Tuesday, March 11, 2014

Sustainability Planning: Why Businesses Need to Listen to Consumers and Prepare for Government Regulation

To mitigate against risk and capitalize on opportunities, the business community must listen to consumers and prepare for an expanded role for government. The combination of increased global consumption and diminishing supply is the biggest challenge that business leaders face.

Whether we are talking about energy, food or water we are tasked to find more sustainable approaches to meet the growing demand. While part of the answer involves reducing consumption (and waste), we will also need to be much smarter in our allocation of resources.

In the quest for more energy, more food and more water we must realize that of these issues are directly impacted by climate change. Traditional fuel sources (ie, fossil fuels) are the primary cause of global warming and for a whole host of reasons, it is expected that this finite energy source will be increasingly relegated to the sidelines. Food supplies are expected to dwindle as we are confronted with greater numbers of crop destroying extreme weather events. And water is being tapped in an unsustainable fashion in much of the world causing ground wells and aquifers to run dry.

Energy, food and water are not separate and distinct concerns, they are in fact interrelated in a number of important ways. To illustrate the point agricultural production is dependent on water to irrigate crops and fossil fuels to produce fertilizer. The complex interconnections between energy, food and water is one of the reasons why we need coherent long term policy approaches.

Businesses need government policies that clearly outline the regulatory environment of the near and long term future. Although the business community is often accused of being resistant to change, the truth is that most are far more concerned about the unknown than they are about long term policy initiatives that they can plan for.

It is apparent that growing demand is on a collision course with diminishing resources. Responsible policy is indispensable if we are to minimize these impacts. 

Consumers and governments are increasingly rewarding efficiency and punishing waste. The adoption of a closed loops and circular resource technologies makes sense both from the vantage point of individual corporations as well as at the national level. This is no longer just dreamy eyed idealism, this is bottom line economics. 

Market forces are driving green innovation both to reduce costs and to address resource scarcity. This is not only a means for individual companies to prosper, the associated intellectual property rights represent a lucrative opportunity that can generate billions of dollars of revenue.

Companies must meet the changing expectations of consumers. Sustainability is increasingly expected by consumers as a baseline to earn their trust and confidence. In addition to product quality and financial returns, transparency is now an important driver of corporate reputation. While winning the public's trust is of great importance today, there is far more at stake. While this is about protecting reputations and advancing public relations, this is also about operational planning that can protect the bottom line and even save corporate lives.

Unlike some of the old guard, the new generation of business leaders see the writing on the wall and they are inculcating modern realities into their planning. In addition to the adoption of low carbon business, these new leaders see value in new models that deliver improvements to all stakeholders from customer to suppliers and investors.

Like it or not, governments will play a larger role in business. To do so responsibly they must prioritize investment in research so that the policies they develop are premised on science. The general public will eventually catch up as the vast and growing pool of data makes the veracity of anthropogenic climate change irrefutable.  The impacts of global warming will only increase over time, preparing for these impacts is a business imperative as the costs of ignoring such things as disruptions to supply chains can be monumental.

In an increasingly resource constrained world business leaders must see the writing on the wall. They must not only listen to consumers, they must prepare for the expansion of the government's role as regulators.

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