Many businesses measure growth by selling more stuff to more people, and consumer markets are expected to expand in the decades ahead. Thanks to the rapid industrialization of developing countries including China, Brazil and India, 3 billion people are projected to join the global middle class in the next 15 years. These demographic shifts represent both a human development victory and an enormous business opportunity for those companies positioning to meet the needs of added consumers.
However, current consumption patterns put the global economy on an impossible trajectory. We would use three times as many natural resources by 2050 compared to what we used in 2000. Yet few, if any, companies are fundamentally rethinking the models by which they meet customer needs. This is the elephant in the boardroom — uncomfortable and unmentioned because the solution requires radical change.
Business leaders are at a crossroad.
Companies will not thrive if their growth strategies assume infinite supplies of finite resources. Likewise, without progress on global environmental challenges such as climate change, economic and social instability will undermine development around the world. Meanwhile, those businesses that remain stagnant will face more direct threats from the innovative business models that emerge to deliver more value with the resources available.
Meeting the demands of a growing global middle class will mean innovating new products and services that deliver shareholder value and satisfy consumers’ needs in different ways. Moving away from unchecked resource consumption may be the defining sustainability challenge of our time, but even companies with laudable sustainability agendas tend to stop short of addressing today’s unsustainable consumption patterns.
A review of 40,000 corporate sustainability reports between 2000 and 2014 found that only about 5 percent of companies mention some type of ecological limits. Of those, most did not provide detail on current or planned changes to address the issue.
A new working paper from WRI ‘The Elephant in the Boardroom: Why Unchecked Consumption Is Not an Option in Tomorrow’s Markets’ can guide the conversation within companies and with stakeholders.
The choices that business leaders make today will define the future for generations to come.