With more than a billion people unable to access clean drinking water, or enough food or electricity, the prospect of increasing the world’s population by 80 million annually ratchets up already daunting challenges. By 2030, earth’s nine billion people will need 30% more water, 40% more energy and 50% more food to survive.
This growing scarcity of resources across the board already is forcing innovation at forward-looking corporations, which increasingly are realizing that the inter-related problems of food, energy and water threaten their own sustainability. At the same time, many organizations see a business opportunity in increasing efficiency and reducing waste that could offer a reasonable payoff period.
Some of the results are seen, for example, in new technologies that are dramatically reducing the amount of energy needed to create fresh water from salt water, helping to make better use of both of those resources. And as the benefits of the Green Revolution of the last few decades fade, and the population shift from farms to cities accelerates, new farming policies grounded in science, government policies and local solutions are beginning to gain traction.
According to Andrew Winston, founder of Winston Eco-Strategies, and co-author of Green to Gold, the related environmental challenges of food, energy and water are “the final exam for humanity, and it’s the biggest test we’ve ever faced. It’s time to set radical efficiency goals.” He made the comments at a workshop sponsored by the Initiative for Global Environmental Leadership (IGEL) at Wharton, part of a larger conference titled, “The Nexus of Energy, Food and Water.”
The challenge of a fast-growing world population and rising resource demands are being pushed further by the effects of climate change. So, despite some progress on sustainable environmental policies, the efforts are not scaling up to meet the level of the problems. In 2012, for example, extreme weather events linked to a warmer world were estimated to cost the Unite States $60 billion.
At the same time, however, the effects of global warming could be amplified by 1,200 new coal-burning power plants proposed worldwide. And while more than 300 of the S&P 500 companies report their greenhouse gas emissions to the Carbon Disclosure Project, more generally the corporate responses to climate change and natural resource scarcity often are “marginalized” and are not a high priority compared with “core” concerns such as “product manufacturing or marketing campaigns …” notes the World Resources Institute (WRI).
But corporate views are evolving quickly. Dwindling supplies of the natural resources on which companies depend, and new consumer preferences, are forcing executives to pay attention. WRI believes the priorities are clear:
- Change the corporate charter to liberate sustainability from its “silo” and integrate it into long-term planning — on a par with other operations that create value.
- Give sustainability a seat at the table where capital is allocated. When companies use traditional financial measures that generally fail to give fair value to natural resources, environmental protection often loses out. Better metrics are needed to account for the planetary impact of business decisions.
- Work to integrate the goals of financial managers with those on the environmental team, so they can present to management as a unified voice.
IGEL and Knowledge@Wharton delved deeper into these topics in a special report, also titled, “The Nexus of Food, Energy and Water,” which includes articles on progress underway in desalination (‘New Water’ Offers and Ocean of Hope), agricultural improvements (Growing Food, Growing Problems) and the controversial food-vs.-fuel issue (The Transportation Nexus: Ethanol Is a ‘Food vs. Fuel’ Issue).
You can also download the entire report here.