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.

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Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.