The 10 sustainability "megaforces" threatening your business

Businesses have been urged to step up their efforts to ensure they are resilient to an increasingly resource-strained world, after a new report by KPMG identified 10 "global sustainability megaforces" that could derail businesses' plans over the next two decades.

BusinessGreen runs down the list below.

Climate change

KPMG says this could be the only global megaforce that directly affects all others, with annual output losses ranging from one per cent per year, if strong and early action is taken to tackle rising temperatures, to as much as five per cent a year, if policymakers fail to act.

Energy and fuel

Fossil fuel markets are likely to become more volatile and unpredictable due to higher demand, shifts in the geographical pattern of consumption, supply and production uncertainties, and increasing regulation to tackle climate change.

Material resource scarcity

As developing countries industrialise rapidly, global demand for material resources is predicted to increase dramatically, says KPMG. Businesses are therefore likely to face increasing trade restrictions and intense global competition for a wide range of material resources that become less easily available. However, such scarcity also creates opportunities to develop substitute materials or to recover materials from waste.

Water scarcity

Based on a forecast that the global demand for freshwater will exceed supply by 40 per cent by 2030, KPMG warns that businesses may be vulnerable to water shortages, lower-quality water, price volatility and resulting reputational challenges.

Ecosystem decline

With global ecosystems showing signs of breakdown and stress, more companies are realising how dependent their operations are on the critical services these ecosystems provide. The decline in ecosystems is making natural resources scarcer, more expensive and less diverse, which increases the costs of water and escalates the damage caused by invasive species to sectors such as agriculture, fishing, food and beverages, pharmaceuticals and tourism.

Population growth

The world population is expected to reach 8.4 billion by 2032, increasing pressures on ecosystems and affecting supplies of natural resources such as food, water, energy and materials. KPMG maintains, however, that this population boom also provides business opportunities to grow commerce and develop new ways of addressing the demand of growing populations for agriculture, sanitation, education, technology, finance and healthcare.

Wealth

Within growing populations, the middle class is forecast to grow 172 per cent between 2010 and 2030. This presents a challenge for businesses, which will be required to provide services and goods to this new middle class market at a time when resources are likely to be scarcer and more price volatile. Additionally, increasing wealth means that many companies will no longer be able to take advantage of "cheap labour" in developing nations in the same way they have previously.

Urbanisation

By 2030, all developing regions, including Asia and Africa, are expected to have the majority of their inhabitants living in urban areas. Virtually all population growth during the next 30 years will be in cities, which will require extensive improvements in infrastructure, such as construction, water and sanitation, electricity, waste, transport, health, public safety, and internet and cell phone connectivity.

Food security

Global food prices are predicted to rise 70 to 90 per cent by 2030 as a result of growing populations, water scarcity and deforestation. Farmers in water-scarce regions are likely to have to compete for supplies with electric utilities and mining, as well as with consumers.

Deforestation

Wood products contributed $100bn per year to the global economy from 2003 to 2007, while the value of non-wood forest products, mostly food, was estimated at about $18.5bn in 2005. But the OECD predicts that forest areas will decline globally by 13 per cent from 2005 to 2030, mostly in South Asia and Africa, hitting the timber industry as well as downstream industries such as pulp and paper. However, KPMG notes that new opportunities may arise through the development of market mechanisms and economic incentives to reduce the rate of deforestation such as the UN-backed REDD+ programme.