Report: "Green Shift" could save heavy industry over $2tr

Transitioning towards a low carbon economy could help avoid multi-trillion dollar costs that will otherwise arise from increased energy and resource insecurity, according to a major new report from the World Economic Forum.

The report, developed in conjunction with consultancy giant Accenture and due to be discussed at the annual World Economic Forum in Davos this month, argues that investment in more sustainable and efficient business models will deliver net economic benefits and help insulate businesses against the risks posed by worsening material shortages.

Entitled More With Less: Scaling Sustainable Consumption and Resource Efficiency, the report looks at the carbon, steel, and iron sectors operating in major economies and concludes that resource efficiency measures in these three industries alone could save up to $2tr.

Similarly, the report cites evidence suggesting that consumer goods industries could save $37bn by 2030 through investment in basic energy efficiency measures – savings that could rise to over $55bn if energy prices rise in line with some analysts’ expectations.

The report also warns that “the exhaustion of natural resources is a structural risk to long-term economic stability”, noting that recent price shocks that have seen the price of cocoa rise 246 per cent over the past decade and the price of palm oil rise 230 per cent over the same period highlight the vulnerability of many global supply chains.

“The sustainability agenda is not an abstract development concept,” said Sarita Nayyar, head of consumer industries at the World Economic Forum. “There is real economic value at stake. Companies that effectively weave resource efficiency into their core strategy and operations can drive revenue growth, reduce cost and improve brand reputation.”

Peter Lacy, managing director for Sustainability Services at Accenture, said pressure was mounting on businesses to develop more resource- and energy-efficient business models.

“Scaling resource efficiency is not just ‘nice’ to have,” he said. “It is a business imperative, a new model for sustainable growth in a world where we need to do more with less. It means rethinking business models and supply chains. It requires fundamental shifts, both in the way we deliver the products and services people want and need, and in the relationship between consumers and consumption.”

The report recommends that business leaders play an increasingly proactive role in promoting more sustainable business models, arguing that they should be taking steps to promote more effective environmental policies and regulations, ensure sustainability best practices are embedded within their entire organisation, and encourage consumers to switch to more sustainable goods and services.

“About 50 per cent of consumers surveyed in over 40 countries stated that they do everything they can to protect the environment, but only a small proportion buys ethical brands and pays more for organic food,” the report states. “Consumers need to be more consistent with their actions, and businesses need to engage with consumers to ensure they are able to match their actions with their desires.”

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