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Key Drivers for Sustainability

COMPETITION FOR RESOURCES

The world’s population is projected to increase to more than 9 billion people by 2050. Rising living standards will result in both expanded markets for goods and services and unprecedented demands on the planet’s natural resources. Many of the resources once considered renewable–like forests and fresh water–have become finite when we consider that human demands are growing more quickly than the ability of natural processes to replenish them. While exhaustion of commodities can be monitored and measured, the impact of depletion on ecosystems is harder to gauge and often impossible to remedy.

With resource depletion comes risk of conflict as people struggle to meet their basic needs. Take water– population growth, economic development and climate change are straining access to fresh water globally. By 2025, two-thirds of the world’s population will live in water-stressed countries, posing significant risks to the economic and social stability of entire regions and to the corporate operations in those regions.1

CLIMATE CHANGE

Our current fossil-fuel based economy has led to a growing concentration of greenhouse gases in the atmosphere that is driving more extreme weather events, more severe and frequent cycles of drought and flood, and rising sea levels. In 2012 alone, the estimated costs to the U.S. insurance industry from severe weather were $65 billion, with total economic losses amounting to $119 billion.2 These phenomena are being met with new policies and regulations including those designed to limit and put a cost on carbon emissions. Businesses need to plan for a policy environment increasingly hostile toward carbon emissions and for the costs of adaptation to climate change.

In addition to risks, climate change also poses new business opportunities for companies that recognize the potential new revenue sources available to those who develop solutions to the challenges of climate mitigation and adaptation.

ECONOMIC GLOBALIZATION

The integration of national economies into the global economy brings opportunities for business, but often with significant risks. More and more companies operate in or source from multiple countries with wide disparities in enforced environmental and social standards. Whatever the local enforced standard, many stakeholder groups demand, at a minimum, that companies meet international expectations.

CONNECTIVITY AND COMMUNICATIONS

Advances in digital communication over the last two decades have reduced not only the time it takes to build a reputation, but also the time it takes to destroy one. Communication is increasingly disaggregated across multiple social networks. In 2012, Facebook reached one billion users3 while Twitter grew from a “mere” 7 million users in 2009 to 500 million in 2013.4 Using these types of tools, it has never been easier for people to track a company’s sustainability performance and to widely disseminate their perspectives on it. We have entered an era of “radical transparency.”

 


1. UN-Water. Coping With Water Scarcity: Challenge of the Twenty-First Century. 22 March 2007. Retrieved from http://www.fao.org/nr/water/ 20. docs/escarcity.pdf.

2. Swiss Re Ltd. No. 2/2013, Natural catastrophes and man-made disasters in 2012: A year of extreme weather events in the US.  1 February 2013.  Retrieved from http://media.swissre.com/documents/sigma2_2013_EN.pdf.

3. Smith, Aaron, Laurie Segall and Stacy Cowley.  "Facebook reaches one billion users." CNN Money. 4 October 2012. Retrieved from http://money.cnn.com/2012/10/04/technology/facebook-billion-users/index.html

4. Lunden, Ingrid.  "Twitter May Have 500M+ Users But Only 170M Are Active, 75% On Twitter’s Own Clients."  TechCrunch.com. 31 July 2012.  Retrieved from http://techcrunch.com/2012/07/31/twitter-may-have-500m-users-but-only-170m-are-active-75-on-twitters-own-clients/.