Evidence suggests small to medium-size enterprises in the Global South are prioritizing social and environmental impact over economic growth.

Cle-Ann

<p>The ‘post growth’ agenda envisions a future where economies do not grow infinitely. Degrowth is one of many routes to get there — by reducing the use of finite natural resources and addressing the social inequity that is inherent to the quest for endless economic growth.</p>
<p>Much of the post growth and degrowth discourse comes from the Global North, often with little regard to existing approaches in the Global South and its context specific challenges. The Global South is in fact home to a range of business model alternatives to economic growth, especially among smaller and medium-sized enterprises — many of which are democratically owned or grassroots organizations. The region faces disproportionate ecological and societal challenges, and is therefore uniquely placed to lead the world in the transition away from growth-based success metrics.</p>
<p>While the transition to renewable energy will play a crucial role in the emergence of a post-growth future in the Global South, investors and development organizations from the Global North continue to impose growth-based key performance indicators (KPIs). This approach disregards the challenges of local contexts, and obfuscates alternative, “unconventional” ways of doing things. In their 2019 article, <a href="https://journals.sagepub.com/doi/abs/10.1177/0304375419853148?journalCode=alta">Performance Beyond Economic Growth: Alternatives from Growth-Averse Enterprises in the Global South</a>, Cle-Anne Gabriel, Samira Nazar, Danfeng Zhu, and Jodyanne Kirkwood analyze examples of renewable energy enterprises (REEs) in the Global South that look beyond economic growth for key indicators of success.</p>
<h1><strong>How important is economic growth to enterprises in the Global South?</strong></h1>
<p>The authors interviewed the owners or managers of 30 REEs from 23 countries in the Global South — Barbados, Cambodia, Cameroon, Chile, Costa Rica, Ethiopia, Fiji, Ghana, Guatemala, India, Indonesia, Kenya, Lao PDR, Nigeria, Papua New Guinea, Philippines, Senegal, Somalia, South Africa, Tanzania, Thailand, Trinidad and Tobago, and Uganda — to find out how important economic KPIs are to them. In analyzing the responses, they found that economic growth is a lesser priority for REEs motivated by affecting societal change, and this was most pronounced among those operating in the Global South’s least “developed” countries. They suspect that “proximity to the challenges that degrowth aims to resolve has motivated Global South enterprises to deprioritize economic growth.”</p>
<p>The REEs who felt strongly about the societal impact of their businesses were also the most averse to defining their success by economic growth metrics. Interestingly, among the REEs whose aim is to “do good” or “balance social and environmental sustainability” there were nuanced definitions and experiences of business growth. Some, for example, prioritize the best possible outcomes for the most possible people — in other words facilitating the growth of wellbeing.</p>
<h1><strong>Alternative performance indicators</strong></h1>
<p>These REEs called for financial KPIs that take into account unique, locally specific attributes and needs, and provided a total of 14 alternative financial KPIs that they use to measure their success. These insights can inform post-growth enterprises in the region — and beyond.</p>
<h2><strong>Sales and cash flow</strong></h2>
<p>1. Number of households served and/or receiving RET products<br/>2. Growth in renewable energy technology (RET) Household Volume<br/>3. Number of RET projects in portfolio<br/>4. Growth in RET projects in portfolio<br/>5. Rate at which increasingly poorer households are served and/or receiving RET products<br/>6. Ratio of sales revenue to grants/ seed funding revenue</p>
<p>These KPIs could result in solidary communities of value creation, motivate grassroots sales, boost cash flow to increase impact, and encourage economies based on distribution rather than accumulation.</p>
<h2><strong>Profitability</strong></h2>
<p>7. Ratio of successful to failed RET products and/or projects in portfolio<br/>8. Ratio of high-value RET products and/or projects to low-value RET products and/or projects in portfolio (if IDO-funded)<br/>9. Proportion of cost of RET goods sold borne by the enterprise itself (also indicator of independence from IDO funding)</p>
<p>Such KPIs encourage and reward democratic ownership and equity, and business models based on sufficiency rather than extraction and excess.</p>
<h2><strong>Business growth</strong></h2>
<p>10. Proportion of profits used to increase household volume, access to increasingly poorer households, and number of RET projects in portfolio<br/>11. Increased household volume, number of RET projects, and social impact achieved through IDO grants and funding</p>
<p>These KPIs would limit company sizes based on sufficiency, and engender distribution-based economies.</p>
<h2><strong>Return on equity and investment</strong></h2>
<p>12. Returns to business from RET grant/seed funding received<br/>13. Returns to IDO or other organization from RET grant/seed funding received<br/>14. Ratio of equity to RET grants</p>
<p>Again, such KPIs encourage and reward democratic ownership and equity.</p>
<h1><strong>Wider implications for the degrowth and post growth agendas</strong></h1>
<p>The research offers two valuable insights for post-growth enterprises. Firstly, growth-averse enterprises in the Global South are “encouraged by the potential for short-term, almost immediate, social impact.” The focus is on practical, tangible, incremental social impact instead of distant and lofty goals — and this is an important takeaway for degrowth discourse. In other words, degrowth is a gradual, incremental process rather than a sweeping revolution. What’s more, as the authors note, “the findings suggest that if the social need is felt strongly enough, small enterprises are capable of stepping up to the plate and are potentially willing to sacrifice their own economic growth in pursuit of greater social equity and well-being ideals.”</p>
<p>Secondly, the transition to a post-growth world is happening, and will continue to happen, at a local level. Success can only be assessed by criteria specific to the local context. “For instance, this may mean that performance measures such as ‘sales level’ may be willingly superseded by number and income of households served; ‘growth’ may be interpreted as a gradual decline in the income of the households served over time; and ‘equity ratios’ or ‘leverage’ would reflect the currently prevailing means of attracting and acquiring investment in the Global South — that is, aid and development grants.” In addition to community participation and organization, the authors propose that enterprise performance metrics such as these are taken into account in degrowth activities. After all, the outcomes are as important as the processes.</p>
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<p><em>This article is also published by the <a href="https://medium.com/postgrowth/how-the-global-south-can-lead-the-way-to-a-post-growth-future-b2e2752c6be3">Post Growth Institute</a>.</em> <em>Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.</em></p>


Cle-Ann Gabriel

Cle-Ann Gabriel

How the Global South Can Lead the Way to a Post-Growth Future

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