KPMG: Global sustainability megaforces will affect the future of every business

Posted by Craig Clarke 
on May 18, 2012
 
Recently KPMG released a report entitled Expect the Unexpected: Building business value in a changing world.
The report states that over the next 20 years businesses will be exposed to hundreds of environmental and social changes that will bring both risks and opportunities in the search for sustainable growth. 

The result is a set of ten global sustainability megaforces that they believe will impact every business over the next two decades. They are:

• Climate Change: the one global megaforce that directly impacts all others discussed in this report. Predictions of annual output losses from climate change range between 1 percent per year, if strong and early action is taken, to at least 5 percent a year if policymakers fail to act.
• Energy & Fuel: fossil fuel markets are likely to become more volatile and unpredictable because of higher global energy demand; changes in the geographical pattern of consumption; supply and production uncertainties; and increasing regulatory interventions related to climate change.
• Material Resource Scarcity: as developing countries industrialize rapidly, global demand for material resources is predicted to increase dramatically.
• Water Scarcity: it is predicted that by 2030, the global demand for freshwater will exceed supply by 40 per cent. Growth could be compromised and conflicts over water supplies may create a security risk to business operations.
• Population Growth: global population is predicted to be 8.4 billion by 2032 in a moderate growth scenario. This growth will place intense pressures on ecosystems and the supply of natural resources such as food, water, energy and materials.
 • Wealth: the global middle class is predicted to grow 172 percent between 2010 and 2030.
• Urbanization: By 2030 all developing regions including Asia and Africa are expected to have the majority of their inhabitants living in urban areas which will require extensive improvements in infrastructure.
• Food Security: Global food prices are predicted to rise 70–90 percent by 2030. In water-scarce regions, agricultural producers are likely to have to compete for supplies with other water-intensive industries such as electric utilities and mining, and with consumers.
• Ecosystem Decline: The decline in ecosystems is making natural resources scarcer, more expensive and less diverse; increasing the costs of water and escalating the damage caused by invasive species to sectors including agriculture, fishing, food and beverages, pharmaceuticals and tourism.
• Deforestation: forest areas are predicted to decline by 13 percent from 2005 to 2030, mostly in South Asia and Africa.
Costs of environmental impacts are doubling every 14 years. It is therefore prudent for companies to expect to pay in the future a rising proportion of their external environmental costs which today are often not shown on financial statements.
 
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