Degrowth as a business model: Lessons to be learned from the fashion industry and contributing to kick-starting the conversation about degrowth in business

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Lessons to be learned from the fashion industry and contributing to kick-starting the conversation about degrowth in business

Course:

Master Thesis Strategy Track Student:

Karlijn Meijer, 13843885 Supervisor:

Jeroen Kraaijenbrink

Total words: 16.227

Date: Master Thesis Strategy Track EBEC approval number: 20220623040611

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Statement of originality

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Index of Tables

Table 1. The 8 R-model of Latouche (2019). 16

Table 2. The eight criteria for a degrowth business model. 26

Table 3. Company profile of all 13 firms interviewed. 33

Table 4. The point system for evaluating firms. 36

Table 5. Analytical table for evaluation of the first criterion. 40 Table 6. Analytical table for challenges in relation to the first criterion. 42 Table 7. Analytical table for evaluation of the second criterion. 45 Table 8. Analytical table for challenges in relation to the second criterion. 46 Table 9. Analytical table for evaluation of the third criterion. 49 Table 10. Analytical table for challenges in relation to the third criterion. 49

Table 11. Analytical table for evaluation of the fourth criterion. 51 Table 12. Analytical table for challenges to the fourth criterion. 53

Table 13. Analytical table for evaluation the fifth criterion 54

Table 14. Analytical table for challenges related to the fifth criterion. 54 Table 15. Analytical table for evaluation of the sixth criterion. 56 Table 16. Analytical table for challenges in relation to the sixth criterion. 57 Table 17. Analytical table for evaluation of the seventh criterion. 59 Table 18. Analytical table for challenges in relation to criterion seven. 59 Table 19. Analytical table for evaluation of the eight criteria. 61 Table 20. Analytical table for challenges in relation to criterion eight. 62 Table 21. Analytical table for total score firms as a degrowth business model. 63

Table 22. Matrix for degrowth business model. 65

Table 23. Matrix for challenges in relation to the eight criteria. 66 Table 24. Matrix for solutions in relation to the analyzed challenges. 66

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Acknowledgement

“Sustainability has to be a way of life, to be a way of business.” – Anand Mahindra

This thesis focuses on degrowth as a way to achieve the above stated quote. During this thesis, I have been fortunate to meet many passionate people that are ready for change. I truly believe that the way forward is by changing the way we look at businesses and degrowth has certainly been one theory that challenges the status quo.

I am grateful to have been able to find so many enthusiastic and inspiring respondents that have made this thesis such a worthwhile experience. It has challenged me to look behind the economics we are taught and to think about a new one, while concluding that, luckily, others are already busy creating this. Secondly, I want to thank my supervisor and friends who have taken the time to proofread this thesis. Mostly, I want to thank my partner for listening over the last six months to my rants about the fashion industry, degrowth and all the challenges you encountered when picking a not-so traditional topic.

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Abstract

The seven planetary boundaries visualize boundaries of the safe operating space for

humanity. Four of seven planetary boundaries have now been crossed, increasing the risk to drive the Earth's system into a much less hospitable state. The fashion industry is one of the most polluting industries in the world and contributes heavily to crossing these boundaries. It is clear the way business is done needs radical change. Although there have been several attempts to define a business model that prioritizes sustainability, the initiatives do not involve a radical change to the prevailing business model. The theory of degrowth could bring this radical change, but currently lacks a practical foundation. This thesis aims to contribute to the practical development of the theory of degrowth through answering three research questions, ranging from the degree firms are already implementing a degrowth business model, challenges they encounter and possible solutions to overcome these. These research questions are answered based on empirical data gathered from 13 semi-structured interviews and analyzed through the method of content analysis. In regards to the first research question, based on the sample group it was concluded that firms are already to a certain degree implementing a degrowth business model, but on an unconscious level due to a lack of knowledge about the degrowth theory. In regards to the second research question, multiple challenges were found that need to be solved through future research to ensure that a degrowth business model becomes viable. Lastly, in total nine potential solutions were found.

Keywords: the theory of degrowth, growth paradigm, sustainable business models,

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1. Introduction

The current conversation on sustainable development and business activity focus on the circular economy as a crucial solution to the environmental challenges our planet faces due to human activity. The circular economy aims to achieve perfect circles of slow material flows to enable a decoupling of resource use and environmental impact from economic growth to maintain the current capitalistic system (Lazarevic & Valve, 2017). This, in itself, can be seen as a paradox: one can never have infinite growth in a finite system and therefore the ‘circular economy’ is still elusive (Ghisellini et al., 2016; Haas et al., 2015). When our global

economy surpasses ‘the safe operating space’ for humanity, a higher burden is put on the planet than it can bear. The conclusion that currently four out of seven planetary boundaries, referring to the environmental limits within which humanity can safely operate, are already in the zone for no return should be a wake-up call (Rockström et al, 2009) that an effective solution has to lie in a more radical, economic transformation.

To achieve this, the theory of degrowth becomes relevant. The theory of degrowth calls for enhancing ecological conditions in the short and long run through the process of downscaling of production and consumption at the local and global level (Schneider et al., 2010) with the goal of increasing happiness by decreasing consumption. Degrowth can currently be seen as a normative theory that aims to stay within these planetary boundaries by

´degrowing´: decreasing material and energy output (Kallis, 2012). The theory of degrowth has primarily been researched from a political and anthropological point of view on a theoretical level. Since degrowth calls for a societal and economic transformation (Kallis, 2012), it is not a simple concept to research empirically. Next to this, a full degrowth business model seems to not yet exist in business, which might be the reason that business models have been mostly overlooked in discussions on degrowth (for exceptions, see Hankammer

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and Kleer, 2017; Johanisova et al., 2013; Wells, 2017). Yet, it is highly significant to

operationalize the theory of degrowth towards a business model (Khmara, 2018) to contribute to the transformation of this currently normative theory towards an understandable business model and to kick-start the conversation about degrowth.

