Help WRI turn ideas into action all over the world.

You are here

business

The New Language of Sustainability: Risk and Resilience

On February 20, WRI President Andrew Steer participated in event with GreenBiz CEO Joel Makower at the annual GreenBiz summit in New York City. This post builds off that discussion.

Sustainability has become a major business buzzword in recent years. For many, though, it’s still viewed as a philanthropic initiative, disconnected from a company’s core goals, or even a burden that competes with other strategic priorities. That must change.

Fortunately, more leaders are recognizing sustainability risks. At the World Economic Forum in Davos last month, leaders in business, government, academia, and civil society named climate change and water supply as two of the top five global risks facing companies today—and with good reason.

Extreme weather and climate impacts are becoming increasingly common and carrying a significant economic toll. According to the insurance group Munich Re, the number of weather-related loss events over the past three decades has quintupled in North America, quadrupled in Asia, and increased in Africa, Europe, and South America. In the United States alone, 11 events crossed the $1 billion mark in losses in 2012. Hurricane Sandy cost U.S. taxpayers more than $60 billion, striking at the heart of a heavily populated business and financial zone. And, drought in the United States is expected to cost 1 percent of the annual GDP, making it one of the most expensive natural disasters in the country’s history.

Likewise, water risks are increasingly on companies’ radars. More than 1.2 billion people are already facing water scarcity. By 2025, two-thirds of the world’s population will likely experience water stress. According to a 2012 report by the Carbon Disclosure Project, the associated costs of water events for some companies reached $200 million, up 38 percent from the previous year.

So, how can companies link these risks to corporate strategy? How can they push the management of sustainability issues into the center of businesses’ strategic decision-making?

Aligning Profit and Environmental Sustainability

Stories from Industry

While powerful forces like population growth, resource scarcity, and economic austerity are creating the need for transformative changes in business practices, the question remains: Why aren’t “win-win” results for companies and the environment getting to scale? This paper explores that...

Asia Pulp & Paper's Anti-Deforestation Pledge: Sign of a Changing Industry?

Asia Pulp & Paper (APP), one of the world’s largest paper companies, announced earlier this month that it will no longer cut down natural forests in Indonesia and will demand similar commitments from its suppliers. The announcement was received with guarded optimism by Greenpeace, Rainforest Action Network, World Wildlife Fund, and other NGOs who have waged a persistent campaign to change APP’s forest policies.

Indeed, APP’s new policy—which includes sourcing all material from plantation-grown trees, ceasing clearing of carbon-rich peatland, and engaging more with local communities—is significant, both for the business world and forest conservation. APP and its suppliers manage more than 2.5 million hectares of land in Indonesia and produce more than 15 million tons of pulp, paper, and packaging globally every year. Strong action by APP could indicate that the industry is heading for a more sustainable future.

The question is whether APP will follow this positive announcement with action. The company does not have a strong track record, having defaulted on past commitments to end deforestation.

But APP has something else going for it this time around. A rapidly evolving world of improving corporate practices and powerful technology could provide the right enabling environment for APP’s commitment—and others like it—to succeed.

Case Study: Aqueduct Informs Owens Corning Corporate Water Strategy

Owens Corning, a multinational building materials manufacturer, conducted a global geographic water risk assessment using WRI’s Aqueduct Water Risk Atlas. This assessment aims to identify which of Owens Corning’s manufacturing plants are located in areas facing water supply-related risks....

publication
Water

Water Risk to Business Is No Small Drip

At the World Economic Forum in Davos two weeks ago, I was struck by how often the issue of water risk was raised by business executives. As the global economic turmoil is receding, many CEOs and global leaders are turning to other threats—and water is high on the list. For the second year in a row, water crises were named among the top four global risks at the WEF.

It’s easy to see why. More than 1.2 billion people already face water scarcity. By 2025, two-thirds of the world population will experience water stress. That’s largely due to population increase and climate change, but also behavior patterns: Water use grew twice as fast as population growth in the 20th century. The “food-water-energy nexus” was one of the top four megatrends to watch in the recently released Global Trends 2030 report by the U.S. National Intelligence Council.

CEOs increasingly recognize that water is essential for their business models and economic growth. Disrupted availability of affordable, clean water leads to business interruptions, increased commodity costs, and reduced earnings. The extreme drought gripping much of the United States is likely to cost up to one percent of GDP, potentially making it the costliest natural disaster in U.S. history.

Why 2013 Could Be a Game-Changer on Climate

This piece originally appeared on CNN.com.

As leaders gather for the World Economic Forum in Davos today, signs of economic hope are upon us. The global economy is on the mend. Worldwide, the middle class is expanding by an estimated 100 million per year. And the quality of life for millions in Asia and Africa is growing at an unprecedented pace.

Threats abound, of course. One neglected risk--climate change--appears to at last be rising to the top of agendas in business and political circles. When the World Economic Forum recently asked 1,000 leaders from industry, government, academia, and civil society to rank risks over the coming decade for the Global Risks 2013 report, climate change was in the top three. And in his second inaugural address, President Obama identified climate change as a major priority for his Administration.

For good reason: last year was the hottest year on record for the continental United States, and records for extreme weather events were broken around the world. We are seeing more droughts, wildfires, and rising seas. The current U.S. drought will wipe out approximately 1 percent of the U.S. GDP and is on course to be the costliest natural disaster in U.S. history. Damage from Hurricane Sandy will cost another 0.5 percent of GDP. And a recent study found that the cost of climate change is about $1.2 trillion per year globally, or 1.6 percent of global GDP.

Shifting to low-carbon energy sources is critical to mitigating climate change's impacts. Today's global energy mix is changing rapidly, but is it heading in the right direction?

Big Business and Sustainability: The Missing Links

This piece originally appeared on The Guardian's Sustainable Business website.

As another year begins, big business will continue falling well short of taking the leadership role on the sustainability the world urgently needs. While many chief executives now publicly identify sustainability as a key issue for their companies, walking the talk is proving more elusive.

Successful bosses do not procrastinate. So why are boardrooms dragging their feet as sustainability challenges that have an impact on the private sector mount? As an observer of business trends for two decades, I see two interlinked problems hindering progress: first, corporate failure to embed sustainability into core business strategy, treating it instead as a standalone issue. And second, the lack of tools that allow corporations to make this leap in their day-to-day operations.

5 Reasons India Needs a Green Power Purchasing Group

With more than 400 million of its 1.2 billion citizens without access to electricity, India needs extensive energy development. A new initiative aims to ensure that a significant portion of this new power comes in the form of renewable energy.

The Green Power Market Development Group

Today, WRI and the Confederation of Indian Industries (CII) launched the Green Power Market Development Group (GPMDG) in Bangalore, India. The group will help boost the country’s use of renewable energy like wind and solar power.

The public-private partnership brings together industry, government, and NGOs to build critical support for renewable energy markets in India. For starters, the group will connect potential industrial and commercial renewable energy purchasers with suppliers. A dozen major companies belonging to a variety of sectors—like Infosys, ACC, Cognizant, IBM, WIPRO, and others—have already joined the initiative and have committed to explore options for increasing their use of renewable energy.

The group also aims to make India’s clean energy development more mainstream. Green power buyers and generators in India currently face policy and regulatory barriers—such as high transmission costs and extensive approval processes. Through the GPMDG, the private sector will be able to work constructively with government agencies to instigate the types of renewable energy policies that will spur greater clean energy development.

Pages

Stay Connected

Sign up for our newsletters

Get our latest commentary, upcoming events, publications, maps and data. Sign up for the weekly WRI Digest.