- Business in the Community

Transcription

THE FORCES
OF CHANGE/
the drivers
and trends
Photographs © Creative Commons / All rights reserved by Gayle and j.o.h.n. walker
Business in the Community would
like to give special thanks to:
CREDITS/
WSP and Kingfisher for their
unwavering leadership.
Thanks are also due to the whole
Visioning Steering Group for their
time, inspiration and insights:
Thanks are also due to:
Ordnance Survey for their
bespoke maps.
Our corporate supporters:
Andrew Wanliss-Orlebar for his
drive, intellect and delivery
KPMG and RKCR Y&R for their
invaluable pro bono support in
getting this programme off the
ground.
For further information
on Visioning the Future –
Transforming Business contact
Emma Price-Thomas
Visioning Programme Manager,
Business in the Community, 137
Shepherdess Walk, London N1 7RQ
Tel: 020 7566 8650
Fax: 020 7253 1877
www.bitc.org.uk/visioning
visioning@bitc.org.uk
And our partners:
Disclaimer
This research/report is released
in the name of Business in the
Community. It is the result of both
a collaborative effort from our
members and our own research. It
is meant to be thought provoking;
however, it does not mean
that every member company
necessarily endorses or agrees
with every statement in the
report. Use of and reliance on the
report shall be at the discretion
of the readers.
02
Introduction
CONTENTS/
HINT:
click on the chapter
titles to jump to the
relevant area of this
PDF - plus try this
where you see the Top
Line Trend Data
links!
Why this Primer?
How is the Primer structured?
How can I use this Primer?
What is BITC’s ‘Visioning the Future –
Transforming Business’ programme?
The Forces of Change – the drivers and trends
Balance Shift: from West to East, North to South
Scarcity: fewer natural resources
Protection: resources and practices no longer open to all
Transparency: your business is everybody’s business
Connectedness: instant global communities
Values Shift: decline of blind consumerism
Compendium – Data and visual evidence
Balance Shift: from West to East, North to South
Scarcity: fewer natural resources
Protection: resources and practices no longer open to all
Transparency: your business is everybody’s business
Connectedness: instant global communities
Values Shift: decline of blind consumerism
“The changes we are likely to
see to our society and environment
over the next two decades and beyond will
require a paradigm shift in the economy
and society. The companies that recognise
and plan for it now will be the winners of
the future. We need to think now about how
business services will evolve in the next two
decades and beyond. The opportunities are
real for those who help create a
sustainable future.”
04
04
04
05
05
06
06
10
14
18
22
26
30
31
36
44
50
52
54
“You can’t make
a better future until
you imagine it”
Mohamed Nasheed,
President of the
Maldives
Ian Cheshire, Group CEO, Kingfisher plc
Champion, BITC Visioning the Future –
Transforming Business programme
03
INTRODUCTION/
Why this primer?
A valuable
point of
reference about
long-term
trends and
sustainability
features
Why this Primer?
Investigating how long-term
trends and sustainability
challenges will affect your
business is difficult at the best
of times, all the more so when
facts and trends can often seem
overwhelming, fragmented and
ill-documented.
We hope that this document
will serve as a valuable point of
reference about trends which
may warrant deeper investigation
and as a stimulus which we think
may prompt further debate. It
is particularly aimed at those
business leaders who are keen
to explore the opportunities to
be had and risks to be managed
as they shape their businesses
to deliver healthy shareholder
return in a rapidly changing
global economy, whilst also
making a contribution to securing
the long-term health and well
being of society and the planet.
Some visionary business leaders
will already be alive to many
of the trends and implications
identified in this document. They
may now be seeking answers to
the thorny questions on issues
in ‘contested space’ for which
there are no simple answers
(e.g. the rights and wrongs
of GMO or biofuels). Working
alongside our partners and
other thought leaders, we aim to
engage with these leaders and
others who are ready for change
in order to further develop our
collective body of knowledge
and help map out a route to
transforming business and
achieving a sustainable future.
How is the Primer
structured?
The body of the document
addresses a number of forces
or drivers which we believe
will have particular impact on
the future sustainability of
business and the role they play
in a sustainable world. We have
structured the document in a
way which we hope helps to
organise and to make sense of
a complex array of trends and
challenges associated with these
forces. The charts, statistics
and sources provide a rigorous
backbone to any scenarios
exercise, and specifically the
workshops that will be carried
out as part of the Visioning the
Future – Transforming Business
programme.
Context
A thought-piece and overview of the force
– what are the drivers and trends we can
expect?
Top line trend
data
A snapshot of the data that underlies the
force – what is changing, and by how much?
Opportunity
For leading businesses, what opportunities
does this force unleash and how to access
this?
Threat
For conventional business, how will this
force affect business as usual and why?
Business Example
A company which is already responding
positively to this force – what is the
essence of its business model? Why is it
transformational?
Prediction
An extrapolation of the force – how might
the future be different?
04
INTRODUCTION/
© Creative Commons / All rights
reserved by Gayle
This document is
designed to be
used as part of our
Visioning the Future
– Transforming
Business
programme
You may choose to use this
Primer in three different ways:
•
Browse it to understanding
the challenges of
transformation and likely
changes ahead for your
business: the document
will help surprise, alert and
inspire audiences to consider
their business in a new light
against a broad set of market
changes.
•
Consult it and search through
for quick reference on
specific facts and trends:
the document will help you
quickly retrieve information
to back up your scenarios
and strategies or find sources
for further information.
•
Review it to prepare a
workshop and identify
possible relevant factors for
consideration: the document
will help you identify areas of
change specifically relevant
to your organisation and be
provoked to think about the
likely impact these will have.
What is BITC’s Visioning
the Future – Transforming
Business programme?
This document is designed to be
used as part of our Visioning the
Future – Transforming Business
programme. Some businesses
may find it a helpful pre-read
in preparation for workshop
sessions, whilst others may want
to use it as stimulus for debate
and a point of reference.
Our Vision programme sees
a prosperous world, one that
can sustain itself, that enriches
lives and communities, that is
clean and safe, where the risk
of conflict is reduced. One that
allows human advancement,
and that embraces technology.
And one that addresses the
challenges – rising energy costs,
extreme weather events, resource
constraints. And the great news
is this is a world that people
really want. When 9 billion people
want something, that’s a great
opportunity for business.
Our vision programme helps
boards – your board – understand
this world. What are the biggest
issues companies need to start
solving right now and what are
the opportunities. We’ll help you
understand what will change,
what this means for your
business, and what actions you
need to be taking right now.
We won’t be giving you all of the
answers – that’s not the intention. What it will provide is an
inspiring, positive and structured
programme that is completely
unique. One that’s been created
by some of the best business
minds. One which will draw on
the creativity of hundreds of
businesses over the next few
years. Thinking, working together
and taking action. Ultimately a
programme that will make your
business more resilient, set up for
growth – both while being at the
heart of creating a sustainable
future. More information is
available at:
www.bitc.org.uk/visioning.
05
CONTEXT
FORCES/
Balance Shift
Population
and economic
growth will
be dominated
by emerging
markets
Significant population growth in
emerging markets will continue
to shift our current world order
with the developed economies
faced with an aging and shrinking
population. Already the largest
and fastest growing markets
are increasingly in emerging
economies. Progressively,
education, business innovation
and increased buying power
in these markets could help
them overtake the West in their
economic power and influence.
As they leapfrog western
technologies, infrastructures and
institutions, emerging markets
could also outpace the West in
developing appropriate, low-cost
and low energy ways to serve
their exploding rise in consumer
needs. Demand from emerging
economies such as China, India
and Brazil will drive up the cost of
raw materials. The accelerating
shift to urban living will be the
backdrop to these changes
across all markets.
China, USA, India and Brazil
will be the top economies in
2050 by GDP. The UK ranks
9th in world economies by
GDP in 2050 down from
6th in 2010.
Global economy
TOP LINE
TREND
DATA
Population growth
The global population will increase to 9 billion
by 2050, up from 6.8 billion in 2010. In Britain
the population will increase from 62.2 million
in 2010 to 77 million in 2050 – an increase of
24%.
Disparities in wealth
Inequality is higher in Organisation for
Economic Cooperation and Development
(OECD) nations in 2011 than at any point in the
last 20 years. Even the Managing Director of
International Monetary Fund warns that this
could lead to more unrest.
Migration
200 million people may be on the move
each year because of hunger, environmental
degradation and loss of land.
?
KEY
QUESTIONS
• How will these changes
impact on your business
model?
• How will this balance
shift affect your markets,
operations and supply chains?
• How will your business
compete with new entrants
emerging from these new
global leaders?
06
© Creative Commons / All rights reserved by j.o.h.n. walker
Urbanisation
FORCES/
Balance Shift
?
TOP LINE
TREND
DATA
Health
If current trends continue, by 2050 about 60% of men, 50% of
women and 25% of children in the UK will be clinically obese – so
fat that their health is in danger. Yet globally, it is predicted that there will still be 290
million under-nourished people in 2050.
at investments, you want to look
at how these changes create
growth opportunities.
Ageing population
The percentage of the global population over the age of 60 will double from 11% in
2000 to 22% in 2050.
Source: Ann C Logue, MBA – Types
Education
China has plans to increase the share of those with higher education in the workforce
by almost 10 times from 4.66 % in 2001 to 44 % in 2050. In Britain, the latest OECD
study on 16 to 65-year-olds found that 22% of the population in England and Wales is
functionally illiterate.
New customers
Some 1.7 billion people today can be considered middle class, with incomes between
US$6,000 and US$30,000 in purchasing power parity terms. This figure is likely to
reach 3.6 billion by 2030, with most of this growth in emerging economies.
Disruptive
technologies
According to The Economist, the appearance of $3000 cars, $300 computers and
$30 mobile phones testifies to the emerging economies ability to introduce cheap
and disruptive technologies into the global economy.
OPPORTUNITY
Emerging and frontier markets
have opportunities for growth
that often aren’t available in
more developed economies.
These come from three main
sources: new, pervasive
technologies; the improved
spending power of a growing
middle class; and gains from
greater trading activity with
other countries. When you look
In China alone 10-15 million people will move to cities each year
between 2010-2030. In the UK, there is an increasing pressure to
build in areas of water scarcity, prime agricultural land and even
flood risk areas.
of Growth Opportunity in Emerging
Markets – Dummies Guide
www.dummies.com/how-to/
content/types-of-growthopportunity-in-emerging-markets.
html#ixzz1FHEc888B
KEY
QUESTIONS
• Who will be your employees
and customers of the future,
and where will they be?
• How will you compete for
global talent?
• How will you effectively
compete when northern
economies ‘expertise
advantage’ has
disappeared?
07
FORCES/
Balance Shift
THREAT
Not all trade is free trade.
Some governments place
quotas and tariffs to protect
local industry, as well as using
regulation. Free trade promotes
trade between nations which
is free of quotas and tariffs
and 153 nations have joined
the World Trade Organization,
which negotiates the rules
of trade among nations and
settles disputes as they arise.
Because trade moves better
when it’s free of restrictions,
businesses who are not alive to
and ready to take advantage of
this growing freedom of trade
with emerging markets will be
at a disadvantage. Conversely,
if trade is restricted, it’s harder
to get people the goods and
services they need most at the
most efficient price.
Free trade can be controversial
because some people lose when
they have to compete with
imported goods. However, free
trade is good for people overall,
and a commitment to free trade
BYD
(Build Your Dream)
www.byd.com
Warren Buffet-backed Chinese automaker BYD, established in
2003, created the world’s first dual mode electric car independent
of specialised charging centres launched in 2008 – example of
greentech from the East
M-PESA
www.safaricom.co.ke
Mobile money transfer service, established by Safricom, which
allows people to complete basic banking transactions (deposit,
withdraw, transfer, pay bills) without needing to access a bank, or qualify for
traditional banking. In Kenya, where it was first launched, an estimated 65% of
households use M-PESA and it now accounts for almost 20% of the Kenyan GDP
Patrimonia Hoy
CEMEX
www.cemex.com
For more than a decade, this project has helped to address the housing deficit in
Latin America and improve the lives of low-income families. By providing access to
microcredit, building materials, and technical expertise, the program helps families
build or add to their homes more quickly, more efficiently, and with better materials
than would otherwise be possible for these customers.
Tata Communications
www.
tatacommunications.
com
Another example of North/South change of ownership. Based in India, the Tata Global
network includes one of the most advanced and largest submarine cable networks, it
acquired Teleglobe, a company based in Canada, and Dishnet, an Indian company, and
is the largest shareholder in South African operator Neotel.
TecnoSol
www.terrasol.home.
igc.org
Provides clean energy alternatives for the lighting and refrigeration needs of rural
Nicaraguan households, schools and hospitals that have no access to the main
electricity grid. Tecnosol has installed over 47,000 systems and currently offsets
35,000 tons of carbon dioxide emissions in a country where 74% of people are off the
grid. Their technologies help displace kerosene lamps and wood fires which pollute
the air and increase carbon emissions.
Sahaviriya Steel
Industries
www.ssi-steel.com
Example of North/South change of ownership and new markets – Thailand’s biggest
steel producer has bought Teesside Cast Products steel works, Thai consumption of
steel, which is largely met by imports, is set to expand by a third in the next five years
Xinjiang Goldwind
Science &
Technology
www.goldwindglobal.
com
In 12 years the company’s industry-leading supply chain strategies, production
capabilities, innovative turbine designs and R&D programs that have helped Xinjiang
capture close to 8% of the global market and rank among the top five global wind
companies in terms of market share in 2009.
can also help emerging markets
grow faster.
Some people have greater
access to the market than
others, either because of their
technological sophistication and
business acumen or because of
the infrastructure of the country
where they operate – or both.
