Sustainable development will change your world much faster than you realise.
I’m not a hippy. I am a hard-core capitalist, who believes that unless we change the course of capitalism, we are going to fail. This has nothing to do with idealism. This is about fundamental shifts in business practice.
I’ll give you one example. Mobile phones are made in China, where labour is cheaper. People who buy them expect next day delivery. To achieve this, it takes 163 tonnes of fuel to power one jumbo jet carrying 110 tonnes of iPhones from China to Europe. There is no tax on CO2 so you can make the supply chain as long as you like.
But this world is not sustainable. In June, for the first time ever, it rained on the North Pole. Physics tells us that if you put water on ice, the melting will accelerate. So this is now a self-accelerating system that can cause deep trouble.
In order to meet the Paris Agreement targets on climate change we need a massive change in transportation, in our food system, in how we operate cities – in everything.
At the World Business Council, we work with most forward thinking companies to push the boundaries. There is a pretty strong business case now for being serious about sustainability in any company. Most companies will agree that you cannot attract the right talent anymore if you don’t have a credible sustainability story.
If you look at the world through the lens of UN’s Sustainable Development Goals (SDGS), you will discover 60 new business opportunities – new technologies, new business models – that will create USD12 trillion of incremental economic value and 380 million new jobs by 2030. Investors need to look at those 60 hotspots and see how well they’re reflected in their portfolios.
Revolution of capitalism
Business is the most powerful lever to change any course of anything, and we have to do three things. First, we need to continue to innovate. If you want new solutions, you need new technologies and new business models.
Secondly, we need to change the way we calculate the value of things, to redesign risk assessment and risk management to include the risk of climate change and other challenges to sustainability. The more sustainably a company operates, the lower its risk profile ought to be, and the financial industry should reward it with a lower cost of capital.
The third thing we need to do – and we need to do it together – is to move away from the purely competitive model to a much more collaborative one.
I occasionally call it the “revolution of capitalism”, but most people find that term a bit scary. This is not against capitalism, not at all, it is just about adding better incentives into it.
We are stretching our planet beyond what it can handle
Soon, every company may have to prepare a scenario of what will happen to their business model in a world where global temperature has gone up by two degrees. Many companies will not exist in that world.
Those are the question that companies will be forced to face. Leading investors in the world will begin to ask questions which will then shape company strategy, drive innovation and change the world.
You might have noticed that I have not used the T-word once. That is because the US President is completely irrelevant. If US companies do not take part in this move towards a low carbon economy, they will be out of business very soon. Because China and, with some luck, Europe will drive the innovation. This is about competitive positioning. That’s why the “We Are Still In” campaign is now so prominent.
We are going to have to work on many, many different solutions and see which has the most traction. That could, for example, be growing meat in laboratories, or setting up a cloud-style system for electricity production. People who make the necessary changes will in future be rewarded with a lower cost of capital than those who get stuck in their old coal power plant ways.
It’s about planetary boundaries, and it’s about jobs. We are stretching our planet beyond what it can handle, and I really want you to think: what you are going to do about it?
