Duncan Austin: Market-led sustainability is a ‘fix that fails’… Part 1

… but it may have been the necessary ‘defence at first depth’

Part 1 of a 2-part long read. You can access the full essay PDF here


The sustainable business movement is a prolific generator of new terms. From ESG to TCFD to Net Zero, one can easily be overwhelmed by detail. At such a time, we might follow Wittgenstein’s advice:  

‘Don’t get involved in partial problems, but always take flight to where there is a free view over the whole single great problem, even if this view is still not a clear one.’  

What does the ‘whole single great problem’ of sustainability look like? I believe something like this: 

Over the last half century, a large scale complex adaptive system – ‘humankind’ – has suddenly noticed and begun responding to a new sense of its external context. We have abruptly perceived that our surroundings are finite and fragile and that we have attained the numbers and technological capacity to destabilize those surroundings in their entirety in harmful and irreversible ways.  

In other words, we are a complex system suddenly pitched into adaptive crisis.  

We are gleaning that the crisis is multidimensional. We are threatened not just by human-induced climate change, but also by human-induced destruction of terrestrial and marine ecosystems. Hence, we are in the early stages of accepting that the challenge is not merely to decarbonize but to ecologize.  

There is growing awareness, too, that an adaptive crisis is necessarily a ‘race against time’. The 1.5°C and 2°C targets advanced by climate scientists have crystallized that the task is not to become ‘more sustainable’ but to become ‘sustainable enough before it is too late’. And while we instinctively respond to deadlines with urgency, biophysical limits mean we must be wary of haphazard urgency. The creation footprint of a ‘green’ economy, with ‘business as usual’ activity in the meantime, may itself lead us to transgress irreversible thresholds. The wicked combination of temporal and physical constraints means we already have limited room for manoeuvre to fashion a global transition that is also just.   

Our short individual lives make this all hard to grasp, but the situation becomes clearer with a longer time perspective. A Twitter meme goes as follows. Earth is about 4.6 billion years old. If one rescales that to a more relatable 46-year timeframe, our ancestors first controlled fire 24 hours ago, invented agriculture an hour ago and initiated an Industrial Revolution and a ‘Great Enrichment’ just over a minute ago. With a short lag, a ‘Great Acceleration’ of environmental damage began 20 seconds ago, prompting us to formulate the idea of the ‘Anthropocene’ 7 seconds ago. Aptly, this has been described as the ‘shock of the Anthropocene’ – a shock to the complex system that is humankind. 

A Voluntary Market-Led (VML) First Response 

Accordingly, though our roughly 6-decade response to global environmental challenges is a long time for an individual, from the perspective of the complex system of humankind, all our efforts to date constitute merely the first adaptive responses we have been able to implement. The form of this emergency response has necessarily been constrained by the patterns of collective behaviour we had arrived at before recognizing our new context, for reasons that have little to do with the new context. It is a crisis precisely because it has not found us prepared – behaviourally, organizationally, even cognitively. Figure 1: Waves of Voluntary Market-led Strategies

What has been the nature of this first response? It has been multi-faceted, but as befits our market-centric modern society, it has come to be dominated by voluntary market-led strategies of various forms – socially responsible investing (SRI), corporate social responsibility (CSR), environmental, social and governance (ESG) initiatives, impact investing, divestment campaigns, reporting and disclosure frameworks, corporate engagement efforts, and more. (See Figure 1).  

Despite the apparent differentiation, these initiatives are all sub-strategies of an overarching voluntary market-led meta-strategy. The unifying premise is that voluntary behaviour changes within established market frameworks will be sufficient for us to become sustainable before it is too late, without recourse to undesirable policy or regulations. 

While the last thing we need is yet another sustainability acronym, here I will use VML to signify this voluntary market-led meta-strategy that has been our predominant response to date to the sustainability crisis. (While ‘ESG’ sometimes carries this meaning, I am keen to have a term that unambiguously spans the whole universe of voluntary market-led strategies).  

VML’s slogans include: ‘sustainability is a win-win’, ‘good for profit and planet’, ‘doing well by doing good’, ‘green growth’, ‘shared value’ and more. They express the hope that the allocative and innovative dynamics of the market system can be harnessed powerfully enough and fast enough to create a sustainable human culture.  

