Wednesday, October 15, 2014

Preparing for the Perfect Storm

The UK faces a crisis because UK business lacks the skills to deal with the challenge of sustainability. This is the message of a report issued today by the Institute of Environmental Management and Assessment (iema). At the same time, a poll of members of the Institute of Directors reveals that for 70% of respondents their sustainability priorities are affected by the economic climate. 

The conclusion from this poll is that for many companies sustainability is just a “nice-to-have”, not a necessity. Maybe it’s because “sustainability” as an idea is still widely misunderstood. All too many people’s thoughts go - sustainability - environment - green - beards and sandals - protest - fluffy polar bears: leave me alone I’ve a business to run!

But the iema report makes it clear that sustainability is at the heart of any business. The headline message is that the UK has a sustainability skills shortage, and the underlying truth is that we need these skills to meet sustainability challenges and opportunities. Drawing on research by the World Economic Forum, the United Nations, the IPCC, the OECD and many others, the report shows how critical pressures are building up from population growth, climate change, water shortages, resource scarcity, unsustainable levels of waste and ballooning demand for energy. It shows too, that of some 1,000 companies polled by iema only 13% were very confident that they could compete in a sustainable economy. And of course that’s not a choice. The sustainable economy is rapidly becoming the only game in town: in the world!

In crudest terms a sustainable business is one that stays in business. In reality a sustainable business is an organisation that can adapt to these rapid and radical changes, can meet customers’ evolving expectations while relying on suppliers which may themselves be way behind the curve. Procurement is a sustainability issue, finance is a sustainability issue, product development is a sustainability issue, and so are training, sales and marketing. Many organisations do not realise there is an issue, and therefore have not taken any steps to react. It’s the business-as-usual syndrome. 

It’s not all bad news. Major household names have taken sustainability on board. They include Jaguar Land Rover, Kepak Convenience Foods, (you may not know the name, but you’ll have eaten their products!), Network Rail, Rexam, Ricoh and Rolls-Royce. They recognise that there’s a sustainable business case. They save energy, they save materials, they cut waste. And it all saves them money. Not just manufacturing and construction companies are involved. The Innovation Group is in insurance claims management and software; HW Fisher is an accountancy firm; PHS provides hygiene services and we’ve all heard of the NHS. All these organisations have taken an active sustainability policy on board.

The challenge now is to spread the word to the vast number of organisations that are not yet on side or even aware that there’s an issue. We need to do it before the perfect storm engulfs us in a perfect disaster.

Thursday, October 09, 2014

Is this the end of fossil fuels?

No, of course not, at least not yet, but there are some interesting straws in the wind. Glasgow University has become the first in Europe to sell off its investments in fossil fuels. At £18 million that's not even a drop in the bucket. Insignificant in financial terms but much more important from a PR point of view is the deal between Lego and Shell. Lego carried the brand on many of its sets but following a campaign from Greenpeace with a video which went viral Lego has agreed to end its relationship with the oil company. The focus of the Greenpeace campaign was Shell’s plans to drill for oil in the Arctic. It was both about putting the Arctic wilderness at risk and about producing more fossil fuels which lead to worsening climate change.

The most significant news is that the Rockefeller Foundation announced last month that it was going to sell off all its investments in fossil fuels. That's the Rockefeller that was founded on Standard Oil, ESSO in the UK. If they are now selling out of the fossil fuels which made their fortune maybe we should start to take notice. As professional investors they are likely to be selling out because they foresee a market decline.

So, is this the end of fossil fuels,? It could well be the beginning of the end. People, important people, are finally realising that we cannot exploit all the remaining fossil fuel reserves without setting off climate change which will make the world uninhabitable in a few short decades. However, we still need energy and it must be clean energy. The race is on to develop carbon-free alternatives. And no doubt that’s where the smart money will be going!