Wednesday, February 15, 2012

Heading into a sustainable future - or else

Rising gas prices are again in the news - as they usually are when summer approaches - but this time, according to this story, the increase does not stem from demand. Oil is a commodity, and this spike appears to be linked to speculators.

Oil is a huge cost of business, and an increasingly unpredictable one. And it's only going to get worse, a new study suggests, so corporations better get wise and design sustainability into their business plans.

"Fossil fuel markets are set to become more volatile and unpredictable because of higher global energy demand; changes in where fossil fuels are consumed; supply and production uncertainties; and increasing regulatory interventions related to climate change. All companies – regardless of sector, size, or location – will find it difficult to plan for and manage energy costs, especially those related to fossil fuel," consulting firm KPMG International says in this report.

Thus, businesses should become more energy efficient and strategic. KPMG recommends companies use more alternative or renewable fuel sources to reduce their exposure. In addition, airlines and shipping companies, plus plastic and chemical producers that use petroleum as an input, need strategies to address potential shortages and price volatility.

KPMG calls the report a "starting point" for discussion. The company also has a message for those who urge the end of oil consumption: It ain't going to happen.

The energy mix might change, but use of fossil fuels will dominate for years and, in fact, could expand with an increasing world population - at a price. KPMG cites an International Energy Agency study that estimates crude oil prices in the United States will reach $120 per barrel (from $101.85 today) by 2035.

As it turns out, energy unpredictability is just part of the issue facing businesses. KPMG cites 10 "megaforces" that will shape businesses and their actions: climate change; shortage of materials; water scarcity; population growth; urbanization; increased world wealth; food supply and security; ecosystem decline; and deforestation.

Nimble corporations, however, will be able to use this tidal wave of change to their advantage. What creates problem one place often breeds opportunity elsewhere. Money can be made from sustainability. Innovative businesses could reap rewards for addressing needs of growing populations for agriculture, sanitation, education, technology, finance and health care, the report contends:

"Sustainability is increasingly being seen as a source of innovation and growth rather than simply cost reduction and risk management." Here's another report from KPMG on that topic.

As such, more businesses, landlords, schools and communities already are installing sustainable processes into their core operations. The Corporate Responsibility Newsletter has this story on NIKE and other corporate heavy hitters asking Congress to preserve a wind-power tax credit.

Here's one on property owners discovering that going green pays, and another on Steamboat Springs' desire to go waste free. And let's not forget students, who are helping lead the charge to a sustainable tomorrow.

Sustainability: it's here to stay

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