SUSTAINABILITY TRENDS 2019 - AccountAbility
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SUSTAINABILITY TRENDS 2019
In the sustainability universe, 2018 was a year of global commitments, industry coalitions
and local action. 7 TRENDS THAT WILL SHAPE THE LANDSCAPE
Seasoned business leaders recognized the close linkage between competitiveness and
sustainability in the performance of their companies. Leading international organizations OF SUSTAINABLE BUSINESS IN 2019
committed to climate neutrality, the UNFCCC’s new coalition on health, environment and
climate change was established, and the focus on circularity was intensified.
These shifts have resulted in new market segments, an emphasis on meaningful metrics – and
1
a proliferation of disclosure requirements and reporting frameworks.
The global community recognizes sustainability as a business imperative with long-term COLLABORATION FOR CLIMATE ACTION 04
impact – organizations are setting new precedents, commitments and standards in response
to shifting stakeholder demands for active management. Businesses will need to continue to
Governments, industry groups and the C-suite are
adapt as these developments evolve and escalate in the coming year. catalyzing corporations to accelerate climate action
Through our research and advisory work, AccountAbility has identified seven key trends to help
2
companies and individuals navigate the complex landscape of sustainable business challenges,
and guide organizations towards effectively managing their performance and impact in 2019.
SMARTER CONTRIBUTIONS TO THE SDGS 06
We discuss how the following seven sustainability trends will guide and shape the landscape
of sustainable business over the coming year:
Corporate commitments to the UN Sustainable
Development Goals will get SMARTer
1.
Collaboration for Climate Action – 195 countries have successfully committed to a “rule
3
book” for climate action. How can companies benefit from collaborative climate solutions?
2.
SMARTer Contributions to the SDGs – $5-7 trillion is required annually to achieve the UN
SDGs. How can business leverage the resulting $12 trillion market opportunity? FROM OUTPUT TO IMPACT 08
3.
From Output to Impact – Growing investor demand requires visible long–term value anaging impact is the new baseline
M
creation. How do new standards measure the impact of sustainability initiatives? for sustainability performance
4. S
upply Chain Intelligence – Consumer and regulatory pressures have triggered a need for
4
transparent supply chains. How will technology and big data help companies mitigate risks
10
and achieve efficiencies?
5.
Shift to Circularity – A $24 billion stimulus package has been announced to facilitate SUPPLY CHAIN INTELLIGENCE
circular economies in Europe. How can businesses capture the value of circularity? Smarter technology and transparency
6.
Rapid Urbanization – The smart cities market is poised to reach $3.5 trillion by the mid- are transforming supply chain management
2020s. What will this mean for emerging sectors such as urban tech?
7.
Automation Drives Sustainability – The global market for autonomous vehicles will be
5
$556.67 billion by 2026. How will companies tackle challenges around public opinion,
infrastructure and employment? SHIFT TO CIRCULARITY 12
Each trend includes Key Takeaways and recommendations to help readers Stay Ahead of Shifts from a linear to a circular economy
the Trend.
will change the Business of Tomorrow
In 2019, AccountAbility looks forward to advancing the global sustainability agenda by
collaborating with clients and partners across all geographies and sectors today to address
6
the Environmental, Social and Governance challenges of tomorrow. We invite you to explore
these trends and engage with us in conversations about the exciting times ahead.
RAPID URBANIZATION 14
The rate of urbanization presents
new business challenges and opportunities
7
Sunil A. Misser
Chief Executive Officer
AccountAbility AUTOMATION DRIVES SUSTAINABILITY 16
Automation accelerates the transportation revolution
037 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
1
COLLABORATIVE CLIMATE ACTION IS TCFD IS THE “CEO’S PICK” FOR
OLLABORATION FOR
C FASHION-FORWARD: RESPONSIBLE – AND RESPONSIVE –
DISCLOSURE
CLIMATE ACTION ADIDAS BURBERRY
Growing from 100 CEO supporters in 2017
Governments, industry groups and the C-suite are catalyzing to more than 500 CEO supporters in 2018,
representing a market capitalization of $7.9
corporations to accelerate climate action GUCCI H&M trillion6 , the TCFD has gained substantial
momentum and we expect it to further
increase in wake of the COP24.
