10 Global Sustainability Megaforces to Threaten Business

UN Secretary-General Ban Ki-moon is encouraging more businesses to embrace the principle of sustainability in their strategies –it should be in the DNA of business culture and operations. KPMG reports that climate change could be the only global megaforce that directly affects all others, with annual output losses ranging from 1% per year, if strong and early action is taken to tackle rising temperatures, to as much as 5%  a year, if policymakers fail to act. It is but one of the 10 sustainability “megaforces” threatening your business. What about the others? Read More

By BusinessGreen staff (16 Feb 2012):

Businesses have been urged to step up their efforts to ensure they are resilient to an increasingly resource-strained world, after a new report by KPMG identified 10 “global sustainability megaforces” that could derail businesses’ plans over the next two decades.

Climate change

KPMG says this could be the only global megaforce that directly affects all others, with annual output losses ranging from one per cent per year, if strong and early action is taken to tackle rising temperatures, to as much as five per cent a year, if policymakers fail to act.

Energy and fuel

Fossil fuel markets are likely to become more volatile and unpredictable due to higher demand, shifts in the geographical pattern of consumption, supply and production uncertainties, and increasing regulation to tackle climate change.

Material resource scarcity

As developing countries industrialise rapidly, global demand for material resources is predicted to increase dramatically, says KPMG. Businesses are therefore likely to face increasing trade restrictions and intense global competition for a wide range of material resources that become less easily available. However, such scarcity also creates opportunities to develop substitute materials or to recover materials from waste.

Water scarcity

Based on a forecast that the global demand for freshwater will exceed supply by 40 per cent by 2030, KPMG warns that businesses may be vulnerable to water shortages, lower-quality water, price volatility and resulting reputational challenges.

Ecosystem decline

With global ecosystems showing signs of breakdown and stress, more companies are realising how dependent their operations are on the critical services these ecosystems provide. The decline in ecosystems is making natural resources scarcer, more expensive and less diverse, which increases the costs of water and escalates the damage caused by invasive species to sectors such as agriculture, fishing, food and beverages, pharmaceuticals and tourism.

Population growth

The world population is expected to reach 8.4 billion by 2032, increasing pressures on ecosystems and affecting supplies of natural resources such as food, water, energy and materials. KPMG maintains, however, that this population boom also provides business opportunities to grow commerce and develop new ways of addressing the demand of growing populations for agriculture, sanitation, education, technology, finance and healthcare.

Wealth

Within growing populations, the middle class is forecast to grow 172 per cent between 2010 and 2030. This presents a challenge for businesses, which will be required to provide services and goods to this new middle class market at a time when resources are likely to be scarcer and more price volatile. Additionally, increasing wealth means that many companies will no longer be able to take advantage of “cheap labour” in developing nations in the same way they have previously.

Urbanisation

By 2030, all developing regions, including Asia and Africa, are expected to have the majority of their inhabitants living in urban areas. Virtually all population growth during the next 30 years will be in cities, which will require extensive improvements in infrastructure, such as construction, water and sanitation, electricity, waste, transport, health, public safety, and internet and cell phone connectivity.

Food security

Global food prices are predicted to rise 70 to 90 per cent by 2030 as a result of growing populations, water scarcity and deforestation. Farmers in water-scarce regions are likely to have to compete for supplies with electric utilities and mining, as well as with consumers.

Deforestation

Wood products contributed $100bn per year to the global economy from 2003 to 2007, while the value of non-wood forest products, mostly food, was estimated at about $18.5bn in 2005. But the OECD predicts that forest areas will decline globally by 13 per cent from 2005 to 2030, mostly in South Asia and Africa, hitting the timber industry as well as downstream industries such as pulp and paper. However, KPMG notes that new opportunities may arise through the development of market mechanisms and economic incentives to reduce the rate of deforestation such as the UN-backed REDD+ programme.

Source: www.businessgreen.com

Hameed Shaheen in Pakistan Observer (16 February 2012):

UN Secretary-General Ban Ki-moon is encouraging more businesses to embrace the principle of sustainability in their strategies, noting that with the most of the world’s ecosystems in decline, widening social inequality and climate change, global prosperity, productivity and stability was at stake. “We need corporate sustainability to be in the DNA of business culture and operations,” said Mr. Ban in his address to a gathering in New York entitled ‘KPMG Summit: Business Perspective for Sustainable Growth, says a UN report.’

Mr. Ban pointed out that corporate sustainability is currently not properly valued, noting that many proven innovations and solutions – from energy efficiency to emissions reductions – are not supported with the right incentives.

“In fact, incentive structures still tend to encourage unsustainable behaviour. As a result, too many companies limit their sustainability efforts to pilot programmes that never take off. Even worse, sustainability becomes more a matter of public relations than how companies operate,” he added.

He lauded the nearly 7,000 corporations in 140 countries that had joined the United Nations Global Compact initiative that seeks to foster responsible business practices. Stressing the UN’s commitment to supporting companies to carry out their businesses in a sustainable way, Mr. Ban cited the UN-backed Principles for Responsible Investment that been embraced by more than 900 institutional investors representing at least $30 trillion in assets.

Through the UN-backed “Principles for Responsible Management Education,” over 400 business schools and related institutions are integrating sustainability into curriculum and research, he said, adding that the recently issued report of his Global Sustainability Panel also provided a blueprint for mainstreaming sustainability. Mr.

Ban also highlighted the UN’s Sustainable Energy for All Initiative that is mobilizing the private sector towards a more accessible, efficient and clean energy economy, and the fact that more than 400 business leaders had pledged their support for the Caring for Climate initiative designed to advance low-carbon solutions and help make the green economy a reality, he said.

He urged business leaders gathered at the conference to five steps to advance sustainability: Join the Corporate Sustainability Forum to be held on the sidelines of the UN Conference on Sustainable development in Brazil in June; Heed the call of a new generation of investors by publicly reporting on sustainability performance;Engage in responsible lobbying and advocacy to affirm their belief in free and fair trade; Work with governments to adopt smart regulatory frameworks and incentives that reward environmental and social performance; Work with the UN in its platforms and initiatives on sustainable business practices.

Source: www.pakobserver.net