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by Martin Summers 5th December, 2018
3 min read

Four Scenarios for Sustainability – How to Respond

One of the world’s leading sustainability organisations, Business for Social Responsibility (BSR), recently outlined how business could respond under four possible futures by 2030 – with each scenario illustrating very different levels of centralisation or decentralisation, coordination or fragmentation in politics, economics and society.

Each of the scenarios is plausible, and the 2030 reality will be a sometimes volatile cocktail comprising elements of all four. So how should business and investors prepare?

The first step is to recognise that most ESG (environmental, social and governance) developments do not exist in a political vacuum and manifest themselves in ways that reflect different political, regulatory and institutional realities.

As many parts of the world move away from what has been characterised as the dominant Davos consensus – internationalist, economically and socially liberal – the more important it is to understand that sustainability challenges will be addressed in very different ways, depending on the specific political, regulatory, institutional realities in each country, region, and city.

That is why GK emphasises that our ESG is politically-informed, identifying how ESG risks and opportunities can have material impacts on a business through changes in regulation, taxation, public funding and procurement. Our ESG and political, policy and regulatory due diligence and advisory services address these specific conditions.

The second step is to recognise that, while 2030 is over ten years away, the scenarios vividly present current live sustainability issues that many companies need  to address now, from data protection to automation and demographic change.

The third step is to understand the material impacts that each of these scenarios – and the key elements that comprise them – could have on a business.

For example, under Scenario Two, Move Slow and Fix Things, “health concerns, misinformation scandals, and a global recession undermine trust” and “people become disillusioned with consumerism, big business, and social media”. It imagines an #OpOut movement with tens of millions of people deleting their social media accounts. Such a scenario could result in major risks to the sustainability of big global brands that engage with their customers primarily on-line.

The fourth step is to identify key mitigation actions. For the type of business just described risk mitigation actions might include undertaking more community engagement and investment programmes, to demonstrate that they are not distant global corporations but are firmly embedded in and adaptive to host communities. Such companies could also mitigate risk by demonstrably going significantly beyond compliance requirements (such as with GDPR) to provide consumers with much greater levels of security and privacy about their data.

The third scenario – Tribalism, Inc. – describes high levels of political and social tribalism, with countries, regions and cities forging very distinct identities and policies, with a greater emphasis on policies that explicitly put their nations or cities first, suggesting that it will be more difficult to win business from public and private customers unless companies can show high proportions of local labour and suppliers have been used.

The ‘Local Content’ policy agendas – until now, largely the preserve of developing countries seeking to get multinational investors to develop and use local suppliers and workers – could spread to developed countries. Companies may have to rethink what the concept of a sustainable supply chain might mean to in different contexts – emphasing the impacts of their actions on specific local communities.

The BSR report rightly concludes: “One thing is clear: If humans are to flourish on a thriving planet amid rapid technological change, we need to reorient the relationships between civil society, government, and business.”

Some of this reorientation may take place in global forums and debates, but the companies that manage this reorientation successfully in practice will have to do so with a high understanding of different political and societal contexts.

If you would like to know more about how GK can help navigate the changing ESG and political landscape, please contact Martin Summers – martin@gkstrategy.com.

See more articles by Martin Summers