Businesses have been called on by world leaders
SCIENCE-BASED TARGETS ARE ON
and governments to strengthen climate actions THE RISE:
and efforts. The 24th Conference of the Parties
to the United Nations Framework Convention on 43 FASHION LEADERS COMING
Climate Change (COP24) in December of 2018 TOGETHER FOR CLIMATE ACTION
recognized the private sector not as climate TREND OUTLOOK
culprits, but as indispensable partners1 , who can The fashion industry launched the Fashion
realize profits from innovative climate solutions, Industry Charter for Climate Action5 with
initiatives and programs, as some leading 43 leaders including Adidas, Burberry, H&M, KEY TAKEAWAYS
companies have demonstrated in recent years. Kering and others coming together for
• World leaders recognize the invaluable
he recently concluded UN COP24 climate
T
507 163 targeted climate action across the entire
supply chain, to achieve the goal of net zero part the private sector will need to play
to address global climate concerns, which
emissions by 2050. The Charter includes the
conference in Katowice, Poland resulted in following climate action strategies, which will lead to development of new financial
195 countries successfully committing to a COMPANIES TAKING COMPANIES APPROVED are applicable to other industries: incentives for “green” product and
195 COUNTRIES “rule book” for climate action. SCIENCE-BASED SCIENCE-BASED TARGETS4 service innovation.
SUCCESSFULLY AccountAbility expects the business response
CLIMATE ACTION4 • Decarbonization of production; • Corporations will be looked to and relied
COMMITTING TO A to accelerate climate action most significantly • Use of sustainable materials; upon for support globally, making 2019
ripe for industry collaboration and public-
“RULE BOOK” FOR through: • Investment in low-carbon transport
solutions;
private partnership opportunities around
CLIMATE ACTION We expect these numbers to rise, with
representation from all major industry • Targeted stakeholder communications to
climate action.
• Climate initiatives that are informed by
1
AGGRESSIVE SCIENCE-BASED sectors globally. drive awareness;
TARGETS FOR science-based targets, collaborative in
EMISSIONS REDUCTION • Collaborations with investors and nature, and properly disclosed to relevant
policymakers to catalyze scalable stakeholders will support the shift of
The Science Based Targets Initiative, a solutions; and, climate action from a cost center to a
collaboration between CDP, the United Nations revenue generator.
2 INDUSTRY COLLABORATION • Implementation of circular business
Global Compact, World Resources Institute, the models across the industry.
World Wildlife Fund and the We Mean Business INCREASES IMPACT ACROSS
SUPPLY CHAINS STAY AHEAD OF THE TREND
Coalition aims to establish science-based target
setting as a standard business practice by 2020. As corporations are increasingly looked to • Conduct a structured assessment of how
3 VOLUNTARY DISCLOSURES
for climate change solutions, AccountAbility your organization can establish science-
Science-based targets align with the level of forecasts a significant growth of collaborative RELATED TO CLIMATE ACTION based targets.
decarbonization required to keep the global efforts within and across industries, and • Look to peers and industry associations
The Task Force for Climate-related Financial
temperature increase below 2°C2 . When set between business, governments, and non-profit for collaborative alignment on climate
Disclosures (TCFD), originally developed in 2015,
by organizations, science-based targets are organizations. action to capitalize on efficiencies and
offers recommendations for voluntary climate-
shown to increase innovation, reduce regulatory amplify impact.
related financial risk disclosures. Since launching,
uncertainty, strengthen investor confidence Collaborative climate action offers businesses
the rate of corporate disclosures based on TCFD • Establish proper governance of climate-
and credibility, and improve profitability and and industries the opportunity to drive change
recommendations has increased rapidly. related strategies, programs, policies
competitiveness3. across entire supply chains, extending the
impact of individuals and easing the burden and metrics in alignment to mandatory
on single actors. Such collaboration can also or voluntary disclosure mechanisms and
aid businesses in mitigating supply chain risks, stakeholder expectations.
such as regulatory pressure and consumer and
legal scrutiny.
1: UN News
2: Science Based Targets
3: Science Based Targets
4: Science Based Targets < https://sciencebasedtargets.org/companies-taking-action/>
5: UN Climate Change < https://unfccc.int/news/milestone-fashion-industry-charter-for-climate-action-launched>
6: TCFD < https://www.fsb-tcfd.org/publications/tcfd-2018-status-report/>
04 057 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
2
S
MARTER CONTRIBUTIONS TREND OUTLOOK
TO THE SDGS
KEY TAKEAWAYS STAY AHEAD OF THE TREND
Corporate commitments to the UN Sustainable • Governments will look to the private • Identify and prioritize SDGs relevant to
Development Goals will get SMARTer sector to bolster SDG progress – both, your organization.
in voluntary and mandatory capacities.
stablish SDG initiatives and
• E
Corporates will need to be ready to
commitments that are SMART (Specific,
Rising consumer expectations, mounting respond.
Measurable, Achievable, Relevant and
pressure from governments and shifting investor SURVEY RESULTS ew financing mechanisms and sources
• N Time-bound).
interests are driving companies to make “real” of capital will be available to companies
eport on progress completely,
• R
contributions to the United Nations Sustainable that can demonstrate SDG value creation
consistently and accurately.
Development Goals (SDGs). and effective management. Those with
robust SDG strategies in place have the
While governments, globally, have been playing
most to gain.
a significant role in the SDG progress, the $5-7
• Organizations will be expected to
trillion capital needed annually to achieve the
SDGs7 will require similar commitments from 69% 56% move from high-level SDG alignment
both the public and the private sectors. communications towards quantifiable
and targeted SDG impact disclosure
and reporting.
