Eight drivers of change

Eight drivers of change: Sustainability

SUSTAINABILITY SUSTAINABILITY

The Cambridge English Dictionary defines sustainability as: ”the quality of being able to continue over a long period of time”. Although commonly used to refer to environmental sustainability, it also encompasses economic and social sustainability.

For businesses, sustainability means measuring an organisation’s success according to more than immediate financial return. As well as a key performance indicator for business, sustainability is beginning to influence how countries assess success. New Zealand, for example, now publishes a wellbeing budget with five priorities: a sustainable and low-emissions economy; a thriving nation in the digital age; lifting Maori/Pacific wages; reducing child poverty; and supporting mental health. Bhutan has long been known for its emphasis on Gross National Happiness rather than Gross National Product.

Any long-term look ahead must confront the climate emergency and the need to reduce greenhouse gases to restrict global temperature rises. 2021 has followed preceding years with a succession of extreme climate events including record snowfall in Madrid and Texas, exceptional temperatures in Mediterranean countries, the Pacific North West and Russia, and flooding in New York, Germany, China and London. The World Meteorological Organisation has reported a five-fold increase in weather-related disasters over the last fifty years. António Gutteres, the UN Secretary General, described the UN’s Intergovernmental Panel on Climate Change (IPCC) 2021 report, on the urgency of combatting the effect of human activity on the climate, as “a code red for humanity”.

The Glasgow UN Climate Change Conference of the Parties (COP26) is resulting in commitments from governments, investors and businesses to take action including protecting forests, halting fossil-fuel developments overseas and aligning investments with net zero emissions.

The drive for sustainability and combatting the climate emergency will accelerate change across the world, driving technological development and influencing travel and transportation. The internal combustion engine is being replaced by battery-power and other fuels such as hydrogen power. The environmental impact is curtailing travel in the short term, but it may not be long before low-impact air and sea travel and sustainable land transport change behaviours once more. Technology will play an important role in both a shift to wind, tidal and hydro (and possibly nuclear, including nuclear fusion) and to more energy-efficient goods. Global renewable energy capacity doubled over the last decade and is increasing at an ever faster rate that promises to accelerate further.

Climate emergency

Extreme weather

Rising and record temperatures, droughts, flooding and other extreme weather will change where people live and work. Agriculture will have to adapt as traditional crops may no longer thrive in existing locations. Extreme weather will have a profound effect on many workplaces.

Greenhouse gases

Carbon dioxide, methane and other gases from human activity are responsible for the climate emergency. Technology, as well as changing behaviours, have a role to play in reducing emissions including increased use of carbon dioxide capture.

Rising sea-levels

Rising sea-levels

Melting ice-caps and rising sea-levels threaten many coastal regions and low-lying islands. Internal and international migration will rise as a result and impact on the locations from which businesses operate and the places their people work.

Changing behaviours

Changing behaviours

Certain activities which were normal a few years ago will become socially unacceptable, perhaps including long haul holidays. Purchasing power will increasingly be exercised on the basis of sustainability, with consumers looking to repair more and throw away less. 

Corporate governance

Transparency

Transparency

Transparent decision-making results in good-decision making. It ensures decision-makers are accountable for decisions and abide by appropriate ethical standards. It also contributes to employee engagement and trust and is expected increasingly by investors. 

Checks and balances

Checks and balances

Effective governance requires effective checks and balances through board oversight, strong audit and compliance functions and whistleblowing polices, both within the organisation itself and within its supply chain.

Trust

Trust

Effective governance is required to maintain stakeholder trust. Commentators increasingly emphasise the importance of employers building and maintaining trust in achieving success. 

Executive remuneration

Effective governance includes checks on excessive  executive pay. Most UK public companies have, since 2019, had to report: CEO pay ratios to median pay; and top and bottom quartile pay. The ratios are higher in the FTSE 100 than the FTSE 350 companies. 

Environmental concerns

Carbon neutrality

Carbon neutrality

Stakeholders - whether employees, customers or investors - increasingly expect businesses to have environmental sustainability integral to all decision-making, including carbon-neutral targets.

Waste

Waste

The World finally seemed to wake up to the threat to our biodiversity from plastic and other waste with David Attenborough’s turtle entangled in plastic. One study reported 88% percent of viewers claimed to change behaviour as a result and businesses will need to respond to this shift.

Business travel

Work-related travel dropped off a cliff in 2020 and will not return to anything like past levels. Businesses managed without and see the sustainability impact (and cost-savings) of reducing travel. Airlines, hotels, taxi drivers and restaurants, amongst others, will feel the impact as a result - business travel has been an important contributor to the economy. 

Big business

Big business

The Guardian has reported analysis showing that the UK’s green economy: is now worth more than £200bn; employs more than 1.2 million people; and is four times the size of the UK’s manufacturing sector with growth anticipated in the years ahead. 

Social concerns

Diversity, Equity and inclusion

Diversity, Equity and inclusion

Increasingly DE&I is a top priority for businesses in recognition of the benefits from a diverse and inclusive workforce and the importance attached to the issue by stakeholders, including staff, customers, investors and wider communities.

Supply chains

Supply chains

The UK will be making reporting mandatory for large companies on modern slavery and human trafficking throughout their business and supply chain. There are calls to extend this to environmental and human rights due diligence throughout their supply chains. The EU Parliament has already proposed legislation to this effect.

Worker voice

Worker voice

Social criteria by which a business is measured routinely include effective worker engagement. Different countries’ rules show the different possible approaches such as collective bargaining, works councils, worker directors or other consultative bodies.

Health and safety

Health and safety

In industries such as mining, energy and utilities measuring the health and safety standards of a business has a long track record. With Covid-19, this concern is sure to feature more highly in the future across a broader range of sectors.

SUSTAINABILITY - INTERCONNECTING DRIVERS

Technology

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Technology

Role of the State

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Role of the State

Sustainability

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Sustainability

Migration

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Migration

Globalisation

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Globalisation

Covid-19

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Covid-19

Demographics

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Demographics

Part 1 

DRIVERS OF CHANGE

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Part 2 

EMERGING THEMES

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Part 3 

PREDICTIONS

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