Discontinuity, complexity and competing priorities: Today’s sustainability trends and challenges
Hannah Pathak, Forum for the Future’s director of UK/Europe, analyses the key sustainability trends disrupting society right now, and how businesses can respond to them.
Right now, the pace of change feels like it is happening fast. In the UK alone, consider the impact of the death of Queen Elizabeth II, political transitions in the Conservative government, a probable recession just around the corner, war only 2,000 miles from our shores, escalating inflation and a cost of living crisis. This all makes for many competing challenges and priorities for multiple sustainability players, including businesses, to consider.
If the pandemic shone a light on inequalities and the vulnerability of our socio-economic systems to systemic shocks, and COP26 spotlit the urgency of net zero transitions, where we are now highlights the interconnected nature of these global events and priorities. For example, tackling inequality is increasingly understood to be a climate change adaptation response, while the war in Ukraine has exposed the fragility of global food supply and in part driven the rapidly escalating cost of living, which – left unchecked – will inevitably push many more into poverty.
For business leaders, whether in a sustainability role or not, understanding the interconnected nature of events and the wider trends we’re seeing is an increasingly essential quality – and four trends in particular stand out right now.
First, a shift from strategy setting to strategy implementation. 60 out of the UK FTSE 100 had net zero commitments in place by Glasgow’s COP26 (November 2021). Since then, commitments have only grown and at least a third of UK businesses now have them. Setting a goal is one thing, but achieving it requires us all to embrace an innovation gap. At the time of setting our strategies, not all potential solutions exist yet, or they lack scale, or the enabling conditions are not all in place. But that should not and cannot deter us from being ambitious; narrowing the innovation gap can be both a daunting and exciting challenge, and is key to the implementation phase of net zero.
Second, net-zero commitments are insufficient, while climate adaptation plans are now a must. For all that net zero commitments are stretching and daunting, they’re also not enough. When looking at the full sum of net zero commitments that exist, and assuming – very optimistically – that all of them would be achieved, they still would not keep us within Paris Agreement levels of warming. So there needs to be more commitments, with more precise targets, and more coordination across sectors to collaborate in hitting them.
We must also recognise that, too often, net zero commitments do not factor in climate adaptation. Our climate is changing right now. From recent record-breaking heatwaves in India and in the UK to Pakistan’s flooding, countries the world over are experiencing the extreme effects of a changing climate. Many have for a long time, with climate and weather-related disasters surging five-fold over the last 50 years. It is critical for business leaders to build not only climate mitigation plans, but climate adaptation ones. Robust adaptation strategies will have the potential to address both the physical and human impacts of climate change in a business’s immediate operations, and of building socio-economic resilience across their value chains.
Third, ESG is mainstreaming with an intense spotlight on delivering. With an estimated one-third of investments now having some element of ESG labelling, understanding the weaknesses and potential for ESG as a mechanism for accelerating positive change is key. The UK stock exchange remains one of the world’s most important financial centres, second only to New York. From growing citizen and customer expectations, to demands from ESG-focused investors and mounting regulatory requirements, the focus on performance against sustainability issues is only getting more intense.
With ESG mainstreaming, critical voices are getting louder, with accusations of greenwash, falling short of ethical aspirations and worse – creating fixes that fail. For ESG to contribute to the deep, systemic transformation the world really needs, there must be integration of environmental and social elements. Siloed approaches won’t cut it; instead, we need to design interventions capable of driving both environmental and social benefits simultaneously.
Fourth, the rules of the game are changing. For businesses really committed to having a positive role in society and on the environment, there is a growing realisation that the “rules of the game” must change. The operating context of our political, legal and economic systems must be transformed, and for everyone. It’s not enough for a trailblazing business to become as sustainable as it possibly can within its sphere of control if the wider context of our long-established (but now no longer fit-for-purpose) systems doesn’t change.
The systems themselves must be transformed. Change is afoot, with many initiatives looking to shift the goals, and rules, of our systems. Consider the Better Business Act, which aims to change UK law to ensure that every company aligns their interests with those of wider society and the environment. Or the Beyond GDP movement, which is exploring alternative economic models that integrate planetary health and human wellbeing. Elsewhere, over 140 countries have signed up to the Organization for Economic Cooperation and Development’s proposals on a Global Minimum Corporation Tax, which aims to ensure tax compliance and a levelling of the playing field between markets. These all speak to the growing moral imperative of businesses to influence the wider systems in which they operate.
So what’s the challenge for leadership?
In this time of discontinuity and escalating social, environmental and economic crises, what are the challenges those in leadership roles face? One is to see and truly appreciate the fast pace of change around us and acknowledge that the waves of crisis we’re experiencing represent discontinuity to several decades of relative stability. This, in all likelihood, is the new normal and we need to learn to embrace, not resist, change.
We must also strengthen our ability to hold in mind multiple time horizons – the urgency of the here and now as well as the need for deep systemic transformation longer-term. The sustainability movement must put away short-term, incremental gains and ‘fixes’ that in all likelihood, will ultimately fail. Instead, we must look beyond conventional notions of ‘sustainability’ to something much more ambitious: a just and regenerative future in which both people and the planet thrive.
Getting there will mean deeply and urgently transforming our socio-economic systems – from food and energy to our economy – and what better time to try for that than in the immense period of discontinuity, complexity and competing priorities we’re experiencing, right now?
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