The popular use of the term ‘sustainability’ came to the fore in 1987 with Gro Haarlem Bruntland’s report, ‘Our Common Future’. Commissioned by the United Nations, the document considered the interplay between the environmental, social and economic challenges facing global society. It defined sustainability as the ability of one generation to meet its own needs without compromising the needs of future generations.
Whilst stuttering, hesitant progress towards getting the balance right has been made in the forty years since then, with the occasional flash of brilliance, it is clear that not enough has been done; the evidence is there for all to see. It must help our understanding to consider the following: how much do today’s challenges arise from an initial failure to understand our real impact on the planet? Why has there been by a wilful disregard of the evidence? And how has the lazy approach of ‘someone else’s problem’ contributed to the several crises that confront us?
Why has there been by a wilful disregard of the evidence? And how has the lazy approach of ‘someone else’s problem’ contributed to the several crises that confront us?
To get close to assessing the real and potential prospects for the twenty-first century we need to understand how we have reached the precipice that Bruntland foresaw. What changed between, say, 1800 and 1900? To consider the roots of humanity’s impact on the climate and other issues in those pre-industrial days we need to look at the state of science and technology in Britain, then a world leader.
In 1800 most British scientists were hobbyists, rich men with time to spare, epitomised by the polymath Joseph Priestley (1733-1804). Scientists had initially come together to share and promote knowledge and scientific discipline, both in Britain and in France, in the 1600s through their respective Societies with royal patronage. However, the French Revolution saw the guillotining of the chemist Antoine Lavoisier and other prominent scientists and, post-revolution, the French government chose to regulate science. (Though this stifled invention for a while to Britain’s advantage, this French push for conformity gave us international standards of measurement such as metres and kilograms.)
In 1824 the Frenchman, Joseph Fourier, declared that the Earth was surrounded by a gaseous atmosphere which insulated us from the dire cold of space. In 1856 a British woman, Eunice Foote, concluded that water vapour and the newly-named carbon dioxide were the air’s ‘active’ insulators, though neither discovery is widely recognised today. In 1896, the better-known Svante Arrhenius, a Swede, postulated that growing levels of CO2 from combustion would make the planet warmer; he concluded that whilst preventing another ice age this insulating property would cause overheating problems in 10,000 years or so. His compatriot, Nils Gustaf Ekholm, named this the ‘greenhouse effect’ in 1906 and in 1937 an amateur British scientist, Guy Callendar, showed that Arrhenius’ prediction was already being demonstrated by measurable atmospheric change. Arrhenius’s time scale was already proving perilously wrong…
Factories already existed in 1800. The trade in wool and, increasingly, cotton from America and the Empire dominated a manufacturing sector powered initially by waterwheels, manpower and, literally, horsepower. The use of wind power, centuries-old tech, was largely confined to the milling of seeds. The technology of weaving was developing rapidly thanks to Crompton’s 1779 spinning mule and other innovations. Textiles caused cities like Manchester to grow and trade boosted port cities, prompting local social change on a massive scale. As the century progressed, energy for industry became dominated by coal.
The Chinese first burned coal 6,000 years ago. Until the late 1800s global combustion remained at a level below that which would trigger the exponential growth in carbon emissions which is at the heart of today’s climate challenge. In the Britain of 1800 coal (or peat) was not only burned in every household but in increasing numbers of factories too, whilst the coal mines were largely owned by the landowners who dominated the government, the Establishment, of the day. While his technology wasn’t entirely new, Thomas Newcomen had developed the first primitive commercial steam engine as early as 1712, commonly used to pump water out of coal mines and then to power domestic water supplies. By the 1780s thousands of commercial steam engines, based on Matthew Boulton and James Watt’s invention, had been sold and the industrial revolution was in full swing. Textile looms led the way, opening the door for Charles Babbage and the digital computer. Those same landowners first used steam for transport, taking coal from their mines to the nearest port. By 1900 coal was providing 95 percent of Britain’s energy needs and the exponential rise in consumption and emissions was in full flow. Oil, commercially exploited in USA since the 1880s, was yet to have a significant additional impact.
The nineteenth century saw many social, economic and other trends enter exponential mode: not just coal and energy use but population size, literacy and economic output, too. Thomas Malthus (1766-1834) had noted a century previously that exponential rises in animal populations (such as humans) were ultimately ‘unsustainable’ without an equivalent growth in food supply, a model that should have provided a source of learning… but to whom? Even by the end of the nineteenth century regulation by government was weak and taxation minimal, with foreign policy prioritised. Only two significant laws controlling company governance were passed prior to 1860: those with over 25 shareholders had to be registered and they were granted the option of Limited Liability status.
As we know today, the ever-greater emission of carbon dioxide and other greenhouse gases, such as the potent methane, is only one side of the story. Nature already had a tried and tested way of keeping CO2 emissions in check: green plants, and forests in particular. But, by 1800, Britain’s forests were already long-suffering…
A thousand years ago our leaders started to fell Britain’s woodlands to clear land for royal hunts. Then came demand for vast open spaces for sheep farming. Wool grew to be at the heart of our economy as sheep’s appetites also prevented the natural re-growth of trees. By the 1700s Britain had launched a 200-year commitment to global naval dominance which required many thousands of ships. The plentiful and endemic oak was ideal for shipbuilding: it produced long and malleable planks, was naturally waterproof and slow to rot. Typically 400 mature oaks were felled to build each standard warship, each with a life expectancy of only around 12 years, and Britain had about 300 such vessels at any one time. Nelson’s flagship, Victory, required 600 such oaks. Hundreds of pines provided the ships’ superstructure and then there was the rest of the navy, the merchant fleet, buildings, carts and domestic fuel. The production of mature oaks, defined as over a hundred years old, was a true test of commercial patience and was barely even attempted.
