Accounting firm KPMG is on a mission to change the way we look at the world and to help businesses innovate with sustainable product and investments
By Graham Clifford
As morning broke on February 12th, 2014 those living along Ireland’s western seaboard opened their front doors to be greeted with a sight of sheer devastation – some said what they witnessed resembled a ‘disaster-zone’.
Others waded through water in their hallways.
As they slept, or at least tried to, Storm Darwin with gusts of over 100 kilometers an hour, bashed our Atlantic Isle. There were power outages to 260,000 homes as well as wide-scale destruction of infrastructure, homes and businesses. As many as 7.5 million trees were felled.
But the majority of the damage was caused by flooding. The storm surges hit when tides were at their highest. The combination of factors resulted in the state and private insurance companies forking out tens of millions of euro to help repair the wide scale damage.
As the water level dropped and the winds eased people started asking why we’d made no provisions for this inevitability, had we sleep-walked into a disaster and left our coastal towns exposed – or perhaps some land should be evacuated permanently for fear of unstoppable flooding in the future?
As I sit with Mike Hayes and Caroline Pope, leading KPMG’s Sustainability practice, we talk about some of these likely changes and how Ireland’s people, government and business are preparing.
“We live in a world of finite resources – water, energy, food, land….all of these things are restricted and we need to get ‘smart’ in the way we use them,” says Caroline as she introduces me to some of the megatrends KPMG are discussing with their clients on a daily basis. “The global demographic is shifting, people are living longer, Africa is a developing at an incredible rate and alongside this, society’s awareness of ethics and values is also evolving – we’re holding companies and governments accountable for their management of our futures.” KPMG has identified nine global ‘megatrends’ and analyzed how they will impact on world governments, businesses and citizens in a special report entitled ‘Future State 2030’.
Megatrends are long-term changes that affect governments, societies and economies permanently over a long period of time.
At first glance the pace of change, spelt out so clearly, sends shivers down the spine.
But Caroline believes we’re already adapting to these changes and designing our lives accordingly. “People are starting to think about where their food comes from, whether they need to wash their clothes at 60 degrees, which bin to put the empty milk carton in.” It seems we’re already bringing the smart economy into our homes.
She said that: “we at KPMG believe that government, business and citizens each have a role to play to counterbalance these mega trends or we and our descendants will face a very different future.”
And Partner at KPMG Mike Hayes told me that businesses, both large and small, shouldn’t ignore the changing environment and global developments.
He said: “Businesses and governments will do so at their peril. There are societies and businesses around the world that will be impacted either in a positive or negative way by these megatrends – but if they bury their heads in the sand and simply ignore them we believe it’s the worst single thing they can do.”
While some nations are slow to adopt sustainable policies Mike believes Ireland is internationally recognized as a leader in driving innovation and development in the sector.
“The rate of change in Ireland in this whole area is phenomenal. We punch well above our weight globally, for example, Irish companies are at the forefront in building wind and solar facilities in places like South Africa, Ghana and South America. There’s a growing recognition that this is an opportunity for us, we’re an entrepreneurial people and many see that the future of sustainable energy and new technology in this area is brimming with possibilities.”
KPMG advises companies in the area of sustainable business and Mike explains that in boardrooms senior executives are starting to realize the need for sustainable policies and a shift in the way they look at the world.
He said: “Around the world we are seeing the bigger businesses starting to grapple with this – this is starting to become a boardroom issue.”
But what about the individual, you and I, can we really make a difference? Will our actions have an impact on how our planet will look in half a century?
“Yes I believe they will. It’s not all about what big businesses or governments decide,” explains Caroline.
She adds: “For example we know that the Generation Y (often referred to as the Millennial Generation) are more socially and environmentally conscious than previous generations. They, as individuals and a group, will want to purchase more green products and sustainability is an important issue for them. If the corporate sector ignore this group, which is also their future workforce, their businesses will suffer so the actions of individuals can help to drive change without a doubt.”
Since 2002 (has it really been that long!) Ireland has had a plastic bag levy in place which has not only brought in taxation for the government to be used on environmental policies but has also reduced the number of plastic bags circulating.
Bag usage has fallen from 328 bags per shopper here in 2002 to just 21 now. The success of this initiative, and recycling efforts, shows that our habits can change and that, with a little help from the state and business, we can become a greener and more forward looking nation.
“I really believe that we can help make Ireland a global Centre of excellence in this area,” says Mike, adding “we need to be smart both on a personal and business level. There are opportunities that exist and also we need to protect our planet and hand it onto our grandchildren in a better state than it’s been. Here at KPMG we are working hard to make that happen and I feel great getting out of bed every morning knowing that the advice and help we give businesses can help them to not only be successful but that we are also contributing in our own way to a smarter and more sustainable future for the next generation.”
Higher life expectancy and falling birth rates are increasing the proportion of elderly people across the world, challenging the solvency of social welfare systems, including pensions and healthcare.
Rise of the individual
Advances in global education, health and technology have helped empower individuals like never before, leading to increased demands for transparency and participation in government and public decision- making. Also social mobility faster than ever.
A new wave of technological advances is now creating novel opportunities, while testing governments’ ability to harness their benefits and provide prudent oversight.
The interconnected global economy will see a continued increase in the levels of international trade and capital flows.
Governments’ ability to bring debt under control and find new ways of delivering public services will affect their capacity to respond to major social, economic and environmental challenges.
Economic power shift
Emerging economies are lifting millions out of poverty while also exerting more influence in the global economy. With a rebalancing of global power, both international institutions and national governments will need a greater focus on maintaining their transparency and inclusiveness.
Rising greenhouse gas emissions (GHGs) are causing climate change and driving a complex mix of unpredictable changes to the environment while further taxing the resilience of natural and built systems.
The combined pressures of population growth, economic growth and climate change will place increased stress on essential natural resources including water, food, arable land and energy.
Almost two-thirds of the world’s population will reside in cities by 2030. Urbanisation is creating significant opportunities for social and economic development and more sustainable living, but is also exerting pressure on infrastructure and resources, particularly energy.