Resource Scarcity
Global use of materials has nearly quadrupled in the last 50 years from 26.7 billion tonnes in 1970 to 100 billion tonnes in 2020.
It is forecast to rise to 170-184 billion tonnes by 2050.
Despite the massive rise in consumption, reuse and recycling have stalled.
All this means that prices for commodities and other inputs are increasingly steadily. There are three main reasons for this problem:
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There is a focus on the extraction of virgin materials to fuel growth rather than making better use of existing resources.
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Population growth is adding to pressures for more materials.
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Most products are not designed to be reused, and there are limited facilities for reprocessing materials at the end of their life.
Rising resource costs and increasing risks of shortages will affect profit margins, and organisations need to develop new approaches to minimise these risks. For the companies that adapt the fastest, there are opportunities to be had:
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Companies are now moving towards using waste as source materials for the manufacture of new products and the development of new biomaterials.
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Products and services are being redefined and reformulated to target market opportunities based around ethical consumption.
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In their report 'Waste to Wealth', Accenture identified that a global opportunity worth $4.5 trillion was up for grabs by redefining the concept of waste as a valuable resource.
Resource Scarcity Action
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Review your sources of supply over the next 10 to 15 years and estimate the impact of rising resource costs.
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Factor in the likely increasing costs of virgin materials and the risks of supply chain disruption for these resources.
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Project the likely decreasing costs of reprocessed materials and innovative new products.
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Consider the possible marketing and revenue boost of creating an ethical supply chain.
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Prepare investment appraisal models to compare the costs and benefits of continuing your current sources of resources with moving more ethical and sustainable approaches.
Carbon-Zero Business
Many countries and organisations are making plans to become carbon neutral by 2050 or earlier. Climate change is already happening, and the effects are becoming more serious.
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The energy we use – electricity, heating, and transport – accounts for around two-thirds of global greenhouse gas emissions.
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81% of the global energy mix is still based on fossil fuels – the same percentage as 30 years ago.
Governments are now looking to driving a faster transition to 'Net Zero' to address climate challenges, and that means increasing the costs of fossil fuels through carbon taxes and other changes to regulation.
However, the transition to Net Zero will offer opportunities for every part of the economy:
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Global growth in low carbon industries and technologies is expected to be around $30tn by 2040.
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The UK Government estimates that the UK low carbon economy could grow 11% annually from 2020-2030, four times faster than the economy as a whole, and worth up to £170bn of export sales.
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Here in Scotland, where I live, low carbon industries have the potential to grow to over £30bn by 2027.
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Companies are now shifting their business portfolios away from high carbon activities in operations, supply chains, and product portfolios as a driver of innovation, competitiveness, risk management, and growth.
In fact, if you don't already have plans to address your organisation's carbon footprint, then you are behind the curve and in danger of becoming extinct.
Carbon Zero Action
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The most basic step you should take is to review the opportunity for sourcing low carbon/ renewable energy for the organisation.
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Review your organisation's vehicle fleet. Can it be de-carbonised?
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Appraise the costs and benefits of more proactive recycling and reuse policies.
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In the 10 to 15-year investment appraisal of your supply chain, factor in the increasing costs of high-carbon sources of supply and the reducing costs of low-carbon inputs. Also, consider the likelihood of future carbon taxes/ duties.
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Develop plans for a "zero-carbon" business strategy.
Thank you for listening to this lesson. In the next lesson, we consider another two of the trends you need to prepare for – sustainable investment and the power of people and values.
