Striking a Balance: Sustainability vs Economic Growth

By: Zuhair Shawl – Y12

The debate surrounding sustainability and economic growth has gained prominence in recent years with experts claiming that the environment is being pushed closer and closer to its ‘tipping point’. As economies strive for growth and progress, concerns over the environmental and social impacts of economic development have intensified. I believe that at this point in time, if a choice must be made, protection of the environment should take priority over economic growth.

The pursuit of increased growth often leads to a negative impact on the environment through the release of greenhouse gases during production. We have seen an exponential increase in CO2 emissions since the 1950s due to the burning of coal to produce electricity and steel, as well as oil for vehicles and manufacturing. According to the World Bank, global greenhouse gas emissions increased by 50% from 1990 to 2016. This meteoric rise in emissions has come about due unsustainable resource consumption patterns and unchecked industrialisation which has led to significant environmental degradation, posing risks to ecosystems and human wellbeing. This not only results in direct costs, such as increased expenditure on healthcare and infrastructure damage from hazardous weather events, but also undermines the opportunity for growth.

Economist Kate Raworth, in her book “Doughnut Economics,” argues that economic progress should operate within the “safe and just operating space for humanity.” I believe this is the appropriate mindset to adopt when discussing limiting the tradeoff between economic growth and protection of the environment. By respecting environmental limits, we can minimise the negative impacts of economic growth and promote sustainability, a concept which aligns with the idea of the “circular economy”, as proposed by Ellen MacArthur in her book “The Circular Economy: A Wealth of Flows.” The circular economy emphasised reducing waste, reusing materials and recycling, which not only mitigates environmental damage but also fosters the possibility for innovation, R&D by firms and economic resilience.

Critics argue that sustainability measures impede economic growth by imposing additional costs and regulations. This occurs through policies such as taxation on non-renewable goods and schemes such as pollution permits. It could be argued that if governments are overtly focused on sustainability the benefits of a zero-carbon economy will be significantly outweighed by the drop in standards of living that it is accompanied by. This would theoretically occur as many firms would face higher costs and decreased profits, forcing them to make workers redundant.

However, evidence suggests that sustainability can be a catalyst for innovation and economic prosperity. The Global Commission on the Economy and Climate estimates that ambitious climate action could generate $26 trillion in economic benefits by 2030 and create over 65 million new jobs. Furthermore, while renewable energy may be the unappealingly more expensive option right now, shifting to a zero-carbon economy will lead to long-term cost savings for businesses and households. This will occur due to fossil fuels being a finite resource and as they become increasingly scarce their price will rise putting increased burden on firms’ production costs and consequently on consumers.

Another reason sustainability should be prioritised is because economic growth alone does not guarantee equitable outcomes for all members of society. The United Nations Development Programme (UNDP) reports that the richest 1% of the global population owns more than twice the wealth of the remaining 99%. An increase in growth and average incomes will likely be disproportionately distributed to the wealthy and will widen the gap between the rich and the poor. This is an idea that is explored by French economist Thomas Piketty in his book "Capital in the Twenty-First Century," where he argues that unchecked capitalism tends to exacerbate wealth disparities, causing more harm than good and undermining economic stability. Therefore, sustainable development, with its focus on social equity, aligns with Piketty’s calls for policy interventions such as progressive taxation and wealth redistribution.

In conclusion, while advocates for each side of the debate argue that one must be prioritised over the other, in today’s interconnected world it is vital to recognise that the long-term viability of economic growth is dependent on embracing sustainable principles. By considering the environmental challenges, social equity, and economic potential, societies can strive for sustainable development.

In our visit to the Dubai Refreshments Company, producing Pepsi-Cola products, we witnessed a real-life example that supported many of the Economic theories we learnt about in the classroom (such as Economies of Scale). The factory floor consisted of 5 main production lines, each that produced a specific brand. The tour guide suggested to us that Dubai Refreshments Company (DRC) used to run in Al Quoz, which was more crowded, so meant they had very little space for production. Instead, they moved to the Jebel Ali region with aspirations to create more production lines (the aim to expand into 10 in the near future).

Unfortunately, when we visited the plant, 2 of the production lines were not working (1 had an issue with it, and 1 was under maintenance). Despite this, the lines were very specialised, and each worked rapidly (able to produce anywhere from 8,000 –24,000 bottles within an hour, depending on the size of the bottles). Also, on the factory floor, there were vast stocks of sugar crates present, as well as the plastic origins of all the plastic bottles (that get hot pressurised air blown into them, which allows the plastic to take the shape of the bottle required). The production lines were highly automated and advanced, and the process was definitely capital-intensive, with labour only being present as a safety, back-up measure to ensure that the line is working as is expected. Human workers and labour were also present to work on some of the vehicles that moved around the plant to transport the production parts to the respective sections that they were required in. Safety was of the utmost importance, with several signs present around the plant (to prevent accidents), as well as the fact that safety was one of the few things we were briefed on before entering the plant.

We learnt that DRC (Dubai Refreshments Company) was only a producer of PepsiCo products and did not actually create the ‘secret formula’ that characterises these soft drinks. Instead, all the plant does is add a specific proportion of sugar to the ‘secret formula’ to produce the end-product. It is clear that this remains secret to Pepsi-co, such that they do not even spread the information regarding this highly coveted formula to their producers at DRC.

All in all, the trip was an enlightening one, in which we learnt about the economics behind a large firm such as PepsiCo, and how they manage to produce at the fastest rate possible, whilst still ensuring that high profits are maintained, even in crises such as COVID (in which they were not struck as heavily as some competitors, such as Coca-Cola, which suffered a decline in profits from 2019-2020, whereas PepsiCo managed to maintain their profits).