Fair trade is a movement to
give producers of agricultural
products and handicrafts in
developing nations some of the
advantages of their competitors
in developed countries in order
to make the terms of trade equal.
Some international federations
are trying to improve markets
and to create branding that
would attract buyers in developed
countries. Businesses who are
not alive to the movement
toward mainstreaming fair trade
principles and embedding them in
their own risk losing market share
and credibility.
(Source: Ann C Logue, MBA – Types
of Growth Opportunity in Emerging
BUSINESS
EXAMPLES
Markets – Dummies Guide)
08
FORCES/
Balance Shift
PREDICTIONS
More than fast
followers
Emerging economies
will increasingly leapfrog
straight into greentech
and sustainable energy
production and use.
Ownership of global
companies moves east
Asian multinationals such as Lenovo,
the Chinese company that bought
IBM’s personal computing business,
and India’s Tata Motors, which bought
Jaguar and Land Rover, are just two
pioneers in what is expected to be a
wave of outward Asian investment.
David Pilling ‘Asia Poised for a Shift’,
Financial Times, 22 Nov 2010
The global response to increasing
urbanisation will be a major determinant
in tackling climate change
‘Cities around the world are responsible for around
two-thirds or more of both energy and greenhouse
gas emissions. The choices that are made about
transport, infrastructure, building, and industry in
cities, as they grow rapidly in the next two decades,
will determine, via the technology and ways of life
they lock-in, whether mankind can both manage
climate change and draw the benefits of the new
patterns of growth...Cities will be at the
centre of this story’.
Nicholas Stern, ‘China’s growth, China’s cities, and the new
global low-carbon industrial revolution’, Centre for Climate
Change Economics and Policy, 2010
09
FORCES/ Scarcity:
fewer natural resources
reserved by dennieorson
Materials,
energy, services and
resources we receive from
natural systems (e.g. clean
water, clean air, carbon
absorption, fertile land,
plant and animal life, waste
decomposition, etc) will be
more costly and less
reliably available
CONTEXT
The concept of scarcity is
fundamental. It is rooted in the
environmental realities of the
planet, ruled and limited by
entropy and ecology1.
In 1972 The Club of Rome
challenged the pervading
perception of Earth as
abundant, resilient and largely
unchangeable with their explosive
report The Limits to Growth.
They identified five areas of
global concern: accelerating
industrialisation, rapid population
growth, widespread malnutrition,
depletion of non-renewable
resources and a deteriorating
environment2. Since then the
OPPORTUNITY
Adaptive businesses will do more
with less and also enable their
customers to do more with less
too. This does not just add a
real and immediate commercial
advantage, it also positions
the company as a leader which
helps to builds its brand among
environmentally and sociallyconscious consumers.
Leading companies will find ways
to ‘dematerialise’ their products
for consumers. For example,
music companies can deliver
music online with no packaging
trends not only remain they are
accelerating.
Natural resources are becoming
scarcer whilst Humanity’s
ecological-footprint (impact
upon nature) is increasing3.
We are no longer living within
the sustainable boundaries of
the planet4 and the natural
world is declining rapidly (see
WWF’s Living Planet Index). This
could be catastrophic for our
species5. Scarcity of resources
will affect business in a variety
of ways. The most immediate
and obvious is that the price of
natural resources will continue to
rise. Thus, there is an immediate
commercial advantage to using
and car clubs lease
access to cars without
shifting large volumes
of cars. By focusing
on the consumer
experience rather
than the product,
the business can add
value to people’s lives
without the associated
environmental
impact. This may
also increase the
company’s operating
efficiency. In other words,
companies that find a way to
deliver value efficiently are likely
resources more efficiently. There
will also be a growing market for
products and technologies that
enable consumers to reduce their
ecological footprints.
Ultimately, business comes
head to head with the
inescapable reality that we live
on a finite planet. There may be
technological means to reduce
the impact of business activities
and products but creating
sustainable societies may require
a fundamental re-evaluation of
what humans actually need in
order to have happy, healthy,
sustainable lives. Sustainable
businesses must find ways to add
value to people’s lives without an
associated environmental impact.
? KEY
QUESTIONS
• How would rising energy and
commodity prices impact your
business?
• What would your supply chain
look like if oil cost $250 per
barrel?
• How will these trends impact on
your supply chain?
• How secure is it?
• How severely will overseas
water scarcity impact your
business?
to succeed commercially above
and beyond the brand building
kudos associated with a reduced
environmental impact.
10
FORCES/ Scarcity:
Access to raw
materials
New sources of raw materials such as metals are increasingly hard
to find. For example, China has an increasing number of mining
TOP LINE
contracts in Africa. Business must adapt to the reality that their
TREND
supply chains’ access to these commodities will increasingly be
DATA
limited. This is a key driver for companies to maintain ownership
of the materials in their products for the entirety of their lifecycle
and adopt a ‘cradle-to-cradle’ approach in which, for example,
companies maintain ownership of their products with services leased from them.
Meeting demand
China supplies at least 95% of the world’s rare earth metals vital to a wide-range of
consumer goods.
Recycling
A ‘Zero Waste’ is replacing an ‘End of life’ designed for the dump mindset. Landfill
mining for metals, such as aluminium, is increasingly becoming cost-effective.
Energy supply
In the International Energy Organisation
2010 projections, total world consumption of
marketed energy increases by 49% from 2007
to 2035. The largest projected increase in
energy demand is for non-OECD economies.
The floods in Queensland resulted in a 10%
increase in spot coking coal prices as Asia’s
steel mills scour the globe for new suppliers.
Depletion of natural
resources including
oil and gas
If we continue on a ‘business as usual’ path,
by 2050 we would need 2.5 times the natural
resources of earth. We currently take 20%
more than the earth can naturally replenish.
Water scarcity
The price of water could increase by 300% over
the next 20 years. Up to 7 billion people will face
water scarcity by 2050.
Biodiversity loss
The world could run out of seafood by 2048,
yet half of all the seafood caught in the North
Sea is thrown away and globally government
subsidies of over $15 billion a year play a major
role in creating the world’s fishing fleets so that
the global fishing fleets are 250% larger than
the oceans can sustainably support.
Environmental
Economic losses from climate-related disasters are already substantial, and they are
instability and capital on the rise. Insured losses alone have jumped from an annual US$5 billion to 27 billion
investment risks
over the last 40 years.
Peak Oil
As oil producing nations pass their peak, the amount they can extract decreases daily.
This means prices will rise at an increasing rate. Whilst this will increase the viability of
renewables, more expensive means of extraction become economically viable. There
is therefore an increasing risk of a trade-off between environmental damage and
economic necessity. Businesses must seek solutions and processes that enable them to
become less dependent upon fossil fuels.
Food Prices
Increasing population, together with increased appetite for meat coupled with
degraded land and soil erosion, will inevitably lead to food scarcity and increased food
prices. This will have knock on effects throughout the economy but will affect the
poorest most severely. Food prices in January 2011 are at their highest since 1900 due
to floods in Australia and may have been a factor in the unrest in Algeria.
If the decline in bees numbers continues, there
will be major implications for the pollination of
90% of commercial crops.
11
THREAT
FORCES/ Scarcity:
BUSINESS
EXAMPLES
Advanced Plasma Power
www.advancedplasmapower.com
Mines landfill, recycling half the rubbish and
converting the rest into renewable energy.
Getaround
www.getaround.com
Removing the need for car ownership and adding flexibility to mobility –
you rent other people’s cars – taking advantage of sitting stock.
InterfaceFlor
http://interfaceflor.com
Working towards zero waste, closed-loop
manufacturing cycle by taking back old used carpet
tiles from customers and recyclying them into new
carpet. All this without the use of toxic chemicals.
River Simple
www.riversimple.com
Aims for the elimination of the environmental impact
of personal transport, using hydrogen fuel cells.
Street Car
www.Streetcar.co.uk
Removing the need for car ownership and adding
flexibility to mobility.
TerraCycle
www.terracycle.net
Targets non-recyclable waste materials to turn them
into affordable, eco-friendly products. With over 50
products available at major retailers like Walmart,
TerraCycle is one of the fastest growing eco-friendly
manufacturers in the world. TerraCycle partners with
major FMCG companies such as Kraft Foods, Frito Lay
(Pepsi) to run free national collection programs that
pay schools and non-profits nationwide to collect used
packaging.
Unpackaged
www.beUnpackaged.com
Small London shop that offers no packaging at all
on any of its products – customers bring their own
containers.
A failure to use resources more
efficiently or to develop circular
or ‘cradle-to-cradle’ business
models will result in costs
increasing, profits decreasing and
thus a reduced competitiveness.
As legislation tightens around
resource efficiency, laggard
companies risk sanctions.
Enlightened consumers aware
of resource trends will seek
?
out products and business that
enable them to become more
sustainable whilst avoiding
businesses that are not changing.
This growing consumer
preference will reduce business
for conventional businesses.
Additionally, activists will
continue to seek to name and
shame companies seen to be
underperforming or wasting
resources.
KEY
QUESTIONS
• How can you radically reduce the carbon
intensity of your products?
• How could your business take advantage
of a zero waste approach and integrate the
whole lifecycle of your products into your
operations?
• How can your business operate without
negative environmental impacts? What would
need to change?
• How can your business increase its positive
social impact?
• How can you deliver your value proposition
without creating additional material products?
• How can you deliver your products and
services using no raw materials, only
resources recovered from partner
companies or other sectors?
FORCES/ Scarcity:
PREDICTIONS
Local markets
Currently global trade is
inefficient as a result of cheap
fuel. For example, the UK exports
the same amount of apples to
New Zealand as it imports. Much
of this unnecessary trade will
become superseded by local
alternatives.
Local production
Oil scarcity will change what is viable in
the global economy. Cheap fuel means
that employment costs are currently
the determining factor deciding where
products should be manufactured.
FOOTNOTES
1 Irvine, S., and Ponton, A., A Green Manifesto: Policies for a Green
Future, London, Macdonald Optima, 1988
2 Meadows, D., Randers, J., and Behrens lll, W., The Limits to Growth,
London: Pan, 1974
3 Wackernagel, M., Schulz, B., Deumling, D., Callejas Linares, A.,
Jenkins, M., Kapos, V., Monfreda, C., Loh, J., Myers, N., Norgaard, R.,
and Randers, J., ‘Tracking the ecological overshoot of the human
economy’, Proc. Nat. Acad. Sci, USA, 99(14): 9266- 9271. 2002
4 World-Wide Fund for Nature, Living Planet Report, Gland,
Switzerland, 2004.
5 Boulter, M., Extinction, Evolution and the End of Man, HarperCollins,
London, 2002
Cheap labour in the Far East has enabled
this region to dominate manufacturing.
But as wages rise in China and shipping
costs increase local manufacturing may
become competitive again.
Localism and quality
of life
Localism is presented as
a remedy for many social
challenges today. For example,
congestion, obesity and even
the collapse of the nuclear
family have all been presented
as curable by a return to vibrant,
local communities.
13
FORCES/ Protection:
resources and practices
no longer open to all
Natural services
and resources
will be protected
by new legal
frameworks and
communities
CONTEXT
In 2010 nations of the world
came together at COP 10 of the
Convention on Biological Diversity
(CBD) to face up to the fact that
our efforts to rein in the current
mass extinction crisis have
failed. If present trends continue
one half of all species of life on
earth will be extinct in less than
100 years as a result of habitat
destruction, pollution, invasive
species, and climate change.
Reducing the diversity of life on
earth effectively puts evolution
in rewind, taking us back to an
ecological period when humans
didn’t exist. This unravelling of
life’s rich tapestry destroys real
value that took millions of years
to create and shifts ecosystems
away from those which humans
are adapted to; we are consuming
our own ecological niche which
will leave us nowhere to live.
In large part, modern economies
are based upon linear processes
– one of ‘take, make, waste’.
Industry and corporations extract
natural resources and convert
them into products that are
bought by consumers and then
discarded as waste6. Nature
functions as both the source of
the materials and the sink for the
waste; both functions degrade.
Industrial systems have allowed
the accumulation of previously
unimagined quantities of human
capital. However, natural capital
is now declining – for example,
oil, forests, fisheries, soil and
a balanced atmosphere are all
under threat. As civil society,
government and business leaders
wake up to the immediacy of
the threat posed by a collapsing
biosphere, a widespread and
profound reassessment of the
values underpinning society,
the purpose of the corporation,
and the current predominant
economy is inevitable. This
reassessment will be enshrined
legally at the global level by
new global treaties such as the
Convention on Biological Diversity
with implications for national
legislation.
The scale of the challenge is so
great and the costs of failure
so big that customers want
companies to do more than
simply reduce their impact.
People expect leading businesses
to exert their power and influence
not to damage fragile ecosystems and the last remaining
wildernesses. Companies found
to trample over sensitive lands
and their people face a fierce
consumer backlash.
14
FORCES/ Protection:
Externalities being
incorporated into
supply chain costs
The World Bank established a new global
partnership in 2010 that will give developing
countries the tools they need to integrate the
economic benefits that ecosystems such as
forests, wetlands and coral reefs provide, into
national accounting systems.
The UK’s Carbon Reduction Commitment means
that large non-intensive users of electricity, who
were not covered by the European Union (EU)
Carbon Emission Trading Scheme, will now have
to pay more for their carbon footprint.
Increasing
legislation on
environmental,
social and
governance issues
A review by KPGM of mandatory and voluntary
sustainability reporting standards and
legislation in 30 countries has revealed that
both international and national standards,
codes and guidelines as well as legislation for
sustainability reporting have been evolving
strongly.
