10 sustainability megaforces' impact on business over the next two decades

The costs associated with environmental impacts for business operations are doubling every 14 years. New research from KPMG International has identified 10 megaforces that will significantly affect corporate growth globally over the next two decades.  The 10 global sustainability megaforces are as follows:

Climate Change: Predictions of annual output losses from climate change range between 1 percent per year, if strong and early action is taken, to as much as 5 percent a year, if policymakers fail to act.

Energy and Fuel: Fossil fuel markets are likely to become more volatile and unpredictable because of higher global energy demand.

Material Resource Scarcity: As developing countries industrialize rapidly, global demand for material resources is predicted to increase dramatically. Business is likely to face increasing trade restrictions and intense global competition for a wide range of material resources that become less available.

Water Scarcity: It is predicted that by 2030, the global demand for freshwater will exceed supply by 40 percent. Businesses may be vulnerable to water shortages, declines in water quality, water price volatility, and to reputational challenges.

Population Growth: The world population is expected to grow to 8.4 billion by 2032. This will place intense pressures on ecosystems and the supply of natural resources such as food, water, energy and materials.

Wealth: The global middle class (defined by the OECD as individuals with disposable income of between US$10 and US$100 per capita per day) is predicted to grow 172 percent between 2010 and 2030. The challenge for businesses is to serve this new middle class market at a time when resources are likely to be scarcer and more price volatile.

Urbanization: In 2009, for the first time ever, more people lived in cities than in the countryside. By 2030 all developing regions including Asia and Africa are expected to have the majority of their inhabitants living in urban areas; virtually all population growth over the next 30 years will be in cities.

Food Security: Global food prices are predicted to rise 70 to 90 percent by 2030. In water-scarce regions, agricultural producers are likely to have to compete for supplies with other water-intensive industries, such as electric utilities and mining, and with consumers.

Ecosystem Decline: The decline in ecosystems is making natural resources scarcer, more expensive and less diverse, increasing the costs of water and escalating the damage caused by invasive species to sectors including agriculture, fishing, food and beverages, pharmaceuticals and tourism.

Deforestation: Forests are big business. Wood products contributed $100 billion per year to the global economy from 2003 to 2007 and the value of non-wood forest products, mostly food, was estimated at about US$18.5 billion in 2005. Yet the OECD projects that forest areas will decline globally by 13 percent from 2005 to 2030, mostly in South Asia and Africa.

Source:  KPMG International

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