The 10 Sustainability Megaforces

Deepening social, economic and environmental challenges over the last two decades mean that sustainability issues are increasingly prominent in global business. Sustainability trends predicted to play out over the next 20 years paint a picture of resource constraints, increasing regulation, shifting competitive landscapes, changes in market size and shifting consumer preferences. This means that assessing and acting on sustainability risks and opportunities is fast becoming a strategic imperative for all companies, and a crucial factor in driving long-term business value.

Understanding the forces at play

This article outlines the implications of sustainability for the insurance industry, and highlights selected international and local examples of insurance company responses.

KPMG has identified 10 sustainability megaforces expected to change the world and affect all businesses substantially in the next 20 years and beyond. it is crucial to understand each of these megaforces, and how they interact in a complex system with unpredictable outcomes.

sustainability Megaforces

The 10 Sustainability Megaforces:

  1. Climate Change. The International Energy Agency (IEA) says that we are on course for a long-term global temperature rise of 3.5°C – leading to physical impacts such as increases in extreme weather events and rising sea levels.
  2. Energy & Fuel. Fossil fuel markets are likely to be characterised by higher volatility and unpredictability, due to increasing global energy demand; supply and production uncertainties and increasing regulatory interventions related to climate change.
  3. Material Resource Scarcity. It is predicted that 83 billion tons of minerals, metals and biomass will be extracted from the earth in 2030, 55 percent higher than 2010 levels.
  4. Water Scarcity. According to the 2030 Water Resources Group, the global demand for freshwater is estimated to exceed supply by 40 percent by 2030.
  5. Population Growth. The planet’s population will increase to 8.4 billion by 2032 in a moderate growth scenario. This is some 20 percent higher than 2011.
  6. Wealth. The middle class is expected to grow 172 percent globally between 2010 and 2030, producing an overall rise in global wealth over the next 20 years.
  7. Urbanisation. All developing regions are expected to have the majority of their citizens living in urban areas by 2030. Population growth is expected to occur mostly in cities.
  8. Food Security. It is estimated that global food prices will rise by 70-90 percent by 2030. This could be exacerbated by the potential effects of climate change.
  9. Ecosystem Decline. Natural resources will become scarcer, more expensive and less diverse, due to declines in biodiversity and ecosystems.
  10. Deforestation. OECD projections show that forest areas will decline by 13 percent from 2005 to 2030 globally.

A full description of these megaforces can be found in our thought leadership publication, Expect the Unexpected.

Watch this space for more on sustainability megaforces and the implications for the insurance industry…

David Okwara

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