A blog focused on sustainable business issues and challenges

UN World Economic & Social Survey Looks at Sustainability

July 05, 2013 | Comment (1)

The UN World Economic & Social Survey was published on Tuesday, and among other findings it notes that environmental sustainability is under threat, with accelerating growth in global greenhouse gas emissions and biodiversity loss. The United Nations Conference on Sustainable Development (Rio+20) reaffirmed commitment to sustainable development and adopted a framework for action and comprehensive follow-up. The World Economic and Social Survey 2013 serves as a valuable resource looking towards translating the outcome of Rio+20 into concrete actions.

Key takeaways from the survey include:

  • The world is faced with challenges in all three dimensions of sustainable development—economic, social and environmental. More than 1 billion people are still living in extreme poverty, and income inequality within and among many countries has been rising; at the same time, unsustainable consumption and production patterns have resulted in huge economic and social costs and may endanger life on the planet. Achieving sustainable development will require global actions to deliver on the legitimate aspiration towards further economic and social progress, requiring growth and employment, and at the same time strengthening environmental protection.
  • Sustainable development will need to be inclusive and take special care of the needs of the poorest and most vulnerable. Strategies need to be ambitious, action-oriented and collaborative, and adapt to different levels of development. They will need to systemically change consumption and production patterns, and might entail, inter alia, significant price corrections; encourage the preservation of natural endowments; reduce inequality; and strengthen economic governance.
  • The World Economic and Social Survey 2013 aims towards contributing to the deliberations on sustainable development with a focus on three important cross-sectoral issues: sustainable cities, food security and energy transformation. While the entire range of thematic areas identified for action and follow-up in section V of the outcome document of the 2012 United Nations Conference on Sustainable Development, entitled “The future we want” (General Assembly resolution 66/288, annex), cannot be covered comprehensively in this Survey, highlighting three of the cross-sectoral issues may hopefully contribute to the addressing of sustainable development challenges in the follow-up to the Conference.

With regard to energy transformation in particular, significant investments will be needed in technological innovation and adaptation, supported by efficient technology transfers and cooperation at the regional and international levels. The design of sustainable energy systems as part of national development strategies calls for capacities and skills that are not abundant in many countries of the world. Building such capacities will enable countries to undertake transformative energy plans that would otherwise be considered completely out of reach.

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McKinsey – The Next Agro-Industrial Revolution

June 28, 2013 | Comments (2)

A new McKinsey report, Resource Revolution: Meeting the world’s energy, materials, food, and water needs, notes that resource prices are rising and becoming more volatile. Without a resource revolution, we all face the prospect of damage to global growth, welfare, and the environment.

The English thinker Thomas Malthus argued in his famous essay on the principle of population that there was no longer sufficient land to feed the world’s rapidly growing population, threatening poverty and famine. But an agro-industrial revolution soon transformed the economies of Europe and North America, and his fears proved unfounded.

More recently, conventional wisdom held that market forces would always come to the rescue. Until ten years ago, this hope was largely fulfilled. During most of the 20th century, resource prices—of food, water, energy, steel, for example—declined, despite strong growth in the world’s population and even stronger growth in GDP. Prices fell because of a combination of new low-cost sources of supply and technological innovation.

But in the past ten years, demand from emerging markets, particularly in Asia, has erased all the price declines of the previous century. A number of factors create a risk that the world might enter a new era of high and volatile prices over the next two decades. Up to three billion people could join the middle class, boosting demand at a time when obtaining new resources could become more difficult and costly. The stress on resources will probably be compounded by increasing links among them—links which mean that price shocks in one can swiftly be transmitted to others. In addition, environmental deterioration, driven by higher consumption, is making the supply of resources, particularly food, more vulnerable.

The new McKinsey report shows that the resource challenge can be met through a combination of expanding the supply of resources and a step change in the way they are extracted, converted, and used. Such resource productivity improvements, using existing technology, could satisfy nearly 30 percent of demand in 2030. Just 15 areas, from more energy-efficient buildings to improved irrigation, could deliver 75 percent of the potential for higher resource productivity.

Meeting the resource-supply and productivity challenges will be far from easy—only 20 percent of the potential is readily achievable and 40 percent will be hard to capture. There are many barriers, including the fact that the capital needed each year to create a resource revolution will rise from roughly $2 trillion today to more than $3 trillion, with additional capital requirements to pursue climate change and universal-energy-access agendas. The benefits could be as high as $3.7 trillion a year, however, if carbon had a price of $30 per metric ton and if governments removed substantial resource subsidies and taxes.

Policy makers should consider action on three fronts: unwinding subsidies that keep prices artificially low and encourage inefficiency; ensuring that enough capital is available and that market failures associated with, for instance, property rights and incentives are corrected; and bolstering society’s resilience by creating safety nets to help very poor people deal with change and educating consumers and businesses to heed the reality of future resource constraints.

In the 20th century, governments and businesses didn’t have to worry about resource productivity; they could focus on capital and labor. Over the next 20 years, resources must be at the heart of public policy and business strategy.

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Trust in Product Sustainability Goes Social

June 21, 2013 | No Comments »

According to a study by GlobeScanSustainAbility, and BBMG, social sources of trust like consumer reviews, blogs and message boards (28%) as well as friends, family and co-workers (27%) now rival traditional sources like certifications (40%) and media reports (31%) as consumers’ most trusted sources for determining whether a product is socially and environmentally responsible. Barely one in ten consumers relies on company advertisements or website content for information, showing that the most trusted sources are often beyond a company’s control.