The investor community, working with the UN
Principles for Responsible Investment (PRI),
COMMITTED CORPORATIONS NOT
the UN Global Compact (UNGC) and the UN CORPORATIONS MEASURING THEIR
Environment Program Finance Initiative PROGRESS
$5-7T
(UNEP-FI) – together constituting the largest
networks of private and financial sector
constituencies (corporates, investors, banks 1,500 global corporate brands surveyed
and insurers) – have joined forces as the by Ethical Corporation9
Global Alliance on SDG Finance to mobilize
private capital towards achieving the SDGs.
$5-7 TRILLION We expect to see companies take a structured
REQUIRED PER approach to addressing the SDGs by developing
YEAR TO ACHIEVE The SDGs are expected to provide a $12 trillion
market opportunity in four core industries8
clear strategies and initiatives to fulfill their
SDG promises. This will necessitate adopting
THE UN SDGS – food and agriculture, cities, energy and the SMART (Specific, Measurable, Achievable,
materials, and health and well-being – providing Relevant and Time-bound) model of corporate FOOD AND AGRICULTURE CITIES ENERGY AND MATERIALS HEALTH AND WELL-BEING
the investor community and corporates the goal-setting to ensure their commitments
impetus to explore new market opportunities. generate significant impact.
Companies will need to establish SMART
AccountAbility foresees that traditional goals and practical metrics to effectively
corporate acknowledgement and
communication of high-level alignment or
disclose and report on their progress against
the relevant SDGs. THE SDGS ARE EXPECTED TO CREATE A $12 TRILLION MARKET OPPORTUNITY IN
commitments will no longer satisfy market
demand – investors and governments will be Companies will be expected to: FOUR CORE INDUSTRIES - FOOD AND AGRICULTURE, CITIES, ENERGY AND
increasingly driven to establishing
tangible goals in a targeted effort aimed at
1. Identify and prioritize SDGs that are most MATERIALS, AND HEALTH AND WELL-BEING.
aligned to their business priorities and core
investing in and disclosing impact achieved competencies;
towards the SDGs.
2. Establish SMART goals and targets that
generate quantifiable value; and,
3. Report progress in a regular, standardized
and useful fashion for governments and
industry aggregators.
7: UN PRI
8: UN Development Programme Programme
9: Ethical Corporation
06 077 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
3
3
TELLING THE
FROM OUTPUT TO IMPACT
Trailblazers are advancing their reporting to
IMPACT STORY focus on impact creation, measurement and
We have come a long way from the early days progress:
Managing impact is the new baseline of “greenwashing” as a de-facto sustainability
• BASF has developed a “Value to Society”
for sustainability performance reporting practice. Corporate leaders are paving approach to measure the economic,
the way for the transition from publishing ecological and social impacts of its
superficial annual sustainability PR pieces to activities along the value chain12.
building, owning and sharing stories of impact
that are measurable, relevant and meaningful. •
Kering has reported on the environmental
impact of all its brands and supply chains in
an Environmental Profit and Loss Report13.
In addition to the advancement of contributions
V
and commitments to the SDGs, the maturation lackRock10, Vanguard, Voya, State Street
B •
Salesforce released its first Social Impact
I of corporate sustainability – as both, a field and a and a number of other influential asset Report and has committed to annual
business practice – has brought with it a growing managers11 are calling for companies to serve reporting on its social impacts14.
S
need to effectively measure, manage, monitor a social purpose and generate impact, while
A and communicate its value or business case leading financial institutions like UBS, Morgan
to stakeholders. This has resulted in a shift of Stanley, Credit Suisse and a host of others are
ACCOUNTABILITY
industry focus from “output” or “performance”
to “outcomes” or “impact”.
developing impact-based products
and services. TREND OUTLOOK
DEVELOPED ITS
PROPRIETARY V.I.S.A.TM The AA1000 AccountAbility Principles KEY TAKEAWAYS STAY AHEAD OF THE TREND
2
METHODOLOGY TO HELP (AA1000AP 2018) – a practical set THE EMERGENCE OF TOOLS,
• Growing investor focus on corporate
FRAMEWORKS AND • Identify and prioritize relevant impact
CLIENTS MEASURE of internationally accepted guiding
METHODOLOGIES TO MEASURE social purpose and ESG impact will reward focus areas that your organization is well-
principles used by organizations to assess,
THE EFFECTIVENESS manage, improve and communicate their
AND MANAGE IMPACT companies that visibly and credibly suited to address.
AND IMPACT OF accountability and sustainability performance In response to the nascent, but growing,
demonstrate impact generation, and
penalize those that do not.
