soy is highly concentrated, with eight companies controlling more than half of the processing and export of soybeans.8Folke C. Österblom H. Jouffray J.-B. Lambin E.F. Adger N. Scheffer M. Crona B. Nytröm M. Levin S.A. Carpenter S.R. et al.Transnational corporations and the challenge of biosphere stewardship.Nat. Ecol. Evol. 2019; 3: 1396-1403Crossref PubMed Scopus (121) Google Scholar By 2014, only 1% of soy expansion in the Amazon came from forest clearing.27Gibbs H.K. Rausch L. Munger J. Schelly I. Morton D.C. Noojipady P. Soares-Filho B. Barreto P. Micol L. Walker N.F. Brazil’s Soy Moratorium: supply chain governance is needed to avoid deforestation.Science. 2015; 347: 377-378Crossref PubMed Scopus (364) Google Scholar A similar effort in the beef sector—zero-deforestation cattle agreements—was less successful because of leakage between properties.28Alix-Garcia J. Gibbs H.K. Forest conservation effects of Brazil’s zero deforestation cattle agreements undermined by leakage.Glob. Environ. Change. 2017; 47: 201-217Crossref Scopus (59) Google Scholar Nonetheless, by 2012, the three initiatives—the government push, the beef effort, and the Soy Moratorium—had reduced the rate of deforestation by more than 80% from its peak in 2003, while soy and beef production in Brazil continued to grow. This success has proven vulnerable to political change, however. In 2018, Brazil elected Jair Bolsonaro president. Bolsonaro strongly opposed conservation policies and weakened enforcement against illegal logging. Between August 2018 and July 2019, the defore