When it comes to the environment, business must adapt or die

A golden age of sustainability lies in waiting.

Five years ago the world’s economy went into shock as Lehman Brothers filed for bankruptcy.  The resulting global economic crisis was driven by the greed of loosely regulated financial institutions, governments seeking short term popularity and the unhealthy relationship between the two. It has resulted in unsustainable levels of debt in some major economies with a period of austerity prescribed to restore balance within a decade, although the scars may last far longer.

But a more fundamental risk to our long term economic development lies in the rapidly expanding use of our scarce natural resources, combined with the planet’s ability to cope with the multiple impacts of their use. We know that we are living well beyond our means, drawing on natural resources at a rate that we cannot sustain.  Just as we have accumulated debt priced too cheaply, so we have built economies with resources priced too cheaply. 

Whichever basic need we consider, from warmth to mobility to food, today’s solutions are hugely inefficient – in the same year the Lehman Brothers went under the world was using resources at a rate 50 per cent faster than it can renew.  And as our growing population, expected to reach nine billion by 2050, consumes more, these strains on our natural capital will become even more acute.

The inevitable conclusion of this is a resource crunch. It means we urgently need to find new methods of production, address wasteful consumption and develop innovative business models that put sustainability at the heart of business operations. But a recent survey of global business leaders shows that while awareness of a pending resource crunch is high, most businesses see this as a risk to be managed rather than as a new commercial opportunity. Few see it changing the nature of the business they do today. Tellingly we also found that only 13 per cent of board directors are remunerated for achieving sustainability targets. 

The resource war will bring winners and losers. Take water. Already we are seeing parts of Texas in drought with reports that 30 communities could be dry by the end of the year.  By 2050 the OECD predicts that the world's demand for water will grow by 55 per cent. Competition between water users and nations demanding water resources will escalate. And yet our research has shown that only one in seven businesses have a target to reduce water use.

In our work with businesses all around the world we have found two distinct behaviours when it comes to sustainability.  Think of the 19th century science experiment with frogs and boiling water. Most businesses are treading water on the issue of sustainability as the temperature rises. They won’t move until the issue bites them hard. Our research suggests that they are discounting the impacts of sustainability on their business well into the future, beyond the time horizon of most shareholders or the CEO’s likely tenure.

A few, the jumpers in the frog analogy, are moving now.  They anticipate the danger and see a way out. The first step they take is to look inside their business and map out the resources used in the products and services that they provide.  The insight gained usually highlights simple cost saving measures to improve efficiency and resource use. But incremental improvements that once seemed ground breaking can now look like greenwash, damaging reputations and doing little to ensure competitiveness and survival.

True leaders go further and take a deeper look at resource use to drive a far more fundamental business change. These companies are at the cutting edge, redesigning products and services and their business models to minimise the use of resources that were once plentiful and cheap but are increasingly scarce and costly. Interface, the world’s largest maker of carpet tiles is an example of a company putting sustainability at the heart of business strategy. It’s not being done as an add-on but is core to the future success of the business. Dyson, through its focus on designing out inefficiency from the start, is another.

While I understand it’s hard to challenge the status quo before the platform is burning, the alternative can be harder still. Just think how many of the high street names that have recently failed could have survived had they anticipated, not just reacted to the onslaught of the internet.  A new tsunami of change will result from the resource crunch with less reliable access to cheap land, energy, water and materials as regions of the world and business supply chains become resource stressed.

A golden age of sustainability lies in waiting.  For as we slowly recover from the debt crisis, businesses that have been hoarding capital are now looking to invest once again in their future. But that future can’t just be more of the same. Business face a world where consumers will expect more but resources will be scarce and expensive. This is a huge opportunity to innovate. Successful businesses will be sustainable investments, resilient to the resource crunch, but they will also be good businesses that appeal to environmentally conscious consumers. They will have sustainability inside.

Photograph: Getty Images

Tom Delay is Chief Executive of the Carbon Trust.

Photo: Getty
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Unite stewards urge members to back Owen Smith

In a letter to Unite members, the officials have called for a vote for the longshot candidate.

29 Unite officials have broken ranks and thrown their weight behind Owen Smith’s longshot bid for the Labour leadership in an open letter to their members.