According to the study — Re:Thinking Consumption: Consumers and the Future of Sustainability — consumers in emerging markets (Brazil, China and India) are more than four times as likely as those in developed markets (UK, USA, Germany) to turn to social media platforms like Facebook, Twitter and LinkedIn as a trusted source of information (22% to 5% respectively).

Re:Thinking Consumption Report – Key Findings:

Most Trusted Sources:
  • Consumers’ most trusted sources “to inform you about whether a product is environmentally and socially responsible” include certification seals or labels on product packaging (40%), media reports (31%), consumer reviews, ratings, blogs or message boards (28%), friends, family or co-workers (27%) and government information or reports (25%).
Least Trusted Sources:
  • Consumers’ least trusted sources include company advertisements (11%), films or documentaries (11%), company website or a company’s Facebook page (7%) and church, temple or other spiritual communities (3%). Five percent of consumers say they have “no way of knowing who to trust for this information.”
Market Differences:
  • Twenty-two percent of consumers in emerging markets identify “social media like Facebook, Twitter or LinkedIn” as one of their most trusted sources of information, while only 5% of consumers in developed markets choose the same.
  • Twenty percent of consumers in emerging markets identify “corporate social responsibility or sustainability reports” as one of their most trusted sources of information, while only 9% of consumers in developed markets choose the same.
  • Fifteen percent of consumers in emerging markets identify “endorsements by organizations you trust” as one of their most trusted sources of, while 29% of consumers in developed markets choose the same.

So it looks to me like Green-washing won’t be enough going forward. Protestations of “greenness” and corporate reports aren’t going to cut it. The market will decide…as it always does.

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Spending on Sustainability Initiatives Forecast to Grow Slowly

June 13, 2013 | Comments (2)

Spending in the US market on energy, environment and sustainability initiatives by large corporations will grow at just 5% per annum until 2017, according to a new market size and forecast study from independent analyst firm Verdantix. Based on the proprietary Critical Moments® methodology, interviews with 500 energy and sustainability budget-holders and an analysis of more than 1,000 corporate initiatives, the model forecasts the US market will grow from $34.6 billion in 2012 to $43.6 billion in 2017.

The Verdantix market size and forecast model provides a rich data-set to help commercial leaders understand spending by more than 2,856 firms with $1 billion revenues in the US. The analysis tracks spending on 29 initiatives grouped into energy management, environment, health & safety, sustainability innovation, sustainable transport, strategy and risk management, and human capital. Highlights from the study:

  • Three industries dominate spending. In 2013 the oil and gas, utilities and retail sectors will account for 42% of total spend by US corporations on energy, EH&S and sustainability initiatives representing $15.4 billion. Technology, industrial engineering and pharmaceuticals are all $2 billion markets.
  • Energy management is the largest category of spend. US corporations will spend $13.9 billion on all aspects of energy management in 2013, compared with $13.1 billion on EH&S management, and $5.3 billion on sustainability strategy, branding and risk management.
  • Hidden spend on employees tops $12 billion. Cash-strapped firms are keeping a lot of activity in-house resulting in a $12.1 billion wage bill for energy, environment and sustainability management. The consulting market represents $6.8 billion and program management $10.2 billion.
  • Few industries will increase spend above 5%. Compound annual growth rates for virtually all industries are trapped in a 4% to 5% bracket for the 2012-2017 period. Only automotive (7%), food and beverage (6%) and chemicals (6%) will grow above the overall trend.

“CEOs love to talk about their commitments to sustainability, environmental protection and energy efficiency, but press releases are not followed up with extra cash commitments” commented David Metcalfe, Verdantix CEO. “Weather impacts in 2012 like Hurricane Sandy and the drought in the mid-West were wake up calls without being cash calls. For spending growth to reach double-digits the US economy would need to expand at more than 4% per annum, Congress would need to pass new regulations on energy efficiency and environmental compliance, and corporations would need to compete more intensively on sustainability innovation. We do not forecast that will happen.”

It looks like “Green-washing” is alive and well, unfortunately. Visit Verdantix website for more.

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GRI Launches New Sustainability Reporting Guidelines – G4

June 03, 2013 | Comments (2)

G4 was unveiled before an audience of 1,600 thought leaders and practitioners from around the globe at GRI’s 2013 Global Conference. Experienced reporters welcomed the publication of the Guidelines as a major step forward in the evolution of sustainability reporting.

The latest evolution of the GRI Guidelines – part of the most widely used comprehensive sustainability reporting framework in the world – enable all companies and organizations to report on their economic, environmental, social and governance performance. G4 has been significantly revised and enhanced in order to reflect important current and future trends in the sustainability reporting landscape.

By placing an even greater emphasis on the concept of materiality, G4 will encourage reporting organizations to provide only disclosures and indicators that are material to their business, on the basis of a dialogue with their stakeholders. This will allow reporting organizations and report users alike to concentrate on the economic, environmental, and social impacts that really matter, resulting in reports that are more strategic, more focused and more credible, as well as easier for stakeholders to navigate.

The launch of G4 marks the culmination of two years of extensive stakeholder consultation and dialogue as part of a strict and transparent due process. Working Groups from across the world, comprising 120 specialists from constituencies as diverse as field experts, labor, business and civil society, have contributed. Two public consultation periods in 2011 and 2012 generated a total of more than 2,500 responses.

In addition to enhancing the relevance and quality of standalone sustainability reports, G4 will be a powerful tool for generating material sustainability information for inclusion in integrated reports.

Other key enhancements in G4 include increased user-friendliness and greater accessibility for those new to reporting, and harmonization with other important global frameworks, including the OECD MNE Guidelines, the United Nations Global Compact Principles, and the UN Guiding Principles on Business and Human Rights.

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