Top Sustainable Business Trends of 2014
From Joel Makower and the editors of GreenBiz.com
It’s easy to look at 2013 as a series of disappointments and frustrations, at least through the lens of sustainable business. Companies continued to tinker with incremental changes in their products and operations to reduce their carbon emissions, energy use, waste, chemicals of concern and other aspects of their environmental “footprint.” All told, they were necessary but wholly insufficient to address their fair share of environmental impacts. Meanwhile, scientists reported that the climate continues to cross new thresholds of carbon concentration and temperature rise, while the global growth of middle-class consumers continues unabated. Political leaders around the world continued to dither on decisive action on climate and other pressing environmental and social challenges. And citizens around the world demonstrated relatively little concern over the fate of their planet’s environment — at least not enough to make significant changes — focusing instead on the daily realities of getting by in still-shaky economic climes.
That would be the easy assessment. But it’s hardly the full story.
Our assessment is somewhat more optimistic, powered by significant shifts in attitudes and outlooks among companies and their investors and customers, the growth of technology poised to leapfrog progress and accelerate change and a growing recognition among the public that “sustainability” isn’t just about preserving icebergs, rainforests and charismatic megafauna. It is also about public health, community well-being, food security, affordable housing and alleviating poverty.
In a world where technology enables pervasive and persistent connectivity of just about everyone and everything, there are signs that people — from business and political leaders to everyday citizens and consumers — are themselves making connections between the well-being of species and ecosystems and that of their companies, communities and families. And that is being reflected by an upsurge of concern and action by the private sector.
THE FUTURE, FASTER
Some of our optimism is reflected in the Law of Accelerating Returns, promulgated by Ray Kurzweil, an American author, inventor, futurist and a director of engineering at Google. It describes the notion that people tend to overestimate what can be achieved in the short term (because we conveniently tend to leave out necessary details and simplify complexity), but underestimate what can be achieved in the long term (because the effects of exponential growth of technology and ideas are misunderstood or overlooked).
Kurzweil’s law can be seen in a number of sustainability-related inflection points, some of which took longer than expected but are now on steep, upwards trajectories. Consider renewable energy, long considered a niche technology: It is on a growth path many experts didn’t see coming. Seventy percent of new power generation capacity added globally between 2012 and 2030 will be from renewable technologies (including large hydro), according to Bloomberg New Energy Finance. Only 25 percent will be from coal, gas or oil, with the remainder from nuclear. Solar installations are growing at 30 percent annually in the United States, and are on track to reach a million installations by 2016, generating the equivalent of more than 14 coal-fired power plants, according to GTM Research. Clearly, renewables are no longer niche.
Electric vehicles may be on a similar path, though they are several years behind solar. Just five years ago, no one foresaw EVs having any significant market uptake. Technological advances — not to mention the cool, high-performance image created by Tesla Motors — has led every major car company to promise one or more EV models in the next year or two, many during 2014. They still represent a tiny fraction of sales in the sector — but so did solar not that long ago. We expect EVs, too, will reach an inflection point in the near term.
Will other technologies and trends — advanced biobased materials, green chemicals, plant-based protein alternatives, battery storage for renewables, ultra-efficient appliances, and many others — abide by Kurzweil’s law? Some, perhaps many, will. And each that does will advance the global economy further towards a low-carbon and sustainable future.
COLLABORATING FOR A CHANGE
It’s not just technology. Corporate supply chains are transforming as companies look farther upstream, beyond what they control to what they can influence. Collaboration is spreading as industries and value chains come together to understand how to shift entire ecosystems of players. That’s especially true in agricultural commodities — soy, palm oil, cotton and more — whose supply-chain tentacles can extend to hundreds of thousands of enterprises around the world. These collaborations aren’t just talk-fests. They’re leading to systemic changes.
Some of these ambitious efforts are due to the rise of sustainability within companies, once seen as a nice-to-do, corporate responsibility initiative, but increasingly as a core corporate value. In sectors as varied as finance and fast food, companies are recognizing that elevating sustainability leads to innovations, efficiencies and improved resilience amid turbulent markets — not to mention enhanced reputations. It is seen as a business continuity issue in some sectors, as competition for natural resources sometimes pit households, farmers and small businesses with the world’s biggest corporations for access to resources. Where communities compete with big business for access to water or power, communities often win.
In some sectors, the threats to companies extend beyond environmental concerns to social ones — human rights, livable wages, working conditions, economic inequality and other issues. As a result, social and environmental issues, once seen as separate, are coming together inside some companies. They recognize that improving people’s lives — whether through promoting early childhood education, empowering women, investing in local economies or mentoring marginalized youth — is part of the sustainability equation. Equally important, it can have salutary business benefits, such as educating the future workforce, bolstering the economic well-being of customers and employees and creating healthy communities — in every sense of the word — in which to operate. That is to say: It’s just good business.
SCALE, SPEED AND SCOPE
Such positivity notwithstanding, progress remains incremental and slow. The scale, speed and scope of change appears to be inadequate to the challenges we face. Case in point: A 2013 study of 100 companies’ climate commitments by Climate Counts and the Center for Sustainable Organizations found that only about half of those companies’ goals were sufficient to address the companies’ fair share of carbon emissions reductions needed to limit climate change to what scientific consensus deems to be tolerable. Indeed, that study was novel merely for the fact that it weighed corporate climate actions against the realities of science. That had never been done.
Water is another area where corporate activity is timid and inadequate. As droughts accelerate and population and economic growth lead to overpumping of groundwater supplies around the world, the need for corporate action on water use (and reuse) is growing from a trickle to a flood. One big problem: The price of water (cheap) doesn’t reflect its value (priceless), especially when a shortage can all but put a company out of business.
As always, it’s a mixed bag of progress, with inspiring stories of leadership weighed against sobering environmental realities.
In the seventh annual State of Green Business report, we assess the current state of sustainable business activity, taking stock of the trends and indicators that tell how, and how well, the world of business is addressing these concerns. Where are we headed? Here, in no particular order, are 10 key trends for 2014:
• Collaboration Becomes an Accelerator
• Chemical Transparency Creates a Window of Opportunity
• Water Rises as a Risk Factor
• Shadow Pricing Steps into the Limelight
• The People Side of Sustainability Gets Legs
• Food Sustainability Gets a Seat at the Table
• Employee Engagement Becomes Strategic
• Energy Storage becomes a Game-Changer
• Cities Become Hotbeds of Promise
• Buildings and Companies Go Positive
Source: State of Green Business 2014 Report