• Apply relevant tools, methodologies and
SUSTAINABILITY – defines Impact as “the effect of behavior, demand for impact measurement and reporting,
• Organizations will continue to experiment
frameworks to guide an impact-based
approach to evaluating, managing and
INITIATIVES FOR LONG– performance and/or outcomes, on the a variety of tools and methodologies have been
with emerging tools, methodologies and communicating sustainability and
part of individuals or an organization, on developed. We anticipate the landscape to
TERM VALUE CREATION the economy, the environment, society, narrow, as the market indicates an agreed upon
frameworks for impact measurement business performance.
stakeholders or the organization itself. and management, until consensus can be
“currency of impact.” Until then, organizations • Establish and communicate your
Material topics have potential direct or reached regarding the right “currency of
will need to evaluate the landscape of emerging organization’s impact narrative to
indirect impacts – which may be positive or impact” which will ultimately narrow the
tools, frameworks and methodologies to strengthen the value and legacy of
negative, intended or unintended, expected impact measurement, management and
determine the option that best fits their your brand with investors and other
or realized, and short, medium or long term.” disclosure landscape.
management and reporting needs. stakeholders.
The AA1000 AccountAbility Principles 2018
(AA1000AP, 2018) ORGANISATIONAL ASSESSMENT INFORMATION
VARIABLES VARIABLES QUALITY
AccountAbility asserts that impact is moving to
the forefront of sustainability in business as we POLICIES OUTCOMES
SCOPE
look towards 2019. ACTIVITIES RELEVANT
LIKELIHOOD
The World Business Council for Sustainable
Development (WBCSD) has launched the DECISIONS
1 IMPACT
COMPLETE
INVESTING IN STRATEGIES, TIME
SPAN
PRODUCTS AND SERVICES Social Capital Protocol, which facilitates
CE
BEHA
PROGRAMMES ACCURATE
WITH A PURPOSE measurement of social impact, and has
MAN
INTENTION
upgraded its Natural Capital Protocol to
VIO
PRODUCTS
OR
Impact investing – investments made with the better enable businesses to measure their R F
PER
MEASUREMENT
U
intention to generate positive, measurable, impacts and dependencies on nature. SERVICES SCALE
social and environmental impact alongside a
financial return – has gained significant traction
in the mainstream, further reinforcing the need
for corporate actors to find ways to measure,
manage, monitor and communicate impact of
MEASURING, MANAGING AND EVALUATING IMPACT TO LEAD EFFECTIVE DECISION-
their sustainability strategies and initiatives. MAKING AND RESULTS-BASED MANAGEMENT (AA1000AP, 2018).
10: BlackRock
11: CECP
12: BASF: https://www.basf.com/global/en/who-we-are/sustainability/management-and-instruments/quantifying-sustainability/we-create-value.html
13: Kering: http://www.kering.com/en/sustainability/whatisepl
08 09
14: Salesforce: https://www.salesforce.org/announcing-the-salesforce-org-social-impact-report-2018/7 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
4
SUPPLY CHAIN INTELLIGENCE TREND OUTLOOK
Smarter technology and transparency are
KEY TAKEAWAYS STAY AHEAD OF THE TREND
transforming supply chain management
• Traditional supply chain management • Engage relevant supply chain
practices may no longer suffice to stakeholders to understand their
meet the expectations of regulators expectations.
and investors. Organizations will need
• Conduct a formal review of current
Pressure from consumers, activist groups and contemporary and innovative practices
supply chain management practices
regulators is driving companies to increase to satisfy demands for transparency and
to identify gaps and deficiencies and
the transparency of their supply chains when disclosure.
to highlight potential strategies for
it comes to better accountability of their • Big Data and smart technologies such improvement and modernization.
environmental, social and governance as Block Chain, “Internet of Things”
(ESG) practices. • Consider data management and
and Artificial Intelligence will enable
automation technology platforms that
AccountAbility anticipates regulatory pressures innovative supply chain management
can offer near- and long-term supply
around supply chains to continue to increase, systems that not only offer greater
chain innovation value.
especially in the areas of slavery, human rights transparency and accountability, but
also opportunities for operational • Diligently, openly and honestly
and trafficking.
efficiencies, cost reductions, quality communicate supply chain management
control, and risk mitigation. efforts, progress and results.
The California Transparency in Supply Chain
Act of 2010 has triggered international IBM recently launched IBM Food Trust16
governments, including those in the UK, that uses blockchain technology to bring
unprecedented levels of transparency to
France, Australia, and Hong Kong, to
introduce anti-slavery legislation15. food system data. Carrefour, Nestle, INTERNET
Tyson Food, Unilever and Walmart have
subscribed17to the platform, with more OF THINGS
expected to follow.
Fortunately, the rise of Big Data, Block
Chain, “Internet of Things” (IoT) and Artificial
Intelligence (AI) are easing the burden on
AUTOMATION
companies to mitigate supply chain risks 18
Wilmar International , the world’s largest
and enhance the accuracy, management and palm oil trader supplying 40% of the
transparency of their supply chains and meet world’s palm oil, recently announced a
market demands. detailed plan to map and monitor all its
suppliers, in a bid to make its supply chain
deforestation-free. Wilmar’s announcement,
a culmination of an intense campaign
by Greenpeace, is expected to have
implications for the entire industry. BIG DATA
USER INTERFACE
We anticipate such platforms and collaborations
to soon be developed for other high-risk, high-
impact industries, notably fashion19, jewelry20,
BLOCK CHAIN
metals and mining21.
