Economist with a mission

6 February 2024

To achieve a more sustainable society, we must move towards different values, argues Sandra Phlippen, Chief Economist at ABN AMRO and professor of professional practice in Sustainable Banking at the University of Groningen. ‘We need to give people a different perspective on work and consumption. On prosperity and well-being. To encourage them to move to a new world.’

Who is Sandra Phlippen?

Since 2019, Sandra Phlippen (Kerkrade, 1978) has been Chief Economist at ABN AMRO, where in recent years she has increasingly focused on the economic and financial implications of climate change. Sandra has emerged as an outspoken opinion leader on this issue in public debate. Since January 2023, she has combined her work at ABN AMRO with a practice-based professorship in sustainable banking at the University of Groningen. It aligns with her view that banks have an essential role to play in supporting their clients in the energy transition. Alongside her work for the bank and the university, she writes columns and opinion pieces for the Dutch newspapers AD and Het Financieele Dagblad. Her mission is to work towards a carbon-neutral future by highlighting opportunities that inspire activism and entrepreneurship.

Gert Smit, founder of TriFinance, is certain we are in the midst of a necessary transition. ‘Shareholder value – the centerpiece of the capitalist system – has had its day,’ he argues. ‘It’s no longer fitting, and we see that reflected in the social challenges we face. We’re in a period of chaotic restructuring as we move from capitalism and a focus on consumerism (driven by shareholder value) to a future in which energy transition and climate targets take over and steer people away from consumerism.’

This is exactly what occupies Sandra Phlippen (44), an economist and professor: ‘We cannot continue on the same path because we will reach a dead end. The ecological damage would be huge. If we want to achieve the needed CO2 reduction, we need to shift from focusing on gross national product to broad prosperity. We have to move towards a new vision of prosperity that puts climate and prosperity at its heart.’

The PBL Netherlands Environmental Assessment Agency defines broad prosperity as ‘everything that people find of value’. Beyond material prosperity, it includes issues such as health, income equality, education, environment and living conditions, social cohesion, personal fulfillment, security and insecurity. The focus is not just on our quality of life today. It is also about what our way of life means for future generations.

Does the pursuit of broad prosperity mean we must halt economic growth?

“The solution is not to abandon economic growth. If you look at history, I think it’s dangerous to call for contraction and reduced incomes. But we cannot continue to grow as we have been doing. We need to decouple growth from CO2 emissions. But while we’re already succeeding in the Netherlands, that doesn’t apply to large parts of the world. We also need to focus on things other than income, because growth may no longer be so evident. The current focus on purchasing power is not helping.”

Is it the government that must introduce this change?

“Businesses and consumers cannot do this without the government. Because the government sets the framework, the framework within which capitalism operates. This framework is currently inadequate. Social damage from a production process plays no significant role. And that is the crux of the problem. If stricter limits are set, producers will redesign their production processes. Consumers will make different choices as fossil products become more expensive and clean products relatively cheaper. This is how the government starts the transition. This can be achieved, for example, through a carbon tax. The money raised by this tax can be used to help those who need it to make changes. Because we have to get everyone on board.”

By now, many are well aware that change needs to happen. Or do businesses and consumers also have a responsibility in this regard?

“Of course, a rapidly growing group of people is so concerned about the climate that they are willing to change their lifestyles. I’m one of them. I got rid of my car and now use public transport, my bike and electric taxis in emergencies, and I take as few flights as possible. These are things I can do. But I don’t think it’s realistic to assume that society will change because consumers make these kinds of choices on a mass scale. While the saying ‘a better environment starts with you’ is a fine one, it’s not enough. Besides, not everyone has that luxury.”

And consuming less remains challenging; it’s a form of instant gratification. We think we’re buying happiness, right?

“I remember a cool study about the effect of Black Friday on people. As people want to buy scarce products at the same time, this is an extreme moment of intense consumerism. Turns out that it evokes all kinds of emotions, including powerful feelings of happiness. But it also provokes aggression and feelings of frustration. We’re constantly exposed to these impulses in everyday life, too, though in a milder form. An emerging movement is calling for no growth at all. This movement suggests that people are becoming detached from their autonomous desires and preferences in life. I see no evidence for this. Besides, what’s autonomous? Do people really want a huge range of products? Or does it tempt them to make purchases that don’t actually make them happier?”

What we need is a concrete prospect, a future to yearn for and fight for.

Either way, the uncomfortable message that climate scientists are now delivering is that our lives will have to change fundamentally.

“Yes, radical changes are needed. And drastic social adjustments in particular. The big question here is how do you make people want to change? A crucial question to which politics has not yet provided an adequate response. I recently heard a friend explain climate policy to her young son: ‘Everything we enjoy now won’t be allowed any longer.’ That isn’t going to work. We need a distinct horizon, not fatalism. A vision and an image of a carbon-neutral future to covet and to fight for. So that our children won’t soon have to learn that there was a time when everything was more fun. I want to stay positive. I hope that people will find that there is also a certain peace of mind in reordering their lives and living less hurriedly. Perhaps some kind of movement can emerge around this change. What really matters to you? Social tipping points show that this is already happening. One such example is the rise of Greta Thunberg. Her popularity is only increasing. We also know that complex changes can seem to take forever at first. And then, suddenly, more happens in a shorter time than you think possible.”

Gert Smit also argues that we are moving towards a world in which people are increasingly setting their own course, even – and perhaps especially – in the working environment. He says: “This means organizing work differently to enable everyone to make sustainable choices. Choices that suit them and the world around them.”

Consider work-life balance, for example. “We should invest in empowering people to balance how they spend their time. If we all think that work-life balance is out of kilter, I think it’s positive to help people set their own boundaries and act autonomously. I have a coach in my work, for example. Every employee at ABN AMRO is entitled to one. It’s a huge luxury and one that I know is not for everyone, but it helps me a lot. A coach gets you to think about questions such as: why do you do what you do, what is your deeper motivation? And how can you constantly activate the drive that helps you better decide which impulses to act on? How do you properly filter which things satisfy your autonomous needs and which don’t? What also helps me is to do nothing for six months every five years, to detach myself from my ‘work identity’ and be forced to ground myself. Everyone at ABN AMRO can take such a sabbatical.”

Would you recommend that other employers invest in their employees’ personal development in the same way?

“Definitely. I think it could well be that the net result is not a cost at all. If people continue to toil, they become stuck in their routines, stagnate and less effective at their jobs. Several people on my team are going on sabbatical this year. This is quite difficult because I’m also a manager. But we’ve had a pandemic, a war, massive inflation. As a result, people worked their socks off. Now we’ll just do a little less. When people return, you see they have thought about what they really want. And, of course, it can also be a catalyst for people to do something else. That sucks sometimes, but then I remember that there’s a lot of incoming talent too. As long as you maintain this flow, you maintain a healthy organization.”