UK directors now need to have regard to
the impact of the company’s operations on
the community and the environment under
Companies Act 2006.
Johannesburg Stock Exchange now requires
integrated reporting by listed companies.
Cost of
transportation
As the cost of carbon emissions is introduced
into aviation and shipping, costs will increase.
Community
organisations
The Fish Fight campaign in the UK has attracted 646,652
supporters since November 2010 and claims to already be changing
British purchasing habits.
Biodiversity
The global economy has grown so large that it now requires more
from nature then it can sustainably provide. We live off nature’s
capital, not the ‘interest’ it annually produces as part of natural
bio-productivity. Every year we eat further into this capital and so reduce the biological
integrity of the planet as illustrated by WWF’s Living Planet Index. Whilst ecosystems
are in decline and their productivity is collapsing the human eco footprint is increasing.
Waste
The EU introduced the Waste Electrical and Electronic Equipment Directive which,
together with other Directives, sets collection, recycling and recovery targets for
all types of electrical goods. It imposes the responsibility for the disposal of waste
electrical and electronic equipment on the manufacturers.
‘State’ intervention
in supply chains
In January 2009, the gas disagreement between Ukrainian oil and gas company
Naftohaz Ukrainy and Russian gas supplier Gazprom over natural gas supplies, prices,
and debts, resulted in supply disruptions in many European nations. Eighteen European
countries reported major drops in or complete cut-offs of their gas supplies transported
through Ukraine from Russia.
Land grab
NGOs such as Grain are increasingly concerned by the acquisition of land by foreign
companies or states to secure food supplies for their own countries. According to the
Food and Agriculture Organisation (FAO) and others approved foreign land acquisitions
in Ethiopia, Ghana, Madagascar, Mali and Sudan, from 2004 to early 2009, were equal
to almost half the arable land of the United Kingdom and three times the arable
land of Norway.
Environmental
fines
Thanks to the web, public outcry and global visibility of environmental impacts/
accidents such as oil spillages or rainforest destruction, mean that environmental fines
will continue to increase as companies are held responsible for their direct and indirect
impacts. Bhopal remains a sad example of past mistakes for which companies were not
held sufficiently liable.
Water wars
Disputes over water rights are increasing, particularly at a state level where waters
are diverted for agricultural use or in hydroelectric schemes; for example: the TigrisEuphrates River Dispute between Syria and Turkey.
TOP LINE
TREND
DATA
15
FORCES/ Protection:
THREAT
Companies found to be operating
in ways which may be legal but
run counter to general opinion
concerning the protection
of the natural environment
and eco system services, find
themselves at risk of high-profile
attack by both the media and
pressure groups. Examples
?
•
•
•
•
•
•
include campaigns against several
multinational companies (on palm
oil, soya, tuna, tar sands, forced
removal of people from their land,
child labour) by groups such as
Greenpeace, Social Accountability
International and Survival
International and the increasing
use of shareholder activism.
KEY
QUESTIONS
Are your environmental impact measurement systems
sufficiently rigorous to meet the increasing requirements
from the law and customers?
Do you have the internal reporting systems to meet the
trend toward integrated reporting?
How could these trends impact on your supply chain?
How could your business be associated with a specific
geographical area or ecosystem that you could assume
stewardship for?
How could you use stewardship of a region, ecosystem
or species in your marketing as, for example,
Patagonia does?
Has your business started to plan to deal with the
increased competition for resources as emerging
economies try to emulate our standards of living?
OPPORTUNITY
People care deeply for the
natural world of which they
are a part. Nature is valued
extremely highly by people from
all countries and cultures around
the world. Whilst climate change
may currently be considered
the leading environmental
challenge, biodiversity loss
is a more fundamental crisis
because the loss is irreversible.
The loss of species has been
compared to ‘rivets dropping off
an aeroplane’7. The loss of a few
will not be catastrophic, but a
tipping point is reached where
the loss of a few more causes the
craft to fall out of the sky. Current
scientific knowledge does not
reveal exactly how many species
we can afford to lose, and so the
precautionary principle
is invoked8.
Aside from the macro issues
facing the decision makers of our
times, there are the sensibilities
of consumers to consider. No
parent wants to try and explain
to their children why the cheetah,
blue whale or gorilla became
extinct in their life time or why
an indigenous group was forced
from its traditional lands.
Companies implicated in any
way with species extinctions
can expect to be black listed
and reviled. In contrast, those
companies that are seen to be
protecting people and the natural
systems upon which we all
depend will be hailed as heroes of
the new economy.
“If all the beasts were gone, men
would die from a great loneliness
of spirit, for whatever happens
to the beasts also happens to the
man. All things are connected.
Whatever befalls the Earth befalls
the sons of the Earth.”
Chief Seattle (c. 1786 - 1866)
Co-operative Group
www.co-operative.
coop/corporate/
ethicsinaction/
takeaction/planbee/
Campaign – Plan Bee to address the decline in bees
by taking action on pesticides in its supply chain,
creating a research fund and inspiring people to
help bees in their gardens.
Innocent
http://grow.
innocentdrinks.co.uk
Innovative campaign – buy one, get one tree so that
over 86,000 trees will be planted to help communities in India.
Patagonia
www.patagonia.com/
eu/enGB/patagonia.
go?assetid=9158
Helping to create a new national park in Patagonia, Chile. In 2004,
former Patagonia CEO, Kristine Tompkins, bought the estancia through
the nonprofit foundation, Conservación Patagonica, with the aim of
restoring and permanently protecting it. Patagonia also founded the 1%
for the Planet Initiative.
BUSINESS
EXAMPLES
16
FORCES/ Protection:
PREDICTIONS
Greater spotlight
on companies
Surge in interest in
conservation
The realisation that the loss of
biodiversity represents the death
of the living fabric of our planet
will cause a surge of interest in
conservation. There will be a ‘hot
spot’ approach which aims to save
the areas of our planet that hold the
greatest number of species (often
tropical forests or coral reefs).
The spotlight will be on the way companies
interact with the natural world. (For example,
it is increasingly considered unreasonable
for companies to use animal imagery in
advertisements without making a contribution
towards the species protection). This fits broadly
into a growing sense that the rights of individual
species and eco systems are being overlooked
and should be built into legal and economic
frameworks. Current campaigns to make this a
reality include those behind Wildlaw and Ecocide –
the latter recently proposed at the UN
as the 5th Crime against Peace alongside
genocide, crimes against humanity, war
crimes and crimes of aggression.
Demands to pay
damages
FOOTNOTES
6 Hawken, P., Lovins, A., Lovins, H.,1999, Natural Capitalism: creating
the next industrial revolution, Little, Brown and Company, Boston,
1999
7 Lawton, J.H. ‘What do species do in ecosystems?’ Oikos 71: 367-374
1994.
8 http://en.wikipedia.org/wiki/Precautionary_principle
Governments’
increasing role in markets
Globally, national government
policy will increasingly drive
and determine the commodities
market as countries seek to
ensure supplies. Companies will
need to increase their ability to
respond to this.
Growth of Active
Shareholder Stewardship
Institutional investors and
individual shareholders will
increasingly use their powers to
encourage companies to manage
positively their impact on the
environment and society.
There will be increasing
calls for business to pay
for ecosystem services
and environmental or
social damage caused.
17
CONTEXT
FORCES/Transparency:
your business is
everybody’s business
Information
age leaves
companies
with no place
to hide
As environmental and social
awareness approaches a tipping
point, consumers want to have
confidence that brands have
a bullet-proof sustainable and
ethical approach. The ability of
consumers to understand how
a company operates and where
their products come from is
increasing all the time. This is
made easier by the rights of
public access to information
and the internet. Civil society
groups are quick to publish
damaging information about
corporate misdeeds. New online
functionality (such as Wikileaks)
further empowers internet
users to comment publicly on a
company’s performance.
Today, consumers, employees
and stakeholders are increasingly
engaged in ongoing, two-way
relationships with brands.
For example, the evolution of
the internet has meant that
popular brand websites listen
as well as talk. Indeed, for many
leading brands, user-driven
content makes up an increasing
component of their sites (for
example Howies, Timberland and
lush websites). The more ethical
a company, the more comfortable
it will be entering into a dialogue
with its customers.
Web 1.0 saw the development
of content. For brands this was
a new communication channel
with which to talk to consumers.
Web 2.0 saw the development
of web platforms on which users
can participate, upload, exchange,
share and generate content. For
brands this was an opportunity
to open a dialogue. Web 3.0
sees the devolution of content
management shift further
towards users. Increasingly, all
consumers will continuously
rate content, resulting in an
internet shaped by what people
value. Successful brands will
increasingly be co-created
by consumers.
Doing business on a networked
planet is different. It is becoming
harder for companies to operate
behind closed doors and realtime feedback on performance
means a slip-up can be costly.
A simple Google search of a
brand name quickly yields what
has been posted by satisfied or
unsatisfied consumers. There is
no hiding place for those wanting
to keep secrets about aspects of
their operations. Companies can
be globally shamed in minutes.
Transparency has therefore
become the golden rule for
successful operations.
18
© Creative Commons / Some rights reserved by amacedo
your business is
Campaigning
organisations using
social media
?
innovations. ‘Open’ companies,
those which have embraced
the new ways to communicate
with stakeholders, may be able
to respond to rapidly evolving
market places in the way that a
more traditional ‘closed’ company
may struggle.
KEY
QUESTIONS
• How are you managing reputational risks?
• How are you responding to customers’
demand for more but clearer product
information?
• What are you doing to educate your
investors?
• Have your shareholders tabled a
resolution on a sustainability issue?
• How far along your supply chain do you
take responsibility for? Could there
be concerns beyond your control?
(For example, if you buy commodities
might a proportion of this be from
unsustainable sources (e.g. palm oil)?)
TOP LINE
TREND
DATA
The Carbon Disclosure Project (CDP) and the Forest Footprint
Disclosure Project have both been established with the backing of financial
institutions. In the case of CDP, by 551 institutional investors, holding $71 trillion
in assets under management and 60 purchasing organisations such as Cadbury,
PepsiCo and Walmart.
OPPORTUNITY
For companies that have their
‘house in order’, transparency
is an opportunity to build new
and deeper relationships with
their employees, customers,
investors and suppliers. Open
source product and process
development can lead to major
A few of these organisations include Transparency International,
CEE Bankwatch Network, Tax Justice Network, Human Rights and
Business, Living Wage, and London Mining Network as well as well
known groups such as People and Planet, Greenpeace, Oxfam,
WWF and Christian AID – all of which use social media to the full.
The Forest Footprint Disclosure Project started in 2008. It is backed by 58 financial
institutions with over $5 trillion in collective assets under management, created to
help investors identify how an organisation’s activities and supply chains contribute
to deforestation.
Groups monitoring
company
performance
‘Whistle-blower organisations that don’t play by conventional rules of engagement
can increasingly easily access key information about corporate and government
behaviour. These are groups that can outsmart and outrun the best business’ hightech security measures.’ Gary McCormick, AOL (AOL News, 13 Dec 2010)
Labelling and
certification
The use of certified product labelling continues to grow with Fairtrade, Marine
Stewardship Council, the Soil Association and others’ labels now widely recognised by
consumers, with companies also increasingly providing carbon footprint information.
THREAT
The threat is clear. If businesses
are externalising costs that are
then carried either by society
or natural systems they take
on a major reputational risk.
Google’s stated aim is to make all
information available to everyone
everywhere. This evolution of the
internet changes the business
landscape forever. Increasingly
people are going to know exactly
what companies are doing and
seek to influence this where
possible, be this as a customer or
investor. Businesses can no longer
control information on their
organisation as they could
in the past.
19
your business is
© Creative Commons / Some rights
reserved by touring_fishman
Co-operative Group
www.co-operative.
coop/corporate
For consistently being a leader in transparent reporting to
investors and customers, in particular on issues such as reporting
on UN Equator Principles related project investments.
Kingfisher
www.kingfisher.com
It realises both the extensive environmental benefits and business
opportunities available from engaging and communicating with
customers on improving their impacts on the environment and has
invested in a wide range of eco-products in order to do this.
Marks and Spencer
Plan A
marksandspencer.com
Plan A aims to make the company the most sustainable major retailer. Through Plan
A, it is working with customers and suppliers to combat climate change, reduce waste,
use sustainable raw materials, trade ethically, and help customers to lead healthier
lifestyles. This includes further improvements in the traceability and transparency of
food by 2015.
Marshalls
www.marshalls.co.uk
It provides carbon footprint information on over 2000 of its domestic hard
landscaping products.
Nike
www.nikebiz.com
Aiming to introduce more transparency into its supply chain to improve workers’
rights in its suppliers’ factories by providing access to select contract auditing tools.
Patagonia
www.patagonia.com
Innovative use of the web and social media to communicate with its customers
including its Footprint Chronicles – an interactive mini-site that lets you track the
impact of specific products from design through to delivery.
Siemens AG
www.siemens.com
For their stance on bribery and corruption which includes a dedicated section on their
website. This includes establishing a fund with the World Bank totalling US$100 million
which will be distributed over the next 15 years to nonprofit organizations worldwide
that promote business integrity and fight corruption.
Starbucks
mystarbucksidea.
force.com/ideaHome
My Starbucks website (mystarbucksidea.force.com/ideaHome) allows customers to
give the company its ideas for new drinks and for other customers to vote on the
ideas.
BUSINESS
EXAMPLES
20
your business is
PREDICTIONS
Companies as the
solution
Increasingly corporations will
take on the role of solving
environmental challenges both
directly and through enabling
their customers.
Shared value
Blurring of
divisions
The dividing lines
between consumers,
employees and
suppliers will blur.