TECHNOLOGY WILL ENABLE INNOVATIVE SUPPLY CHAIN MANAGEMENT
SYSTEMS THAT OFFER GREATER TRANSPARENCY, ACCOUNTABILITY, AND HIGHER
OPERATIONAL EFFICIENCIES.
15: International Corporate Accountability Roundtable < https://www.icar.ngo/news/2018/8/14/good-better-best-improving-modern-slavery-acts-from-the-
uk-to-australia>
16: IBM Food Trust: https://www.ibm.com/blockchain/solutions/food-trust
EMERGING TECHNOLOGY IS ENABLING COMPANIES TO SHIFT 17: IBM Blockchain traceability platform: https://channels.theinnovationenterprise.com/articles/ibm-launches-blockchain-based-food-traceability-platform
18: Wilmar International: http://media.corporate-ir.net/media_files/IROL/16/164878/News-Release-10-Dec-18-Wilmar-Leads-Palm-Oil-Industry-to-be-
TO LEANER YET MORE RESPONSIBLE SUPPLY CHAINS Deforestation-Free.pdf
19: Forbes < https://www.forbes.com/sites/samantharadocchia/2018/06/27/altering-the-apparel-industry-how-the-blockchain-is-changing-
fashion/#33f57a7729fb>
20: International Council on Mining & Metals < https://www.icmm.com/en-gb/case-studies/global-projects-to-increase-transparency-and-reduce-corruption>
21: International Council on Mining & Metals < https://www.icmm.com/en-gb/case-studies/global-projects-to-increase-transparency-and-reduce-corruption>
10 117 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
5
SHIFT TO CIRCULARITY TREND OUTLOOK
Shifts from a linear to a circular economy
will change the Business of Tomorrow KEY TAKEAWAYS STAY AHEAD OF THE TREND
• Changing regulatory pressures and • C
onduct a formal Life-Cycle Analysis or
penalties, the cost and availability of raw Impact Assessment to gain clarity and
materials, and consumer behavior and comprehension of the true cost of your
Rampant consumption and an increasing expectations will continue to move local operations, products and services.
awareness of the resulting social and The use of electric subscription and ride- and global markets from linear models to
shares will be between four- to ten-times • T
arget innovation around responsible
environmental impacts are leading governments, circular economies.
cheaper than owning a car by 202129. This resource selection, production methods
consumers and organizations to rethink the • Businesses will be forced to seriously and predicted consumer behavior.
current “linear” economic system (Produce- means that products can be designed for
consider the increasingly material
$24
Use-Discard) and move towards a “circular” fleet or high-volume commercial sales and • Identify secondary markets for materials
externalities associated with the sourcing, reuse to guide product design and
economy, a system of production and produced more efficiently, resulting in a production, consumption and end-of-life
BILLION consumption that is reusable, restorative, and market that produces less waste at all strategic partnerships.
impacts of their products and services,
sustainable by design. points of a product’s lifecycle. and respond with innovative solutions at • W
ork with local regulators to co-develop
While the private sector has spearheaded the design level. systems and incentives that facilitate
innovative circular economy solutions, Though this circular model is gaining momentum circular economy-inspired R&D for your
• The sharing economy has flooded the
governments internationally have recently made in all sectors, an evolving economic model such business.
market with new, inventive and quickly-
significant political and financial investments as this requires a parallel shift in consumer growing startups that are disrupting • C
onsider alternative “product as service”
to facilitate this movement. The EU and China behavior and expectations. The shift from a traditional industries. Established models to engage new demographics
ECONOMIC STIMULUS signed an MoU28 committing to align on circular traditional “ownership model” requiring capital- players will move from startup and capitalize on sharing economy
economy policies to unlock new sources of intensive purchasing to a “sharing model” that partnerships to acquisitions in order opportunities.
ANNOUNCED BY EU22 TO ALIGN
economic growth and innovation, while reducing attracts consumers with low-cost, pay-for-use to absorb innovative models and
ON CIRCULAR ECONOMY environmental impacts. rental alternatives is generating increasing compete in the changing landscape.
POLICIES INCLUDING A consumer demand.
NEW SET OF MEASURES
AND DIRECTIVES AROUND THE SHARING ECONOMY MODEL
In addition to new companies, like Uber, Lyft SKILLS EXCHANGE SHARED ASSETS PAY-FOR-USE
PLASTICS, CHEMICALS, AccountAbility anticipates that the shift towards and Airbnb, that have disrupted traditional
WASTE, RAW MATERIALS circularity will accelerate with increasing transportation and hospitality industries
AND MORE.23 directives and investments in favor of circular with sharing economy business models,
FACILITY SHARING
processes, which will keep resources in use established companies are also exploring
for as long as possible, minimizing negative ways to innovate and partake in the
impact on society and the planet. We anticipate sharing economy.