Since the theory of degrowth could especially be of interest to resource intensive industries, the fashion industry has been chosen as an area of focus. The fashion industry is incredibly harmful towards the environment: most brands currently follow a pattern of over-production which leads to garments being incinerated, shredded or sent to landfill. The (over)production of fashion has an enormous impact on the planet: fashion production makes up 10% of humanity's carbon emissions, dries up water sources, and pollutes rivers and streams (McArthur Foundation, 2021). Considering the increasing population and the rising incomes of developing countries, if the fashion industry remains unchanged, its carbon emissions are expected to increase 60% by 2030 (Kearney, 2020) so radical change is

urgently needed. Especially taking into account that clothing production has doubled between 2000 and 2015, while during the same period utilization of those clothes decreased by 36%

(McArthur Foundation, 2021). The fashion industry is therefore a highly interesting industry to research from a degrowth perspective, since more fashion is produced, but worn less,

‘degrowing’ seems a viable option to reduce the unnecessary impact in a truly transformative, long-term manner. For this reason, this thesis will enrich understanding of the currently mainly abstractly researched degrowth theory by operationalizing it as a business model.

To do this, three research questions have been developed. Based on the framework of Khmara (2017) all firms will be evaluated to answer the first research question: To what degree are firms, consciously or unconsciously, already implementing a degrowth business model? The second research question is: What are the challenges in the fashion industries that are blocking firms from implementing a degrowth business model^?The goal here is to

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analyze challenges related to every criteria that are blocking the adoption of a degrowth business model. Next to contributing practical challenges in relation to the degrowth beliefs, this will also develop the framework of a degrowth business model further by adding

empirical data. The third research question is: What are possible solutions to overcome analyzed challenges? The goal here is to gather empirical data on how the analyzed challenges could possibly be overcome.

The following chapters show how the conclusions of this thesis were reached. The second chapter provides a literature review of the relevant concepts of this thesis. The third chapter presents the relevant framework through which a degrowth business model will be operationalized. The fourth chapter elaborates on the methodology used to evaluate degrowth as a business model and to establish challenges. The fifth chapter presents the empirical results of the 13 interviews. The sixth and last chapter draws up the conclusion and discussion of this study.

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2. Literature review

In this chapter the literature surrounding degrowth will be analyzed to create a deeper understanding about degrowth and degrowth as a business model.. First, the history of degrowth will be analyzed. Secondly, the theory itself and relevant theories in relation to degrowth. Thirdly, the criticism surrounding the theory of degrowth will be elaborated upon.

Fourthly, the literature surrounding degrowth as a business model will be presented.

2.1. The history of Degrowth

Degrowth is a relatively new academic theory, but the debate about the limits to growth is not. The belief that happiness stems from doing more with less is millennia old and can be traced back to all religions. For example, the principle of moderation or the buddhist belief that letting go of attachment is required to truly experience happiness. Human history offers myriad examples of non-capitalist societies, and of community economies not based on capitalist relations, that have lived well without growth (Kallis, 2017). This might have contributed to the fact that the true beginning of degrowth as a theory is relatively unknown, but the idea of limited growth has been broadly accepted by academics since the early 1900s.

The established narrative within the degrowth history mainly highlights the intellectual origins of the French Inspired original décroissance debate and neglects other relevant references (Borowy, 2017). A report called ‘The limits to growth’ was written in Rome in 1972 and showed a concern for our society and the ideology behind the dogma of economic growth. The report argued that infinite growth in a finite system is impossible and therefore the planetary system will collapse at a certain point (Meadows et. al., 1972).

Mathematician Nicholas Georgescu-Roegen (1975) was the first scientist to promote this vision in his paper ‘Energy and economic myths’ where he debated this report and proved scientifically that exponential growth on a finite planet is impossible. Yet, today it is

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undisputed that the Limits of Growth report contained some inaccuracies, such as technological progress, which is nowadays used by many economists to dismiss protests around the climate change as nonsense, was largely ignored in the Meadows et al.’s drawn future scenarios in 1974 but acknowledged in their thirty-year update in 2004. In addition, a drying up of various raw materials was still predicted within the 20th century, which has demonstrably not occurred (Pinker, 2019).

Through these thinkers and movements, the roots of the theory of degrowth seem to have sprouted. Yet the movement remained poorly received by the broader society during these years. It was only recently, sparked by The first International Conference on Degrowth for Ecological Sustainability and Social Equity (ICDESS) in 2008 located in Paris, 2010 in Barcelona, 2012 in Venice and 2014 in Leipzig, that the English word ‘degrowth’ became frequently used and here the theory of degrowth as we now know it sprang to life (Borowy, 2017). In the years that followed, both the international Degrowth conferences in Budapest in 2016 with 600 participants and in Malmö in 2018 with 800 participants and petitions

addressing environmental breakdown (i.e. “Europe. It’s Time to End the Growth

Dependency”, signed by almost 100,000 people) gained popularity. Today over 200 English peer reviewed articles with the keyword degrowth can be found (Demaria, 2018).

Nevertheless, degrowth is still often dismissed as a utopia that can and will never become reality, especially on the business level (McAfee, 2016).

To conclude, the foregoing sections reveal the ongoing evolution of the degrowth idea, one that still has not reached a state where degrowth can be considered a clear concept or philosophy and therefore the theory is combined with healthy criticism, which will be discussed in Chapter 2.3. It has led to scholars struggling for a broader audience, arguing with economists who dismiss their theory as nonsense. However, they still manage to constantly

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make more people aware of their movement and in some cases convince them that the degrowth is at least one opportunity to prevent lasting harm to planet Earth (Parrique, 2019).

2.2. The theory of Degrowth

In this subchapter, the definition of the theory of degrowth will be discussed, the relation to economics and relevant theories in relation to the degrowth theory.