According to Michael Porter and Mark Kramer
(Harvard Business Review 2011),
’...The solution lies in the principle of shared
value, which involves creating economic value
in a way that also creates value for society
by addressing its needs and challenges.
Businesses must reconnect company success
with social progress. Shared value is not
social responsibility, philanthropy, or even
sustainability, but a new way to achieve
economic success. It is not on the margin
of what companies do but at the center. We
believe that it can give rise to the next major
transformation of business thinking.’
21
CONTEXT
FORCES/
Connectedness: instant
global communities
Yesterday’s
consumers are
now equipped
to redefine
your business
overnight
Communications technology
is creating a world where
people’s awareness of global
developments in ideas, politics
and popular aspirations is
growing in both speed and
reach. The very same tools
and technologies allow
communities to assemble
almost instantaneously (across
markets, across ages and political
divides) to influence or to
create alternatives to traditional
business, government and
community structures.
The increasing use of teleworking
and telepresence meetings
looks set to continue with over
two million of us doing it in
2002, twice the number in 1997,
according to Forum for the
Future. In addition, the Carbon
Disclosure Project believes that
business travel could be cut
with the use of telepresence,
removing nearly 5.5 million
metric tons of CO2 – the
greenhouse gas equivalent of
removing more than one million
passenger vehicles from the road
for one year.
Politics and social
media
The Obama campaign,
which made extensive use
TOP LINE
of social media, has been
TREND
heralded as having changed
DATA
political campaigning.
Facebook, twittering, emails
and web-based news have
all played a significant part in the political
unrest and regime change in the Middle East
in 2011.
Consumer pressure
groups
Social media will continue to make it easier
for people to bring pressure to bare on
companies. Avaaz is one example of this type
of online community.
Customers designing
the goods
The approach used by Local Motors, which
shows how a 8,000 strong on-line community
of potential customers can be involved and
contribute to the design of cars that they
also help to make, could be the way forward.
Reebok are looking at a similar approach.
Gap decided to retain its existing logo after
customers made it clear they did not like the
new design.
Disappearance of the
middleman
ICT, particularly in emerging economies, is
allowing small producers and small business
direct access to markets and customers.
Return of the leasing
business model
Globally there is a move away from direct
ownership to leasing of goods involving
everything from lifts in commercial buildings
to cars to power drills. This approach
combined with tracking technology could allow
manufacturers to retain control on scarce
resources at the end of a products’ life.
22
© Creative Commons / Some rights reserved by Razlan
Crowdfunding
FORCES/
global communities
OPPORTUNITY
THREAT
Small businesses are increasingly
finding it easier to compete with
large ones, with the internet and
web-based communities allowing
access to markets, suppliers
and funding. In addition, the
creation of new virtual global
marketplaces offers sizeable
business opportunities for
those companies with business
models flexible and nimble
enough to take advantage.
We are seeing the rise of the
virtual corporation. This is
a network of independent
companies (suppliers, customers,
even competitors) linked by
information technology to
share skills, costs, and access
to one another’s markets. This
structure allows companies to
come together quickly to exploit
rapidly changing opportunities.
In the concept’s purest form,
each company that links up
with others to create a virtual
corporation is stripped to its
essence9.
Social media, and in particular
twittering, which connects up
people, means that businesses
can no longer control information
on their organisation or products
as they could in the past, or
use the law to try to do so as
Trafigura’s failed attempt to use
a superinjunction gagging order
on The Guardian proved in 2010.
Recent campaigns against mining
and consumer goods companies
clearly demonstrate the power
of the internet and, in particular,
that of YouTube.
Increasingly companies and individuals will be able to use webbased platforms such as KickStarter to find new sources of
funding from large groups of individuals rather than traditional
sources such as banks or venture capitalists.
TOP LINE
TREND
DATA
Crowdsourcing
Through on-line communities even small businesses can access
global suppliers, customers or outsource its workforce.
Cloudcomputing
A study commissioned by Microsoft, and conducted by WSP and Accenture, reveals
that businesses choosing to run their applications through cloud computing can
reduce energy consumption and carbon emissions by a net of 30% or more,
compared to using traditional on-site server rooms.
Dematerialised
service provision
Manufacturers cease thinking of themselves as sellers of products and become,
instead, deliverers of service, provided by long-lasting, upgradable durables. Their
goal is selling results rather than equipment; performance and satisfaction rather
than components parts.
?
KEY
QUESTIONS
• How could your company take greater
advantage of the new forms of two-way
dialogue with employees and customers?
• How are you involving customers in
product design?
• How could you take full advantage of
the opportunities offered by virtual
markets?
• How could your next joint venture be a
virtual business?
• Could your company or one of your
suppliers be vulnerable to a negative
consumer campaign?
23
FORCES/
global communities
Alibaba
www.alibaba.com
Founded in 1999 in Hangzhou, China, it makes it easy for millions of buyers
and suppliers around the world to do business online so enabling even the
smallest business to benefit from globalisation. It is an on-line community
of more than 56 million registered users in more than 240 countries and
regions.
Amazon
Mechanical Turk
www.mturk.com
Gives businesses access to an on-demand scalable workforce while
providing ‘workers’ thousands of projects they can work on at their convenience. This provides
work opportunities for people in remote locations who can select and complete tasks at the
times they are free rather than depend on a job with a conventional employer.
Kickstarter
www.kickstarter.com
It is the largest funding platform for creative projects in the world. Every month tens of
thousands of people pledge millions of dollars to projects from the worlds of music, film,
art, technology, design, food, publishing and other creative fields bypassing traditional
funding sources. A project must reach its funding goal before time runs out or no money
changes hands.
One Block Off the
Grid
http://1bog.org
Organises group discounts on solar energy equipment for the home in order to make
the process more affordable and transparent for residential consumers, and to foster an
environment of community activism and responsibility. They help make the purchase less
financially and technically daunting while building a sense of local community around every
purchase.
Quirky
www.quirky.com
Since launching in 2009, Quirky has rapidly changed the way the world thinks about product
development. It brings two brand new consumer products to market each week, by enabling
a fluid conversation between a global community and Quirky’s expert product design
staff. For example, products do not go into production until it receives sufficient pre-order
commitments.
TripAdvisor
tripadvisor.co.uk
Travel website that gives customers the chance to provide reviews on hotels, restaurants,
flights etc.
Zilok
www.zilok.com
Platform that allows users to rent their belongings to other people, from cars to strollers,
fondue sets, Playstations and power drills. The service is open to both individuals and
businesses, and allows members to post things for hire. Through Zilok, people can avoid
accumulating superfluous purchases but can also make money from their current possessions
by listing them for others to rent.
BUSINESS
EXAMPLES
24
FORCES/
global communities
PREDICTIONS
Personal globalisation
It will not just be the large
corporations who outsource
to the emerging economies.
Individuals and small businesses
will do so increasingly. The oneman band in Devon could have a
PA in India and IT support
in Turkey.
Teleworking will increase
Access to business
intelligence
Knowledge networks such
as the Funded, which allows
entrepreneurs to rate venture
capitalists, will continue to shift
the balance of power away from
large organisations.
‘Non-material knowledge work will
become more intimately entailed
with computers and networks.
But when those networks reach
everywhere, location will not be a
competitive advantage.’
Dr John Gundry, Director,
Knowledge Ability Ltd
FOOTNOTES
9 Lawrence Gitma and Carl McDaniel The Future of Business: The
Essentials 2009
25
FORCES/ Values Shift:
decline of blind
consumerism
reserved by Chigmaroff
Industrial
capitalism
faces a tide
of disapproval
and disinterest
CONTEXT
Until very recently the planet
we live upon seemed enormous.
Humankind was limited not by
resources but by the technological
means by which to extract and
use them. Ever since the industrial
revolution, humans have strived to
develop the planet and add value to
people’s lives through the creation
of human capital. Huge gains have
been made for many in terms of
quality of life and lifespan. The
huge technological strides forward
have also driven population
growth. Today, up to 83% of the
global terrestrial biosphere is under
direct human influence10.
When nature was abundant
and humanity’s impact on it
immeasurably small (for most of
human history) it was natural for
humans to value the unrestricted
expropriation of natural resources.
A pioneer spirit underlined human
behaviour and thus humans have
spread around the world.
Humanity has now entered a
new era. Future human progress
depends not on extracting more
from nature but from ensuring
that the remaining natural
systems function well enough to
support the human population.
We are therefore experiencing a
widespread reassessment of the
values that underpin society. There
is a growing realisation that we
need to apportion more value to
natural systems and become aware
of the limitations and threats posed
by conventional economic growth.
During the industrial age there
has been an implicit assumption
that increases in human capital
correspond to increases in human
well-being. For this reason, GDP
has been used as the international
measure for national progress. GDP
increases as forests are razed and
fisheries depleted – it seems clear
that we need to re-evaluate our
measure of progress.
From a human perspective, it is not
growth per se that is important
but improvements in well-being.
There is an increasing trend to
integrate human well-being and
biological integrity in our values
systems, thereby re-orientating
our economies along sustainable
lines and creating a new measure
of progress more relevant for our
times.
A values shift can turn crisis
into opportunity. Corporations
that respond to the needs of our
age will find ways to help their
consumers reduce their impacts
and then actually contribute to
restoring natural systems.
To achieve a vibrant, productive,
positive and healthy society, we
can reduce the emphasis on
material acquisition, and develop
a ‘service and flow’ economy11. A
growing body of research reveals
that shifting focus to experiences,
relationships and meaningful
activities rather than material
gains will improve quality of life and
overall well-being, whilst easing
pressure on the environment12.
There is a huge opportunity for
companies to shift their focus from
shifting units of products to the
fulfilling of people’s psychological
needs and adding value to their
lives with positive ramifications
that ripple outwards from the
person into their communities and
their environments. Companies
can facilitate the return to local
vibrant communities and add value
by enabling consumers to engage
in low impact and enjoyable life
activities, such as sports, hobbies,
community activities. Business
has always been effective at
responding to demand. As values
shift markets so demand is
evolving from physical ‘things’
to lifestyle solutions that enable
a high quality of life without an
associated environmental impact.
A manifestation of values shift
is the reassertion of national
identities and the emergence of
pockets of fundamentalism.
26
Decreasing trust in
business
‘Being a public company means something different now than
it did when Milton Friedman claimed in 1970 that the social
responsibility of business is to increase its profits. Some four
decades later, we’ve moved from a shareholder to a stakeholder
world in which business must recast its role to act in the public’s
interest as well as for private gain.’ Richard Edelman in Edelman
Trust Barometer, 2009. A view that is reflected in Michael Porter
and Mark Kramer’s concept of Shared Value
Increasing empathy
globally thanks to the
power of the internet
and a greater awareness
of purchasing power
Millions watched the rescue of the Chilean miners. The growth of Fairtrade shows how
people are using their purchasing power to voice their concerns. Fairtrade’s explosive
growth in UK slowed during the recession in 2010 as British shoppers thought twice
about buying more expensive ethical products but overall, Fair-trade sales rose by
12% to an estimated £799 million.
Disparities in wealth
Inequality is higher in Organisation for Economic Cooperation and Development
(OECD) nations in 2011 than at any point in the last 20 years. Even the Managing
Director of IMF warns that this could lead to more unrest.
Sales of organic
produce
Organic products are now an established part of the British supermarket offering.
Although sales declined in 2010, the sector has seen tremendous growth since 1998
according to the Soil Association. The latest rolling 12 week sales trend is showed
a -1% decline on the same period last year (to 31 October 2010). They view this as
positive news reinforcing the view that the decline in the market has ‘bottomed out’.
Consumer
campaigns
The UK has a long tradition of consumer campaigns. Which? with 650,000 members, for
example, was established 50 years ago. However, the internet allows its reach, and that of
NGO run campaigns on palm oil, cocoa beans, child labour or blood diamonds etc, to be
wider, more immediate and potentially more damaging to corporate reputations.
Living wage
Consumer campaigns are not just directed overseas employment practices. London
Citizens’ Living Wage campaigns for a minimum wage paid by UK employers that
actually meets people’s basic needs, where the legal one does not.
decline of blind
consumerism
OPPORTUNITY
Companies and brands who are
perceived as embodying values
held dear by people can see
their consumers be transformed
into brand ambassadors. Brand
ambassadors will champion
a company’s products and
recommend it to their friends.
These people look for deeper
contact with the brand and can be
engaged in a relationship beyond
simply buying products. For
?
example, Howies sell sustainable
clothing but their website has
become a hub for young people
interested in outdoor pursuits and
the environment:
http://brainfood.howies.co.uk/
In a similar way Flora has become
a hub for people interested in
healthy lifestyles. This deeper
relationship with customers builds
brand loyalty and market share.
KEY
QUESTIONS
• Do your products or
services conflict with
emerging values?
• What impact could this
have on your business
model?
TOP LINE
TREND
DATA
Protests at corporate Shareholder activism is on the rise in both the USA and UK with organisations such
as Fairpensions in the UK and CERES in the USA tabling shareholder resolutions at
AGMs
AGMs. London Mining, Amnesty International and others increasingly use protests
and email campaigns outside AGMs to attract media coverage to a particular issue.
27
The People’s
Supermarket
Single small supermarket aiming to promote better food habits
and a greater sense of community. Members decide together on
supermarket stock and policies and all work four hours a month
to earn their member discount, keeping staff costs down in doing
so. They are then able to connect specifically with farmers to offer
cheaper, fresher produce as well as reinforce local links and pride.
TOMS Shoes
www.toms.com
Founded on a simple premise, with every pair of shoes purchased, TOMS will give a
pair of new shoes to a child in need. The TOMS’ mission transforms customers into
benefactors, which allows them to grow a sustainable business rather than depending
on fundraising for support. This programme is presented explicitly to buyers and
contributes to the image and success of the brand.
