Criterion 1: Alternative understanding of business

5.1.1. Current state of business models and most important gaps

The average score of the first criterion was 3.6, no firm achieved the maximum score of eight points (see Table 5). Nine firms scored ‘yes' on being established for more than profits. On

‘motivated to solve environmental problems’ 10 firms scored ‘yes’. Only Bali Accessoires, Flower and Hells Angels scored low. No firm scored a ‘yes’ on the operationalization of the presence of an anti-growth strategy, indicating that the idea of what could be seen as the core of degrowth is something yet completely unspoken of. Interestingly, no firm had a clear long-term growth strategy and implicitly and automatically saw growth as the ultimate goal short-term (growth paradigm), which can be illustrated by the following quote from Bali Accessories: “I've never really discussed it with [my boss], like: where do we want to be in 10 years? The goal is to just grow each year”. However, respondents, especially the

innovative start-ups without shareholders or investors, did seem intrigued by the idea of having a point where they should or would stop growing. The owner of LOKI said: “From a personal point of view, when I think about it [referring to non-growing] it seems really chill, the idea of reaching a plateau [...] I think it is very healthy that we accept for ourselves that you can leave something behind at some point”.

The three firms scoring ‘a little’ on the non-growing strategy were Momu, Aratram

and MALORY. All these were related to the limitations of their business model and not necessary because of the belief that growing less could have a positive impact. Aratrams business model will become irrelevant if they achieve their mission in the coming years, thus limiting growth. For Momu, due to their handmade clothing, it takes between 3 to 5 months to be produced. And even though they want to grow slowly and ethically. so they can help more communities through the production of clothing, their primary aim is to grow. They were open to differentiating their business after a certain point by moving towards consulting.

This could enable a sufficient growth point, where they would stop producing. Firms were actively engaging in bringing down output percentual, but a conversation about ‘degrowing’, especially for the profit-driven businesses, was non-existent. Interestingly enough, most firms that scored strong on operationalization one and two often had significantly strong growth ambitions, seemingly because their purpose drove them. By believing growth could enable a positive change, the need for growth became even more embedded, yet only three firms (Aratram, Bamboo and LOKI) communicated a clear goal of becoming net-positive.

This is interesting, because the motivation to do good seems to go directly against one of the most important pillars of degrowth: growing less in output.

Criterion 1: Alternative understanding of business

Momu Golden origin

Hells Angels

Bali Access oires

Flower MALO

RY

Ba mb oo

LO KI

Mint Life cycle Assessment Institute

Tick Forecasted Fashion

Aratram

1) Not only established for profits;

Yes Yes No No No A little Yes Yes A

little

Yes Yes A little Yes

2) Motivated to solve environmental or societal problems;

Yes Yes No No A little Yes Yes Yes Yes Yes Yes Yes Yes

3) Aims for net-positive impact;

No No No No No No Yes Yes No No No No Yes

4) Non-growing strategy. ^{A little No No No A little A little No No No} Not relevant No No A little

Total points 5p 4p 0p 0p 2p 4p 6p 6p 3p 4p 4p 3p 7p

Table 5. Analytical table for evaluation of the first criterion.

5.1.2. Challenges analyzed in relation to the first criterion

Eight challenges were analyzed in relation to the first criterion (see Table 6). Firstly, the growth paradigm seems to make the conversation of stagnating growth almost impossible, as quoted by the Head of Sustainability at Aratram: “It gets awkward! People think, but does that mean that at some point we no longer grow… But we want to grow, don't we?”.

Therefore, the embeddedness of the growth paradigm can be seen as one of the biggest challenges to even kick-start the conversations about a non-growing strategy. Secondly, firms believe they have to be big to make an impact and fulfill their missions. For example, Mint's mission is ‘to make a second-hand first choice’. This is also why they clearly believe that they have to grow on a global level: “The bigger we are, the more power we have, the lower the costs should be so that even more people can use our platform.” Yet clear evidence that this platform and service leads to less firsthand consumption is currently missing. The following situation is described: “Our platform also attracts young girls who buy new tops at Zara, wear them twice and then sell them through Mint so they can then buy more”. This shows that the positive impact they strive for, has a negative side-effect in practice and is a direct threat to the core idea of degrowth.

