Humanity faces a confluence of challenges. Arguably at the top of the list is feeding a growing population – already at 8 billion and counting – while managing a fast-changing climate, writes Ponsi Trivisvavet, CEO of Inari.
As leaders of organizations big and small gather this week in Davos, Switzerland, for the annual World Economic Forum meeting, there will be robust discussion about the need to do more. To do better. To reach net zero.
These commitments represent progress, but net zero is simply not enough. We also need net-positive companies that enrich the world around them.
This might seem like an impossible ask. After all, recent history has shown that even the path to net zero is highly challenging for most organizations. But as outlined in a newly published paper, “Modeling the Path to Nature-Positive Agriculture", there is proven, user-friendly methodology enabling companies to develop roadmaps through complexity for nature-positive impacts.
While companies have long been calculating net present value to estimate financial returns, historically we have had no good way to calculate expected returns on social or environmental metrics. Dynamic system modeling (DSM), however, can be used to optimize returns across environmental, human, social and financial capital. It was developed at the Massachusetts Institute of Technology to understand how many hundreds of variables interact across complex systems over time. It offers a whole system analysis that considers first, second and third order effects of organizations’ decisions – in other words, it allows companies to evaluate whether the road they are on will really yield the sustainability impact they expect. And what road might deliver greater benefits today and for generations to come.
Humans excel at navigating the complicated: a machine, for example, can be complicated, but ultimately all its many parts and their interactions are knowable. We humans struggle, however, with the complex. Complex systems have emergent patterns that cannot be explained by reducing them down to their parts. These systems are difficult to control and to predict.
The earth’s biome is composed of many interdependent complex systems. In this complexity, linear outcomes are rare. Instead, small actions can yield unexpectedly magnified results (the “butterfly effect”), and the reverse is also true. For example, we might intuitively believe that a 40% reduction in crop nitrogen needs would reduce water pollution from fertilizer by 40% as well. In reality, the difference in water pollution will be determined by a series of interactions unfolding between technology, weather, soil type, bacteria, and even public policy. DSM homes in on the most critical causal relationships between these many factors to explore how effects will ripple out through time. Ultimately, DSM is a data-driven way to determine rate and level of impact over time.
The organizations meeting this week in Davos have both an unparalleled opportunity and a mandate to course-correct toward a brighter future. To thread the climate change needle, investments must deliver the maximum positive impact with the fewest “externalities.” This requires understanding how actions will likely cascade through the complex, intertwined systems that create our home.
The competitive advantages of optimizing for the natural, social and human capital that underpins all financial profits will only increase exponentially as climate change advances. With a systems perspective, we can all better invest in people, planet and profits today, and well into tomorrow.
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