January 8, 2013
One look at the daily headlines suggests little reason to be optimistic as we start 2013. We are now in the fifth year of the global financial crisis, the Eurozone continues to sputter, and all evidence suggests that climate change is accelerating even faster than feared.
But these headlines tell only part of the story. As we learned in 2012, when we took a moment to look back and look ahead during BSR’s 20th anniversary year, it is just as important to consider the long-term trends. Sustainability depends not only on the factors that are explicitly related to a sustainable economy, but also on broader changes in culture, technology, and economics that define all aspects of our world.
With this in mind, here are some of the big trends we think will shape the sustainable business agenda in 2013.
- Climate is back—and this time, it’s personal. Numbers don’t lie, and it is clear that warming is accelerating in an alarming way. (And for the deniers still out there, here’s the pie chart to end all pie charts.) But some other numbers are even more important. More people are starting to think about how the changing climate affects them personally—from those in Brooklyn’s Far Rockaway who weathered Superstorm Sandy to the farmers in the more than 2,000 U.S. counties that the U.S. Department of Agriculture designated disaster areas, mainly due to severe drought conditions. The Brookings Institution’s U.S. survey asking whether global warming was increasing has rebounded, after big drops from 2008 to 2010 (though the numbers are still not quite to pre-financial crisis levels). All this points to greater sensitivity on the part of consumers and citizens that could create opportunities for companies with climate solutions, and increased pressure on companies that ignore the issue.
- Labor rights: Time for a reboot. The tragic fires in Bangladeshi apparel factories provided the coda for a year in which working conditions in global supply chains received renewed attention. Companies relying on such supply chains—as they all do—should strengthen their efforts to ensure that basic rights are respected. The old models of disconnected factory monitoring won’t do. BSR’s Beyond Monitoring framework holds the key to progress through (1) greater attention to purchasing practices and product design, (2) advocacy for better public enforcement of existing laws, (3) the enabling of workers to have more of a voice, and (4) deeper industry collaboration.
- New measures of value—natural capital. While Rio+20 appeared to be unsuccessful, the concept of measuring natural capital gained steam in Brazil last June. It is entirely possible that Rio+20 will be judged a success by economic historians if it marks a turning point away from “externalities” and toward holistic measures of value that deliver genuinely sustainable prosperity. With more companies looking at integrated reporting—and more considering how to do full-cost accounting that includes natural capital, reputational capital, and other non-traditional assets—the ideal of markets that reward long-term thinking is starting to seem feasible. Success will not be declared in 2013, but there is important progress to be made.
- Human rights moving to the mainstream. The integration of the Guiding Principles on Business and Human Rights is proceeding quickly inside many companies. By the end of 2013, human rights policies and practice will have completed a two-year journey from leadership practice to threshold expectation. Companies that fall behind this curve will face disrupted operations, reputational risk, and, thanks to cross-border litigation, the potential for legal liability as well.
It is equally important to consider broader changes that will shape everything business does, and figure out what the “sustainability angle” is for that. With that in mind, here are three more things to keep an eye on in 2013 that might just have more of an impact on sustainability than “pure sustainability” questions do.
- The industrial internet and Big Data. As GE’s CEO Jeff Immelt has noted, connected devices can become “instruments of understanding,” and the obvious potential is there for massive improvements that save energy, water, and other scarce resources.
- Economic stagnation. Economies are sluggish around the globe. China, Brazil, and India have each slowed in the past 12 months, joining the mature economies in the sick bay, at least in relative terms. Pressure on companies to hire and limit executive compensation will remain present in this environment, rewriting the corporate responsibility agenda.
- Technology gone wrong. Today, big technological bets are being placed to deliver more energy, health care, and even everyday items with nanotechnologies. Most of these technologies are likely safe, but none of them is entirely without risk. The recurrence of low-probability/high-impact events like the 2010 spill in the Gulf of Mexico will recur. The only question is what will happen and when. Businesses need to be ready to address the concerns of the public and regulators about these risks.
We will all undoubtedly be surprised by new ideas and events that emerge over the course of the year, but as futurist Peter Schwartz told a group of us at a BSR dinner debate in 2012, even if predictions for the future change slightly, they’re rarely a surprise. As he put it, “Seeing the future is the easy part. Taking it seriously is the hard part.”
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.