7 key trends all sustainability execs should watch
It is 2018, and it arguably never has been a more difficult, unpredictable, yet exciting time to run an international business.
No doubt overcoming the Great Depression ahead of the outbreak of World War II in the 1930s was more than a little trying, of course. But fast forward 80 to 90 years and the global economy is an ever more complex and fast-evolving place, exposed to a widening variety of risks and shocks — a fact only underlined by last week's stock market volatility.
Today, data is the world's most valuable commodity, oil companies are investing in renewables, vacuum cleaner companies are building electric cars and car manufacturers are leasing out bicycles. Silicon Valley tech firms — aside from having their reach extended into myriad industries — are even accused of undermining, or at least influencing, democratic elections. Meanwhile, environmental damage is intensifying, global CO2 emissions jumped up 2 percent last year and the U.N. estimates the world's population could grow to 11.2 billion by 2100, putting ever greater strain on resources and infrastructure.
All in all, climate change, new disruptive technologies and associated political and social upheaval make building a sustainable company that is fit and robust for the present, let alone the long-term future, a significant challenge for executives.
Yet, according to global non-profit Forum for the Future, by better understanding these complex trends and risks, companies can create strategies that can unlock new opportunities for both sustainability and their bottom line.
As James Goodman, director of futures and projects at the Forum and lead author of a new report published (PDF) this week, pointed out, amid great political, economic and environmental uncertainty sudden and major changes "have become the new normal."
"We need a better understanding of the trends emerging today that will impact the future, how they are linked, and also how we are part of ongoing processes of change," Goodman said. "Only then can leaders make better decisions that ensure that we survive and thrive in the future."
So what are these main emerging trends? Here, BusinessGreen assesses the report's seven key "signals of change" — or areas of likely disruption and innovation — taking place for which all sustainability executives should prepare in a low carbon future.
1. E-mobility and automated vehicles
Driven by air pollution and climate concerns, the emergence of electric and automated vehicles as viable technologies has been hard to miss the past couple of years, and their disruptive impact on the global economy over the next decade is likely to be profound.
Several countries have moved to ban fossil fuel cars within the next 25 years, and with increasing numbers of consumers expected to share rather than own cars in future, city infrastructure will need redesigning to support changes in mobility habits, according to the report. After all, the Organization for Economic Cooperation and Development (OECD) forecasts that fleets of self-driving vehicles eventually could remove up to 90 percent of vehicles on urban city streets.
Clearly, changes to road transport habits — already starting to be seen with the popularity of ride-hailing apps such as Uber — have big implications for companies' staff and supply chains, requiring significant investment in new fleets, charging infrastructure and electricity grid capacity management in the coming years.
But in the longer term, a well-managed transition to shared, low-emission transport can produce major efficiency gains, reductions in CO2 and more breathable air in cities, Goodman pointed out.
"If the entire mobility system is in this state of extraordinary, dynamic flux of the sort that we haven't seen for over a century, then how do you shape it to try and drive business value, but also social and environmental value?" he told BusinessGreen. "So there's a massive opportunity there to think really big picture and reinvent business models behind that."
2. Regenerative agriculture
Another "dynamic change" outlined in the report which perhaps has fallen under the radar in recent years is that of "regenerative" agriculture, which encompasses a range of alternative approaches to farming that, in essence, seek to put more into the environment and society than they take out.
As climate change, biodiversity loss and declining nutritional contents of soils and food start to bite, there is a growing trend towards farming methods which improve the ability of soil to both store carbon and produce nutritious crops, the report said. Such techniques include intercropping — cultivating two or more crops together — carbon sequestration in the soil and using insect predators rather than chemical pesticide. Far from being a simple reversion to traditional techniques, these approaches can be bolstered by greater use of AI, data and automation as technology develops.
"The internet of things, remote sensing, artificial intelligence and a revolution in robotics are coming together to make low-input, data-driven automated agriculture at scale a real possibility," the report stated. It points out that in the U.K., 60 percent of farmland is managed by precision methods such as sensor systems, cameras, drones, microphones, virtual field maps, analytics and GPS-guided tractors.
But while there is a "huge amount of potential" in harnessing technologies to better understand crop growth, tackle climate change and keep track of farming practices in supply chains, businesses also should be aware of the signs of significant change ahead in consumer eating habits, Goodman warned.
"You're seeing on one side signs that farming production is changing slightly, or at least moving into the mainstream, then on the other side people in some countries are actually eating a lot less meat and thinking about plant-based protein in a very different way," he said. Sustainable companies, he explained, therefore should consider the impact of both agriculture technologies and changing diets on their businesses.
"There are signs of a shift in the whole food system starting to emerge," stated Goodman.
Blockchain may have been grabbing headlines for its use in cryptocurrencies such as bitcoin and CloakCoin of late, but its applications for boosting companies' sustainability credentials — particularly by improving transparency and tracking of supply chains — potentially are significant. Businesses should be striving for increased supply chain transparency, the report stated, which can help to reduce or eradicate material waste, boost collaboration and knowledge sharing, and help decentralize energy grids.