Unilever Shakti
www.unilever.com
Shakti was developed by Unilever to distribute their products in rural areas where
it was not economically possible. It aims to empower underprivileged rural women
by providing income generating opportunities. Women are trained to communicate
about and sell Unilever products in local communities. 45,000 Shakti entrepreneurs
now cover 3m customers in rural India and each of them now has a renewed positive
influence on their community.
Waitrose
www.waitrose.com
Consumers are consciously choosing to buy more local, seasonally produced food
from supermarkets. Motivated both by their wish to contribute financially to their
local market and to reduce the environmental impact (shipping fuel, refrigeration,
storage) their purchase choice has on the planet. But also through a desire to eat
more nutritious healthy food. Transition towns are another example of this localised
model. Waitrose has responded (to these changing consumer values) with its ‘Small
Producers’ Charter assuring smaller local suppliers that it is committed to growing a
fair and ethical long term relationship.
decline of blind
consumerism
THREAT
‘Consumers have not been told
effectively enough that they have
huge power and that purchasing
and shopping involve a moral
choice.’ Anita Roddick
Consumers are increasingly
realising that every pound spent
is a vote cast. As values change,
consumers are voting for brands
and companies that show they
are responding effectively to
the great challenges of our age.
?
There are a range of organisations
springing up to help consumers
align their values with brands
and products, for example, good
guide (http://www.goodguide.com)
and climate counts (http://www.
climatecounts.org).
Companies that are not well
rated by these websites will
suffer commercially compared to
competitors who better align to
shifting values.
KEY
QUESTIONS
BUSINESS
EXAMPLES
• How could your products and services be adapted
to provide greater social or environmental good?
• Do you have a product or service which can be
aligned to emerging values? For example, train
companies would not have traditionally advertised
themselves as ‘green’ but they are now and
emerging green preferences are an opportunity to
grow their business.
• How could your products or service be used
collaboratively and thus play a role in facilitating
the shift to local communities in which people
join forces to overcome local challenges? (For
example, could you shift from selling tools to
leasing community tool sheds?)
28
decline of blind
consumerism
Alignment of values
Companies that seem out of
touch with shifting values are
likely to see their market share
fall. In contrast, the companies
who align with their consumer’s
values will find the relationship
with these people deepen and
potential transform into a
two-way relationship.
Co-creation of
solutions
FOOTNOTES
11 Hawkens 1999
12 Brickman, P., & Campbell, D., ‘Hedonic relativism and planning the
good society’ in M.H.Appley (ed.), Adaptation Level Theory, pp287-305.
Academic Press, New York, 1971; Myers, D,. Diener, E,.‘The Pursuit of
Happiness’, Scientific American, 54-56; Kasser, T., 2002, The High Price of
Materialism, MIT Press, Cambridge, MA; 1996; Diener, E., and Seligman, M.,
‘Beyond Money: towards an economy of well-being’, Psycological Science
in the Public Interest, Vol. 5 issue 1, 2004; American Psychological Society,
Washington DC; Marks, N., Simms, A., Thompson, S., Abdallah, S., The Happy
Planet Index: An index of human well-being and environmental impact, nef
publishing, 2006; Sheldon, k., Lyubomirsky, S., ‘Achieving Sustainable Gains
in Happiness: Change your Actions, not your Circumstances’, Journal of
Happiness Studies, 2006
Leading brands will open
a dialogue with their
consumers and co-create
solutions to environmental
challenges.
PREDICTIONS
Consumer Choice
Consumers will increasingly make up
their own mind about where a company
stands on key social and environmental
issues, irrespective of whether
companies explicitly state their values or
not. They will make purchasing decisions
based on their perception, informed by a
new wave of online resources designed
to empower the consumer to make
enlightened purchasing choices.
29
COMPENDIUM/
Data & visual
evidence
30
Photographs © Creative Commons / All rights reserved by Gayle and j.o.h.n. walker
BALANCE
SHIFT
Population and economic
growth, as well as business
innovation will be dominated
by emerging markets
How will these changes impact
on your business model?
Who will be your employees
and customers of the future
and where will they be?
Top 10 economies by GDP in 2010
Population growth
Global economy in 2050
The world’s economic balance
of power is shifting dramatically.
By 2050, the United States and
Europe, long the traditional leaders
of the global economy, will be joined
in economic size by emerging
markets in Asia and Latin America.
China will become the world’s
largest economy in 2032, and grow
to be 20% larger than the United
States by 2050. Over the next forty
years, nearly 60% of G20 economic
growth will come from Brazil, China,
India, Russia, and Mexico alone
Source: Uri Dadush, Bennett Stancil ‘The G20 in 2050’
Carnegie Endowment for International Peace, International
Economic Bulletin, November 2009.
9 BILLION IN 2050
The global population, currently 6.8
billion, should increase to 7 billion
by 2012, 8 billion by 2025 and 9
billion by 2045. All this growth
will occur in developing countries
and primarily in towns, whilst
the population of all developed
countries (1.25 billion) should start
to decline towards 2030.
However, Britain will see its
population swell from today’s 62.2
million to 77 million, an increase
of 24%. This will make it bigger
than France and Germany. The
extra 15 million equates to the
combined populations of Glasgow,
Birmingham, Manchester, Leeds and
Liverpool being added to the total
national population over the next
two generations.
Source: Population Reference Bureau, 2010 World Population
Data Sheet, 2010 http://www.prb.org/pdf10/10wpds_eng.pdf
Source: Wikipedia based on IMF figures for 2010 – in US$.
Global economic power is shifting:
Top 10 economies by GDP in 2050
Source: WBCSD Vision 2050.
31
BALANCE SHIFT:
Population
GLOBAL PROJECTIONS FOR POPULATION GROWTH
Source: Foresight, UK Government, Land Use Futures, 2010 pg180 http://www.bis.gov.uk/assets/bispartners/foresight/docs/land-use/luf_report/8507-bis-land_use_
futures-web.pdf
Source: Lloyds Bank Group based on UN data 2010
Move to the city
By 2050, around 75% of the
world population will be living
in cities. In China alone, given
anticipated urbanisation rates,
around 10 to 15 million people
will move to cities each year
over the coming two decades.
Source: Nicholas Stern ‘China’s growth, China’s
cities, and the new global low-carbon industrial
revolution’ Centre for Climate Change Economics
and Policy and Grantham Research Institute on
Climate Change and the Environment Policy Paper,
November 2010.
By 2050, the number of city
dwellers who, for the first time
in 2008 outweighed rural
dwellers, will increase by more
than 3 billion to 70% of the
global population by the end
of the period and more than
85% in developed countries.
The countryside stands to lose
almost one billion inhabitants,
having peaked around 2020.
Source: Foresight, UK Government, Land Use Futures,
2010 pg180 http://www.bis.gov.uk/assets/bispartners/
foresight/docs/land-use/luf_report/8507-bis-land_use_
futures-web.pdf
32
BALANCE SHIFT:
Population
AGEING
The percentage of the global
population aged over 60 will
double, increasing from 11% in
2009 (8% in 1950) to 22% in
2050 – which, in absolute terms,
corresponds to a 3-fold increase
(740 million in 2009, 2 billion in
2050). However, this general ageing
of the population will be much more
marked in developed countries.
In Britain, from 2010 to 2050, the
population of those aged 0-14 is
predicted to fall from 30% to 20%.
The population of those aged 15-65
will be constant. The percentage of
65+ will rise from 10% to 20%.
Source: United Nations, Economic and Social Committee,
Commission on Population and Development, Demographic
Trends, 42nd session, April 2009.
The obesity crisis
If current trends continue, by 2050
about 60% of men, 50% of women
and 25% of children in the UK will
be clinically obese – so fat that their
health is in danger.
The analysis indicates that the
greatest increase in the incidence
of disease would be for type 2
diabetes (a >70% increase by
2050) with increases of 30% for
stroke and 20% for coronary heart
disease over the same period.
According to the HM Treasury,
‘it is estimated that obese and
overweight individuals currently
cost the NHS £4.2 billion, and that
this will double by 2050’.
One in 10 of the world’s adults is
obese, according to a joint UK-US
study published in The Lancet In
2008, 9.8% of men and 13.8% of
women in the world were obese...
This is compared with 4.8% for
men and 7.9% for women in 1980.
Source: BBC News 4 Feb 2011 http://www.bbc.co.uk/news/
health-12357385
Change of diet
In 2050 diets will have changed
with increasing affluence, leading to
a much increased demand for food.
At the same time, the food supply
may be threatened as agriculture
will have to compete with industry
and municipal uses for energy and
water. Climate change will also have
adverse impacts on production in
some areas.
Sources: Foresight, Tackling Obesities: Future Choices –
Project Report http://www.bis.gov.uk/assets/bispartners/
foresight/docs/obesity/17.pdf
Isobel Tomlinson, BBC News Online, Food figures need a
pinch of salt http://news.bbc.co.uk/1/hi/sci/tech/8946555.
stm based on 2006 report from the UN Food and Agriculture
Organization (FAO) August 2010.
The projections reflect a continuing
pattern of structural change in
the diets of people in developing
countries with a rapid increase
in livestock products (meat, milk,
eggs) as a source of food calories.
Moreover it is predicted that there
will still be 290 million undernourished people worldwide
in 2050.
Sources: NHS – Health survey for England trend tables 2008
& statistics on obesity, physical activity and diet, 2010.
33
BALANCE SHIFT:
Population
Sexual health
UN data suggest that meeting the
unmet need for family planning
would reduce unintended births
by 72%, reducing projected
world population in 2050 by half
a billion to 8.64 billion. The UN
estimates that nowadays 40%
of all pregnancies worldwide are
unintended. Fewer than 20% of
sexually active young people in
Africa use contraception. Barriers
include insufficient knowledge,
fear of social disapproval and side
effects, and misperceptions about
the partner’s opposition.
Source: http://www.optimumpopulation.org/releases/opt.
release09Sep09.htm
Weekly food baskets of an
Ecuadorian family and one from
the USA.
Source: Peter Menzel/ Impact Photos via
Lloyds Banking Group
34
LITERACY
BALANCE SHIFT:
Education
Opportunity to change global
literacy levels over the next 40
years?
UNESCO announced that there
were 900 million illiterates in
developing countries, representing
nearly 25% of the world’s youth
and adults. Largely ignored was the
fact that nearly a quarter of 16 to
65-year-olds in the world’s richest
countries are functionally illiterate.
In Britain, the latest Organisation
for Economic Cooperation and
Development (OECD) study on 16 to
65-year-olds, finds that 22% of the
population in England and Wales is
functionally illiterate compared to
25% in Ireland and 20% in France,
but still out performed the USA.
[The OECD defines a person as
functionally illiterate if they cannot
engage in all those activities in
which literacy is required for
effective functioning of their
group and community and also for
enabling them to continue to use
reading, writing and calculation
for their own and the community’s
development.]
There were 72 million children out
of school in 2007. Business as usual
would leave 56 million children out
of school in 2015.
UNESCO, Highlights of the EFA Report 2010, http://www.
unesco.org/new/fileadmin/MULTIMEDIA/HQ/ED/GMR/pdf/
gmr2010/gmr2010-highlights.pdf
http://warriorlibrarian.com/CURRICULUM/global_literacy.html
Millions of children are leaving
school without having acquired
basic skills. In some countries in
sub-Saharan Africa, young adults
with five years of education had a
40% probability of being illiterate...
This contrasts with China’s
ambitions.
Sources: Increased educational attainment and its effect
on child mortality in 175 countries between 1970 and 2009:
a systematic analysis, E.Gakidou, K. Cowling, R. Lozano, CJL
Murray, 2010;
UNIVERSITY EDUCATION
IN CHINA
The number of new students in
the higher education system has
increased over ten-fold, from
about 400,000 in 1978 to nearly
4.5 million in 2004. In 2004, the
majority of China’s postgraduate
students have studied either
engineering (38.8%) or science
(12.5%). One planned outcome is
that the share of those with higher
education in the workforce is due
to increase almost 10 times from
4.66% in 2001 to 44% in 2050.
Source: Chinese Education and Society, 38:4, July-August
2005, p. 14.
But at the same time, the
increase in an educated middle
class is a global phenomenon
which brings its own resources
challenges.
Growth of the middle class?
Source: UNESCO, Institute
of Statistics, http://stats.
uis.unesco.org/unesco/
TableViewer/tableView.
aspx?ReportId=201
Goldman Sachs estimates that
some 1.7 billion people today can
be considered middle class – with
incomes between US$6,000 and
US$30,000 in purchasing power
parity terms; this figure is likely
to reach 3.6 billion by 2030, with
most of this growth in emerging
economies...Unless these new
consumers and the existing ones
choose the right products, and
use them properly, it will be hard
to achieve the vision of 9 billion
people living well, within the limits
of one planet.
Source: WBCSD Vision 2050
35
ENERGY
SCARCITY:
Energy
Can you
reduce the
carbon intensity
of your
products?
The scale of improvement
required is daunting. In
a world of nine billion
people, all aspiring
to a level of income
commensurate with 2%
growth on the average
EU income today, carbon
intensities (for example)
would have to fall on average by
over 11% per year to stabilise the
climate, 16 times faster than it has
done since 1990. By 2050, the
global carbon intensity would need
to be only six grams per dollar of
output, almost 130 times lower than
it is today.
Source: Tim Jackson, Sustainable Development, Prosperity
without Growth: the transition to a sustainable economy
www.sd-commission.org.uk, 2009.
WikiLeaks cables: Saudi Arabia
cannot pump enough oil to keep a
lid on prices
US diplomat convinced by Saudi
expert that reserves of world’s
biggest oil exporter have been
overstated by nearly 40%.
