Collaborate or lose money: New report warns of global sustainability pressures on big business
Resource pressures in global commodity markets will derail the business goals of multinational corporations unless they start to collaborate with local stakeholders.
That is the warning of a new report from the Earth Security Group – an international sustainability consultancy – which analyses seven key commodities markets and identifies actions that companies operating in stressed markets can take.
CEO of the Earth Security Group and author of the report Alejandro Litovsky said: "Beyond a common appreciation of commodity "super cycles", analysts and investors should be aware that future disruptions in the global supply of resources will be linked to slow-burning sustainability pressures.
"Governments and businesses must anticipate these risks and cooperate across national borders to promote strategic investments in sustainability and resilience."
Cornering the market
One of the examples given by the report is the struggling corn market in the US and its corresponding effect on food prices in Mexico. Over the past four years, an increasing number of droughts has lowered US corn output to 1995 levels, forcing prices up to record highs. As a result, the price of tortillas - the main staple food in Mexico - has tripled in many areas since 2008.
The resulting strategic opportunity, according to the report, is for the private sector to invest in agricultural and irrigation equipment in the south of Mexico, which could increase domestic corn production by 24 million tonnes – more than enough to meet national demand.
Profit and people
Such investments will not only help multinational companies manage their exposure to complex resource risks, according to the report, but will also underpin national and global development goals, including the Sustainable Development Goals (SDGs) to be agreed by the United Nations later this year.
Commenting on the report, Investec Investment Institute executive director Katherine Tweedie said: "From an investment perspective, we see two of the greatest challenges to global resource security being productivity shortfalls in agriculture, particularly in developing economies and lack of efficient transport and distribution mechanisms for food and water globally.
"We believe that the ability to increase agriculture productivity through inputs such as seed, fertiliser and farm requirement are critical components to 'doing more with less'. Secondly, we believe that increasing the efficiency of food storage, food transport and basic underlying infrastructure will help solve the high wastage in the global food chain."
Sustainability Live 2015
‘From competition to collaboration’ is one of the sessions at edie's brand new high-level conference during Sustainability Live 2015. The session, to be chaired by Forum for the Future, will look at how the creation of 'value networks' is helping businesses reap the rewards of collaborative change and bring more sustainable products and services to market.