5
growth in both opportunities and challenges
for businesses as they will have to continuously • P
hilips has created subscription models
innovate in order to overhaul traditional for its lighting products30
processes and product designs aimed at •
CHP is creating temporary villages for
maximizing resource value, while minimizing students using shipping containers31
waste and emissions.
• B
MW launched ReachNow, a car sharing
service that allows App users to use
BMWs and Minis for a per-minute or per-
hour rate32
THE SHARING ECONOMY MODEL ATTRACTS CONSUMERS WITH PAY-FOR-USE RENTAL
ALTERNATIVES. USERS THRIVE ON THE VALUE DELIVERED BY ACCESS TO BETTER,
UNILEVER CONTINUES TO AFFORDABLE AND UNIQUE PRODUCTS AND EXPERIENCES.
EXPLORE AND REINVENT
ITS BUSINESS MODEL FOR 22: European Commission < http://ec.europa.eu/environment/circular-economy/index_en.htm>
A CIRCULAR ECONOMY 26 23: European Investment Bank: http://www.eib.org/en/infocentre/press/releases/all/2015/2015-299-eu-opens-up-eur24bn-of-existing-finance-to-
circular-economy-businesses-in-support-of-eu-climate-goals.htm
EILEEN FISHER LAUNCHED 24: Eileen Fisher: https://www.eileenfisher.com/circular-by-design-gfa/25: European Commission < http://ec.europa.eu/environment/circular-
A PROGRAM TO TIMBERLAND IS PRODUCING economy/index_en.htm>
REPURPOSE AND REMAKE TIRES THAT CAN BE RECYCLED TOAST ALE TURNS WASTED 25: TIMBERLAND: https://www.timberlandtires.com/our-story/
OLD CLOTHES24 INTO TIMBERLAND SHOES25 BREAD INTO BEERS27 26: UILEVER CIRCULAR BUSINESS MODEL: https://www.forumforthefuture.org/Handlers/Download.ashx?IDMF=ea974cca-6444-41cb-9d37-0341fe2d7fe1
27: TOAST ALE: https://www.toastale.com/
28: European Investment Bank: http://www.eib.org/en/infocentre/press/releases/all/2015/2015-299-eu-opens-up-eur24bn-of-existing-finance-to-
circular-economy-businesses-in-support-of-eu-climate-goals.htm
BUSINESSES HAVE BEGUN TO RETHINK THE SOURCING AND THE END-OF-LIFE USE OF THEIR PRODUCTS 29: https://www.forbes.com/sites/quora/2017/06/22/what-will-car-ownership-look-like-in-the-future/#5173ebef6b99
30: PHILIPS CIRCULAR LIGHTING: https://www.signify.com/global/sustainability/circular-lighting
12 13
31: CPH Village: https://cphvillage.com/
32: BMW CAR SHARING: https://reachnow.com/en/7 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
6
RAPID URBANIZATION TREND OUTLOOK
he rate of urbanization presents new business
T
challenges and opportunities KEY TAKEAWAYS STAY AHEAD OF THE TREND
• Urbanization will continue to offer onduct a formal Life-Cycle Analysis or
• C
new opportunities, though the Impact Assessment to gain clarity and
speed of change is already bringing comprehension of the true cost of your
unprecedented challenges that will operations, products and services.
Rapid urbanization is redefining societies, require responsive action in 2019. arget innovation around responsible
• T
economies and cultures, and compelling “Urban tech” – a budding technology sector
• Changes in labor availability, purchase resource selection, production methods
businesses to both address the challenges and which designs innovative products, services and predicted consumer behavior.
order volume and demand volatility
capitalize on the opportunities posed by the and business models around city living will stress human capital, sourcing, • Identify secondary markets for materials
urbanization. systems and communities – is on the rise, production, distribution and response reuse to guide product design and
capitalizing on the growing value of a shared systems. Companies in all sectors will strategic partnerships.
economy model in increasingly populated need to redesign their business models to
urban centers. ork with local regulators to co-develop
• W
adapt to the shifting landscape and rise
2050 of “smart” and sustainable cities.
systems and incentives that facilitate
circular economy-inspired R&D for your
2019 2018 saw a continued and accelerated rise of • The growth of the urban tech sector will business.
companies capitalizing on rapid urbanization continue to disrupt traditional business
• Consider alternative “product as service”
models. Established companies across
68% – such as Uber, Lyft, WeWork, Waze, Lime
sectors will explore acquisitions and/or
models to engage new demographics
and Bird – along with a multitude of startups and capitalize on sharing economy
55% partnerships with urban tech companies.
in emerging fields like construction tech, opportunities.
real estate analytics, delivery, and smart
infrastructure.