2.2.1. The definition of degrowth

The Earth has been increasingly stripped of its untouched nature in recent years (Kennedy et al., 2019), more species have become extinct than in millennia before (Lambertini, 2020) and finite resources such as oil and minerals are running out without appropriate alternatives that are usable on a global scale (Heun et al., 2015). This has led to the call for action to slow and ideally stop the destruction of the Earth's ecosystem to grow. It is already clear that national climate action plans and corresponding CO2 reduction targets will not be sufficient to achieve the goals set in the 1997 Kyoto Protocol to limit global warming to less than 2°C by year 2100 compared to the level before the start of the industrialization (United Nations Environment Program, 2020). Instead, an increase of 3.2°C is still expected if the current concepts are adhered to as planned. Yet the current accepted framework to ‘solve’ these global threats, such as the circular economy, seems to reject the belief in the planetary limits to growth since a circular economy where waste no longer exists, where material loops are closed, and the place products are recycled indefinitely is, in any practical sense, impossible.

Since the Rioþ20 UN Conference on Sustainable Development, political strategies and discussions have been focusing on the idea of “sustainable growth”: strategies that aim at

“boosting the economy” (European Commission, 2010; OECD, 2011; UN, 2012) thus fitting into the overarching “addiction to growth” (van Griethuysen, 2010) even though countries that reduced their material flows and CO2 emissions have done so either because of

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economic decline (i.e., the ex-communist bloc in Europe), or through relocation to other countries of their consumer goods production (Peters et al. 2020). Recession and negative growth in some western countries following the latest economic crisis led, for the first time, to an absolute decline in CO2 emissions (Friedlingstein et al., 2016). To implement the necessary shift away from the growth paradigm, change needs to start at the bottom. To achieve this, degrowth needs to transition towards a more coherent theory with a clear definition (Khmara, 2018).

Degrowth has been described in various ways, and to this day there is not yet a clear agreement on a single definition. A reason for this might be that degrowth is a

multidimensional concept with diverse roots, including anti-utilitarianism and anthropology leading to definitions of few sentences and incoherent ideas. Hickel (2020) states the

following definition: “Degrowth is a planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being”. Another commonly found definition used to define

degrowth is from Schneider et al. (2010) who describes degrowth as: "Degrowth can be described as a collective process of downscaling of production and consumption that

increases human well-being and enhances ecological conditions at the local and global level, in the short and long run”. The Conference on Degrowth defined the theory as: “Degrowth is a voluntary transition towards a just, participatory, and ecologically sustainable society. It calls for a paradigm shift from the general and unlimited pursuit of economic growth to a concept of “right sizing” the global and national economies” (Research & Degrowth, 2010).

All definitions have two things in common: a common goal (increase human well-being) through decreasing downscaling, degrowing or right-sizing the economy.

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2.2.2. The road towards a degrowth society

Even though the goal of degrowth might be clear, the road towards a degrowth society is complex due to a variety of possible actions. Latouche (2010) is certain that the journey to a degrowth must begin by dismantling associations that growth is automatically better. Kallis et. al (2010) takes a similar stance. They call for an “equitable and democratic transition to a smaller economy with less production and consumption”. Hickel propagates that this the way to achieve this is through an intellectual transformation, where questions like ‘do countries of the global North really have to keep growing?’, and ‘what if we maintain the status quo, would we be worse off?’ are asked. Hickel (2020) argues that if relevant empirical evidence is sought to answer these questions, this may lead to a change of views and an

open-mindedness towards degrowth, which is exactly what this thesis aims to contribute to by gathering and analyzing empirical data, so degrowth can take ‘the next step’ in its evolution.

2.2.3. Degrowth and economic downsizing

Unclear is often the relation between degrowth and a negative gross domestic product (GDP) growth. Kallis et al. (2015) state that calls for degrowth are not about negative GDP growth, even if this is the likely outcome of actions promoting degrowth. Yet degrowth heavily criticized the GDP-model. Supporters of degrowth criticize the GDP-model based on two arguments. First, when the economy grows, so do resource extractions and waste emission.

yet our planet's boundaries do not. Secondly, GDP does not measure societies welfare and only measures output related to monetary values. Yet the well-known ‘Easterlin paradox’

shows that above a level that satisfies basic needs, growth does no longer improve psychological wellbeing. So, although degrowth does not focus on reducing GDP

intentionally but on decreasing material and energy throughput, it will most likely result in a GDP decline (Kallis, 2011). Yet profits are necessary for the existence of a company. Wells (2017) argues that it is mostly about the consideration of how profits are distributed and

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whether they are prioritized over other interests. Words such as ‘right-sizing’ or ‘degrowing’

the economy seem to create confusion. We argue that these words refer to the rethinking of the economy as we know in line with the theory of Latouche (2010). Latouche (2010) published a book called ‘Farewell to Growth’ and being one of the pioneers of modern degrowth his work represents one of the most important in the field. He argues that degrowth is not the same as negative growth. The goal is not to shrink the global economy which would inevitably “plunge our societies into disarray, increase the rate of unemployment and hasten the demise of health, social, educational, cultural and environmental projects”, but to initiate eight inter-dependent changes that reinforce one another to build and maintain an

autonomous de-growth society, see Table 1.

The R’s Definition

Re-evaluating Re-evaluating drivers of the economy

Reconceptualizing The concept of wealth, poverty, consumption and production must be reconceptualized

Restructuring All systems designed for continuous growth must be restructured.

Redistributing Redistribution of wealth not only between the Global North and South, but also within societies to lessen overconsumption.

Relocalisation Produce locally, not globally

Reducing Decrease greenhouse gas emission and waste, but also things such as working hours

Reusing Re-use products instead of buying new ones Recycling Recycle all products

Table 1. The 8 R-model of Latouche (2019).

