Paul Polman’s article Business can’t afford a generation that can’t afford a future triggered this.
Perfect storm
As Polman describes it, young people are coming of age in a perfect storm. Wages barely grew after the 2008 crash. Covid disrupted their education and first jobs. Living costs surged. And the pressures feed each other: rent eats the savings, insecure work postpones independence, and failing public services push costs back onto families.
Budget pressure
The destruction of nature makes it worse. Food depends on healthy soils, water cycles, pollinators and a stable climate. Break those systems and the bill lands in the shopping basket. Polman cites the ECB estimate that this year’s heat and drought could add 0.3 to 0.8 percentage points to euro-area food inflation over the next year, with food already around 30% more expensive than at the end of 2021.
Protest
No wonder they are protesting all over Europe. For years, governments have kicked the can down the road. They have postponed maintenance, avoided difficult reforms, protected broken systems, and congratulated themselves for managing decline. Institutional incompetence. None of this should come as a surprise.
Institutional incompetence
The infrastructure deficit was visible. The housing shortage was predictable. The pressure on electricity grids was foreseeable. Water scarcity, leakage, and treatment constraints were known. The consequences of an ageing population were known. The need for climate adaptation was known. The transformation of work and education by technology has been visible for years. What they did not do was act.
Limit
Now the system has reached its limit, and the bill has arrived. Decision debt leaves governments with a bill they cannot afford. Current taxes will no longer cover it. Increasing taxes will exacerbate the problem. It will lead to more protests.
Funding source
So what can you expect governments to do? They will aggressively look for another funding source. Assisted by AI that will make everything in your value chain transparent. They will identify who did the damage, trace who is responsible, and assess the damage and impact. Tax at restorative levels. Your organisation will be held fully financially accountable. Assume that in the near future, you will pay for the negative impacts, and assume that positive impacts will be part of your revenue model.
Example
There is already a concrete example of this shift. The EU’s revised wastewater directive requires pharmaceutical and cosmetics producers to contribute at least 80% of the additional treatment costs for removing micropollutants. The principle is becoming a financial obligation: producers help fund the clean-up.
It will not only be climate
Bad employers will pay for their negative health impact. Social media companies are already being sued. Think gambling. Food. Pollution, Chemicals. Soil. Water. Finance. Any transactions that destroy value for humanity will be scrutinised and taxed. Buddhist economics as the future.
Assume you will pay
If you lead a company, do not wait for the legislation. Run the scenario now. Here are three questions for your next board meeting:
- If every negative impact in our value chain were priced at full cost tomorrow, would we still be profitable?
- Which of our products or practices would an AI audit flag first?
- Which of our positive impacts could become part of our revenue model?
