Think tank SustainAbility has released its 2017 trend report, which highlights 10 issues that are expected to have the greatest influence over sustainability in the upcoming year and their implications for the private sector. 2016 was a year of profound global change, rife with protectionism, populism, and political and economic instability, whose far-reaching effects pose a potential threat to the further advancement of the sustainability agenda.
Yet there remain significant opportunities for the private sector to solve global challenges — particularly in the case of the United States, where executive orders undercutting climate progress are being churned out on the daily. A growing number of companies are already taking action, aligning corporate strategies with the Sustainable Development Goals (SDGs), pursuing ambitious climate targets, and developing plans to address health and food challenges.
Globalization Under Pressure
Slowing global trade, expansion of protectionist measures, and a rapid rise in nationalistic and xenophobic rhetoric are increasingly prominent issues globally. In 2015 alone, G-20 governments enacted 644 discriminatory trade measures and international lending has decreased by more than 10 percent since 2014. And in his first week in office, US President Donald Trump has already pulled the plug on US involvement in the Trans-Pacific Partnership, leaving European leaders concerned about the future of the Transatlantic Trade and Investment Partnership. Growing anti-trade rhetoric and Brexit have caused the World Trade Organization to revise its global trade forecast for 2017 from a 3.6 percent expansion down to between 1.8 and 3.1 percent.
What’s more, SustainAbility says that analysts are warning that the new landscape is already forcing some companies to scale back international operations and is affecting cross-border capital flows. The long-term impact on sustainability, however, remains to be seen. Moving forward, companies will need to determine the impact of barriers to trade and capital flows generally, as well as what this means for corporate sustainability.
The scale and sophistication of cybersecurity attacks are growing, putting businesses, governments and individuals at increasing risk. In 2016 alone, the US presidential election fell victim to hacking and Yahoo announced that over a billion user accounts were stolen in 2013 by an unspecified hacker, marking the largest known data breach in history. With over 20.8 billion devices expected to be connected to the Internet by 2020, the risk for cybercrime is expected to increase, making robust data-protection capabilities and improved policies for both governments and companies imperative.
Climate Leadership Shake-Up
The climate leadership landscape has undergone major transition since the negotiation of the Paris Agreement and its ratification in late 2016. As the Trump administration reveals its plans to lead the US back down the dirty road to fossil fuels, China has stepped up its climate change efforts, emerging as an unlikely champion for renewable energy. European countries continue their advocacy for implementation of the Paris goals, while private sector and regional and local government activity on climate has increased. Hundreds of companies and investors have called on President Trump to continue US participation in the Paris Agreement, as well as support for policies to accelerate a low-carbon future. Further evidence of the private sector’s growing importance in the fight against climate change is the growing divestment movement. Institutions and individuals controlling more than $5 trillion in assets have pledged to divest from fossil fuels over the last 15 months.
Uncertain Next Steps for SDGs
Since their launch in 2015, the SDGs have attracted significant corporate, investor and government attention, but concrete action, such as setting goals, targets or metrics to track progress, have been limited. Despite this, consumer expectations of corporate leadership on the SDGs continue to increase, with 81 percent of millennials believing business has a key role to play in achieving the SDGs, according to a report from Corporate Citizenship.
The investor community has been doing its part to push forward the SDG agenda by launching new initiatives that provide financial support to companies and startups creating infrastructure and solutions key to achieving the SDGs.
The power of technology companies to influence public consumption of information and shape public opinion has reached new heights. The rise of social media as a major distributor and publisher of news, often operating with little editorial or quality control, has growing implications for governments and business. The proliferation of fake news — which impacted the US election and could potentially influence voters heading to the polls in France, Germany and the Netherlands — has forced technology companies such as Google and Facebook to reconsider the boundaries of their responsibility for content shared on their platforms.
Sweden, Germany, Finland and Indonesia are just a few of the growing number of governments actively tackling fake news, calling on technology and social media companies to censor fake news or else face “compulsory measures.” Businesses are also becoming increasingly aware of the implications false data may have on brand reputation and consumer trust: both PepsiCo and New Balance faced consumer backlash after fake stories misquoting senior executives hit the Internet.
Feeding the Future
Businesses in the food and beverage industry are increasingly coming under consumer and regulatory pressure to address food-related health and climate change issues. As affluence rises, so does the prevalence of obesity and diseases such as Type 2 diabetes: According to the World Health Organization, diabetes rates have increased by approximately 400 percent and global obesity rates have doubled since 1980. Meat consumption continues to increase in developing countries, but the negative impact of meat production and consumption on the environment and human health has led countries such as Denmark to consider taxing red meat in order to fight climate change, and some of the world’s largest meat producers are responding to consumer demand for non-meat proteins. Growth in the area of plant-based proteins is expected to continue as consumers prioritize health and wellness.
Financial Disclosure Requirements Emerging
Investors are increasingly paying attention to sustainability and ever more financial institutions have units dedicated to sustainable investing. In 2016, more than US $8.72 trillion was invested according to sustainable strategies, a number that is up by 33 percent since 2014, according to the US SIF Foundation. Regulators and standard-setting bodies continue efforts to create disclosure guidelines, and pressure from investors is spurring companies to be more transparent about sustainability risks and performance.
Access, Antibiotics and Pandemics
Access to medicine, antibiotic resistance and pandemics continue to be some of the most acute challenges faced by global health institutions and businesses in their efforts to improve human health. Two billion people across the globe still lack access to medicine and recent outbreaks of Ebola and the Zika virus have underscored the lack of preparedness of the global community to effectively deal with pandemics. Additionally, the overuse of antibiotics has resulted in the spread of resistant super-bugs, from which more than 700,000 people die each year. This number is expected to reach 10 million by 2050. Proactive planning, along with improved access to medicines and fighting antibiotic resistance will remain central health themes influencing governments and the corporate sustainability agenda of pharmaceutical companies, in particular.
Ever More Consumption
Across emerging economies, increasing affluence and economic growth are being accompanied by growing consumption and resource use. This presents a number of human health and sustainability challenges, as countries outpace the capacity of their waste-management systems and land and marine ecosystems. Despite these challenges, companies operating in emerging markets have a unique opportunity to partner with local communities on finding mutually beneficial solutions to tackle the negative economic, environmental and social impacts of rapid growth.
A Jobless Future Draws Close
A recent Ipsos MORI report revealed that unemployment is a major concern across the globe, and according to SustainAbility’s trend report, their worries aren’t unfounded. Artificial intelligence, robots and other technologies are creating a shift in the work landscape — researchers at Forrester and Oxford University estimate that 6 percent of jobs will be automated by 2021, and 47 percent by 2035. In response, countries including Finland, Canada, Italy and the Netherlands are launching national basic income pilot projects as a means to provide universal income as economies change through automation. Experts also agree that the nature of jobs that remain in the future will change.