This model of eight R’s can be used to better understand the basis of the degrowth idea in relation to the economy by showing that degrowth argues for a ‘rethinking’ or

‘regrowing’ of our economy. Successful degrowth governance rests on taking tough

positions, which include capping and protecting resources but also phasing out unsustainable consumption options (Sekulova, 2012) but not necessarily economic downsizing, which is an

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important misconception to set right since it is often assumed when using the theory of degrowth. Degrowth proponents do argue for a shift towards a more holistic measurement system than the GDP-model to be able to measure the success of degrowth (Fournier, 2008;

Foster, 2011). Luckily, not only economists but also politicians are beginning to understand the shortcomings of GDP as a dominant political objective (Stiglitz et al., 2010), yet

alternatives to the political objective of GDP growth still remain scarce and marginal.

2.2.4. Similar theories to degrowth

In this chapter, similar theories to degrowth will be analyzed to clearly establish differences and possible similarities. Since the theory of degrowth has not gained support on the business level, linking the theory towards other, further established scientific and academic theories gives it more established value. The theory can be mainly linked to four established theories:

the Doughnut Economy, the idea of businesses becoming ‘net-positive’, the Planetary Boundaries and Earth Overshoot Day.

Firstly, the Doughnut model, or Doughnut economics, is a visual framework for sustainable development – shaped like a doughnut – combining the concept of planetary boundaries with the complementary concept of two boundaries: a social foundation and an ecological ceiling (Raworth, 2012). Between these boundaries lies what Raworth sees as the place where humanity can ‘thrive’ in balance. Similar to the degrowth theory it goes against the growth paradigm and offers an alternative to the classic market-oriented economic model that takes into account that constant economic growth and related economic paradigms (such as cost-benefit analyses) frequently ignore the social and environmental costs entailed in products (Climatalk, 2022).

Secondly, over the last few years a transition seems to have taken place for businesses from striving for ‘no net loss’ to reaching a ‘net positive’ effect. No net loss is a target for a

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development project in which the impacts on biodiversity caused by the project are balanced or outweighed by measures taken to avoid and minimize the project’s impacts and to offset the residual impacts, so that no overall biodiversity loss results (Rainey, 2015). Where the gain exceeds the loss, the term net positive impact is realized: when offsets go beyond the loss resulting from the firm's existence, towards a positive impact. This is similar towards degrowth thinking in regards to rethinking the purpose of business, which is why it is one of the operationalizations of a degrowth business model (see Chapter 3).

Thirdly, according to planetary boundaries researchers, proposed boundaries for atmospheric carbon dioxide concentration, biodiversity loss, and anthropogenic additions of nitrogen and phosphorus to the global ecosystem have already been crossed (Rockström et al, 2009; UNEP, 2009; Carpenter and Bennett, 2011). Fourthly, Earth Overshoot Day marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year (Earth Overshoot Day, z.d.). Anno 2022, the current month EOD takes place is July, meaning that we are surpassing the earth's regenerative capabilities in the seventh month of the year and thus surpassing it enormously. The

planetary boundaries framework's conceptual foundation aligns with degrowth, especially in this overshoot situation (Rockström et al, 2009). Despite the primacy of planetary boundaries, the “operating space” they enclose allows “humanity the flexibility to choose a myriad of pathways for human well-being and development” (Rockström et al, 2009). This notion of limits opens up vast possibilities (Berry 2008) and invites creativity in all domains, which is why this thesis topic is of such significance for the degrowth movement to further develop: to show ‘how’ it can be done, instead of only arguing ‘what’ needs to be done.

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2.3. Criticism of the theory of Degrowth

There are many criticisms to be found about the theory of degrowth, as is often the way for theories that challenge the status quo. Criticism is not inherently a bad thing for a developing theory, since it can provide opportunities to stabilize the foundation of degrowth. To ensure focus, this subchapter presents the six main criticisms of the theory of degrowth. Firstly, and the most common criticism found, is already concluded in chapter 2.2.1.: degrowth as a theory lacks a coherent definition, which is why most criticisms are correlated to the fact that degrowth currently lacks practical foundations. Degrowth is currently seen as a normative and idealistic idea rather than an analytical and realistic theory (van den Bergh, 2012, Khmara, 2018). Asem (2020) states that the creator of the term degrowth has done the movement a disservice by naming it degrowth. However, Parrique (2019) states that

“degrowth only sounds ugly because we love economic growth so much”.

Secondly, degrowth assumes that a reduction in GDP will be good for the

environment. Van den Bergh (2012) argues that the short-term effect of reduced GDP growth may lead, for example, to fewer CO2 emissions as aggregate production falls. However, the long term effect is uncertain as GDP degrowth may depress investments in cleaner

technologies, renewable energy and related research, which can lead to an decrease in future CO2 emissions. He further argues that even the short-term effect is uncertain, as production may well shift to cheaper, dirtier techniques. Here, it makes sense to note once again that degrowth aims to decline material and energy throughput by right sizing the economy, which will probably result in a decrease of GDP growth, yet this is not the primary goal, that is to increase happiness by decreasing economic activity (Kallis, 2011; Hardt and O’Neill, 2017).

Making profits can still be a part of a degrowth society, but from a different paradigm than the current growth paradigm. Next to this, investment in cleaner technologies if often done so more can be produced, not less, leading to still growth of total energy, material or emissions

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output. A potential degrowth economy where less is produced and needed, might not require as much innovation due to the effect of ‘rightsizing’ the economy.

Thirdly, the degrowth theory wants the whole economy to degrow. Van den Bergh (2012) argues that especially the dirty or dirtiest sectors should “degrow” if they do not succeed in adopting sufficiently clean technologies or realizing a substitution away from dirty inputs. This criticism is an interesting one, since the focus of this thesis is also on an industry where degrowth would generate significant value. In other industries, the intrinsic need and thus motivation might be less urgently required. Next to this, Kothari et al. (2016) argue that degrowth is not appropriate for people that are still lacking basic needs, i.e. the global south.

Therefore it is argued that degrowth fails to address the unjust impacts that decreasing GDP will have on certain people and geographic locations (Perkins, 2019).

