Six growing trends in corporate sustainability
Trend 5: Awareness is on the rise regarding the scarcity of business resources
Between 2009 and 2030, demand from the global middle class could grow from $21 trillion to $56 trillion.
As markets grow, the strain on natural resources can lead to critical shortages and significant business risks.
Some resource constraints are already happening, whether due to limited supplies, geopolitics, price rises or sustainability concerns. And 76% of survey respondents said that they anticipate their company’s core business objectives to be affected by natural resource shortages in the next three to five years.
Resource availability is rapidly becoming a de facto reporting requirement for some companies. A significant number of survey respondents said they are being asked by key constituencies about sustainable sourcing and procurement of raw materials, such or forest products (34% of respondents), business risks associated with scarcity of water (33%) and the use of rare earth minerals and metals (20%).
Another concern is “conflict minerals” — those mined in conditions of armed conflict and human rights abuses.
Still another concern is palm oil which has affected food processors. The oil — common in the commercial food industry due to its lower cost and the high stability of the refined product when used for frying — is seen as a cause of substantial and often irreversible environmental damage, including deforestation, habitat loss of critically endangered species and climate change.
Faced with activist and customer scrutiny, large companies have had to better define and certify palm oil harvested sustainably.
And then there are “rare earths,” a collection of 17 chemical elements in the periodic table that are used extensively in technologies such as:
- Wind turbine generators
- Electric vehicle motors
- Fuel cells
- Energy-efficient lighting
Nearly all (97%) of these materials come from China — creating economic, environmental and national security challenges. Companies relying on rare earths have found themselves seeking means to mitigate these risks.
Such transparency and disclosure requirements offer a peek into a growing future, where the availability and access to strategic resources and materials become a concern to investors and others. Whether driven by regulatory mandates or customer or activist concerns, the rise of such issues in reporting underscores that these materials are intrinsic to a company’s ability to operate.