nathalie-udoA few weeks ago I had the opportunity to be part of the Future & Insights panel at the Better Business 2016 Conference focused on Better Business, Self-Regulation and Impact.

We discussed questions like what new business challenges and opportunities are waiting on the horizon, and what disruptive forces will overtake the business models and technologies currently shaping the marketplace. In today’s blog, I’ll focus on the first question.

Playing from a Stacked Deck

Let’s start with looking at what challenges and opportunities the current global business environment is facing:

  1. Increased consumption – There are more than 7 billion people on Earth right now. By 2040 that number is expected to be more than 9 billion. More importantly, the number of people classified middle class will increase from 1 billion today to 3 billion by 2050. They will have the societal expectations to buy things commonly associated with a middle-class life. A huge new market is on the horizon, and people will expect goods and services to be available to that market.
  1. Constraint resources – Already there are not enough resources to fulfill our consumption demand. Two examples:
    1. Even in today’s world 1 in 10 people don’t have access to safe drinking water. Since fresh water is a finite resource this number is expected to rise, especially as groundwater resources are depleted due to overuse and contamination. Meanwhile, most of the developed world flushes its toilets with drinking water. But even water-rich countries are starting to feel the pinch, as evidenced by the current extreme drought in the western US, and the water use restrictions prompted by the shortfall.
    2. Our second example is less visible, but just as dramatic. You are probably reading this on your phone, computer or tablet. Those devices contain rare earth elements, another finite resource. The expectation is that by 2020—less than four years from now— there will be 11.6 billion mobile-connected devices. You can imagine the amount of raw materials needed to create these—materials that are increasingly scarce and expensive to extract.
      Already constrained resources coupled with increased consumption will stretch the planet’s capacity to the limit without a dramatic change in approach.
  1. Shifting weather patterns – Records broken during extreme weather used to be unusual. Today, it seems almost expected. Shifting weather patterns are already affecting our food supply, impacting corporate supply chains, and even altering our daily lives.
  2. Rapid technology changes – According to professor Klaus Schwab, founder of the World Economic Forum, we are in the Fourth Industrial Revolution. Previous industrial revolutions brought us mechanical locomotion, mass production, and the wonders of the digital era. Today we are merging physical, digital, and biological worlds. The opportunities are limitless: contact lenses that tell you when to take your insulin. Self-driving cars that know your schedule as well as your destination. Biological implants that allow people to control artificial limbs or restore lost sight or vision. Genetic medicine that corrects diseases or dysfunctions at a molecular level. 3-D printing, nanotech, quantum computing. These dramatic and rapid changes in our technological capabilities will have profound impacts on our societies and our environment.
  3. Informed customer and workers – Information travels at the speed of light and people today have access to a tremendous amount of data. This combined with the increasing lack of trust in institutions means that your customers and employees (current and future) look to each other for feedback, not just to you. Case in point: who in today’s world buys a product on Amazon without looking at the reviews?

Sustainability as Risk Management

Let me share an image I got from Sylvia Earle, National Geographic explorer-in-residence: Imagine you are an astronaut on a mission in space. Before departure you would learn everything you could about the systems that keep you alive during your journey in the hostile environment beyond Earth’s atmosphere. While flying through space, you would take care of your air, water, food, and temperature control as if your life depends on it, because it so clearly does.

We seem to forget that we are all aboard a great, blue spacecraft called Earth, hurtling through an otherwise inhospitable universe, so we better take care of it as if our lives depend on it.

If the sustainability of our planet isn’t a sufficient reason, the sustainability of your organization might be. When people hear the word “sustainability”, they think “green” and “environment”, but we are talking about the sustainability of your business as well. The challenges and opportunities I mentioned above affect every business. Thinking about sustainability is a risk management strategy. How will you manage the increased threats to your supply chain, the depletion of natural resources, and the demands of conscientious customers and employees?

A Competitive Edge in a Crowded Market

The upside is tremendous. Organizations that care about the social, economic, environmental and ethical aspects of their business can expect a substantial increase in their market share. A recent Nielsen study found that 55% of global online consumers across 60 countries are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact.

Changing the processes and activities within your organization and value chain to become more socially and environmentally friendly reduces overall operational costs in the long run. It also increases employee engagement, which will be key to survival in a world where the “war on talent” is increasing.

All this requires a change in mindset, innovation, and new business models. We will look at that in the next blog. For now just remember: Sustainability is better business.