#8 - Overcoming Wired Denial

2022 has been a fascinating year. And it was the 50th anniversary of The Limits to Growth report commissioned by the Club of Rome and published in 1972. Also known as the Meadows report after the name of two of its authors, it used for the first time a computer simulation to present the impossibility of systemic exponential economic growth based on the finite quantities of ressources available on our planet Earth.

50 years later, exponential growth has been pursued without much hindrance...

Just as global temperatures continue to rise thanks in large part to ever higher CO2 emissions and biodiversity is being destroyed at such a speed that we are now talking about the Sixth Extinction (after the book by Elizabeth Kolbert published in 2014). All the alarms rang by the IPCC, the IPBES, the Scientist Rebellion, etc. are having marginal effects, if any.

Why?

Why can't we see it? Why are we not hearing the sirens? Or maybe we can hear them, but will not listen? Or maybe we listen, but cannot act and change our systems accordingly? If we are to overcome this denial, we need to understand its source.

For years, our collective inaction made me alternatively angry and depressed. But understanding is much more helpful than anger, let alone depression.

20 year ago, I read a beautiful book: Extraordinary Popular Delusions and the Madness of Crowds. Published in 1841, it recounts stories of popular delusions including many financial bubbles like the Tulip Mania of the 1630's, where people traded whole estates for a couple of flowers in the hope of making an easy fortune... The end was probably even more violent than today's bitcoin crash! And beyond this anecdotal example, the book presents many situations where groups of humans or entire populations just lost sight of reality. Today is no exception.

But as entertaining as this book may be, it does not explore the fundamental question of "Why?". Marketers know that facts alone don't sell; only emotions do. So with that insight, I spent the last couple months reading about psychology and neurobiology.

The first author I explored was the great neuroscientist Antonio Damasio. I had enjoyed his first book, Descartes' Error, so devoured Feeling and Knowing: Making Minds Conscious. Published in 2021 and with such a title, I hoped it could help me bridge the gap between the scientific knowledge about sustainability and our conscious actions. As often, I was a little too optimistic. Nevertheless, the distinction A. Damasio makes between "emotions" and "feelings" may be part of the answer. Emotions are a reaction to something happening outside the body. Feelings are concrete information collected by the nervous system throughout the body; they help us maintain homeostasis, our biological equilibrium. So when we learn in early 2022 that humanity has breached another planetary boundary, this external knowledge does not modify our biological constants enough to have a deep impact on our functioning and our actions. We must dig further.

The next interesting book I stumbled upon was Le Laboureur et les Mangeurs de vent by Boris Cyrulnik (sorry, this one is in French). The great neuropsychiatrist explores the circumstances that can lead the same person to being a monster one day and a nice sensitive man the next. How could the nazi who tried sending him to a death camp be the same person helping in the fields the day after the war? B. Cyrulnik presents very convincingly the limits to our freedom of thoughts. Oversimplifying greatly, thinking differently than our tribe is dangerous as this could lead to exclusion. Some people have more freedom than others because of the way they were brought up, but most of us will follow the herd.

And pushing things further: sharing extreme thoughts reinforces social bonds and the feeling of belonging. In this sense, extreme thoughts are reassuring... This is used by savvy politicians who can express shocking ideas that will gather the votes of people who will share these ideas in order to feel part of the group. The story of Jair Bolsonaro being a "flat-earther" denying that our planet is a sphere may seem crazy; but the 7% or so of people who believe the Earth is actually flat feel recognised and will likely support him.

And things can get worse: our savvy politician may design an "enemy" and call for justice; after all, who doesn't like justice? Ideally, the "enemy" should be a faceless minority: the jews, the immigrants, the gays, the elite... and the accusation should leave no place for defence: "The Greens want to destroy your jobs!"

And the more crazy the ideas we share, the stronger the sense of belonging. The problem? These accusations hurt real people and feed the social divide which we can see reflected in politics today. The most extreme is probably in the US where the subject of sustainability has been politicised and the arguments are getting evermore disconnected from reality.

One side is fighting an imaginary "ESG bubble" while the other is struggling to build a consensus around reasonable solutions.

For example, Florida is forbidding the use of Environmental, Social and Governance factors in the management of their pension funds in order not to become the victims of the "ideological agenda of the ESG movement". All right. But good fund management is intrinsically tied to good governance. Otherwise, how can we be sure no-one will run with the money? or at least that interests are correctly aligned? Furthermore, taking into account environmental factors is not charity. How can a bank protect its mortgage portfolio from the cost of floods if it cannot evaluate this localised environmental risk? Should the pension funds invest in banks that do not have sound risk management practices? Forbidding the use of ESG factors is obviously the wrong answer... to the wrong question.

But things get a little more complex when we realise that our psychological biases are intertwined with a beautiful neurobiological machine: our brains. In Le Bug Humain (sorry, another reference in French, but this TED is in English) Sébastien Bohler, exposes the functioning and relationship between our cortex and our striatum. For better or worse, our rational cortex obeys our deeper striatum whose role as a reward mechanism is to help us prioritise our basic needs: food, sex and social status... This certainly helped us survive in the savannah!

But our striatum only knows "more" which is rewarded by a pleasurable dopamine shoot and "less" which is painful. It does not know "enough, our basic needs are pretty well covered in this 21st century". And it has no sense of time; it cannot prioritise tomorrow's survival over today's comfort... That pension fund we mentioned is totally out of its scope! Yes, we have a few hurdles to overcome.

But... How?

These denial mechanisms are fascinating and we could explore them forever. But we also need practical solutions to get moving. I love Aurélien Barrau's idea of a poetic and philosophic revolution, but we also need to be pragmatic and down to earth.

That is where solutions lie: on the ground, in the nitty gritty details of reality.

My first takeaway from these readings is that when we dig into the reality of our challenges, we find solutions. And as a nice side effect, the theoretical "enemy" vanishes, dissolved into the complexity of the real world. We need to work together. We need to talk. And we need to listen.

Coming back to our pension fund example: There is no "ideological agenda" and no "organised ESG movement". The world is changing and our knowledge of environmental and social issues is deepening. Some want to use this knowledge in order to invest more efficiently. The real question is: "if there is a tradeoff between financial returns and environmental or social benefits, to what extent do you want us to favour one or the other?". Please note the "if": it is not clear that such a tradeoff exists, especially for universal owners and long-term investors like pension funds. In any case, the question should be asked to future pensioners!

When we do, we will get an array of different answers from which we can build an array of different portfolios. Individuals will then be able to invest in companies that fit their values. Yes, it is complex, but it is worth it! By the way, asking for ESG preferences is exactly what Mifid II regulation in Europe is pushing for.

My second takeaway from these readings is that stoking fear with environmental alarms has not worked and there is no reason why it would start to work tomorrow. After all, what can anyone of us do when we learn that a new planetary boundary has been breached? Cry and move on? On the other hand, there are plenty of examples of people doing great things and building ventures that make sense. We need to learn from their experiences, let them inspire us and build the courage to join them into action. This will be the subject of a few upcoming letters.

Because overcoming our challenges is possible together!

As usual, this is meant to be a discussion. Please share your comments, ideas or questions! Also, do not hesitate to share sources that can help better understand our denial process and/or examples of inspiring changes we could explore in 2023... to make this New Year even brighter! I wish you all a very happy 2023! May it bring us inspirations of kindness.