Fourthly, reducing working hours is a big part of the degrowth ideal because it would lead to less consumption. Degrowth is more than ever in need of coherent proposals in the field of work. Employment has been frequently put forward as a major challenge to the degrowth narrative (consider the vision of degrowth as generating unemployment). However, proponents of degrowth argue that there are solutions to this problem, such as a shorter working week or work-sharing (Jackson, 2017; O’Neill, 2017). This would lead to less production and lower wages, and therefore less consumption and less work stress and more happiness due to more leisure and time for family and friends (Latouche, 2010). Van den Bergh argues that even though a shorter working week may reduce consumption effectively, it will not serve as a very effective, efficient and directed tool for reducing environmental pressure associated with consumption. Among others, it does not guarantee more reduction of

“dirty” than of “cleaner” consumption, and it may lead to substitution of labor by machines with an uncertain impact on pollution and resource use (van den Bergh, 2012).

The sixth criticism is that degrowth is such a radical, paradigm shift that it is not

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realistic and it will be impossible to obtain political support for it in a democratic system (van den Bergh, 2012). We acknowledge this criticism but are strongly convinced that by

developing the normative theory towards a more concrete business model, these criticisms can be (partly) dissolved. Even though it is true that degrowth ultimately is incompatible with capitalism as it now exists, the transitional aspects of degrowth should focus on what the current dominant economic system can do to promote ecological and social integrity on its way out. Through this development, degrowth can transition from an ‘activist movement’

(Demaria et al., 2013) towards a viable business activity theory.

2.4. The theory of Degrowth as a business model

In this chapter, examples of possible degrowth business models will be analyzed in a generalized way to start understanding the context of a degrowth business model. The operationalization of degrowth as a business model can be found in the third chapter.

2.4.1.1. Examples of degrowth business models

Degrowth needs to be operationalized for a more typical business activity, because as long as degrowth is associated with the postulates of “an alliance among those disenfranchised by growth, such as the unemployed and the underemployed ‘precariat’, the ecologists and the landless peasants” (Kallis et al., 2012), typical business people will hardly be able to position themselves in this context (Khmara, 2017). Therefore, the first step is operationalizing degrowth as a business model. In this thesis, Porter's (2001) definition of a business model will be accepted and used: “how all the elements of what a company does fit together”.

Most business models and exemplary firms invoked in the degrowth discussion so far are small and medium-sized and they usually operate locally or regionally, often positioning themselves in a certain market niche. They have strong and long-term relationships with their customers and are deeply connected with local communities. Johanisova et al. (2013)

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identified several other examples of businesses that are driven by profits, but might fit into the degrowth beliefs. For example: locally rooted for-profit enterprises and credit unions (a group pooling their resources to allow every member to borrow from this pool, re-investing locally, and based on democratic self-governance and rejection of the “money must grow”

paradigm characteristic of a typical bank). Liesen (2015) discussed several examples of firms from German-speaking countries which decided not to grow and thus to measure themselves differently. Interestingly, such firms rejected the sales growth imperative and some even deny pursuing growth in profits. Instead, they declare that they are driven by the quality of

products and quality of work and life.

Still, the primary way degrowth has been linked in the literature with business models is through social enterprises and not profit-driven businesses. For Johanisova et al. (2013) the main arguments for linking social enterprises and degrowth are the de-emphasis on profit maximization; focus on benefiting the society and community ownership. However, we argue that the transition from the current business models towards primarily social enterprises is too big of a transformation and as argued above: the transitional aspects of degrowth should focus on what the current dominant economic system can do to promote ecological and social integrity on its way out. This is of importance, since organizations that are able to master the economic and social/environmental trade-offs offer important lessons for developing

sustainable business models (Santos et al., 2015). Therefore, developing a degrowth business model for businesses that are (partially)-driven for profit, has much more potential to make a global impact in the fashion industry.

2.4.1.2. B-corps business model and sufficient business model theory When looking at theories that have similarities toward degrowth thinking and have

transitioned into viable, accepted business models, two models come up. First, the B-corps business model and secondly, the sufficient-driven business model. In this subchapter, both

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will be analyzed based on similarities and differences. Firstly, sufficiency-driven business models seek to moderate overall resource consumption by curbing demand through education and consumer engagement, making products that last longer and avoiding built-in

obsolescence, focusing on satisfying ‘needs’ rather than promoting ‘wants’ and fast-fashion, conscious sales and marketing techniques, new revenue models, or innovative technology solutions (Bocken and Short, 2016). This model addresses the environmental aspect rather than the social aspects of degrowth. Degrowth goes beyond these theories, in particular in terms of key objectives and motivation for the existence of a company, collaborative value creation, and democratic governance (Khmara, 2017). Yet, degrowth could learn from the businesses activity this theory is embedded in, thus making it more relatable for

business-minded people.

B Corps are for-profit, socially obligated, corporate forms of business, with traditional corporate characteristics but also with societal commitments (Hiller, 2013). To become a B Corp, a business must complete an Impact Assessment, which requires firms to provide evidence of the company's impact on its stakeholders. firms are assessed on criteria in four areas: environment, workers, community and governance (Stubbs, 2016). This business model has the same environmental and societal prioritization similar to degrowth, however Stubbs (2016) found that B-Corps’ revenue growth rate exceeded the average revenue growth of public firms in the same industries’. Therefore, a non-growing strategy is non-existent, highlighting the biggest difference with a degrowth business model. However, this theory is broadly accepted as a business activity: more than 100,000 businesses have signed up for the B Corp Impact Assessment since its launch in 2006, but only 3,500 firms—brands like Ben &

Jerrys and Patagonia—are certified B Corps (Lemonade, 2022) and therefore brings forth a lot of learning opportunities for the transition towards a degrowth business model. In

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conclusion, such a forward-looking business model might provide examples of a transition toward a degrowth-oriented society and can therefore be of value to the theory of degrowth.