By 1919 two-thirds of Britain’s trees had gone, leaving just five percent of Britain under wood. Before this time there was little large-scale commercial forestry. Nevertheless, today’s approach to pines – ‘let’s plant fast-growing trees in vast numbers and cut them down in twenty years’ – is misguided, as young trees consume a lot of energy for growth and thus contribute much less in climate regulation terms, than do mature ones.
Globally, the destruction of rain forests also started in the nineteenth century. The eighteenth-century slave trade had seen some clearance of colonial forests for plantations of sugar, tobacco, cotton and other commodities and, following the formal end of Britain’s involvement in slavery in 1834, there came a further wave of deforestation. Palm oil provided Britain’s trade with west Africa with an economic alternative to slaves as our changing marketplace demanded lubricants, candles, soap and, latterly, margarine. At the end of the nineteenth century the Far East saw growing demand for rubber plantations which originated from seedlings smuggled out of Brazil by the British.
Meanwhile the nature of business itself changed during the nineteenth century with start-ups being almost invariably family-owned. Even the biggest entrepreneurs started small: W. H. Smith ran a newspaper stall, Lever and Hartley were grocers’ assistants, Josiah Wedgwood started his own pottery after a relative denied him a job. Growth was never a priority, but it became almost inevitable. Whilst Adam Smith had distinguished between productive and unproductive work in the late eighteenth century the modern goal of productivity, measured by output per unit of input, didn’t catch on until the twentieth.
Many nineteenth-century entrepreneurs were motivated by their values: three-quarters were not only religious non-conformists (barred as such from universities, Parliament and the Establishment generally for their non-Anglican views), but Liberals too. Such values explain why many adopted a paternalistic approach to their workforce, building sanitary and often beautiful villages, sharing profits, awarding bonuses, and throwing parties and picnics for their workers. William Hartley made a point of paying his women employees more than most employers did – though it would be a century before pay rates had to equal those of men. Their political and religious views led the Quaker Cadbury’s company to campaign vigorously against slavery and alcohol. Compared to today’s pressures such leaders had time to take the long view of their business, their prospects and responsibilities, and act accordingly. Later in the nineteenth century many business leaders were found on the Liberal benches of both Houses of Parliament and in the annals of the great philanthropists.
Companies had been recognised from 1600 when trading behemoths like the East India Company were behoven to the government for patronage. Throughout the nineteenth century, however, and into the twentieth, private companies were legally indistinguishable for tax purposes from the families that owned them. In 1891, when WHSmith’s founder’s grandson died, the company was liable for death duties, the precursor to inheritance tax. Not only did the family have to refinance and restructure the company to pay the massive bill but they were obliged to do the same again just a generation later.
Even those early government-owned giant corporations had shareholders but they were impotent, exerting little or no power or influence. Individual investors merely sought regular dividends. Companies welcomed access to their cash and few investors thought it necessary to sell or buy shares, nor stray from their traditional family investment vehicles.
The early nineteenth century posed a new problem: there was no history, for obvious reasons, of families owning railways. To succeed, railway companies would need vast amounts of investment capital to build engines and carriages, not to mention a network of lines, before they could earn a single penny. The demand for upfront cash far exceeded what was available either from rich families or Britain’s hundreds of small banks. A new source of funding had to be found, which was mass shareholding. Even then, this new breed of investors sought neither power nor responsibility. It was only when investors started to club together in cabals to exert claims to shareholders’ and then owners’ ‘rights’ that ‘shareholder power’ came to be significant. This didn’t happen at scale until after World War One, initially in the (by then) ailing Lancashire cotton industry. In trying to take control of companies, the early ‘shareholder activists’ showed marked naivety and a lack of preparedness, with fraud not uncommon. Prior to this exertion of shareholder influence there had been no ‘clean’ way for an outsider to take over a thriving company without the wholehearted consent of its owners. But now the gloves were off.
This transfer of company ownership from families to shareholders saw responsibility move from close to the shopfloor to distant board room, from ‘hands-on’ to ‘hands-off’, as local priorities were succeeded by abstract ones such as profit maximisation.
We have considered Environmental, Social and Governance (ESG) factors at play in Britain’s commercial economy of the nineteenth century. After World War One all bets were off and by the 1960s a degree of anarchy had set in, spurred by the rise of private equity and the short-term Friedmanite ethos peddled by British business schools post-World War Two. Many factors, including the increasing size and complexity of businesses, triggered levels of business regulation and corporate taxation that Victorians would never have imagined.
Opportunities for communication have improved manifold since those days, which is why new ideas in business, for good or ill, catch on far faster than they used to, why influence spreads so much more vigorously and why previously long-term horizons have shortened so noticeably. Compare the Victorian entrepreneur’s decision to build a village for 600 residents to live in for the rest of their lifetimes to that of a modern board tying C-suite bonuses to a single KPI such as quarterly share price.
No one wants to reinstate life in Victorian cities nor to cast off every last shred of twenty-first-century privilege. But if we have learned anything from British commerce over 250 years it is that while values may have driven many business founders, their vision was limited by history. In the average business of 1900 ignorance of the distant world, of man’s place in nature, of climate science, was almost universal.
There is no excuse for ignorance today. ‘Our Common Future’ is already here – but how long can it survive? Anyone who pleads ignorance to justify inaction today is putting the future of all in jeopardy. What is clear is that business, the ultimate consumer, can and must address the problems that, with hindsight, it has so clearly caused in the past. After two centuries of negative impact a neutral approach is no longer enough; our economy and all the players within it needs to focus on healing the planet.
Tom Levitt’s new book, The Business of History, is available to purchase now.
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