Sustainable Business

Placing sustainability alongside a 'national treasure' is a timely initiative.

If our society is going to achieve the full-blown paradigm-shift needed to address the challenges we all face then mainstreaming sustainability and grand-scale awareness raising as part of behaviour change programs are essential. Whilst we are all still so committed to what we do as a society today the momentum for change isn't there. Hats off to Marks and Spencer - it's a good start and let's hope Joanna can be as successful on sustainability as she has been on the Gurkhas.

I had the pleasure of attending Unilever's Sustainable Living Plan – One Year On report back session this morning.

It is really good to hear of the progress so far. I should say upfront, the Sustainable Living Plan definitely isn't perfect. There are a whole host of questions and issues that remain, from reviewing the choices of some of the initiatives underpinning the key goals to the speed of progress. Then there's the balance of trade-offs faced in so many sustainability initiatives between apparently solving one problem and possibly creating others, not to mention the fundamental questions around the social value of some brands.

The KPMG study, Expect the Unexpected: Building Business Value in a Changing World, explores issues such as climate change, energy and fuel volatility, water availability and cost and resource availability, as well as population growth spawning new urban centres. The analysis examines how these global forces may impact business and industry, calculates the environmental costs to business, and calls for business and policymakers to work more closely to mitigate future business risk and act on opportunities.

There are more people. 

The population will grow to 9 billion by 2050.

They are living longer. 

The percentage of the global population over the age of 60 will double from 11% in 2000 to 22% in 2050.

Wealth will increase. 

The middle class is likely to double from around 1.7 billion to 3.6 billion by 2030, with most of this growth in emerging economies.  

There will be an increasing pension and savings gap.

Only around half of people in the UK are actively saving for the future.

The economic focus of power will change.

China, India, Brazil and the USA will be the major economies in 2050 by GDP. 

More and more people will be living in cities.

McKinsey finds that population in the City 600 will grow an estimated 1.6 times faster than the population of the world as a whole. By 2025, the City 600 will be home to an estimated 310 million more people of working age—and account for almost 35 percent of the expansion of the potential global workforce.

Health will continue to be a major issue.

There will be 290m undernourished people by 2050 (but in the UK up to 60% of men and 50% of women could be clinically obese).

We face energy scarcity.

Demand for energy could double by 2050.  There is a risk of an energy gap equivalent to the whole of the energy sector in 2000.  As oil producing nations pass their peak, the amount they can extract decreases daily. This means prices will rise at an increasing rate.

We face water scarcity.

Up to 7 billion people will face water scarcity by 2050. On current economic and population growth trajectories, by 2030 global water supplies will satisfy only 60% of demand (source; Baccaletti, Grobbel, Stuchtey, The business opportunity in water conservation, McKinsey Quarterly, 2010). The price of water could increase by 300% over the next 20 years. 

We face food scarcity.

Increasing population, together with increased appetite for meat coupled with degraded land and soil erosion, will inevitably lead to food scarcity and increased food prices. One futurist believes we will have to produce as much food in the next 40 years as in the whole of history.

We face resource scarcity.

By 2050 we would need 2.5 times the natural resources of earth. We currently take 20% more than the earth can naturally replenish.

We face unexpected costs.

Economic losses from climate-related disasters are already substantial, and they are on the rise. Insured losses alone have jumped from an annual US$5 billion to 27 billion over the last 40 years. 

Economic volatility is highly likely to continue.

The cyclical nature of the economy and the fact that many businesses are still not managing for long term success increase the likelihood of continued economic volatility.

Growth will be constrained by literacy.

One in six young people leave school unable to read, write and add up properly (source; Leitch Review on Skills, 2008, UKCES).

Growth will be constrained by poverty.

29 authorities across the UK have more than one in five children living in severe poverty (source; Save the Children, February 2011).  A fifth of the world’s population earns just 2% of global income (source; UN Global Compact, 2010).

We face an increasingly diverse world.

200m people may be migrating each year to escape environmental degradation, hunger or poverty.

Business will increasingly lead social change.

Of the world’s 100 largest economic entities, 43 are companies (source; D. Steven White, September, 2010).

*These insights are from a variety of sources from the World Economic Forum to Shell’s Signals and Signposts.

Here’s the thing. If we were thinking big, we would put our current challenges in the context of space and time. 

We are now three years into the recession and the banks continue to be bashed.

The most recent attack (March 2011) is from the governor of the Bank of England Mervyn King in the Daily Telegraph. http://www.telegraph.co.uk/finance/economics/8362959/Mervyn-King-intervi…

In response to Mervyn King’s comments, one senior banking source, at one of the UK's top five banks, branded Mr King "an embittered old man with no appreciation of reality". (Telegraph website, March 6th  2011).

So, who is most in touch with reality and what can banks do to recover trust?

It’s time to shake-up the beliefs that have guided us in our thinking on philanthropy. That’s what I will be arguing today (February 25, 2011) in a speech to a philanthropy conference hosted by ACEVO (the Association of Chief Executives of Voluntary Organisations).

I’m speaking at the Economist Sustainable Business Summit on March 17 in London. The topic I will be exploring is how to engage employees in sustainable business.

I suspect the starting point is for us to have a shared definition of sustainable business. For me it is how organizations manage in order to achieve long-term commercial success.

Anglian Water is responsible for supplying clean water and taking away and recycling dirty water for six million people in the East of England.

But there’s a problem. They work in one of the lowest lying areas of the UK and are therefore more vulnerable to climate change. Rainfall is low – about the same as Jerusalem. And the population has gone up 20% in the last 20 years and certain to grow further.  It’s not sustainable.

Their response in the last year has been to imagine a new sustainable business model for the company under the banner Love Every Drop. Their ambition is to put water at the heart of a whole new way of living.