QUALITY OF LIFE
Fueled by substantial venture capital ECONOMIC
5% of the world’s population lives in cities,
5 investments, urban tech companies are HEALTH & SECURITY ATTRACTIVENESS
and this is poised to grow to 68% by the revolutionizing everything from food delivery
year 205033. to office rental as they continue to find ways to
innovate for, and profit from, urbanization in a
millennial market.
$75
NECESSITY FOR RADICAL REDESIGN
OF OPERATIONS
Companies like Nestlé and Mars are faced with
BILLION MOBILITY
SMART GRID/
ENERGY UTILITY
supply chain disruptions as rural small-holder
farmers migrate to cities. Logistics companies,
like UPS and FedEx, are concerned about the
increasing volume and complexity of their
17%
operations due to congestion and infrastructure
challenges. These examples demonstrate
DIGITAL CITIZENS GOVERNANCE
the shifting nature of operations faced by
all businesses and highlight the need for
organizations to re-evaluate and redesign their
operations to survive, let alone thrive, in this
rapidly changing landscape. 17% OF ALL GLOBAL VENTURE
CONTINUEDCAPITAL
Urban tech investment totaled $75 billion
OPPORTUNITIES FOR SUSTAINABILITY between 2016-2018, representing 17% of all
INNOVATION
global venture capital35. THE “SMART CITIES” REVOLUTION IS ALREADY HERE, WITH A MARKET THAT IS
As businesses are compelled to address the PROJECTED TO GROW FROM $1 TRILLION IN 2017 TO $3.5 TRILLION BY THE MID-
challenges and opportunities associated
2020S . HITACHI, CISCO, SIEMENS, AND MICROSOFT ARE SOME EXAMPLES OF
36
with urbanization, they are poised to play
COMPANIES INVESTING HEAVILY IN BUILDING “SMART” AND SUSTAINABLE CITIES .
37
critical roles, both in the rise of infrastructure
and technology that reduce social and
environmental impact, drive economic
development, and improve quality of life34. 33: UN DESA
34: Bank of America < https://www.bofaml.com/en-us/content/smart-cities/future-smart-city-infrastructure.html>
35: Investopedia < https://www.investopedia.com/news/smart-cities-companies-profiting-urban-challenges/>
36: Smart City Hub < https://smartcityhub.com/technology-innnovation/the-top-ten-companies-that-build-smart-cities/>
37: CityLab < https://www.citylab.com/life/2018/07/the-rise-of-urban-tech/564653/>
14 157 TRENDS THAT WILL SHAPE THE LANDSCAPE OF SUSTAINABLE BUSINESS IN 2019
7
As the industry evolves, there will be
AUTOMATION DRIVES
In August 2018, Yara International47, a unavoidable consequences when it comes to
Norwegian fertilizer company, announced infrastructure and employment. The public and
SUSTAINABILITY
plans for an autonomous and purely electric private sectors alike will need to grapple with
container ship that should be operational in a transforming workforce - 300,000 traditional
2022. According to the company, the electric jobs may be eliminated each year in the US,
Automation accelerates the transportation revolution ship should replace a total of 40,000 truck but new automated transportation job listings
journeys a year48. accelerated to a 250% year-over-year increase
in the second quarter of last year49.
AccountAbility expects focus and innovation
the roads in several major urban areas in the field of autonomous transportation to
94%
A PEW RESEARCH STUDY SUSTAINABILITY ISSUES IN THE
internationally. General Motors, Ford and Toyota escalate in 2019, with vehicles and infrastructure
TRANSPORTATION SECTOR
FOUND SHIFTING BUT have responded in kind, with investments in increasingly recognized not just as utilitarian
STILL CONCERNING While the socioeconomic benefits of acquisitions or innovations of their own. machines, but as hardware and software with
PUBLIC OPINION AROUND transportation – of both, goods and people accelerating intelligence.
As beta testing and rollout of autonomous
– has made the sector an indispensable,
AUTONOMOUS VEHICLES: integrated facet of modern civilization, its
vehicles accelerates in 2019, we see growing
proliferation has generated costly impacts on
application and impact of autonomous THE U.S. DEPARTMENT
environment and society:
transportation in other sectors, such as long- OF TRANSPORTATION
haul trucking, railways and sea transportation. EXPECTS AUTONOMOUS
60% •
Premature deaths related to air pollution,
TREND OUTLOOK TRANSPORTATION
estimated to be 3.7 million by the WHO in
2012, are most closely related to particulate
CHALLENGES TO REDUCE TRAFFIC
matter (PM). Road transport alone can 1. Easing public perception (e.g. risk, ethics, FATALITIES BY AN
WERE NOT TOO account for up to 30% of PM in European accountability) ESTIMATED 94% 50
ENTHUSIASTIC OR NOT cities and up to 50% in OECD countries38. KEY TAKEAWAYS STAY AHEAD OF THE TREND
2. Overhauling operations in order to maintain
AT ALL ENTHUSIASTIC •
Transport is also responsible for about 15% market competitiveness • The recent growth of automation in the • Understand the implications that
of global greenhouse gas (GHG) emissions39, auto industry will encourage and advance transportation automation will have for
3. Incentivizing investment in
and, more specifically, over 20% of total fuel similar trends in other core industries of your supply chain, operations, distribution
transformative R&D
and employment for your organization.
