by: Joel Makower
So, what will the world look like? And how should forward-thinking companies prepare?
That's the theme of an intriguing new report from the U.K.-based Forum for the Future and the consultancy Capgemini. The free report, Acting Now for a Positive 2018, Preparing for Radical Change: The Next Decade of Business and Sustainability, examines four scenarios of what the world might look like from a sustainability perspective and offers advice on how to be ready for any of them.
The years 1998-2008 have been dubbed the NICE decade — for "Non-Inflationary Constant Expansion" — marked by growing markets, consumption, population, and profits; fueled by relatively cheap debt, energy, food, labor, and raw materials; and supported by regulations geared toward globalization. But, as many of us are painfully aware, there has been a nasty side to all this NICEness: deteriorating ecosystems, burst asset bubbles, burdensome debt, infrastructure bottlenecks, and billions of people with unmet needs, or who were left behind during the growth years.
During NICE times, there's little reason to question the role of business. Its purpose, for most observers, remains little changed from Milton Friedman's observation that the purpose of business is to maximize shareholder value. To the extent companies have needed prodding to address environmental and social concerns, it has come in the form of piecemeal interventions — regulations, incentives, partnerships, etc. Being seen as green or sustainable has been mostly a matter of responsibility and reputation, not as a business imperative.
All that's changing, but exactly how isn't clear. The report offers four plausible scenarios, "created from our bank of hundreds of factors from previous 'futures' projects" and augmented with a series of joint workshops between Capgemini and Forum for the Future. They range from a better-than-expected scenario, a business-as-usual scenario, and two others that paint very different pictures from the status quo.
For example, in a scenario titled "The Global Interest," large businesses are "globally integrated enterprises with a sense of global citizenship, but limited ties to any particular place. They try to maximize shareholder value over years rather than quarters." In another scenario, "The National Interest," most global businesses are broken up into regional groups along geopolitical lines, creating national franchises that make them appear as local as possible, with every business primarily responsible to the sustainability of its nation or region. In "Patched-up Globalization," there are still large global companies, many protected by their home governments in return for contributing to priorities like poverty alleviation. And in "Me and Mine, Online," businesses are "coordinating hubs or delivery partners in ultra-flexible networks, not companies as we understand them today." These hubs coordinate profit-seeking activity by outsourcing everything except the coordination of the many different partners needed to get things done.
I've barely done justice to each of these scenarios, let alone their implications and the respective roles of government, shareholders, and NGOs in each. You'll have to pore through the document yourself, which I highly recommend.
What's implicit if not explicit from this report is that the business approach to sustainability is different in each scenario because the practical manifestation of sustainability itself is different. (Some will cavil that there is only one pure manifestation of sustainability, a complex topic beyond the scope of both this report and this column.)
One common theme is that companies will need to meet customers' and society's expectations with a supply chain that faces resource constraints and changing patterns of globalization. "This is a more important factor than consumer demand for sustainable products," write the authors, pointing out that "the supply chain pressures remain as we move into a recession, even if consumer demands for sustainable products declines."
So, should companies wait and see which scenario unfolds, or are there things that can be done now? Say the authors:
In an interconnected world, it is sometimes hard to see who should act first. The scenarios show it is in business's own interest to take the first step. Waiting for governments to regulate for all risks will be too late and too costly.
The key, they say, is to act now, embedding sustainability into decision-making and a company's key business functions, and by creating alliances and pursuing strategic opportunities.
No company in the world is currently prepared for the changes ahead. The four scenarios are plausible but very different. Whatever happens next, business-as-usual is not an option, even after an economic recovery. Our scenarios show that every aspect of business will change: the demand from customers; how goods or services are produced; the supply chain; the nature of competitive advantage; the way staff live their lives; and the regulatory context for business.