2.5. Degrowth and technology

Despite the rapidly growing scholarship on Degrowth since the 2008 Paris conference, there have been no scientific articles systematically discussing degrowth and technology (Weiss and Cattaneo, 2017). Yet technology seemingly has the power to become the means to

degrow output. Since fast fashion changes so quickly, a lot of resources are overproduced and overbought by retailers. This overproduction leads to more resources wasted, more CO2 emissions and leads to highly discounted sales thus contributing to overconsumption on the consumer's side – and when not sold off, they are thrown away so they can’t be resold, donated or used by anyone else (Hasselhöf, 2022). Technologies such as Artificial

Intelligence (AI) can help fashion firms to develop more accurate production targets through forecasting models that analyze historical trend cycles and forecast future trends

(Vemulakonda, 2021). An example of a start-up that uses AI-technology to generate less resources is Heuritech. They launched the world's first AI service that predicts fashion trends based on the analysis of millions of images shared daily on social media through machine learning. Lastly, innovations such as body scanning technology make the virtually fitting of outfits possible, leading to fewer returns and less resources wasted. In conclusion, the most important difference technology can currently make is the gathering of more data, which will lead to less waste by predicting demand much more accurately; through which

overproduction can become obsolete. However, technology does not seem to contribute towards less consumption, only more efficient production. Due to its relevance to lessening output of energy and resources, technology will be added as an operationalization in chapter three and the potential relevance will be researched through the interviews.

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3.

Operationalized criteria for a degrowth business model

In this chapter, what characterizes a degrowth business model will be clarified based on the seven criteria from the article of Khmara (2017). Khmara (2017) has developed seven criteria that can be used to determine to what degree a company follows a degrowth business model (see Table 2). From the literature review, an eighth criteria has been added: Technology.

These operationalizations of each criteria are derived from the literature on degrowth and those business models which are linked to degrowth and its underlying ideas, such as sufficiency driven business (Bocken and Short, 2016).

The eight criteria Operationalization

Criterion 1: Alternative understanding of business

1) Not only established for profits;

2) Motivated to solve environmental or societal problems;

3) Aims for net-positive impact;

4) Non-growing or remaining at a certain size-strategy.

Criterion 2: From business to activism 1) Part of social/environmental activism, such as partnerships with NGOs, donating parts of profit or inspiring the industry to become better by knowledge sharing;

2) Motivates customers to consume less or with more awareness.

Criterion 3: Collaborative value creation 1) Value creation or solving environmental or societal problems through collaboration;

2) Choose partners that align with corporate values.

Criterion 4: Democratic governance 1) Transparency of financial and sustainable performance so not only shareholders have control and can influence business decisions;

2) Promoting work that motivates employees to share the company's values.

Criterion 5: Leaders commitment to values 1) Firm is based on a motivation to solve environmental/societal problems;

2) Leaders are examples in personal life.

Criterion 6: Reduction of environmental impact

1) Addressing the most important environmental impacts before the easiest;

2) Fully/mostly use of renewable/recycled materials;

3) Constantly reduces materials, energy- and emission being used.

Criterion 7: Products that last and are repairable

1) Creates durable products;

2) Repairs and recycles its own products and creates value from its own waste;

Criterion 8: Use of technology to produce less

1) Use of (emerging) technologies to gather data;

2) Use data to grow less.

Table 2. The eight criteria for a degrowth business model.

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Unlike in many commonly used CSR assessment protocols, these criteria have to be analyzed integratively and qualitatively, and not merely by ticking separate issues and summing up the number of ticks which is why each criteria will be operationalized so it can be used as a basis for the interview topic list. The data gathered from the interviews will be the basis through which the first step of this thesis, as described in the introduction, will be achieved: to evaluate to what degree the 13 interviewed firms are currently already

implementing criteria of a degrowth business level, on a conscious or unconscious level.

3.1. Criterion 1: Alternative understanding of business

The first criterion states that a firm should be established not only for profit, but also to solve environmental or societal problems. Firms should aim for creating a net-positive impact. Next to this, a non-growing strategy beyond a certain target is set in terms of a) resource use, b) organizational structure, c) costs and sales or have a ‘sustained’ point of growth set as a goal.

For example, turning down growth opportunities to not clash with their motivation to solve certain problems.

3.2. Criterion 2: From business activity to activism and social movement

The second criterion has two operationalizations. The first argues that firms should be a part of social activism to promote sustainable consumption. This can range from working together with an NGO to create an educational campaign, donating profits to environmental or societal causes or by inspiring the industry to become better through actively sharing knowledge. The second operationalization is added based on the literature review to this criterion: motivates customers to consume less, through for example promoting sustainable consumption or sustainable behavior in personal life, like cycling instead of taking the car.

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3.3. Criterion 3: Collaborative value creation

The third criterion has two operationalizations. The first states that firms should create value through collaboration with business partners and stakeholders. For example, partnering with other fashion firms or social entrepreneurs to solve environmental or societal problems and involving consumers in these initiatives to influence them to participate in the process of value creation as well. The second operationalization focuses on the rigorous approach to choosing partners and suppliers that comply with the values of the company and maintaining strong and long-term relations with them.

3.4. Criterion 4: Democratic governance

The fourth criterion has two operationalizations. The first argues that firms should have participatory control for all stakeholders, and not prioritize shareholders. This can be achieved through transparency of performance on a financial and sustainable level. The second operationalization is promoting work that provides personal satisfaction that complies with the degrowth thinking and motivates employees to share the company's values (e.g. by rewarding positive social and environmental performance in personal life).

3.5. Criterion 5: Corporate leaders’ commitment to company values in personal life

The fifth criterion has two operationalizations and although corporate leaders are usually not addressed in the degrowth literature, degrowth tends to be linked to sustainable lifestyle and lifestyle movement). The first operationalization states that the firm was started based on a motivation to add solutions to social and/or environmental problems. Corporate leaders' personal lives are an example of sustainability-wise and they actively engage in

social/environmental movements.

