18 June 2012
One of the themes of Rio+20 is ‘green growth'. The first and most obvious question will be ‘Can there be such a thing as green growth?' and for me the answer is an emphatic ‘Yes' - as long as there is a paradigm shift in the way that governments, the private sector and consumers think about resources.
There are currently some 2 billion middle class consumers globally; by 2030 there will be 5 billion. That's something to celebrate as those currently struggling to meet their basic needs become wealthier. The challenge will be to provide these people with an improved standard of living in the context of climate change, water stress and resource scarcity, ensuring our planet is not put under further strain. The Cambridge Leadership Compact, which SABMiller has recently signed, is a ground-breaking commitment by business leaders which will take a step towards this, by properly valuing and maintaining the Earth's natural capital.
A recent session at the World Economic Forum on Africa looked at the growing African middle class and discussed the difference between ‘spenders' and ‘strivers' - the former are relatively wealthy and have been buying major goods such as cars for some time, whilst the latter group is growing rapidly and beginning to regularly purchase day to day branded consumer products for the first time. From the perspective of the private sector, our purpose is to provide products and services to meet consumer demand. Until recently, our success had been defined primarily by growth. However, to continue growing, this has to be the right kind of growth; growth which addresses the resource challenge we are all facing, and a growth mentality which acknowledges the shared common interest in tackling the resource challenge collectively.
The issue of resource depletion and scarcity is nothing new - oil, rainforests, water and minerals have all been the focus of scarcity concerns at various times. But what has changed is the realisation that these issues can no longer be treated individually. They are all connected, and this is where the paradigm shift comes in. Understanding the resource ‘nexus' - how water, food and energy supplies can be managed in a connected way - is critical to green growth.
For companies, there is a huge opportunity to reduce the resources they use and many companies are doing just that. For example, SABMiller, will become 25% more water efficient by 2015 and 50% more carbon efficient by 2020. On a global scale, this means we will be able to grow our output and supply beers at the end of a hard working day to many of those 3 billion extra middle class consumers - without adding to our environmental impact.
Companies across many sectors are seeing the positive feedback loops presented by the nexus, and often finding hidden value and operating cost savings. Companies are also now pushing these targets down into their supply chains - and this will have an even greater positive impact.
To improve resource efficiency in our supply chains, we need help though, especially from governments. Government departments work in silos - often with water, food and energy policy set with no or little regard to each other. An agriculture department might say that it will double land under irrigation to maintain food security, whilst the water department says there is no more water available for irrigation; meanwhile the energy department is promoting a huge biofuel plantation which will need irrigation, and climate change will mean there is less water available overall.
All of those things simply cannot happen at once, and government departments must start working together. If Rio surfaces this issue in a meaningful way, it will have been worthwhile. The efforts being made by the private sector and the growing consciousness of consumers about their impacts will not be sufficient on their own to bring about the necessary changes.