According to a recent article in the Harvard Business Review on The Sustainability Imperative,
over the past 10 years, environmental issues have steadily encroached on businesses’ capacity to create value for customers, shareholders, and other stakeholders. Globalized workforces and supply chains have created environmental pressures and attendant business liabilities. The rise of new world powers, notably China and India, has intensified competition for natural resources (especially oil) and added a geopolitical dimension to sustainability. “Externalities” such as carbon dioxide emissions and water use are fast becoming material – meaning that investors consider them central to a firm’s performance and stakeholders expect companies to share information about them.
Furthermore, these forces are magnified by escalating public and governmental concern about climate change, industrial pollution, food safety, and natural resource depletion, among other issues. Consumers in many countries are seeking out sustainable products and services or leaning on companies to improve the sustainability of traditional ones. Governments are interceding with unprecedented levels of new regulation – from the recent SEC ruling that climate risk is material to investors to the EPA’s mandate that greenhouse gases be regulated as a pollutant.
As a result, managers can no longer afford to ignore sustainability as a central factor in their companies’ long-term competitiveness.
Considering that a megatrend is a great force in societal development that will very likely affect the future in all areas in the next 10-15 years (Gitte Larsen on why megatrends matter), and that sustainability affects each and every one of us, it’s pretty easy to see that if sustainability isn’t the current megatrend, it soon will be. Less than 2.5% of the water on the planet is fresh, and two thirds of this is frozen. In recent years, energy crises have arisen in a number of US states, Central Asia, South Africa, Pakistan, and China and current oil reserves will empty within 50 years. Carbon dioxide levels have increased 36% in the past 180 years and is now about 25% higher than historical highs over the last 400,000 years! And this is just the beginning.
Environmental responsibility has pervaded the consumer mindset across the developed countries and is quickly taking root in the mind of the customer in the emerging market … where consumers are tired of smog filled cities, dirty water, and regular rolling black-outs. Consumers want a product that’s green, made with recyclable material in an environmentally friendly process, and produced in a socially responsible manner. Furthermore, they want a product that is high quality and cost effective — proving that sustainability cuts through the business and consumer worlds.
In short, sustainability is the current megatrend and an imperative. So what does this mean to your organization? That’s the subject of a future post.