The US fears that Saudi Arabia, the
world’s largest crude oil exporter,
West Africa
North Africa
North Africa
Middle East
Middle East
Former Soviet Union
Europe
South & Cent
America
Mexico
Canada
The cables, released by WikiLeaks,
urge Washington to take seriously
a warning from a senior Saudi
government oil executive that the
kingdom’s crude oil reserves may
have been overstated by as much
as 300bn barrels – nearly 40%.
Jeremy Leggett, convenor of the
UK Industry Taskforce on Peak Oil
and Energy Security, said: ‘We are
asleep at the wheel here: choosing
to ignore a threat to the global
economy that is quite as bad as the
credit crunch, quite possibly worse.’
Source: The Guardian, John Vidal, environment editor 8
February 2011 http://www.guardian.co.uk/business/2011/
feb/08/saudi-oil-reserves-overstated-wikileaks
Where do we buy it from? Oil import dependency: security of supply
West Africa
may not have enough reserves
to prevent oil prices escalating,
confidential cables from its
embassy in Riyadh show.
Former Soviet
Union
Middle East
Europe
USA
West Africa
USA
Other Asia Pacific
Singapore
India
China
West Africa
Middle East
West AfricaMiddle East
Other Asia Pacific
Middle East
Middle East
Middle East
Source: BP Statistical Review of
World Energy 2010.
36
SCARCITY:
Energy
Where is our planet’s
supply? Oil reserves:
security issues amplified
Source: BP Statistical Review of World Energy 2010.
Is gas any more secure?
Source: BP Statistical Review of World Energy 2010.
Steel mills face higher costs
after Australia coal mines
flood Spot coking coal prices
have risen around 10% in a
month and look set to move
sharply higher as Asia’s steel
mills scour the globe for new
suppliers to cover production
lost to Australian floods.
Source: Reuters 4 January 2011 http://uk.reuters.
com/article/2011/01/04/uk-australia-floods-coalidUKLNE70300B20110104
What
can happen if
you are too
reliant on
one source of
energy!
Source: http://www.
theglobeandmail.
com/report-onbusiness/industrynews/energyand-resources/
australias-massivefloods-create-globalsupply-problemsfor-coal/
37
SCARCITY:
Renewable energy
Could renewable
energy meet the
world’s energy
needs and provide
energy security?
Source: WWF, The Energy Report: 100% Renewable by 2050, 2011 http://wwf.panda.org/what_we_do/footprint/climate_carbon_energy/energy_solutions/renewable_energy/sustainable_energy_report/
Could schemes like the
European Supergrid offer a
viable idea to address access
to electricity issues, not just in
Europe but also in Africa?
Source: The Globe and Mail, 3 February 2011 http://www.theglobeandmail.
com/report-on-business/industry-news/energy-and-resources/the-wwfsscenario-for-an-all-renewable-energy-world-by-2050/article1892326/
European Supergrid
If we are to reduce carbon
emissions by 80% then all of this
increased demand will have to be
met by renewable energy. Existing
coal, oil and gas generation
will have to be phased out –
completely. By 2030 there will
be no more fossil fuel plants built
in Europe. New build will consist
mainly of renewables. By 2050, all
of Europe’s electricity could come
from zero carbon sources. Already
we can see that trend develop,
with more wind energy installed in
Europe in 2008 and 2009 than any
other form of electricity generation.
If we are to fully exploit these
renewable resources, and deliver
power on a continental scale,
then the energy sector has to
significantly reduce investment
costs through a whole series of
innovations, from plants design
to voltage source technology.
In offshore wind, scale will come
from combining large clusters of
simplified turbines into wind-fired
power stations. These stations are
the modules on which the Supergrid
will be built.
Source: Friends of the Supergrid, http://www.
friendsofthesupergrid.eu/europes-opportunity.aspx
38
SCARCITY:
Minerals
Rare Earth Metals: how vital are they to your supply chain?
Source: International Energy Agency, United Nations Development Programme, United Nations Industrial Development
Organisation Energy Poverty: How to make modern energy access universal 2010 http://www.worldenergyoutlook.org/
docs/weo2010/weo2010_poverty.pdf
Recycling mining waste
Mining waste can recapture
materials and reduce the demand
for raw resources. For example,
aluminum product recycling rates
are currently quite high, but only
10% of aluminum foil is recovered
and recycled. With the global
aluminium foil market at around
2.8 million tonnes, the opportunity
to recover foil is worth US $5.6
billion, at US$ 2,000 per tonne. As
new materials become increasingly
scarce and environmentally costly,
economics will encourage the
recovery of landfill waste and
by-products such as methane gas.
As a zerowaste mindset replaces an
‘end of life’ mentality, there will be
many opportunities for recycling,
including specialized systems for
collecting the usable components
of discarded waste and separating
them according to demand for
materials.
Source: WBCSD Vision 2050
Source: IMCOA, Roskill, CREIC and Rare Earth Industry Stakeholders, in Dudley J Kingsnorth, Industrial Minerals Company of Australia Pty
Ltd, Rare Earths: Facing New Challenges in the New Decade, 2010
39
SCARCITY:
Minerals
And with the relative
slowness of new
reserves coming on
line, this means that
prices have risen
sharply
Source: Dudley J Kingsnorth.
40
SCARCITY:
Biodiversity
BIODIVERSITY
In collaboration with the Global
Footprint Network, WBCSD
calculated the Vision 2050
ecological footprint against
business-as-usual. They found
that by 2050, despite increases in
population, humanity will be using
the equivalent of just over one
planet, based on the changes we
embrace in Vision 2050, as opposed
to the 2.3 planets we would be using
if we continued on the business-asusual path we are on today.
Source: WBCSD Vision 2050, http://www.wbcsd.org/DocRoot/
r62qLFi6d7uv4GCCu8sw/Vision_2050_FullReport_040210.pdf
Had you ever
thought about the
importance of bees
to the agricultural
supply chain?
Decline in the
number of bees
The abundance
of four common
species of
bumblebee in the
US has dropped
by 96% in just the
past few decades,
according to the most
comprehensive national
census of the insects. Scientists
said the alarming decline, which
could have devastating implications
for the pollination of both wild and
farmed plants, was likely to be a
result of disease and low genetic
diversity in bee populations...Bees in
general pollinate some 90% of the
world's commercial plants, including
most fruits, vegetables and nuts.
Coffee, soya beans and cotton are
all dependent on pollination by bees
to increase yields. It is the start of
a food chain that also sustains wild
birds and animals.
Source: Alok Jha ‘Bees in freefall as study shows sharp US
decline’ The Guardian, 3 January 2011
http://www.guardian.co.uk/environment/2011/jan/03/
bumblebees-study-us-decline?INTCMP=SRCH
Source: BIS Foresight – Land Use Futures 2010.
41
SCARCITY:
Marine Stocks/Water
MARINE STOCKS
The United Nations FAO estimates
that 11 of the world’s 15 major
fishing areas, and 69% of the
world’s major fish species, are
in decline and in need of urgent
management.
• One billion people rely on fish
as an important source of
protein.
• An international group of
ecologists and economists
warned that the world will run
out of seafood by 2048.
• 1% of the world’s Industrial
fishing fleets account for 50%
of the world’s catches.
• Government subsidies of over
$15 billion a year play a major
role in creating the world’s
fishing fleets.
• The global fishing fleets are
250% larger than the oceans
can sustainably support.
•Over the past 50 years
World consumption of
Around half of the fish
tuna has increased
caught by fishermen in the
tenfold, from 0.4
North Sea are unnecessarily
million to over 4 million
thrown back into the ocean dead
tonnes.
Sources: End of the Line, Fish Facts,
Source: Fish Fight Campaign,
http://endoftheline.com/campaign/
http://www.fishfight.net/2011
fish_facts
Marine Stewardship Council, Environmental
Impact, http://www.msc.org/healthy-oceans/theoceans-today/environmental-impact
WATER SCARCITY
A number of scenarios have been
developed based on the most
recent UN population projections.
According to the most alarming
projection, nearly 7 billion in 60
countries will face water scarcity
by 2050. According to the lowest
projection, under 2 billion people in
48 countries will face water scarcity
by 2050.
by the year 2025, it is estimated
that nearly 230 million Africans will
be facing water scarcity, and 460
million will live in water-stressed
countries.
Source: UNESCO, Water and the Future, http://unesco.uiah.fi/
water/material/06_water_and_future_html
Sources: WBCSD Vision 2050, http://www.wbcsd.org/
DocRoot/r62qLFi6d7uv4GCCu8sw/Vision_2050_FullReport_040210.pdf
OECD: Organisation for Economic Co-‐operation and Development BRIC: Brazil, Russia, India And China
ROW: Rest of World
Water scarcity will not hit all regions
the same way. Over the next two
decades, population increases and
growing demands are projected to
push all the West Asian countries
into water scarcity conditions.
North and Sub-Saharan Africa are
the other regions most threatened:
Could
overseas water
scarcity
impact on your
supply chain?
Source: AK Chapagain and S Orr (2008) in UK
Government Foresight Land Use Futures 2010
42
SCARCITY:
Water scarcity
Growth
areas designated
by government as areas
for increased housing and
employment in England
despite being areas of water
scarcity and
prime agricultural
land.
Could your
business be
vulnerable to water
scarcity even in
the UK?
Cost of fresh water to rise dramatically
Source: Ordnance Survey based on maps from WaterUK
and in Foresight Land Use Futures.
According to ING ‘Global demand for fresh water
will increase due to rising populations, increasing
per capita consumption and urbanisation. We
forecast a bigger supply-demand gap in the
coming 20 years, which means the price of water
could increase by 300% over this period.’
Source: Gerard Rijk, Food and Beverages analyst, ING Commercial Banking, Equity
Markets in SalterBaxter Directions 2010
43
PROTECTION:
Resource consumption
Land grab
Today’s food and financial crises
have, in tandem, triggered a new
global land grab. On the one hand,
‘food insecure’ governments that
rely on imports to feed their people
are snatching up vast areas of
farmland abroad for their own
offshore food production.
On the other hand, food
corporations and private investors,
hungry for profits in the midst of
the deepening financial crisis, see
investment in foreign farmland
as an important new source
of revenue. As a result, fertile
agricultural land is becoming
increasingly privatised and
concentrated. If left unchecked, this
global land grab could spell the end
of small-scale farming, and rural
livelihoods, in numerous places
around the world.
Source: GRAIN, The 2008 land grabbers for food
and financial security, http://www.grain.org/
Foreign
briefings/?id=212
acquisition of land –
a new potential human
rights risk to your
supply chain?
How much land is
at stake?
A quantitative
inventory of five
African states (Ethiopia,
Ghana, Madagascar,
Mali and Sudan) compiled
by the International Institute for
Environment and Development
(IIED), the Food and Agriculture
Organisation (FAO) and the
International Fund for Agriculture
and Development (IFAD),
documented a total of 2,492,684
hectares of approved foreign land
acquisitions from 2004 to early
2009. That is almost half the arable
land of the United Kingdom and
three times the arable land
of Norway.
Source: UN, Sustainable Development Innovation Briefs no
8: ‘‘Foreign land purchases for agriculture: what impact on
sustainable development?’, 2010 http://www.un.org/esa/dsd/
resources/res_pdfs/publications/ib/no8.pdf
India and China buying land
abroad for food production
In September 2008, news emerged
that 14 Indian vegetable oil
companies, including Ruchi Soya
and KS Oils, formed a consortium to
buy large tracts of land abroad for
production of soybeans, sunflowers
and pulses, to overcome the high
costs of domestic production.
The group is negotiating with the
governments of Burma, Paraguay
and Uruguay for land leasing
or acquisition...further offers
are coming in from Brazil and
Argentina.
China has a number of projects
in the pipeline to produce food
in the Philippines, under various
land leasing or concessionary
arrangements. In 2007, the
Philippine government signed
18 deals with Beijing that grant
Chinese companies, such as
telecoms giant ZTE, access to
1.24m ha of Philippine land to grow
these crops, some of it for food
and some for energy production...
The agreements were immediately
perceived as China outsourcing
its food and fuels production and
after much social protest they were
temporarily ‘suspended’.
Source: GRAIN 2008, The 2008 land grabbers for food and
financial security http://www.grain.org/briefings/?id=212
200 million people may be on
the move each year by 2050
because of hunger, environmental
degradation, and loss of land.
Source: Oxfam, Briefing Paper 130, Suffering the Science:
Climate change, people and poverty, July 2009
http://www.oxfam.org.uk/resources/policy/climate_change/
downloads/bp130_suffering_science.pdf
Climate scientists warn that
the world is heading for war
of the resources
Scientists fear that temperature
rises above 2oC would lead to
wars over key resources, including
water supplies, falls in crop yields
in southern Europe and the spread
of diseases such as malaria and
dengue fever.
Source: Lewis Smith, Environment Reporter, ‘Climate
scientists warn that the world is heading for war of the
resources’, The Times March 9, 2009 http://www.timesonline.
co.uk/tol/news/environment/article5870702.ece
44
Environmental instability
PROTECTION:
FLOOD RISK
Central London showing the extent of the Environment Agency’s
polygon for extreme flood from rivers or sea (1 in a 1000 chance of
occurring in any year), if there were no flood defences.
Source and copy: Ordnance Survey 2011 based on Environment Agency data
Insured losses
Economic losses from climate-related
disasters are already substantial, and
they are on the rise. Insured losses
alone have jumped from an annual
US$5 billion to 27 billion over the last
40 years.