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3.6. Criterion 6: Reduction of environmental impacts at all stages of product/service life-cycle

The sixth criterion has three operationalizations. The first states that firms address the most important environmental impacts first, instead of the easiest. The second argues that firms use fully or mostly recycled/renewable materials and renewable energy. Thirdly, firms constantly reduce materials, energy use and emission and eliminate hazardous wastes from the

production process.

3.7. Criterion 7: Making products that last and are repairable

The seventh criterion has two operationalizations. The first argues that firms should create durable products that have a long-life cycle because they are built from quality material.

Secondly, firms should provide repair services through their own repair facilities.

3.8. Criterion 8: Technology

Based on the literature study in Chapter 3 this eight criterion has been added and has two operationalizations. The first states that firms should use (emerging) technology to gather data and secondly use that data to grow less, in either resource, material or energy output.

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4. Data and method

This chapter presents the research design used to answer the research questions. First, the choices behind the research type and design will be briefly evaluated. Secondly, the data collection strategy and result will be explained, including the acquiring process of the 13 interviews and the company profiles of these firms. Thirdly, the data analysis process will be analyzed. Lastly, issues with regards to validity and reliability are considered.

4.1. Research type and design

Qualitative research is used mostly to interpret, describe, and find in-depth insights into the topic being researched (Seidman, 2006) which fits the goal of this thesis since the theory of degrowth still holds a lot of unknown areas to research. Therefore, exploratory methodology in combination with a deductive method is used. An exploratory qualitative research

approach is appropriate for topics that have attracted little formal theorizing to date

(Edmondson and McManus, 2007). In this case, the theory of degrowth has already shown great potential in the scientific literature department, but on the business activity level formal theorizing is still unknown. However, since the framework of Khmara (2017) is tested to answer the first research question, a deductive approach has been chosen.

4.1.1. Semi-structured interview

In order to answer the research questions, data is collected through fieldwork in the form of semi-structured in-depth interviews (Bryman, 2012). The interview has been called the primary method used in qualitative research (Burnard, 1994; Doody & Noonan, Schultze &

avital, 2011) and "the most direct, research-focused interaction between research and

participant" (Oltman, 2016). In addition, Patton (2002) states that semi-structured interviews give researchers comparable and reliable data. To answer the first research question multiple

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business models were needed to make significant conclusions. To answer the second and third research question, multiple experiences of managers were needed to conclude a

conceptual model that shows the challenges, and potential solutions, firms face and to ensure these challenges are to some degree significant for the ‘whole ‘ fashion industry. Since the knowledge about challenges could not have been gathered from archival data due to a lack of empirical data about degrowth, semi-structured interviews were chosen. They are especially useful because they use a standard question format (see Appendix A), but also allow the opportunity to get additional in-depth information that comes up naturally during interviews (Patton, 2002), such as the solutions.

4.2. Data collection

In this thesis, a purposeful sampling strategy was chosen. Purposeful sampling actively selects the most productive sample to answer the research question (Marshal, 1996). Through this purposeful sampling strategy the sub strategy of critical case sampling and key informant sampling have been used. Critical case sampling means that individuals have been targeted that have specific experiences and key informant sampling means choosing subjects with special expertise, in this case: higher-level managers with knowledge about their business model (Marshal, 1996). Over 90 firms have been approached, through either LinkedIn

Premium or personal networks. From all 13 interviews, six came from the personal networks, five came from reaching out to managers through LinkedIn Premium, one came from

emailing firms directly and one came from messaging firms through Instagram.

4.2.1. Respondents and company profiles

In this subchapter the respondent and company profiles will be discussed. The company profiles have been summarized in Table 3. The names of the respondents, function titles and company names have been changed to ensure anonymity.

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Company name

Business profile Interviewee

profile

Number of employees

Product Based Business Models

Momu Business model: They sell high-end, handcrafted clothes made by artisan communities of women on the luxury market.

Mission/Purpose/Goal:. Their mission is to tell the stories of women through these clothes.

Headquarters based in: The Netherlands

Name: Fleur Role: Business Partnership Manager

Number:.

Between 2-5.

Data source:

LinkedIn 10-06-2022 and interview.

Golden Origin

Business model: They make sportswear from natural materials, the first non-plastic workout brand.

Mission/Purpose/Goal: A plastic free clothing industry.

Name: Berend Role: Owner

Number:.4 Data source:

LinkedIn 10-06-2022

Hells Angels

Business model: Sell lingerie for women.

Mission/Purpose/Goal: is committed to building a family of the world's best fashion brands offering captivating customer experiences that drive long-term loyalty and deliver sustained growth for our shareholders.

Headquarters based in: The United States of America

Name: Laura Role: Global Manager of Sustainability

Number:

Between 21.877 and 30.000.

Data source:

LinkedIn 10-06-2022 Bali

Accessorie s

Business model: They sell Amsterdam designed pieces made with real craftsmanship in Bali. The brand is currently sold in 180+ retail stores.

Mission/Purpose/Goal: We create unique and handmade pieces with a message of the importance of local craftsmanship all over the world. We produce in a way that is fit for today and the future; Beautiful and sustainable.

Name: Julia Role: Sales manager

Number: 5 Data source:

LinkedIn 10-06-2022 Flower Business model: One (wo)men company that produces clothes by hand based on orders:

sustainable slow fashion that is custom made.

Mission/Purpose/Goal: Not clearly stated Headquarters based in: Netherlands

Name: Karin Role: Owner

Number:. 1 Data source:

Interview

MALORY Business model: On-demand sustainable fashion based on pre-order only. They sell footwear, clothes and accessories.

Mission/Purpose/Goal: To encourage others to follow a fun sustainable lifestyle. We know we are small, however, we believe that everyone's efforts can make a huge change in the environment, local economies, and society as a whole.

Headquarters based in: Spain

Name: Mirthe Role: Global Operations Specialist

LinkedIn 10-06-2022

Bamboo Business model: They sell underwear, premium underwear made of bamboo.

