Virtualisation

Businesses have major role in changing the world


Article Type: Feature          Published: 12-2013         Views: 1800   

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Putting sustainability at the heart of business is the only option for businesses to succeed in a world where consumers expect more, and where resources are scarce and expensive

That is the view of Tom Delay, chief executive of the Carbon Trust. "Five years ago, the world's economy went into shock as Lehman Brothers filed for bankruptcy. The resulting global economic crisis was driven by the greed of loosely regulated financial institutions, governments seeking short term popularity and the unhealthy relationship between the two. It has resulted in unsustainable levels of debt in some major economies, with a period of austerity prescribed to restore balance within a decade, although the scars may last far longer," he warns.

"But a more fundamental risk to our long-term economic development lies in the rapidly expanding use of our scarce natural resources, combined with the planet’s ability to cope with the multiple impacts of their use. We know that we are living well beyond our means, drawing on natural resources at a rate that we cannot sustain. Just as we have accumulated debt priced too cheaply, so we have built economies with resources priced too cheaply.

"Whichever basic need we consider, from warmth to mobility to food, today's solutions are hugely inefficient - in the same year the Lehman Brothers went under, the world was using resources at a rate 50% faster than it can renew. And as our growing population, expected to reach nine billion by 2050, consumes more, these strains on our natural capital will become even more acute."

The inevitable conclusion of this, he says, is a resource crunch. "It means we urgently need to find new methods of production, address wasteful consumption and develop innovative business models that put sustainability at the heart of business operations."

However, a recent survey of global business leaders shows that, while awareness of a pending resource crunch is high, most businesses see this as a risk to be managed, rather than as a new commercial opportunity. Few see it changing the nature of the business they do today.

"Tellingly, we also found that only 13% of board directors are remunerated for achieving sustainability targets," adds Delay. "The resource war will bring winners and losers. Take water. Already we are seeing parts of Texas in drought, with reports that 30 communities could be dry by the end of the year. By 2050, the OECD predicts that the world's demand for water will grow by 55%. Competition between water users and nations demanding water resources will escalate. And yet our research has shown that only one in seven businesses has a target to reduce water use.

"In our work with businesses all around the world, we have found two distinct behaviours when it comes to sustainability. Think of the 19th century science experiment with frogs and boiling water. Most businesses are treading water on the issue of sustainability as the temperature rises. They won't move until the issue bites them hard. Our research suggests that they are discounting the impacts of sustainability on their business well into the future, beyond the time horizon of most shareholders or the CEO's likely tenure."

A few, the jumpers in the frog analogy, are moving now, he states. They anticipate the danger and see a way out. "The first step they take is to look inside their business and map out the resources used in the products and services that they provide. The insight gained usually highlights simple cost saving measures to improve efficiency and resource use. But incremental improvements that once seemed ground-breaking can now look like greenwash, damaging reputations and doing little to ensure competitiveness and survival."


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