Follow by Email

Tuesday, October 6, 2015

Welcome to the next generation/Part 1

Good article--which is long and will be broken up into two parts--that mimics our findings;  that is, we are transforming right now into the next great industrial revolution.

We, too  believe 2015 is a pivotal year in this process.  Govt sets the playing field and it is important they expand that field and make it easier for us to play on.

Great momentum has been built.  The business world is fast adjusting and starting to set very different social goals.  Consumers are demanding safer, healthier products.  Education is at the forefront of pushing sustainable changes.  The economics around clean energy are great.  All the pieces are coming together to drive building a whole new, more resilient world.  


Welcome to the next generation of sustainable development

Terry F. Yosie

The year 2015 is shaping up as one of the most consequential years for environmental/sustainability policy in our lifetimes.  In May, the Vatican published the Papal encyclical Laudato Si, a moral reference point for examining climate change, poverty and inequality and a critique of capitalism as currently practiced.

In August, the Obama Administration announced its final greenhouse gas controls for existing electricity generating power plants as part of a broader Clean Power Plan.

On September 25, the United Nations is scheduled to launch a comprehensive set of Sustainable Development Goals that significantly expands the number of global environment, development and social commitments beyond the Millennium Development Goals.

And, beginning on November 30 in Paris, the United Nations Conference of the Parties (COP 21) will hold its 21st session with the expectation of achieving a new agreement to limit future greenhouse gas emissions in both developed and developing nations.

Taken together, these initiatives are restructuring the expectations, policy frameworks and commitments for businesses and governments to implement sustainable development — not in some distant future, but beginning now.

Both business and government, and their partners in non-governmental organizations (NGOs) and multi-lateral institutions, are already engaged in many elements of the new sustainability agenda. This has occurred through investments in disease eradication, local collaborations to extend mobile telephony and build other infrastructure, job creation, and other philanthropic endeavors.

Businesses are also in the process of extending many of the tools and methods they created in developed countries (e.g., stakeholder assessment methodologies, supply chain management, energy and water efficiency measures) to emerging and lesser-developed markets.

Expected outcomes from the new generation of sustainable development differ from current efforts in at least several important ways:

1) Companies will be challenged to go beyond efforts to achieve efficiencies in energy and water consumption to develop more fundamental changes in business processes and product innovations to embody “net zero” and circular economy parameters,

2) This new generation includes a social responsibility agenda — centering on women’s empowerment, workforce diversity, access to capital and natural resources, income inequality and poverty reduction — which aims to achieve parity with the economic and environmental pillars of sustainability, and
3) New institutional innovations will be expanded to focus on system-level governance and take sustainability initiatives to market scale in ways that will increasingly eclipse more bureaucratic, time-consuming multi-lateral negotiations as a preferred approach to problem-solving.

At this stage, very few institutions — public, private or non-profit — have thought systematically about these interrelated aspects of the new sustainability agenda. The past decade of experimentation involving a variety of cross-institutional collaborations, however, has yielded increased information and confidence among leading companies and NGOs that they can shift the contours of capitalism towards sustainability.

Businesses across a variety of sectors — motivated by employee expectations, the search for operational efficiencies, awareness of sustainability-related risks, and external stakeholder pressures — have increasingly engaged in the sustainability conversation and published their commitments and performance results.

However, while companies invested years of effort and money to integrate sustainability parameters into “normal” business operations, the goal posts have moved.

This development has occurred for several reasons. For one, competitive pressures in key market segments (e.g., retail, consumer products) have begun to disrupt the business processes and products of important upstream value chain participants (think of the dilemma of chemical producers that face chemical de-selection pressures from customers and stakeholders in making ingredients for food products, cleaning agents and personal care products).

Another reason is that government policy, in selected instances, has begun to catch up with marketplace developments (the Obama Administration’s final greenhouse gas regulations for power plants have piggybacked on utilities already existing transition from coal to natural gas).

Thirdly, companies are finding business advantages in making more aggressive sustainability commitments (for example, Ingersoll Rand’s Climate Solutions Business has experienced greater market demand in part because of the company’s commitment to phase out harmful hydrofluorocarbons in its refrigeration and air conditioning businesses with substitutes by 2020).

And lastly, consumer awareness and values continue to evolve as the result of water scarcities, more frequent floods and storms, greater availability of information and the heightened sustainability awareness of young people.

Emerging business models and technologies are also beginning to reshape expectations of producers and customers. From Tesla Motors to Uber Technologies in the transportation sector to new energy service options decoupled from the centralized utility grid in the energy sector, we can expect the variety of such experiments to proliferate across a number of business sectors.

Interviews conducted by the World Environment Center and the Corporate Eco Forum with Chief Marketing Officers at such companies as Hewlett Packard and Unilever also provided early insights on how potentially disruptive and innovative digitization might be upon commercial relationships and customer interactions. While sustainability is not necessarily the driving force behind these specific developments, is has become an increasing part of the rethink of business models and strategy.

New sustainability goals and societal priorities

While none of the above developments should motivate a CEO to push the panic button and scrap the existing business strategy, they do provide a clear set of signals that market-based, public policy and broader societal goal posts are changing in ways that, over time, will have tangible impacts on the investment climate and business portfolios.

Out of this vortex has emerged a new set of 17 Sustainable Development Goals (SDGs) that originated at the United Nations. At first glance the SDGs represent a typical UN initiative — the result of years of speeches and a complicated process whose end product contains too many goals and even more numerous metrics.

While this critique is valid, the important point for global companies to absorb is that the SDGs will represent a significant reference point for the global conversation around business investment and sustainability for years to come. This conversation will include the tenets of the SDGs: the need to reduce and/or eliminate inequality, poverty and hunger; ensure healthy lives; empower women and achieve gender equality; advance inclusive and quality education; provide access to natural resources and energy; build more sustainable and resilient communities; combat climate change and protect ecosystems; and strengthen cross-institutional partnerships.

How should global companies begin to think about the SDGs?  As a beginning, companies should recognize that many of these goals will have the most resonance in many of the emerging markets where they hope to expand.  The SDGs will have legitimacy within civil society and will define the expectations for company performance and behavior among potential consumers and employees in a number of growing markets.

Second, the UN goals create the opportunity to further a company’s narrative about the added benefits that advancing these goals will achieve for its new customers. Third, the SDGs can be harmonized with already existing risk management systems and materiality evaluations companies undertake in order to build their own sustainable business road maps in the future.

No comments:

Post a Comment