Recognize Our Unique Place in Time

The sustainability, energy and climate imperative

You may argue about how we’ll get there or have opinions about what we should or shouldn’t do to get there. But there is no denying that we are in the midst of what may be the most fundamental change in business and the global economy since the Industrial Revolution. What author Tom Friedman has called the “Energy-Climate Era” may drive more innovation and disruption than the Industrial Revolution and the Internet did in their times. Are you in the mix?

We are moving into an era when the environmental and social impacts of global commerce must be – and will be - measurable, manageable, visible, and valued.

Everyone benefits in a world where economic outputs are fully indexed for their relative effect on environmental and social impacts. It’s an easy strategic choice - even though it may mean substantial disruption to and potential failure of large sectors of the existing economy. While some organizations may utterly fail in an age of environmental and social accountability, others may thrive.

Three things to consider:

1. Historical conflicts amongst economic systems will evolve differently as energy, climate, and resource impacts come into play. In his book Plan B 3.0, legendary environmentalist Lester Brown quotes former vice president of Exxon for Norway and the North Sea Oystein Dahle as observing: “Capitalism may collapse because it does not allow the market to tell the ecological truth.” Simultaneously addressing risks and opportunities posed by energy, climate, and resource issues will require structural changes in how businesses operate, and those that can build economic success while accounting for externalities will thrive. For democratic capitalism to emerge as the leading (or sole) political/economic system, its component parts must embrace economic performance indexed to related environmental and social inputs and impacts.
2. The entire approach to measuring performance must evolve to account for the social and environmental impacts related to a given set of economic outputs. However, we are still in the infancy of our collective ability to measure social and environmental impacts with the same rigor and transparency with which we measure financial ones. We’ve spent decades developing methods, policies, tools, infrastructure, regulations, and systems to manage, report, and compare financial performance; we don’t do it perfectly, but we do it far better than we measure environmental and social performance. The development and widespread adoption of metrics for environmental and social performance is the next wave of change - affecting everything an organization does over time – and there will be clear winners and losers in this disruptive change.
3. We are past the tipping point; we are in the soup. Governments, businesses, foundations, NGOs, consumers, trade associations -- virtually every entity whose members have a common interest in energy, climate, and resource issues is striving to address those issues in ways that are most beneficial to them. And although these groups may be driven by self-interest – and even though those interests may be disparate or even contradictory – the net-net is that we’ll all be better off when global economic growth is driven with full accountability for the related social and environmental impacts.

Whatever your personal belief about climate change, coal vs. solar power, corn for food rather than ethanol, the power of government vs. big business, or any other of today’s ”hot” sustainability topics, how we answer each of those questions matters less than the fact that the dialogue is happening at all—forcing us to rethink, for the better, our collective definition of economic success. The value is in the debate. Jump in, and don’t worry for now about being right or wrong - worry about missing the boat entirely.

Chris Park
Principal, Deloitte Consulting LLP

Comments

[Cory]

Chris -- What are your thoughts on the how the "Energy-Climate Era" will impact business models compared to the impact the Internet had on business models -- and where do they intersect?