Mission/Purpose/Goal: We stand for durability and comfort. Making beautiful, durable and comfortable undergarments.

Name: Prisca Role:

Sustainable Branding Expert

Number:: 5.

Data source:

LinkedIn 10-06-2022

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LOKI Business model: They sell t-shirts on the high-end level, made holistically sustainable.

Mission/Purpose/Goal: Clothing brand of tomorrow. To show how real sustainable clothing is produced through a high-level sustainable developed supply chain and hopefully inspire the industry that it can be done in another way.

Name: Rik Role: Owner

Number:: 8.

Data source:

LinkedIn 16-06-2022

Service Based Business Models

Mint Business model: Mint is an online marketplace that functions as a platform for the purchase and sale of second-hand goods, especially clothing and accessories.

Mission/Purpose/Goal: Their 50 million members support their mission: to make second-hand the first choice.

Headquarters based in: Litouwen

Name: Lucy Role: Director

Number:.

1000-1397 Data source:

LinkedIn 10-06-2022 and website.

Life Cycle Assessmen t

Business model: Through the Life Cycle Assessment Institute a global standard for products that are safe, circular and made responsibly is set. Their business model is to certify firms and firms can become part of our community.

Mission/Purpose/Goal: To lead, inspire and enable all stakeholders across the global economy to create and use innovative products and materials that positively impact people and the planet.

Headquarters based in: The United States of America

Name: Micky Role: Business

& Policy Employee

LinkedIn 10-06-2022

Tick Business model: Sustainability inside platform that was developed by the fashion industry and for the fashion industry to have a universal language to measure sustainability data.

Mission/Purpose/Goal: Without full visibility into a product’s impact, we believe that the sustainable transformation our world demands will remain impossible. We want to change this through advanced technology.

Headquarters based in: ? Fully remote

Name: Mara Role:

Management of Customer Base

LinkedIn 10-06-2022..

Forecasted Fashion

Business model: Forecasted Fashion is a cutting-edge fashion technology company that offers brands predictive analytics on trends and products using advanced artificial intelligence (AI) to translate real-world images from social media into insights.

Mission/Purpose/Goal: With our platform and consultative approach, fashion brands can clarify their vision of their market via images, analyses, and forecasts.

Headquarters based in: France

Name:

Mariette Role: Creative Director

LinkedIn 10-06-2022

Aratram Business model: Main business model is selling unsold items from brands collections on their platform, which they don't get sold through their regular channels.

Mission/Purpose/Goal: Our mission is that all clothing that is produced should be worn and does not end up in a landfill.

Name: Marjan Role: Lead manager in the Sustainability Department

LinkedIn 10-06-2022

Table 3. Company profile of all 13 firms interviewed.

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Out of all 13 interviews, 10 were Dutch and three were not (one from Spain, one from France and one from USA). The Dutch interviews were only translated for relevant quotations. In conclusion, from the 13 interviews, five are platform based business models, meaning specifically that they do not produce fashion, but have access to a lot of knowledge surrounding sustainability issues in the fashion industry. One, called Life Cycle Assessment, is a certification non-profit that certifies firms based on the level of sustainability of their products. Two are technology driven and offer services to fashion firms. The fourth is called Mint and is a global platform for secondhand clothing. The last, Aratram, is a reseller of overstock for big brands. The other eight firms are fashion producers, varying from sport clothing to jewelry. The firms range from a one woman slow-fashion firm to an international multinational lingerie brand with over 30.000 employees. Almost all of the interviewees were higher level managers, ranging from owners, to Directors to the Head of Sustainability. Three were not: the interviewee of MALORY, Bamboo and Bali Accessories. They were involved with sales, marketing or operational experts. All had knowledge about the business model and were to some level involved in their firms sustainability policies.

4.3. Data analysis

Each interview was audio recorded with permission. Afterwards, each interview was transcribed by hand. Afterwards, every interview was coded in Nvivo based on the theory behind a directed content analysis.

4.3.1. Directed content analysis

Directed content analysis is used as the method of analysis in this thesis. Content analysis enables researchers to analyze collected data in a systematic way by coding and categorizing the data (Neuendorf, 2002). Content analyses help reveal themes and issues that recur and need further exploration: “both the organization of qualitative data into coherent stories of

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experience and sensemaking processes are essential analytic activities” (Edmondson and McManus, 2007). This is relevant for this research, since the data analysis is based on the existing theory or framework of Khmara (2017) which enables a structured approach to the analysis. The available data of the interviews is analyzed in three ways. First, all transcripts are coded in Nvivo and categorized. Secondly, all 13 firms were analyzed on each criterion and operationalization based on data from the interview and publicly available data. The full analysis can be found in Appendix B. Each firm then gets assigned a score based on the analysis. These quantifications will be further explained in the next subchapter. Thirdly, all data was analyzed again in Nvivo, but this time focused on answering the second and third research question about challenges and potential solutions. What must be mentioned is that the challenges were prioritized and summarized based on the amount of times mentioned, but challenges of seemingly significant importance that were mentioned by one or two interviews were also analyzed to see if they were of significant value towards a criterion. Therefore, it can be argued that the 26 total analyzed challenges can to some extent be of significant relevance for the fashion industry.

4.3.2. Method of evaluating results

To answer the first research question as to what degree firms are already implementing a degrowth business model, an evaluation point system has been developed (see Table 4).

There are 19 areas where each criteria can earn zero, one or two points. The maximum number of points is 38 points, if all data is accessible and if every operationalization is relevant. The formula used to conclude the total individual firm results was: points scored : maximum points possible based on data accessible x 100 = score. To decide on which point to give to each of the 13 firms per operationalization, the method of triangulation was used by analyzing data from the interview and publicly available data from either their website or

Degrowth as a business model: Lessons to be learned from the fashion industry and contributing to kick-starting the conversation about degrowth in business

Table of Contents

Index of Tables

1. Introduction

2. Literature review

Operationalized criteria for a degrowth business model

4. Data and method