53% combustion CO₂ emissions globally40. the transportation sector, particularly
4. Developing strategic partnerships or those with broad-reaching impact. • Determine ways to capture new market
Negative externalities – direct, indirect and acquisitions
• Impacts from the acceleration of opportunities through innovation.
cumulative – have been exacerbated by
electrification, automation and shared • Identify and engage strategic partners
WERE VERY WORRIED population and GDP growth, especially in urban OPPORTUNITIES vehicles can be overwhelmingly beneficial that will support a smooth and profitable
centers, and have long been a focal point for
OR SOMEWHAT WORRIED sustainability advocates who have thus far 1. Improvement in safety incident rates if advanced concurrently and with transition.
as autonomous vehicles are not prone complementary investment in necessary
witnessed gradual, incremental improvement.
to human error caused by exhaustion, infrastructure development and policy
inebriation, emotion or subjectivity42 reform.
The Sustainability Accounting Standards
56% Board (SASB) has identified GHG Emissions, 2. Lower fuel/power consumption rates and • As the transportation sector continues
to transform, traditional industry jobs
Air Quality, Health & Safety and Critical reduced direct transportation emissions,
provided it is coupled with electrification will fade and new jobs and market
Incident Risk Management as the sustainability
WOULD NOT WANT and utility scale renewables43 opportunities will continue to materialize.
issues most likely to be material to industries
TO RIDE IN AN across the transportation sector41.
AUTONOMOUS
VEHICLE The advent and innovation of a) electrification, General Motors (GM), which bought Cruise
b) vehicle sharing and c) automation have Automation for nearly $600 million, is on
more recently enabled rapid change in the the verge of delivering self-driving EVs44.
transportation sector, encouraged, not by GM built one of the largest charging stations
advocacy, but by competitive market conditions, and is ready to launch electric “robotaxi”
and facilitated by regulatory responses to services45 in several US cities, starting in
sustainability issues, such as climate change, San Francisco this year. In January 2019, 38::https://www.who.int/sustainable-development/transport/health-risks/air-pollution/en/
42% OF WHICH SAID public safety and urbanization. GM’s Cruise Automation announced its 39: https://www.c2es.org/content/international-emissions/
THEY DON’T TRUST IT partnership with the food delivery 40:
41:
https://data.worldbank.org/indicator/EN.CO2.TRAN.ZS
https://materiality.sasb.org/
OR WOULDN’T WANT AUTOMATION CAN HELP, IF MANAGED company, DoorDash. In 2019 they will be 42: https://its.ucdavis.edu/research/publications/?frame=https%3A%2F%2Fitspubs.ucdavis.edu%2Findex.php%2Fresearch%2Fpublications%2Fpublication-
EFFECTIVELY testing driverless deliveries46 to consumers
TO GIVE UP CONTROL 43:
detail%2F%3Fpub_id%3D2723
https://its.ucdavis.edu/research/publications/?frame=https%3A%2F%2Fitspubs.ucdavis.edu%2Findex.php%2Fresearch%2Fpublications%2Fpublication-
in major cities across the United States.
Since Tesla mainstreamed the recognition detail%2F%3Fpub_id%3D2723
of “vehicles as technology” in the 2000s, 44: GM < https://www.gm.com/our-stories/self-driving-cars.html >
45: The Economist < https://www.economist.com/business/2018/01/25/gm-takes-an-unexpected-lead-in-the-race-to-develop-autonomous-vehicles >
the paradigm shift has transformed the auto
46: CNN Business < https://www.gm.com/our-stories/self-driving-cars.html >
industry and presented opportunities for non- 47: YARA INTERNATIONAL < https://www.yara.com/knowledge-grows/game-changer-for-the-environment/ >
traditional entrants from other sectors. Google 48: Clean Technica < https://cleantechnica.com/2018/08/23/the-worlds-first-electric-autonomous-container-ship-to-set-sail-in-norway/ >
and Uber have been pioneers in driverless 49: https://www.cnbc.com/2018/08/10/autonomous-vehicles-are-creating-jobs-heres-where.html
50:ABOUT ACCOUNTABILITY
AccountAbility is a global consulting and standards firm that works
with business, governments and multi-lateral organizations to advance
responsible business practices and improve their long term performance.
Since 1995, we have been helping corporations, nonprofits and
governments embed ethical, environmental, social and governance
accountability into their organizational DNA.
For two years in a row, AccountAbility has been ranked among the Top
Sustainability Management Consulting Firms by the Financial Times, UK.
www.accountability.org
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