It is important to recognize that VML emerged as our predominant adaptive strategy from the mid-1990s, not out of confidence it would be a sufficient response, but because it was the only scalable strategy Western socio-economic norms could tolerate at that time. From the 1970s, led by the West, many countries have embraced a neoliberalism that promotes market primacy of social arrangements – ‘markets are the solution, government is the problem’. VML was the approach to social and ecological problems that best fit these deeper ideological currents. The question today is whether the VML adaptive response can generate ‘enough sustainability before it is too late’. 

While VML is flourishing by many measures of uptake – from share of financial assets managed under sustainable mandates to the growing number of corporations disclosing sustainability data, the real-world backdrop sees ongoing deterioration in most of the global environmental metrics VML targets. Global CO2 emissions are now 50 percent higher than they were in the mid-1990s. A September 2021 IPCC report shows that we are on track for a disastrous 16 percent increase in global emissions by 2030, dangerously far from the 45-50 percent emission cuts required to have a likely chance of stabilizing at around a 1.5°C increase in global temperature. The accompanying pressures on biodiversity are similarly concerning with The Dasgupta Review noting that between 1992 and 2014, the stock of natural capital per person declined by nearly 40 percent, while WWF has reported that population sizes of mammals, birds, fish, amphibians, and reptiles have fallen an average of 68 per cent globally since 1970.  

While the VML meta-strategy has certainly delivered gains that might not otherwise have occurred – in accelerated green innovations, widespread awareness, and incremental behaviour change – after 25 years, it is becoming apparent we cannot rely on VML to generate ‘enough sustainability in time’, Basically, our predominant first response strategy does not seem to be working.  


If VML is the ‘first response’ of a complex system to an abrupt new awareness of context, certain concepts developed to understand complex systems can help us identify the type and extent of response VML has been and what might now follow. Systems thinking invites two high-level conclusions about the VML strategy. VML appears to be a ‘fix that fails’ but it may have been the possibly inevitable, not unhelpful ‘defence at first depth’ of a complex system. If so, it is critical that we now graduate from this shallow, first response strategy to accelerate deeper change.  

One of the earliest tools developed to describe complex systems was the Causal Loop Diagram (CLD), pioneered by Jay Forrester in the 1950s. The basic insight is that elements of a complex system continually influence each other. If one part of a system (A) is in causal relation to another part (B), A acts either to ‘reinforce’ or make more of B happen, or to ‘balance’ or make less of B happen. The behaviour of an overall system emerges from the interaction of its constituent reinforcing and balancing loops.  

Figure 2: The ‘Fix that Fails’ archetype Systems thinkers have catalogued archetypes for the most commonly occurring causal patterns. Alas, the archetype that appears to best describe the VML strategy is a ‘fix that fails’, in which a first-order solution triggers a less apparent or delayed, second-order unintended consequence. (See Figure 2). 

VML can be viewed as a ‘fix that fails’ at both the project level and the discourse level.  

At the project level, many solutions advanced by VML strategies suffer from rebound or even backfire effects whereby initial environmental benefits are either offset or completely overturned by environmental damages elsewhere in the supply chain or broader economy. For example, many of the components of the envisaged green economy, from EVs to batteries to solar and wind technologies suffer from marked climate and ecological rebound effects. While one can argue the details of individual technologies (see accompanying essay for details), the point is that each ‘fix’ loop triggers one or more ‘fail’ loops, invariably not publicized by the technology’s promoters, but which compromise the net contribution. The meta-manifestation of the pattern is that many of our climate ‘fixes’ may be ecosystem ‘fails’. Too much focus on ‘decarbonization’ and we might achieve the Pyrrhic victory of a stable global temperature and a devastated global ecology.  

VML is also a ‘fix that fails’ in the sense of perpetuating a public narrative or discourse that increasingly crowds out more effective solutions. As a market-based movement, VML cannot but reinforce the already powerful entrenched cultural bias of ‘the market is the solution, government is the problem’, which makes policy harder, not easier, to implement. Hence, in this case, the ‘fail’ loop is the opportunity cost of certain solutions being inhibited by diverting society’s finite attention, energy and resources to market-based strategies.  