Thirdly, sustainability policies seem to come secondary to making profits in the growth strategies: meaning that they first want to grow and afterwards implement

sustainability strategies. Yet it is also argued that once you have grown, degrowing seems impossible. In the interview with the Creative Director of Tick, growth is described as a

‘monster’ which you can't turn back from, often due to shareholder or investor pressure to grow once you have partnered up with them. Lastly, firms do not truly seem to have set long term growth targets and ambitions, only short-term. There are no current laws and regulations pushing businesses to grow less or start thinking about these long-term growth goals. The same goes with certification institutes. Most of them focus on percentual improvement, but

never on true output of emissions, energy and material use. As the Customer Manager at Tick – a sustainability data insight platform – said about her sustainable clients: “Our service really measures the impact of products [...] even for truly sustainable firms we say: sorry, but you still make a lot of negative impact. Yes, it's organic cotton [..] but it's still just a little better”. For a degrowth business model to be implemented as ‘business as usual’, laws will have to be created. This, in combination with the lack of knowledge of the degrowth theory of businesses, leads to the biggest challenge: there is no ‘sufficient’ growth model that firms can practically use to calculate an optimal growth level or a non-growth strategy, therefore making the conversation even harder by the lack of a clear framework that can be used.

Challenges Definition Exemplary quotations

Growth paradigm

The systemic belief that growth is a requirement instead of an option.

“It's not that we want to become a very big brand, but that we just grow every year.”

Shareholders The pressure firms experience to grow due to shareholder pressure.

“If it's a public company, I think shareholder pressure is always to keep growing. That the shareholders look at the growth figures, if it is not a public company and they have it in their own hands. As H&M is really a public company, it should really continue to grow.”

Profit before

good The tendency to see sustainability policies as a secondary to (financial) growth.

“Now the money is spent to make more products […] So that's the focus now […] But sustainability policies will eventually happen as we grow.”

Big to make impact

The bigger we are, the more positive impact we will leave behind.

“We believe that the faster we grow, the better it is for the fashion industry.”

Growth as a

monster Once you have grown, there is no way back.

Lack of laws

and regulations The lack of laws and regulations that would be required to make a potential degrowth business model possible.

“Legislation should simply provide very clear structures within which firms can develop such models. Because we have simply seen that when it's voluntary, that it only happens very slowly […] And I think that can only be done top-down.”

No clear long term growth goals

The tendency to just assume growth but not clearly set growth targets for the long term and thus think about a sufficient growth point.

No sufficient degrowth model

The lack of a ‘sufficient’ growth model that gives firms a tool through which they can calculate a sufficient point of growth, through which they are financially healthy while still respecting the boundaries of the planet.

“And where is the boundary [...] in which we set up a business model that makes an impact, is financially healthy, without having a negative input on our surroundings. It is very hard to even start this conversation [...] in a commercial business.”

Table 6. Analytical table for challenges in relation to the first criterion.

5.1.3. Possible solutions analyzed in relation to the first criteria

Based on the interviews, three solutions were mentioned that could contribute to overcoming the above stated challenges. Firstly, a practical sufficient degrowth model is needed to make it easier for firms to develop a non-growth strategy. As quoted by the Lead Manager of Sustainability at Aratram: “An optimal split between income and expenditure, whereby certain financial objectives are achieved, without having a negative effect on our surroundings [...] I think the focus should be on a certain effectiveness model like the Doughnut, where you really look at what are the ideal conditions for this business [...] What kind of growth or shrinkage would match that?”. In other words: a practical “personalized degrowth doughnut model” that firms could use to calculate an optimal growth or stagnation point that can give firms a concrete goal to work towards or ‘shrink’ towards could contribute towards a non-growth strategy becoming real.

Secondly, shareholder pressure to grow is mentioned as a big challenge when considering a degrowth business model. Crucial therefore is operating either without investors or shareholders or choosing shareholders very carefully. Aratram has done this, which shows that their purpose will make their business model irrelevant in the future. They describe their shareholders as “progressive” and “knowledgeable” enough to help their mission further. This shows that there are shareholders or investors to be found that really want to do good. What could also contribute to this, is the commitment to the explained B-corps business models, where you declare that stakeholder value is worth as much as shareholder value and integrate this in the business strategy.

Thirdly, laws and regulations are needed that stimulate the urgency for businesses to start talking about a non-growing strategy, for example laws and regulation that cap output, energy- material or emission use. In the interviews, several upcoming laws were mentioned that will steer the fashion industry in a better direction, such as an upcoming law that

prioritizes sustainable products. Meaning that there will be stricter EU developed, binding product-specific requirements for “eco-design” by the end of 2022. The proposal also

includes the creation of a digital product passport (DPP). The DPP will provide standardized information on the lifecycle of all products regulated under the ESPR and provide the ability to trace products. This means those products will have to be equipped with specific

information, which could take the form of “classes of performance,” ranging from A to G, to facilitate comparison between products. The DPP will play a key role in enabling customers to make conscious decisions, based on the environmental impact of their purchases (EY, 2022). The upcoming User Responsibility Extension Laws will push recycling, durability and reparability processes. Once EU measures make firms accountable for the end of life of their products, reuse, recycling, and design for circularity will significantly increase. Even though these are great steps, none are taking the necessary steps by capping output growth, which could really pave the way for a degrowth business model.