Source: SwissRE, Weathering Climate Change, 2011 http://www.
swissre.com/rethinking/climate/Weathering_climate_change.html
Association of British insurers’
figures highlight the huge financial
cost of flooding:
• Since 2000 insurers have paid
out £4.5 billion to customers
whose homes or businesses
have been hit by flooding. This
is up 200% on the £1.5 billion
paid in the previous decade in
real terms.
•
Major floods since 2000 have
included the 2007 summer
flooding which resulted in
insurers paying out £3 billion, the
2005 floods in Carlisle that cost
£272 million, and the Cumbrian
floods in November 2009
costing £174 million.
Queensland premier estimates
clean-up will cost more than £3bn
Source: The Guardian Flooded Brisbane ‘like a war zone’
13 January 2011 http://www.guardian.co.uk/world/2011/jan/13/
flooded-brisbane-war-zone-queensland
45
PROTECTION:
Transport
TRANSPORT WITHIN THE
SUPPLY CHAIN
Shipping and climate change
Today, ocean-going vessels
transport 90% of all trade
by volume to and from the
25 members of the European
Community (EC), and nearly 80%
by weight of all goods shipped
in and out of the United States
(EC 2006, US DOT 2003). Over
the last three decades, activity
in the marine shipping sector, as
measured in metric ton-kilometers,
has grown on average by 5%
every year...Since emissions from
ocean-going vessels have only
been moderately controlled, this
growth has been accompanied by
a commensurate increase in the
sector’s contribution to local and
global air pollution...Currently,
carbon dioxide (CO2) emissions
from the international shipping
sector as a whole exceed annual
total greenhouse gas emissions
from most of the nations listed
in the Kyoto protocol as Annex I
countries (Kyoto Protocol 1997).
Source: The International Council on Clean Transportation,
Air Pollution and Greenhouse Gas Emissions from Oceangoing Ships: Impacts, Mitigation Options and Opportunities
for Managing Growth, 2007 http://www.agati.com/images/
about_agati/Ocean_Freight_Pollution.pdf
International shipping provides the
overall lowest carbon intensity for
long haul transportation...in 2007
international shipping emissions
were estimated to be 870 million
tonnes of CO2. This is 2.7% of
all global emissions. Mid-range
projections indicate that without a
concerted policy approach this will
increase between 150% and 250%
by 2050.
As other sources of CO2 are
stabilized and reduced, for
example through the EU ETS,
the relative contribution from an
unabated shipping industry will
proportionately increase putting
even great pressure to act.
The cost implications for
international shipping and the price
of transported commodities will
vary dependent upon fuel prices
and the cost of carbon at any
given time...The modelled impact
of the additional transport costs
on the price of goods was 1% for
agricultural, 2-3% for ores and coal,
0.4% for crude oil and 0.4-0.8% for
manufactured goods.
Source: KPMG Shipping Insights Issue 3, 2010 http://www.
kpmg.com/SG/en/IssuesAndInsights/ArticlesPublications/
Documents/IGH_ShippingInsights3_201010.pdf
POLITCAL INSTABILITY
INDEX 2010
Source: Economist Intelligence Unit, Political Instability
Index 2009/10, http://viewswire.eiu.com/site_info.asp?info_
name=instability_map&page=noads
46
PROTECTION:
Supply chain
How
secure is
your supply
chain?
Building the supply chain of
the future
‘Getting there means ditching
today’s monolithic model in
favor of splintered supply
chains that dismantle
complexity, and using
manufacturing networks to
hedge uncertainty.
Many global supply chains are not
equipped to cope with the world we
are entering. Most were engineered,
some brilliantly, to manage
stable, high-volume production by
capitalizing on labour-arbitrage
opportunities available in China and
other low-cost countries.
But in a future when the relative
attractiveness of manufacturing
locations changes quickly – along
with the ability to produce large
volumes economically – such
standard approaches can leave
companies dangerously exposed.
That future, spurred by a rising tide
of global uncertainty and business
complexity, is coming sooner than
many companies expect. Some of
the challenges (turbulent trade
and capital flows, for example)
represent perennial supply chain
worries turbocharged by the
recent downturn. Yet other shifts,
such as those associated with the
developing world’s rising wealth
and the emergence of credible
suppliers from these markets, will
have supply chain implications
for decades to come. The bottom
line for would-be architects of
manufacturing and supply chain
strategies is a greater risk of
making key decisions that become
uneconomic as a result of forces
beyond your control...’
Source: Yogesh Malik, Alex Niemeyer, and Brian
Ruwadi, McKinsey Quarterly, ‘Building the supply
chain of the future’, January 2011 http://www.
mckinseyquarterly.com/Building_the_supply_chain_
of_the_future_2729
Externalities being
incorporated into supply
chain costs
The World Bank announced a new
global partnership that will give
developing countries the tools they
need to integrate the economic
benefits that ecosystems such as
forests, wetlands and coral reefs
provide, into national accounting
systems.
The goal is to introduce the
practice of ecosystem valuation
into national accounts at scale
so that better management of
natural environments becomes
‘business as usual’. The Global
Partnership for Ecosystems and
Ecosystem Services Valuation
and Wealth Accounting builds on
the United Nations Environment
Programme project ‘The Economics
of Ecosystems and Biodiversity’
(TEEB). Among other things, TEEB
programme concluded that the
‘invisibility’ of many of nature’s
services to the economy results
in widespread neglect of natural
capital, leading to decisions that
degrade ecosystem services
and biodiversity. It advises that
ecosystems services worth
$2-5 trillion are being lost
every year. Global fisheries
are reportedly now producing
$50 billion less per year than
they could and the global economy
is losing more money from the
disappearance of forests than
through the current banking crisis.
Source: News @Worldbank 28 Oct 2010 http://web.worldbank.
org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22746592~pageP
K:64257043~piPK:437376~theSitePK:4607,00.html
Are you
allowing for these
increased costs to doing
business?
Will you still be able to
source the same raw
materials?
47
Move to company
reporting integrating
Do you
financial and
have the internal
environmental,
reporting systems to
social and
governance issues
meet the trend
Over the last years [from
2006] the regulatory
landscape has evolved
substantially in all parts of the
world. More codes and regulatory
measures are now available in more
countries. A review of mandatory
and voluntary sustainability
reporting standards and legislation
in 30 countries has revealed that
both international and national
standards, codes and guidelines as
well as legislation for sustainability
reporting have been strongly
evolving. The increasing number
of reporters seems to go hand in
hand with an increasingly dense
regulatory network of international
and national standards, codes and
guidelines as well as legislation for
sustainability reporting...
PROTECTION:
Reporting
towards integrated
reporting?
...However, there are a few general
trends to be discerned. The first
is a stronger role for the state
in its regulatory role, to ensure
a minimum level of disclosure
and risk prevention. The second
is an emerging emphasis on a
combination of (complementary)
voluntary and mandatory
approaches and the third emerging
trend is one of integration,
resulting in a combination of
corporate governance, financial and
sustainability reporting into one
reporting framework.
Source: KPMG, Global Reporting Initiative, UNEP, Unit
for Corporate Governance in Africa Carrots and Sticks
– Promoting transparency and sustainability an update
on trends in voluntary and mandatory approaches to
sustainability reporting 2010.
Johannesburg Stock Exchange
requires integrated reporting
...Starting on June 1, 2010, all
450 companies listed on the
Johannesburg Stock Exchange
will be required to publish an
‘integrated report’ or explain why
they are not doing so.
http://www.world-exchanges.org/news-views/views/
integrated-reports-voluntary-filing - _ftn1
The press release announcing the
formation of the IRC [Integrated
Reporting Committee] noted
that it ‘will work with the new
International Integrated Reporting
Committee (IIRC) in promoting the
international harmonization of
guidelines on integrated reporting.
The IIRC is a global collaboration
that includes IFAC (International
Federation of Accountants), the
Global Reporting Initiative (GRI),
and the Prince’s Accounting for
Sustainability Project among many
other organizations.’
Integrated reporting is based on a
view of the corporation as having
a role in society that is broader
than creating short-term wealth for
shareholders. Wealth creation must
be done with a long-term view that
recognizes the impact a company’s
operations have, both positively and
negatively, on the environment and
society. This requires appropriate
principles of corporate governance,
which also need to be reported on
in the integrated report, and that
‘The board should ensure that the
company is and is seen to be a
responsible corporate citizen.’
South Africa is the first country to
mandate integrated reporting for
all listed companies. We believe
that every major capital market
must follow its lead soon, and that
ultimately this needs to be the
universal global practicee.
Source: Robert G. Eccles and Mervyn King, Integrated
Reports Voluntary Filing 2010
www.world-exchanges.org/news-views/views/integratedreports-voluntary-filing
a. the likely consequences of any
decision in the long term,
b. the interests of the company’s
employees,
c. the need to foster the
company’s business
relationships with suppliers,
customers and others,
d. the impact of the company’s
operations on the community
and the environment,
e. the desirability of the company
maintaining a reputation for
high standards of business
conduct, and
f. the need to act fairly as
between members of the
company.’
Source: UK Companies Act 2006 www.legislation.gov.uk/
ukpga/2006/46/part/10/chapter/2/crossheading/the-generalduties
Company Directors in the UK to
be held more accountable
‘A director of a company must act in
the way he considers, in good faith,
would be most likely to promote
the success of the company for
the benefit of its members as a
whole, and in doing so have regard
(amongst other matters) to:
48
PROTECTION:
Food security
Communities taking action
Source: www.fightfight.net
World food prices at fresh
high, says FAO
World food prices rose to a record
high in January, according to
the UN’s Food and Agricultural
Organization (FAO).
The FAO Food Price Index, which
measures the wholesale price
of basic foods within a basket,
averaged 231 points last month – its
highest level since records began
in 1990...The Cereal Price Index
averaged 245 points in January
reflecting rises in the price of wheat
and grain. This was driven higher
by flooding in Australia, which is a
major wheat exporter...
The high price of food is thought
to have been a factor in recent
political unrest in both Algeria
and Tunisia in the form of antigovernment demonstrations,
protests which have spread to
neighbouring Egypt and Jordan.
Source: BBC News, 3 February 2011 http://www.bbc.co.uk/
news/business-12354402
Food security
Farming & climate change
‘The topic which I have chosen
– food security – is, I believe, the
central issue confronting the food
industry. More than that, it is one
of the biggest challenges facing
the world as a whole. Writing in the
Financial Times, only a few days
ago, Robert Zoellick – President of
the World Bank – described it as a
“threat to global growth and social
stability”. I could not agree with him
more.’ Paul Polman, CEO, Unilever.
Source: City Food Lecture ‘Food Security in a Changing
Climate’ Guildhall, London 18 January 2011
‘A third of all greenhouse emissions
come from agriculture, so we
need to focus our efforts on an
agriculture which does not degrade
the soil and which increases carbon
capture,’ Olivier de Schutter, the UN
special rapporteur on the right to
food in ‘How can we feed the world
and still save the planet?’
Source: Madeleine Bunting, The Guardian, 21 January 2011
http://www.guardian.co.uk/global-development/povertymatters/2011/jan/21/olivier-de-schutter-food-farming
49
TRANSPARENCY:
Power of Information
‘Whistle-blower
organisations
that don’t
play by
conventional
rules of
engagement
can increasingly
easily access key
information about corporate and
government behaviour. These are
groups that can outsmart and
How are
you managing
reputational
risks?
This IPhone app that lets you
scan a bar code to find out the
environmental credentials of any
product in the supermarket.
outrun the best business’ hightech security measures.’
Gary McCormick, AOL
Source: Gary McCormick, AOL News,
Opinion: Corporate Secrecy, Meet
WikiLeaks, 13 December 2010
http://www.aolnews.com/2010/12/13/opinioncorporate-secrecy-meet-wikileaks/
Established in 2000, the Carbon
Disclosure Project acts on behalf
of 551 institutional investors,
holding $71 trillion in assets
under management and some 60
purchasing organizations such as
Cadbury, PepsiCo and Walmart.
Some 3,000 organizations in
some 60 countries around the
world now measure and disclose
their greenhouse gas emissions
and climate change strategies
through CDP, in order that they
can set reduction targets and
make performance improvements
Source: www.cdp.net
Forest Footprint Disclosure
Project started in 2008
The Forest Footprint Disclosure
Project (FFD Project) is a new
initiative, backed by 58 financial
institutions with over $5 trillion
in collective assets under
management, created to help
investors identify how an
organisation’s activities and
supply chains contribute to
deforestation.
Growth of Active
Shareholder
Stewardship
– growth of
institutional
investor demand
for environmental,
social and
governance (ESG) data
Are
your investors
asking for more
information?
How are
you responding
to customers
demand for more but
clearer product
information?
50
TRANSPARENCY:
Corruption
The true cost of
externalities
The companies that constitute
large, diversified equity portfolios
cause global externalities that
undermine the environment’s
ability to support the economy.
The top 3,000 public companies
cause over US$ 2.15 trillion or
one-third of global environmental
costs. In a hypothetical investor
equity portfolio weighted
according to the MSCI All Country
World Index, externalities could
equate to over 50% of the
companies’ combined earnings.
Source: UNEP Financial Initiative PRI Universal
Ownership Why Externalities Matter to Institutional
Investors, 2010
http://www.unpri.org/files/6728_ES_report_
environmental_externalities.pdf
Corruption Perceptions
Index 2010 Results
Source: Transparency International, Corruption
Perceptions Index 2010 http://www.transparency.org/
policy_research/surveys_indices/cpi/2010/results
51
CONNECTEDNESS:
Future working
Source: Tom Geoghegan, BBC News Magazine, Lessons
to be learnt from the Gap logo debacle, 12 October
2010 http://www.bbc.co.uk/news/magazine-11517129
How has the
internet changed
the way you run
your business?
