Marga Hoek: “The decade of sustainability”

Sustainable business in the 2020s

We have just entered not only a new year, but a new decade as well. A decade in which sustainable business and capital will develop and grow in an unprecedented way. Throughout the 2010s, technology has proven to be the definite game-changer. This will continue in the 2020s, yet the perspective will be from society at large, as the shift to sustainable business and capital will no doubt be the most significant shift of the next decade.

It is absolutely vital that business and capital use technological means to make this shift to sustainability. The numbers tell us that business will fail in a world that is falling apart due to climate change, resource scarcity, lack of drinking water and growing inequality. Public concern on the impact of climate change is growing rapidly and rightfully so.

The whole point of setting the Sustainable Development Goals for 2030 is that with this deadline in place, we will aim to achieve them in time to safeguard a functioning and lasting world and economy. Since we adopted the goals in 2015, there has been much preparation. The next ten years will have to be a period of action, rather than words.

Business for good is good business

Business and capital should also want to achieve the Goals. The Sustainable Development Goals offer tremendous new market opportunities, 12 trillion dollars till 2030 to be precise.

The Goals also inspire new ways to relate to customers and employees, build company reputations, and trigger organizational agility. They also write the roadmap on how to become and stay relevant in the market and the economy.

Being on the forefront of sustainability during the next decade will mean being on the winning side of business. This can be done with a positive business case: business for good is in fact good business, like the title of my book The Trillion Dollar Shift states. So, what are the emerging trends for companies to build on throughout the 2020s?

The millennial and Gen Z consumers will drive change in the 2020s

Sustainability will become much more important to big and small companies in the year and decade ahead, as new generations become the largest portion of both consumer and workforce markets. Millennials are already a large proportion of the consumer and labor markets, and they have noticeably started to be a driver for sustainable change. They demand purpose-driven companies as employees, are willing to pay more for sustainable products, and do not accept non-sustainable practices from companies. Generation Z, entering the workplace and consumer market right after them will continue to demand action. A recent McKinsey study showed that 90% of Gen Z expects brands to take a responsible approach to societal issues. Companies will have to get a move on if they want to become and stay relevant since they will need to respond rapidly and at scale to the major changes ahead in workforce and consumer demands.

Technology for good

Technology is the biggest accelerator for sustainability in the 2020s, or at least it should be. Smart companies are already aware that they should use technology to drive sustainable change. In the next decade, every company, regardless the sector, needs to go tech. Small and big data, robotics, AI, drones and other innovative technologies offer new pathways to sustainability as well as business opportunities. Technology creates a hyper transparent future since it is driving new possibilities and expectations for real time tracking, measuring and decision making around the globe. Thus, these new technologies are crucial for transforming supply chains, products and services as well as the way companies communicate and interact with clients and stakeholders. We will need to rely on technological innovation to enable us to beat climate change by inventing and scaling electric vehicles in ways that hasn’t been effectively addressed yet, like trucks, ships and airplanes. By inventing cheap as well as long-term storage solutions, accessible solar power, carbon capture and storage, and hydrogen solutions, the companies with technological solutions will thrive, and so will our planet.

Circular economy for real

The 2020s will compel a major shift toward a circular economy. For companies, incremental changes in the supply chain will no longer suffice. Supply chains will need to be redesigned and reinvented as technology enables the transformation and the new generations demand it. Anti-plastic sentiment is already higher than ever before and will translate into a major change. The UK Plastics Pact for instance, with a roadmap to 2025, demonstrates the change ahead. And it is a crucial change, considering that inaction means there would be more plastics in the sea than fish by 2050. In the next decade, governmental policies and tax systems will have to change to support recycling rather than frustrating it and to put a, right, price on carbon and resources. Even without these changes, consumers will demand more recycled packaging and sustainable supply chains. Consumers will insist upon a no waste policy which will necessitate a fresh perspective on how we do business, and will require the bold move to a real circular economy.

The investment shift

As in the next few years the growth of the concern on climate change will accelerate, regulatory pressures will increase as well as the demands for corporate companies to disclose climate and other ESG related risks, the impact of sustainability on investments will see a tremendous growth of the next decade. From the risk side, there is a need to. The above creates a what we call transitional risk, a risk that results from policy, legal, technology and market changes. On the opportunity side, it becomes increasingly clear that do not underperform but outperform ‘mainstream’ investments and thus, there is a business reason to shift. Last but not least the new generations demand sustainable investment, banking and mortgage products and services and thus will drive change throughout the financial sector.

The 2020’s will be the decade of sustainability. It will mean adapt and thrive, or deny and die. It is literally the tip of the iceberg we see now. The future of all of us and thus of business relies on our joint ability to transform. Tackling the challenge means new opportunities for growth, innovation and resilience investments. We are entering not only a new year, but a new decade. The decade of sustainability.

Marga Hoek, global author & speaker

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