Businesses urged to address sustainability ‘megaforces’

Businesses should act now to avoid being slammed by the ‘megaforces’ – or global trends – that will transform the Earth over the next two decades and cause the costs of environmental impacts from business to multiply, said business leaders at a sustainability summit.

Over 600 business leaders and policy makers met at the “Business Perspective on Sustainable Growth” summit in New York last week to agree on a set of policy recommendations to cope with the sustainability ‘megaforces’ mapped out in a new report from global advisory firm KPMG International.

The recommendations are meant to shape the business sector’s contribution to negotiations at the upcoming Rio+20 global environment summit in June.

Executive director of the UN Global Compact Georg Kell said in a statement that most companies were not doing enough to address sustainability and environmental impacts.

“Rio+20 will be a critical opportunity to change that and move corporate sustainability to a global scale. We encourage businesses everywhere to come to Rio with strong commitments and transformative solutions,” he added.

Described by organisers as ‘near-unanimous’, the recommendations for businesses were to focus on long-term sustainable growth rather than on short-term profits and to adopt ambitious targets for better use of natural resources.

 

Recommendations for policy makers included clear, long-term policies that encourage businesses to develop and invest in ideas for sustainable growth, and greater cooperation between business and government on environmental issues. The summit recommendations also called for ways of including the value of natural resources in economies.

The KPMG report, Expect the Unexpected: Building Business Value in a Changing World, which was released on the opening day of the summit, found that external environmental costs from industry were doubling every 14 years.

Currently, most companies do not include such costs in their accounts. But if they did, they would lose over 40 per cent of their profits on average, the report noted.

The rise in costs are driven by ten sustainability ‘megaforces’ defined in the report as climate change, energy and fuel volatility, water scarcity, material resources availability, population growth, expanding middle classes, urbanization, food security, ecosystem decline, and deforestation.

These ‘mega-forces’ will cause immense pressure on business operations unless the industry steps forward to mitigate the problems, noted the report.

“Business affects the state of the world, and the state of the world is now affecting business,” said KPMG advisor on Climate Change and Sustainability Yvo de Boer at the summit.

Mr de Boer, formerly the United Nations climate chief, added that global trends on energy, water security and food scarcity were being complicated by the convergence of other forces such as population growth, deforestation and a surging middle class.

“Leaders are overwhelmed by the sheer scale of these problems and struggling to act. There are ways to solve these problems, and that includes harnessing the capacity of business,” he said.

Regional head of KPMG, John B. Veihmeyer, noted that the problems can still be converted to opportunities if necessary policies and business strategies are taken.

He explained that many of KPMG’s client companies are gaining competitive advantage over their competitors by presenting their sustainability activities to investors and customers in clear and accurate data.

Other speakers included UN Secretary-General Ban Ki-moon, New York Mayor Michael Bloomberg, former US President Bill Clinton and heads of numerous multi-national companies such as consumer goods firm Unilever and French conglomerate Alstom.

The three-day event, hosted by KPMG, UN Global Compact (UNGC), the World Business Council for Sustainable Development (WBCSD) and the United Nations Environment Programme (UNEP), was one of many global preparations for the Rio+20 summit.

In early January, the UN released a draft document called “The Future We Want” to serve as a basis for negotiations at the summit, which will be held in Rio de Janeiro from 20th to 22nd June.

High-level leaders attending RIO+20 are expected to produce a policy statement declaring the international community’s commitment to developing green, or environmentally friendly, economies.

Another UN report published last month, called “Resilient People, Resilient Planet:  A Future Worth Choosing”, provided recommendations on sustainable growth for world leaders, including the development of new indicators that measure sustainability.

Other ideas from the international community to encourage sustainable development from businesses and communities include a new online database, which is accessible to the industry and the public through the UN Framework Convention on Climate Change (UNFCCC) website.

This was launched in January to promote the sustainable business strategies currently used by more than 100 corporations, such as multinational brands Coca-Cola, Levi’s, Microsoft and Starbucks.

The database of case studies is an example of the public-private collaboration called for by participants at last week’s event.

KPMG International chairman Michael Andrew said at the event that businesses needed to take a leadership role in developing solutions to a sustainable future.

“By leveraging its ability to enhance processes, create efficiencies, manage risk, and drive innovation, business will contribute to society and long-term economic growth,” he said.