THE ELKINGTON REPORT

On the trail of the Green Swan

The following is an article by John Elkington, Chairman and Chief Pollinator Volans Ventures Ltd, originally published on 3 April 2019 on GreenBiz.

A few weeks back, on my way to work and just around the corner from my London home, I watched a white swan peck viciously at his own reflection in the side of a shiny black car. The image stuck in my memory because I have been on the trail of swans of a very different color — or, more accurately, colors.

The swan has long been a symbol of transformation. Think of “The Ugly Duckling” by Hans Christian Anderson. In the same spirit, the working title of the new book I am writing is “Green Swans.” It is the tale of the accelerating transformation of capitalism, markets and business — a process I believe will reach a major inflection point in the 2020s.

The result will be a world either of Black Swan breakdowns, among them the climate emergency and species extinction, or of breakthrough Green Swan solutions. More likely, of course, it will be a shifting mix of both, challenging us to move the needle from black to green.

Astute readers will quickly spot that the Green Swans metaphor inverts Nassim Nicholas Taleb used in his 2007 book, “The Black Swan.” Its subtitle: “The Impact of the Highly Improbable.” A professor, risk analyst and former hedge fund manager and derivatives trader, Taleb explained how Black Swan events typically come as a complete surprise and can have massive impact, generally for the worse. Then, often, they are poorly analyzed, using selective hindsight.

As a result, time and again, we fail to understand what has just happened to us, setting ourselves up to be blindsided once more.

Time and again, we fail to understand what has just happened to us, setting ourselves up to be blindsided once more.

Taleb’s title harked back to an ancient story based on the assumption that black swans did not exist. An assumption upended when, in 1697, real-life black swans were discovered in Australia by Dutch explorer Willem de Vlamingh. The impossible had proved to be anything but.

Green Swans, in contrast, are positive market developments once deemed highly unlikely — if not actually impossible. For most people, they arrive more or less out of the blue. And they can have a profound positive impact across the triple bottom line of economic, social and environmental value creation. At their best, to use the Future-Fit Foundation’s formulation, they are simultaneously environmentally restorative, socially just and economically inclusive.

But, at least early on, many Green Swan innovators and entrepreneurs tend to be dismissed out of hand, very much like the Ugly Duckling in the fairy tale. Only later do critics and skeptics see what their eyes — and minds — have been blind to. The ungainly cygnets (or start-ups) morph into something else entirely.

Burning down Paradise

Like beauty, ugliness is in the eye of the beholder. Most farriers, alongside saddle and harness makers, viewed the works of auto pioneers such as Karl Friedrich Benz or Henry Ford as vile distractions, abominations. Yet in short order they took over the world, turning the horse-drawn economy on its head. Increasingly, the distractions clattered center-stage, while suppliers of earlier forms of horsepower retreated to the sidelines, increasingly confined to beach rides, gymkhanas and dressage.

As we move deeper into the Anthropocene epoch, and swans peck at the cars that are invading their habitat, the likelihood of Black Swan events is growing exponentially. Think of the bankruptcy of the Californian power utility Pacific Gas & Electric (PG&E). Once it might have got away with its lax safety culture and with sparks flying from time-expired equipment, but — with the Golden State drying out — the result these days was a full-blown catastrophe, literally burning down Paradise.

Green Swan solutions are already at work solving at least some of today’s apparently impossible challenges.

So what to do? Well, just as we sometimes have no choice but to fight fire with fire, so we must fight exponential breakdowns with exponential breakthroughs. This theme has been central to Project Breakthrough, a research program developed by Volans for the United Nations Global Compact, the world’s largest sustainable business platform.

Happily, Green Swan solutions — including new mindsets, technologies, business models and policy frameworks — are already at work solving at least some of today’s apparently impossible challenges. But they need help to reach the necessary pace and scale.

Public or private?

One question the Volans team has been wrestling with is what the respective roles of the private, public and citizen sectors will be. Can the private or public sector save us? On March 20, I debated economist Mariana Mazzucato at University College London. It will be no surprise to those who know of her that she championed the role of governments in driving breakthrough innovation, while I was invited to address the private sector’s role.

Anyone expecting gladiatorial combat would have been sorely disappointed, as we agreed on pretty much all fronts. Indeed, I find her work on mission-led innovation (PDF) inspirational and compelling. But one problem we face is that those sectors of the global economy that are growing exponentially also have the greatest potential to spawn Black Swan outcomes.

A few days after social media livestreamed the New Zealand mosque massacres, for example, I got an email from Derek Handley, founding CEO of Richard Branson’s B Team. He noted in some distress, “When a plane goes down, the airline and Boeing CEO fronts up and makes it the center of their world to try and comfort and solve. When BP spills oil, the world calls for blood and they end up fronting $60 billion in costs and fines. But when YouTube and Facebook livestream horror, does life just go on?”

A couple of weeks earlier, I had the great privilege of having dinner with Vint Cerf, one of the grandfathers of the Internet. During the dinner, he was politely asked why the Internet founders hadn’t seen hacking and all the rest of this stuff coming. His reply was that they had been struggling so hard to get the thing to stay on its feet that such possibilities were very remote from their minds.

So how many people are trying to haul new technologies, new business models and new mindsets to their feet without thinking through the potential unintended consequences? We have learned to talk of sustainability, but our existential challenge is to spot potential Black Swans early and rein them in — while creating the market and policy setting in which growing numbers of Green Swans can flourish.

John Elkington

John Elkington is a world authority on corporate responsibility and sustainable development. He is currently Founding Partner and Executive Chairman of Volans, a future-focused business working at the intersection of the sustainability, entrepreneurship and innovation movements. He is also leading a 2-year program in partnership with the United Nations Global Compact (UNGC) focussing on the market opportunities around exponential sustainability, titled Project Breakthrough. He is also Honorary Chairman of SustainAbility, and sits on an A-Z of some 30 boards and advisory boards.