Set sustainability initiatives for managing business opportunity
For its success and growth, business depends on resources _ social, environmental, and economic _ many of which are rapidly being depleted. Governments, consumers, investors, and other important players are thus suggesting that businesses participate to an even greater extent in the global effort to ensure a livable planet.
The risks of taking inadequate action on sustainability _ including at worst loss of license to operate _ are formidable. But the sustainability imperative is also creating tremendous opportunities. The rapidly-changing environment calls for innovation.
Consider just a few issues representing both business opportunity and risk.
Energy consumes a significant portion of an enterprise's spending, accounting for 5 to 20 percent of a typical company's costs. In 2010, revenue from clean energy _ solar photovoltaic, wind power, and biofuels _ rose more than 30 percent over the prior year to reach nearly $190 billion.
Water risks are regarded as "substantial" by 59 percent of the 190 large companies surveyed for 2011 Water Disclosure Global Report. Two-thirds of these risks are considered near-term risks.
Carbon pricing mechanisms have been instituted on either a pilot basis or under long-term programs in major countries. Some emerging-market countries are considering setting up carbon markets of their own under a World Bank scheme.
All of the sustainability factors that influence a company's performance today _ energy prices and availability, supply chain reach and resilience, regulation, and public sentiment, among many others _ are changing quickly and dramatically. Sustainability is about charting a different future for companies and other organizations by either designing and delivering new products and services or delivering products and services in entirely new ways.
Today organizations need to comprehend sustainability pressures and societal responses. They should convert this understanding into opportunities to increase revenue and profits and manage risks more effectively and implement sustainable practices across every aspect of their businesses.
Yoo Jong-ki is a senior manager at Enterprise Risk Services, Deloitte Korea.