To spell out the causal links: the more the ‘win-win’ message is promoted, the more reassured people are that ‘markets are the solution’, the greater the reinforcement of our current market-favouring, anti-regulatory norms, and so the harder it becomes to implement meaningful policies – or, equivalently, the easier it is for policy opponents to mobilize existing anti-regulatory sentiment to block new environmental policies. The more that our sustainability inclinations are directed toward market solutions, the emptier the government lobbies become for fossil fuel interests to roam obstructively within.  

The underlying obstacle is that the policy and cultural changes increasingly required are of a demand-reducing nature at odds with VML’s market-supporting character. As a market-based movement, VML has a pro-economic growth bias, dictated by the need for capital to earn a positive return (by the unsustainable way we currently measure returns). This compromises VML’s ability to authentically support the growth-challenging, demand-reducing actions that are now also required.  

Effectively, VML stands for two conflicting ideas at once. VML’s explicit message is that we must urgently solve social and environmental problems. But the unavoidable, tacit meta-message of VML, as a market-based movement, is that ‘markets are the solution’, which reinforces many of the underlying dynamics that perpetuate the problems. 

Plainer still, one can look through the economics to the underlying physical reality. A sustainability discourse conducted in business and economics terms continues to miss the physics for the finance. Our climate and biodiversity challenges are fundamentally driven by human transformation of matter and energy at a scale and pace that exceeds Nature’s capacity to absorb. In response, VML aims to transform the world more sustainably, but the building of a clean economy has simply become the new banner by which we accelerate our transformation of the physical world. We frame the build-out of a clean economy as ‘greener’, but the Earth just registers ‘yet more’ transformation of matter and energy overwhelming natural processes. VML denies that a large part of our sustainability response requires establishing a slower and gentler interaction with Nature to fall back into balance with its pace. Less, not more.  

Worse still, even the credible ‘fix’ elements of VML strategies are now being diluted by ESG newcomers who do not always exhibit the sincerity of CSR and SRI pioneers. The trajectory of the last three decades of sustainable investing has been the gradual inversion of intention from an initial ethical stance (‘how can we use finance to make a sustainable world even if it costs something?’), to enthusiasm for win-win (‘you know, some of this might be profitable, too’), to today's ‘ESG integration’ (‘how can we exploit the trend of sustainability to enhance financial returns?’). This arc almost perfectly conforms to Eric Hoffer’s 1960s aphorism:  

‘Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.’  

Neoliberalism’s capture of environmentalism is virtually complete.  

A Psychological Trap 

The claim that VML is a ‘fix that fails’ may be resisted, but is becoming increasingly hard to deny, for both top-down and bottom-up reasons. On a top-down basis, there is the ongoing dissonance between the two-decade-old deployment of VML strategies and the still-worsening trajectory of many global environmental metrics. The bottom-up reason is that the increasing sophistication of life-cycle analyses (LCAs) continues to tease out rebound and backfire effects, bringing fail loops into the light. 

Whether we can accept the challenging findings of such LCA studies is a pertinent question. The psychological trap of a ‘fix that fails’ is that it is a perfect breeding ground for wishful thinking, because one can selectively notice the ‘fix’, ignore the ‘fail’, and sustain belief that the strategy is working overall.  

So, it is not that VML has been entirely without benefits – a ‘fix that fails’ must have some fix to it! One can point to many green innovations that have been accelerated by widespread adoption of VML strategies, and there has been a marked transformation of private sector attitudes to social and ecological sustainability.  

Instead, the problem is that the execution of the VML strategy is also a causal driver of unintended consequences. This explains why many VML strategies exhibit an air of ‘wishful thinking’ – or ‘greenwish’ – well-intended efforts being celebrated as ‘sustainable’, but which are not delivering enough change, fast enough. Greenwish may now be a more formidable barrier to advancing sustainability than greenwash because it overwhelmingly springs from good intention, and so feels unkind to call out. But our knowledge of the system continues ever on and the self-denial it represents will be increasingly hard to maintain. A half-aware greenwish must slip at some point to become a knowing greenwash.  

With VML, the sustainable business community is increasingly consciously propagating a ‘win-win’ narrative that is too good to be true, to governments and citizens eager to believe it. But both high level trends and our improving identification of feedback loops, will continue to puncture the narrative.   

