Jon: When I think about resource scarcity and climate change there are quite fundamental changes happening over the next 10, 20, 30 years. Firstly, the number of people on the planet is going to grow and by 2025 we could have eight billion, by 2050 nine to 10 billion. Those people are going to want to eat food, consume power, consume water; about 50% more energy, 40% more water, 35% more food will be needed to feed, house and clothe those people to give them a way of life.
Will: For decades now science has been telling us that we can expect to see certain levels of sea level rise regardless of whether we stop producing greenhouse gas in the global economy for the next 20 years or so. So, some of these big issues are locked in. Others are definitely reducible. We can, and will need to, improve the quality of what we do and how we do it. That’s going to take some time.
Jon: We need to reduce carbon emissions at 6% per annum if we're going to avoid dangerous climate change. We're currently doing about 10%, of that, 0.7% per annum. I think where we really need to focus is on the collision between megatrends. So for example the impact of changing climate on water scarcity, on food production; the impact of technology on slowing climate change; it's quite easy to say well I'm not changing my market focus, I'm remaining for example in the UK; what's going to change for me because I'm very familiar with this market. The difficulty is that many of the impacts of climate change and resource scarcity will be felt overseas but because of the global nature of supply chains in particular, then those impacts will come back to the UK.
Will: How fast is this change happening? Where will it happen? I’m buying my cocoa from Ghana. How long will cocoa grow in Ghana? I’m buying my coffee from Uganda. How long will it grow in Uganda? If we warm the planet 2ºC or more, which will be a bad thing to do, no more coffee grows in Uganda, no more cocoa grows in Ghana, so you had better start planning your alternative growing areas pretty soon.
Jon: I think about what PWC can do to really help its clients, both public sector governments for example and private sector. Those organisations are facing exactly the challenges that we've described. And if we can begin to translate our understanding of megatrends into business issues, for example how do I think about my corporate strategy in a way that looks at these new market opportunities full of new technologies for example; what risks do I face in my supply chain as another example; how do I reduce costs and reduce dependence on scarce natural resources.
Will: So, smart companies are looking at something like water and mapping the world over the next few decades and saying where are the people going to be, where is the water going to be, can we honestly justify a heavy water footprint. The Chinese import vast amounts of water intensive products like beef, for example, from wetter parts of the world. They don’t want to produce beef in China. They want to use their water for something else. So, it’s already becoming a virtual currency.
Jon: And if you look at our CEO survey and you look at the questions around how important do you as CEOs think sustainability and climate change are, it's a sort of top three issue; more than 50% of CEOs saying we think it's important. I remember as a child my father always saying to me turn off the lights boy. In fact it's now my children saying that to me. So I think we're seeing a generation of behavioural change which perhaps will be the most important way that we can personally take some responsibility for avoiding dangerous climate change.
Will: On resource scarcity, let’s try to decouple our ambition to have more stuff with the need to own and replace as much as we do and that doesn’t need to be a bad place. That doesn’t mean to say you’re darning your socks for the next 30 years, but it does mean waste less, choose carefully, and be aware.
Jon: I think we have an absolutely brilliant opportunity to help our clients understand the global context of these megatrends, both from a domestic market point of view, but as they expand overseas, and we're a global firm.
Will: Now, we all know that prevention is better than cure. We all know that we’re heading for a set of really very challenging circumstances with volatility of prices. Food and energy and water we’ve touched on. The question is how do we try to make and support people making a business case for that sort of decision and investment. I think there has been a failure to articulate what a great place the world can and needs to become not just for us sitting here in absolute luxury in global terms, but for a shepherd in Somalia or a cocoa farmer in Sierra Leone. They have an absolute aspiration to be part of this successful dynamic developed world and why not and they increasingly know about that because their smartphone tells them.
At current consumption trends, technology and proven reserve levels, there could be just half a century’s worth of oil and gas supply available. At the same time, meeting our development needs is highly dependent on fossil fuels, which in turn leads to more carbon emissions and a warmer and more volatile climate. At current rates, we will breach the carbon budget needed to keep temperature rises to two degrees by 2034.
Overall, our economic development model is extending beyond the planet’s capacity to cope and the interconnectivity between trends in climate change and resource scarcity is amplifying the impact. Climate change could reduce agricultural productivity by up to a third across large parts of Africa over the next 60 years, according to estimates by the United Nations Environment Programme (UNEP).
But in practice, we expect policy actions will be unpredictable and inconsistent. Policy makers are likely to be driven by short-term reactions to natural events. We believe that businesses must play a leading role in mitigating environmental damage, while making their organisations more agile and resilient to the changes that an unpredictable climate and policy environment will bring.
Sustainability will play a particularly important role in how businesses respond. Corporate Social Responsibility used to be a ‘luxury’ businesses liked to speak about but not anymore. Sustainability is becoming the lens through which a business is judged by its consumers, workforce, society and even its investors.