However, it remains too early to be sure blockchain's potential as a game-changing technology can be realized, while environmental concerns pervade over the vast energy used to ensure the security of each transaction.
As Goodman stated, while it is worth keeping a keen eye on, the "jury is still out as to whether blockchain will prove a negative or a positive" for sustainability.
4. Action on plastics pollution
One issue which took Goodman by surprise in 2017 was the rise to prominence of plastic waste and pollution in the public consciousness, demonstrating how businesses need to stay ahead of or respond swiftly to fast-changing sustainability trends.
Moreover, regulatory and business-led action on tackling plastic waste in recent months has instilled a sense of urgency, meaning plastic waste is a huge risk and opportunity for sustainability execs to build into their company plans, the report suggested.
"It is worth reflecting on what has happened in 2017 with the plastic pollution issues, as it is only just now that we've noticed how pervasive the pollution is, because it has reached a threshold," Goodman said. "But what has also been really astonishing has been the really rapid and growing response. You could argue is it a bandwagon that everybody is jumping on, but it is not an easy thing to solve — it is a massively complex and systemic issue."
Several companies have made pledges the past fortnight to reduce their plastic waste, including supermarket Iceland, which plans to rid its own brand products of plastics by 2023, and media giant Sky, which wants to eradicate single use plastic across its business by 2020. Such targets are ambitious and demonstrate the sort of action companies should take over the issue, but reaching them will be by no means an easy feat.
"People have really taken on stretch targets — it is difficult to remember another time when that has happened," Goodman pointed out. "Even climate change — there has never been a scramble to demonstrate stretched targets and ambition in the way there has been with plastics."
5. Retail and consumerism shifts
The growth in online shopping is radically changing the way people buy and sell goods, and the wider impacts of this shift on town centers, employment and the sharing economy are major considerations for businesses and governments in the coming decade or two.
Customer buying experiences are likely to continue to change and reduce high street footfall, but this can shift more pressure onto freight for deliveries with implications for congestion, emissions and other related environmental impacts. Meanwhile, Goodman suggested, unless managed properly, the ease with which goods can be purchased and delivered could encourage even more consumptive, unsustainable resource use.
Indeed, a separate study this week of 151 countries led by University of Leeds' researchers this week concluded that no nation currently meets its citizens' basic needs at a globally sustainable level of resource use.
There are opportunities, though. For example, IKEA is looking at the future potential to lease products rather than just manufacturing new goods in response to resource concerns and behavior change, while U.K. firm Smarter's FridgeCam is designed to link up smartphones to help plan meals and reduce food waste.
"If you can see how the whole retail system is reconfiguring, how can your business be part of that change and shape it in such a way that is setting us up for more sustainable systems?" asked Goodman.
6. Disruption to work and livelihoods
As industries built around fossil fuels are forced to confront low carbon alternatives, such as electric vehicles and renewable energy, workforces will need retraining. At the same time, greater automation may begin to reduce the need for human workers altogether. Yet losses in income or livelihoods can lead to backlashes against businesses or governments, thereby undermining the low carbon transition.
Moreover, the report highlights how automation is eroding traditional routes to development for emerging economies through manufacturing and agriculture, which can affect supply chain resilience and climate adaptation.
The problem is there is still little understanding of the potential scale of this challenge, let alone a consensus on how businesses and governments should respond.
"There is a need for all stakeholders — governments, workers representatives, corporations, development INGOs and relevant academia — to collaborate to identify new routes to development and prosperity," the report stated.
7. Social action
Social media, collaboration, campaigning and crowdfunding platforms are tools readily used by a variety of groups and businesses, enabling them to respond immediately to events with actions that can go viral and gain significant influence. For example, the ban on plastic microbeads came into law in the United Kingdom this year, having resulted from a green activist campaign that quickly picked up support on social media.
Clearly, sustainable companies need to be aware of such trends, but grassroots organization also provides opportunities to change the very nature of how businesses are run, explained Goodman.
"Power is moving out from the center and it is becoming easier to mobilize people around a particular issue, and businesses absolutely need to be alert to that," he said. "The organization form is also changing in itself. It's a radical change in power structures and that provides an opportunity to do things in a different way again and to be much more collaborative and democratic in the way that value is created."
In the U.K., it may be tempting to think of Brexit as the most immediate dynamic affecting the future of the green economy, yet the pervading uncertainty at present serves to demonstrate the need for businesses to think more carefully and holistically about wider trends threatening to cause disruption in the coming years.
"When you see some of these changes coming together, it motivates — or at least it should do," explained Goodman. "This report is aimed at giving a little bit of hope amid all of that flux."
Amid such political, technological and social upheaval, it is no doubt difficult for businesses to prepare for a sustainable future, but such flux also means it is more necessary for them to do so.
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