The future of work is
anyplace. What will
workplaces look like in 10
years? Almost certainly
quite different – because
already workplaces are
changing and multiplying
and fragmenting and there is
no reason to believe that will stop.
A time-honoured cliche, but none
the worse for that, is: ‘Work is
something you do, not somewhere
you go.’ Welcome to the world of
post-geographic working, which will
be a reality for many but not all...
non-material knowledge work will
become more intimately entailed
with computers and networks.
But when those networks reach
everywhere, location will not be a
competitive advantage. Someone
on the other side of the country,
or the other side of the world, can
compete...Inside the organisation,
the manager-employee
relationship will also become more
contractualised. Building on the
current practice of managing virtual
teams by objectives, delivering what
by when at an agreed cost will be
key. And because someone setting
a contract need not care how the
work is undertaken, employees will
join external contractors in being
able to work when and where they
want. A lot of that is not going to be
in the traditional office (which will
be looking expensive and carbonunfriendly). A lot of that will be at
the more appealing or convenient or
cheap locations... Dr John Gundry,
Director, Knowledge Ability Ltd Source:
The Age, Australia, 2 December 2010
Telework – working at home or
on the move using networked
computers – is on the increase in
the UK. Over two million of us did it
in 2002, twice the number in 1997.
But we are still a long way behind
countries like Finland, Sweden and
the Netherlands where up to 17 %
of the workforce teleworks. This is
a missed opportunity for the UK.
60% of UK workers are interested
in teleworking. It helps with worklife balance, especially for workers
with young families, and improves
quality of life. For companies, it
improves staff satisfaction, improves
productivity and can reduce
operating costs.
Source: Forum for the Future, Encouraging Green Telework,
2005 http://www.forumforthefuture.org/library/Encouraginggreen-teleworking 2005
Changing social trends – It appears
that (perhaps because of social and
technological changes) teleworking
is now coming of age. The UK
Labour Force Survey revealed
a 65% increase in teleworkers
between 1997 and 2001.
Source: Centre for Transport & Society, Teleworking – trends in
and causes of location independent working, 2009 http://www.
transport.uwe.ac.uk/research/projects/futures-teleworking.asp
Teleworking is not necessarily the
panacea it purports to be. At least
it is not yet. Research conducted
by Oxford University Centre for
the Environment (OUCE) found
that the extra heat and lighting
needed at home wipes out 80% of
energy savings accrued through not
commuting. The team concluded
that government and companies
need to promote changes in the
way people use technology if the
green advantages of teleworking
are to be realised.
Source: IBM Economist Intelligence Unit, IT and the
environment: A new item on the CIO’s agenda? 2007
Commuting accounts for around
a fifth of all miles travelled. The
UK lags behind its European
competitors in allowing teleworking
and flexitime and benefiting from
the energy savings that they can
create. In Germany, Sweden and
Denmark, 40% of employers
have staff involved in teleworking,
compared with 20% in the UK.
52
CONNECTEDNESS:
Future working
Source: A. Bolger, ‘Broadband spurs rise in number of
techno commuters’, The Financial Times, September 3,
2007 http://www.ft.com/cms/s/0/5d4e599e-5989-11dc-aef50000779fd2ac.html#axzz1FRtNZ0R4
Telepresence cutting business
travel
According to a new [Carbon
Disclosure Project] study of large
companies using telepresence
technology, U.S. and U.K.
businesses that substitute some
business travel with telepresence
can cut CO2 emissions by nearly
5.5 million metric tons in total –
the greenhouse gas equivalent of
removing more than one million
passenger vehicles from the road
for one year – and achieve total
economy-wide financial benefits of
almost $19 billion, by 2020.
Telepresence is a rapidly growing
and increasingly popular
technology that enables groups of
people to meet and collaborate in
multiple locations worldwide while
feeling as if they were all in the
same room together.
Source: Carbon Disclosure Project, The Telepresence
Revolution, 2010 https://www.cdproject.net/telepresencerevolution
53
According to the 2009 Edelman
Trust Barometer more
than a half of its survey
respondents said that
they trusted corporations
less in 2009 than they did
in 2008. Richard Edelman
concluded:
‘Being a public company
means something different now
than it did when Milton Friedman
claimed in 1970 that the social
responsibility of business is to
increase its profits. Some four
decades later, we’ve moved from a
shareholder to a stakeholder world
in which business must recast its
role to act in the public’s interest as
well as for private gain.
VALUES SHIFT:
Inequality
What
impact could
this have your
business?
Business must make fundamental
changes if it is to regain the license
to operate.
The rebuilding of trust will not
happen overnight; it will go
hand-in-hand with a recovery in
the economy and a rise in share
prices. Historically, we’ve seen that
trust is key to restoring investor
confidence...Rebuilding trust
requires business to think and
communicate differently, to partner
with government and NGOs, to be
transparent by speaking publicly
about goals, and then to document
successes or failures.’
Source: 2009 Edelman Trust Barometer
‘Empathy is the real “invisible hand” of history. It is
the social glue that has allowed our species to express
solidarity with each other over ever broader domains.
Empathy has evolved over history...In the great
agricultural age, empathy extended past blood ties to
associational ties based on religious identification...In
the Industrial Age, with the emergence of the modern
nation-state, empathy extended once again, this time to
people of like-minded national identities...Today empathy
is beginning to stretch beyond national boundaries to
include the whole of humanity. We are coming to see the
biosphere as our indivisible community, and our fellow
human beings and creatures as our extended evolutionary
family.’
Source: Jeremy Rifkin, Author of The Empathetic Civilization: The Race to Global
Consciousness in a World in Crisis in an article in the Huffington Post entitled
‘Will we heed President Obama’s call for a more empathetic Society?’
Source: The Himalayan, Millions worldwide watch Chilean mine drama unfold, 14
October 2010 http://www.thehimalayantimes.com/fullNews.php?headline=Million
s+worldwide+watch+Chilean+mine+drama+unfold&NewsID=261751
Fairtrade sales growth slowed in
recession [but sales still rose]
Fairtrade's explosive growth slowed
during the recession last year as
British shoppers thought twice
about buying more expensive ethical
products, figures to be released
today show.
Overall, Fair-trade sales rose by 12%
to an estimated £799m, the Fairtrade
Foundation said. While products such
as coffee and tea held up, sales of
Fairtrade cotton in clothing fell. In
2007, sales jumped 71% compared
with the previous year while in 2008
they were up by 45%...
...For millions of growers and
their families and communities,
Fairtrade was able to make the
difference that has helped them
survive a difficult year and plan
for the future. It is to the credit of
the decent British and Irish public
that they do care and, despite the
recession, they are still voting with
their wallets for fairness and want
to change the indignities of an
unjust trading system...
Source: Josie Clarke, Press Association, The Independent, 22
February 2010 http://www.independent.co.uk/news/business/
news/fairtrade-sales-growth-slowed-in-recession-1906489.
html
Human development and
wealth distribution
...But globalisation also had
a dark side. Lurking behind it
was a large and growing chasm
between rich and poor – especially
within countries. An inequitable
distribution of wealth can wear
down the social fabric. More
unequal countries have worse
social indicators, a poorer human
development record, and higher
degrees of economic insecurity
and anxiety. In too many countries,
inequality increased and real wages
stagnated – failing to keep up with
54
VALUES SHIFT:
Inequality
productivity – over the past few
decades. Ominously, inequality in
the United States was back at its
pre-Great Depression levels on the
eve of the crisis...Fundamentally,
the growth model that co-existed
with globalization was unbalanced
and unsustainable. Growth was
driven by too much borrowing in
some countries, made possible
by too much saving in others. For
a while, this seemed to work. But
the illusion of stability was forever
shattered by the wild ride of the
global financial crisis. A runaway
financial sector took risk to new
heights, making sure that the
inevitable fall was especially hard.
Inequality may have actually stoked
this unsustainable model. In countries
like the United States, borrowing
seemed to allow ordinary people to
share in the rising prosperity. Like
the Great Depression before it, the
Great Recession was preceded by an
increase in the income share of the
rich, a growing financial sector, and
a major rise in debt. Inequality could
also be behind the Chinese exportoriented model, since solid domestic
demand needs a healthy middle
class, while a low exchange rate goes
hand-in-hand with a low real wage.
Of course, the unbalanced pattern
of growth had a variety of causes,
but we would be foolish to ignore the
distribution of wealth.
...An immediate task is to end the
scourge of unemployment. The
crisis threw over 30 million people
out of work, and in the coming
decade, more than 400 million
young people will be looking for
their first job. So clearly – growth
is not enough, we need growth for
jobs. And jobs are not enough, we
need decent jobs – so that all can
benefit from the rising tide.
Dominique Strauss-Kahn,
Managing Director, International Monetary
Fund
Source: IMF, Human Development & Wealth Distribution,
1 November 2010 http://www.imf.org/external/np/
speeches/2010/110110.htm
Despite growth in middle class,
increase in inequality
In 2005 there were approximately
400 million ‘middle class’ people
throughout the world (approx. 4%
of global population), by 2030 there
will be approximately 1.2 billion
(approx. 14% of global population).
A fifth of the world’s population
earns just 2% of global income.
Inequality is higher in the OECD
nations than it was 20 years ago.
Source: www.sd-commission.org.uk
The total income of the world’s
500 richest billionaires is higher
than that of its 416 million poorest
people.
Source: Oxfam, Duncan Green & Isobel Allen, The Urgency of
Now, 2008 http://publications.oxfam.org.uk/display.asp?m=2
3&ds=books&dc=286&sort=sort_date/d&mw=1&dbm=oxfamrcm&q=(oxfam_archive_flag%20contains%20not%20
(y))&st_01=bks&sf_01=format_code
Since the late 1980s income
inequality has remained much
higher than in the 1960s and 1970s;
on some measures it is the highest
in last 50 years.
Source: National Equality Panel, An anatomy of Economic
Inequality in the UK — Summary, 2010 http://www.equalities.
gov.uk/pdf/NEP%20Summary.pdf
Dodd-Frank Act presents
companies with a PR minefield
The $1,025,000 median salary of
an S&P500 chief executive last
year, according to the Equilar
analysis, is 25 times the $40,174
that official statistics show was paid
to the average US private sector
employee.
The chief executive’s $7.5m median
total pay package, including
bonuses and stock options, is
187 times that of average private
sector pay.
Source: Jean Eaglesham, FT, 30 August 2010
http://www.ft.com/cms/s/0/977211ac-b461-11df-820800144feabdc0.html#axzz1FRtNZ0R4
Happiness is a top pay peg.
Will making public how bosses’
salaries compare with the
average employee’s income curb
‘excessive’ executive rewards?
It also cited calculations showing
why pay ratios are potentially such
a flashpoint. In its latest boardroom
pay survey, Manifest, the voting
advisory firm, shows that total
chief executive pay has tripled in
10 years to £3.7m, compared with
a 55% rise for average employee
earnings, to £32,500. Expressed as
a ratio, the boss gets 115 times what
the average worker gets, compared
with 59 times a decade ago.
Source: James Ashton, The Sunday Times, 7 November 2010
http://www.thesundaytimes.co.uk/sto/public/Appointments/
article438744.ece
Is the John Lewis model become
more common?
Ministers have been persuaded
that co-operatives can reduce
absenteeism, improve performance
management, encourage
innovation, and increase
productivity.
‘John Lewis’s staff absence levels
are half of the average in the retail
sector. Staff turnover is lower when
employees feel they can influence
the way their organisation works,
and productivity can be up to 19%
higher in organisations where staff
feel they have a stake in success.’
Francis Maude, Cabinet Office
Minster, 2010
Source: Mark Easton, BBC, 17 November 2010
http://www.bbc.co.uk/blogs/thereporters/
markeaston/2010/11/john_lewis_model_for_government.html
55
VALUES SHIFT:
Inequality
Move away from investor
short-termism?
...As a father of three children
I don’t want to be party to an
economic system that steals
resources that rightfully belong
to future generations. As a
businessman I know that our
company requires a stable
environment and a continuous
supply of raw materials to survive
and grow. If that is in jeopardy,
which it is, we have a responsibility
to all our stakeholders to do
something about it.
Vital as it is to get growth back on
track, short-term pressures must
not stop us from also addressing
the longer-term challenges around
poverty, energy, water, climate
change and food security. At a time
when governments are increasingly
focused on shorter term issues it is
even more important that business
takes a lead. And for big companies
such as Unilever that means
developing new business models
which allow us to continue to grow
but within the finite resources of a
fragile planet.
This change is not some minor
evolution of corporate social
responsibility. It has nothing to do
with the philanthropic programmes
or cause-related marketing
campaigns which are common
in many large organisations. What
I am talking about is a completely
new way of managing the
company: one where sustainability
is embedded in every business
function and process; where it is
an integral part of the business
strategy; and where it is the
responsibility of everyone from
the CEO to the most junior brand
manager.
To deliver this will require us to
manage the business for the long
term. That is why we have stopped
giving guidance to the markets;
stopped giving quarterly profit
updates; and stopped reacting to
the short-termism of so much of
the financial community. We have
made it clear to investors that if
they are looking to make a quick
return then maybe Unilever is not
the best place to put their money.
If, however, they are investing for
the future and are prepared to
stay with us over the long term
then we will deliver for them good,
predictable and sustainable returns.
We have done the same thing
with employees by weighting their
compensation schemes towards
medium and long term results.
Paul Polman CEO, Unilever.
Source: City Food Lecture, Food Security in a Changing
Climate, Guildhall, London, 18 January 2011
Photo Credit: Pett, Lexington
(Ky.) Herald-Leader,
Cartoonists
56

- Business in the Community

Transcription

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