Synopsis of the book " Capitalism at the Crossroads" by Stuart. L .Hart

Contents

• Mapping the terrain
• Worlds in Collision
• The sustainable value portfolio
• Creative destruction and sustainability
• The great leap downward
• Broadening the corporate bandwidth
• Developing native capability
• Toward a sustainable global enterprise

The total environmental impact (I) created by human activity on the planet is a function of three factors:

1. Population P
2. Affluence A
3. Technology T

The total environmental impact of human activity can thus be expressed as a formula :

                                            I = PAT

Achieving sustainability will require stabilizing and ultimately reducing the human impact on the planet.
According to the formula, impact can be reduced by three ways.

1. Reduce population
2. Reduce affluence
3. Reduce technology or move technology to denominator

First option, decreasing population is not feasible at present.
Second option is also not viable option. You cant dictate everyone to become poor. Also you cant dictate rich people to donate all their wealth to poor people. Even if all the assets of worlds seven million millionaires ( $25 trillion) were divided among 4 billion poorest, each poor receives $6000 as one time payment- clearly not a viable solution.

Only option left over is move T to denominator.

                                                                   
                                                                   I = PA(1/T)

What that means?

Changing the technology used to create the goods and services that constitute the worlds wealth.

If both P and A increases then to keep I constant , 1/T should decrease.

Some of the technologies quoted as examples are:

•  Biotechnology
  
• Nanotechnology
• Bio-mimicry
• Wireless IT
• Renewable energy

Such technologies hold the potential to meet the needs of the billions of rural poor ( who have thus far been largely ignored by global business) in a way that dramatically reduces environmental impact.


Is there any road map and examples to follow ?

yes!

• Use liquid Carbondioxide instead of water ( in computer manufacturing and dry cleaning )
• Grameen bank ( Micro credit a success story in Bangladesh)
• Nirma soap and HLL wheel detergent
• Monsonto crops using less chemicals per acre of agricultural land
• Replacing materials with natural biomaterials 
• Moving away from petroleum cars to hybrid cars ( Toyota, Honda, GM, Google)
• Central distribution through Electric grid to gridless solar powered electricity
• Government supplied municipal water to self producer ( membrane technology )
• Vertical agriculture in green house

The list goes on!

Please read the book for complete details and strategy.

What finally i understood from this book is :

World population is 6.6 billion. In this 4.5 billion are poor. ie They can't buy anything worth other than foods and clothes. 90 % of the companies are producing goods and services for 2 billion affordable community. That market is saturated. If your agenda is to increase share holder value ie  if you want to earn more money with limited resources, you have to uplift the poor such that they will participate in market. In this process , you should be careful such that resources should be maintained. Otherwise it will end up like the story of Golden Goose.


Reference

Stuart L Hart (2005) Capitalism at the cross roads. Wharton Publishing house, USA.