- Raghav Jasuja

A BIG THANK YOU to all our speakers this year!

Mr Javaid is a seasoned telecommunications professional with over a decade of experience, and currently serves as the CEO of UAE Trade Connect. This venture focuses on the power of blockchain and artificial intelligence to enhance the banking and supply chain sectors in the UAE

18/1/23 Robert Carver External Human or Computer Traders, who wins?

Robert Carver is an independent systematic futures trader and investor, writer, and research consultant. Mr. Carver is the author of several books, including “Systematic Trading", "Smart Portfolios", "Leveraged Trading" and "Advanced Futures Trading Strategies". He formerly held a position as a portfolio manager and researcher at AHL, a quantitative hedge fund, where he was responsible for the creation of AHL's fundamental strategies group and managed the fund's $5bn fixed income portfolio.

01/2/23 Sleem Hasan External “My Entrepreneurial Journey: What I learnt from my successes and failures”

Sleem Hasan is an experienced owner with a demonstrated history of working in venture capital and the Japanese capital markets. Mr Hasan is skilled in investor relations, securities, asset management, investment advisory, and working with technology entrepreneurs. His strong entrepreneur professionalism is with a Part III Mathematical Tripos from Cambridge and a Mathematical degree from Oxford. He’s also the CEO and Founder of Privity, which is an independent Dubai-based advisory firm founded back in 2004.

08/02/23 Philip Manipadam Year 11 “Banking: An Evolving Landscape”

Will be discussing the general trends and challenges experienced by banks throughout the years, as well as weighing in on the future of banking, with online banking services on the rise.

Marta Roman External Goumbook’s Environmental Protection and Circular Economy Campaign

Marta will speak on how being backed by two important players in the field of ocean health and conservation globally and locally: The US-based organization Ocean Conservancy and Dubai’s beach resort Atlantis the Palm, has enabled Goumbook to demonstrate the potential waste has to return enormous value, both to the environment and economies on larger scales.

01/3/23 Arun Prabhu External Insights on the current state of risk management in the banking sector and the challenges faced by risk professionals in today's fast-paced business environment.

Arun Prabhu is the Chief Risk Officer, and Regional Head of Risk Strategy at HSBC for the MENAT region. Mr. Prabhu has over 20 years of experience working with HSBC and has played a pivotal role in shaping the bank's risk strategy. He will be sharing his insights on the current state of risk management in the banking sector and the challenges faced by risk professionals in today's fast-paced business environment. He will also be discussing his journey at HSBC and the key lessons he has learned over the years.

08/3/23

Haya Faisal External Q&A session –Insights on life at university in Canada vs. the UK

Haya is a recent graduate from the Rotman Commerce program at the University of Toronto, where she completed a Management specialist and Economics major. Currently, she is completing a master's in human resources and organisation at the London School of Economics, through which she is assigned on an 8months consulting project with HSBC UK. She has also completed internships at EY and PwC in Assurance and Executive Talent Management, respectively.

15/3/23 Sherville De Souza External ‘An Overview of the Energy Industry’

Sherville is a seasoned veteran in the field, having worked 23 years with Shell. He has also undertaken numerous commercial and financial roles in businesses

(Upstream/Downstream/Solar/Biofuels) Across Europe, Africa, the Middle East, and Asia.

22/3/23 Christian Ruiz Year 11 How recurrent "free money" could impact our society.

Will be delivering a session on Universal Basic Income, where he will be exploring how recurrent "free money" could impact our society. In recent years, this topic has grown increasingly relevant, with some advocating for its implementation as a means of addressing economic inequality and promoting social welfare. Christian has kindly agreed to explore how a recurrent "free money" system could impact our society, including its potential effects on poverty, employment, and social welfare, as well as its feasibility to implement.

26/4/23 Soraya Beheshti External ‘Breaking down two accepted student profilesHarvard/Stanford and Oxford Economics & Management’.

Soraya has kindly agreed to provide attendees with insights into the key qualities that top UK/US universities seek in applicants, as well as guidance on crafting a compelling personal statement and strategies for enhancing their application profiles

Ed is a Private Equity Analyst with McKinsey & Company based in Waltham, Massachusetts. He graduated from DC in 2018 and completed his Bachelor of Science in EconomicsFinance and Liberal Studies Major in Quantitative Perspectives from Bentley University in 2022. As a PE analyst, most of Ed's work consists of advising clients through all stages of the deal cycle: from top of house diagnostics, fundraising strategy, commercial due diligence and portfolio company strategy, all the way to vendor due diligence.

Mr. Omer Iqtidar is a Managing Director at Citigroup UK. Mr. Iqtidar currently holds the esteemed position of Head of Central and Eastern Europe, Middle East & Africa (CEEMEA) for Mergers and Acquisitions. With an impressive tenure spanning 22 years in the investment banking sector, Mr. Iqtidar has advised big clients on a diverse range of large-scale M&A transactions across various sectors.

Mo studied Economics at Cambridge University, receiving a B.A and M.A. He currently helps teach on the Executive MBA and MBA at the Judge Business School at Cambridge University. He has taught in both day and boarding schools and taught at Eton College as Head of Economics & Politics, before being appointed Deputy Head Academic as well has being elected a senior examiner for Edexcel and Pre-U. Alongside this, Mo has spent many years preparing candidates for Oxbridge applications, focusing on Economics, E&M, PPE, and Land Economy.