How business can use sustainability ‘megaforces’ in strategic planning

 

File | NATION Kenya’s inflation rate has risen to 6.67 per cent in August up from 6.02 per cent in July on account of increased cost of food and fuel. 

 

Bernard K. Kiore. 

By Bernard K. Kiore

In Summary

• This approach can turn daunting complexity into solid opportunities for growth.
• Such opportunities range from developing and maintaining low-carbon, zero-waste cities and infrastructure to improving and managing biodiversity, ecosystems, lifestyles and livelihoods.
• The key for companies is to leverage current risk management processes to tackle future sustainability risks and to invest more leadership capital in sustainability risk management.

In an increasingly complex world of population growth, urbanisation, resource scarcity and environmental change, success will depend on how well a company can analyse these sustainability megaforces, identify effective ways to address them, and implement appropriate action.

This approach can turn daunting complexity into solid opportunities for growth.

Such opportunities range from developing and maintaining low-carbon, zero-waste cities and infrastructure to improving and managing biodiversity, ecosystems, lifestyles and livelihoods.

Enabling these changes can also create opportunities for finance, information and communications technology and partnerships.

With new opportunities to be explored, external priorities to assess, partners to engage and risks to navigate, businesses that plan now for coming decades are likely not only to withstand the changes, but also to prosper.

Sustainability megaforces threaten to bring increasingly complex risks and interrelated challenges that demand a new approach to business planning. Businesses are likely to face a more volatile and unpredictable market for fossil fuels and other resources.

New levels of scarcity for essentials such as water, energy, forest products and minerals could result in increased and more volatile prices and reduced availability of inputs.

Water-intensive industries – including apparel, automobile, food and beverage, biotech and pharmaceutical, chemical, forest products, electronics, mining, refining and electric utilities – will be vulnerable to water shortages, declines in water quality, and water price volatility.

Further, degradation of global biodiversity and ecosystem services could also affect many industries, including forest products, pulp and paper, agriculture, fisheries and tourism.

Industries dependent on biodiversity for innovation, such as pharmaceuticals, would be affected by continued primary forest loss. These risks could jeopardise the long-term profitability — or even the survival — of some of the most-impacted sectors.

Sustainability megaforces could also open the door to unprecedented opportunities for business.

Companies can find ways to save resources and reduce business risks, while also cutting costs. By planning for future resource shortages, they can improve the material efficiency of production, develop alternate materials, or find new ways to use freshwater or energy more efficiently.

Focusing on sustainability could also lead to access to new markets for greener products, improved brand credibility, price premiums for green products and new finance sources.

Companies can also become providers of new resource-efficient technologies and products. Global efforts to combat climate change, for example, will create demand for low carbon technologies, such as industrial and commercial energy efficiency.

Population growth, and a growing middle class will mean significant increase in the number of potential consumers and producers driving the market for consumer goods, global connectivity and access to technology, as well as providing human resources for the workforce.