The officials serve as stewards, conveners and negotiators in Britain’s aerospace and shipbuilding industries, and are believed in part to be driven by Jeremy Corbyn’s longstanding opposition to the nuclear deterrent and defence spending more generally.

In the letter to Unite members, who are believed to have been signed up in large numbers to vote in the Labour leadership race, the stewards highlight Smith’s support for extra funding in the NHS and his vision for an industrial strategy.

Corbyn was endorsed by Unite, Labour's largest affliated union and the largest trades union in the country, following votes by Unite's ruling executive committee and policy conference. 

Although few expect the intervention to have a decisive role in the Labour leadership, regarded as a formality for Corbyn, the opposition of Unite workers in these industries may prove significant in Len McCluskey’s bid to be re-elected as general secretary of Unite.

 

The full letter is below:

Britain needs a Labour Government to defend jobs, industry and skills and to promote strong trade unions. As convenors and shop stewards in the manufacturing, defence, aerospace and energy sectors we believe that Owen Smith is the best candidate to lead the Labour Party in opposition and in government.

Owen has made clear his support for the industries we work in. He has spelt out his vision for an industrial strategy which supports great British businesses: investing in infrastructure, research and development, skills and training. He has set out ways to back British industry with new procurement rules to protect jobs and contracts from being outsourced to the lowest bidder. He has demanded a seat at the table during the Brexit negotiations to defend trade union and workers’ rights. Defending manufacturing jobs threatened by Brexit must be at the forefront of the negotiations. He has called for the final deal to be put to the British people via a second referendum or at a general election.

But Owen has also talked about the issues which affect our families and our communities. Investing £60 billion extra over 5 years in the NHS funded through new taxes on the wealthiest. Building 300,000 new homes a year over 5 years, half of which should be social housing. Investing in Sure Start schemes by scrapping the charitable status of private schools. That’s why we are backing Owen.

The Labour Party is at a crossroads. We cannot ignore reality – we need to be radical but we also need to be credible – capable of winning the support of the British people. We need an effective Opposition and we need a Labour Government to put policies into practice that will defend our members’ and their families’ interests. That’s why we are backing Owen.

Steve Hibbert, Convenor Rolls Royce, Derby
Howard Turner, Senior Steward, Walter Frank & Sons Limited
Danny Coleman, Branch Secretary, GE Aviation, Wales
Karl Daly, Deputy Convenor, Rolls Royce, Derby
Nigel Stott, Convenor, BASSA, British Airways
John Brough, Works Convenor, Rolls Royce, Barnoldswick
John Bennett, Site Convenor, Babcock Marine, Devonport, Plymouth
Kevin Langford, Mechanical Convenor, Babcock, Devonport, Plymouth
John McAllister, Convenor, Vector Aerospace Helicopter Services
Garry Andrews, Works Convenor, Rolls Royce, Sunderland
Steve Froggatt, Deputy Convenor, Rolls Royce, Derby
Jim McGivern, Convenor, Rolls Royce, Derby
Alan Bird, Chairman & Senior Rep, Rolls Royce, Derby
Raymond Duguid, Convenor, Babcock, Rosyth
Steve Duke, Senior Staff Rep, Rolls Royce, Barnoldswick
Paul Welsh, Works Convenor, Brush Electrical Machines, Loughborough
Bob Holmes, Manual Convenor, BAE Systems, Warton, Lancs
Simon Hemmings, Staff Convenor, Rolls Royce, Derby
Mick Forbes, Works Convenor, GKN, Birmingham
Ian Bestwick, Chief Negotiator, Rolls Royce Submarines, Derby
Mark Barron, Senior Staff Rep, Pallion, Sunderland
Ian Hodgkison, Chief Negotiator, PCO, Rolls Royce
Joe O’Gorman, Convenor, BAE Systems, Maritime Services, Portsmouth
Azza Samms, Manual Workers Convenor, BAE Systems Submarines, Barrow
Dave Thompson, Staff Convenor, BAE Systems Submarines, Barrow
Tim Griffiths, Convenor, BAE Systems Submarines, Barrow
Paul Blake, Convenor, Princess Yachts, Plymouth
Steve Jones, Convenor, Rolls Royce, Bristol
Colin Gosling, Senior Rep, Siemens Traffic Solutions, Poole

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.