However, VML does not at all represent the limits of our capacity to adapt. Complex systems adapt by testing more effortful fixes until they arrive at a ‘fix that works’. Everything points to deeper fixes than VML can deliver. 


Understanding the layered architecture of complex systems suggests a way forward, though we should not assume this will be easy. It leads us to see that our first response VML strategy has been a ‘defence at first depth’ – a not unhelpful, if limited, initial adjustment to a newly identified reality. 

A universal feature of complex systems is that they emerge or self-organize as layered systems comprised of fast-responding surface adaptive capabilities underpinned by slower-moving capabilities. This arises from the innate tension within all living systems to have some flexibility to respond to new circumstances and some rigidity to uphold beneficial existing behaviours. The need for a complex system to balance flexibility and rigidity results in complex systems responding to adaptive challenges in a layered or cascade fashion. (See companion essay for discussion and examples).  

Gregory Bateson termed this layered adaptive response process of complex systems ‘defence in depth’. (See Figure 3). Via ‘defence in depth’ a system adapts by working down through successive ‘fixes that fail’ until it finds a ‘fix that works.’ A complex system in adaptive crisis must find a ‘fix that works’ before it is too late.  

Moreover, deeper changes must be more effortful, or costly, because that is the price that must be paid for the system to have had lower-level rigidity. If there were no cost to deeper change, the system would not have had any prior rigidity to have existed for very long at all.  


Description automatically generatedFigure 3: Layers of ‘Fixes that Fail’. A system adapts by working down through 'fixes that fail' until it finds a 'fix that works’. Deeper changes must be more costly as the price that must be paid for the system to have had rigidity. 

The Layered Structure of Human Institutions


Description automatically generated with medium confidenceFigure 4: Stewart Brand’s Pace Layering framework 

One can depict human society as layers of behaviour from flexible and fast-moving to rigid and slow-moving. Stewart Brand offers one version with his ‘Pace Layering’ model. (See Figure 4).

Brand’s model seems to fit our sustainability response to date. It is certainly fashionable to be green these days, with all manner of ‘eco-’ products (perversely) driving consumption. Commerce has begun to internalize the issue via various VML initiatives. Infrastructure, too, is beginning to change with large public and private efforts to ‘build back better’.  

There is much more still to be achieved in all these layers, but we have barely begun to initiate deeper governance and cultural changes that might carry the greatest weight of the adaptive burden. For example, half a century after carbon taxes were first advocated, less than four percent of global carbon emissions is priced at the $40-80 per ton range the World Bank estimates is required to reach the Paris temperature targets. Similarly, at the even lower level of ‘culture’, the predominant Western culture remains firmly anchored around consumerism and has recently taken to celebrating people playing spaceship. 

Ignoring the capricious top layer of fashion, with our heavy dependency on VML strategies, we are effectively defending at first depth only – consistent with the early response of a complex system in adaptive crisis. Governance and culture are certainly more entrenched, slower moving forces, but it is when these gears begin to turn that behaviour really starts to shift. As Brand puts it:

 ‘Fast gets all our attention, but slow has all the power.’ 

As the profundity of our sustainability crisis sinks in – ‘sinks in’– it is becoming clear that we must solve our sustainability challenge at a deeper level than initially thought. In a sense the challenge of our ‘race against time’ adaptive crisis is to now shift deeper and more powerful mechanisms of social change faster than perhaps ever before. That is not straightforward, because their inertia represents the beneficial rigidity we know as tradition, custom and precedent. Hence to accelerate deeper change requires an emergency review of the – entirely pre-Anthropocenic – thinking implicit in our governance structures and cultural beliefs, how they got that way and how they might be different. It is layers again, not of our institutions, but of our prior cognition and reasoning that first shaped those institutions and is now reinforced by them.  

Duncan Austin has had a 25-year career as a sustainability researcher and investor. He writes as an independent at www.bothbrainsrequired.com.

Thanks to Matt Tweed for illustrations. 

To be continued in Part 2: Market-Led Sustainability is a ‘Fix that Fails’… Because Externality-Denying Capitalism is a ‘Fix that Fails’. Sustainability requires reconciling ourselves to the Market’s Unmentionable Foot.