We have entered into a new normal of competing demands for natural resources. This new normal has brought with it greater recognition for the need to safeguard supplies of raw materials at both the governmental and company level.

Coupled with consumer demands for sustainability, this makes resource management a priority for all companies. The silver-lining is the cost-savings and operational and market advantages of placing resource security and efficiency at the forefront of business.
Consumer demands for sustainability are also having a transformative effect on the demand for natural resources.

Today, green concerns have an impact on the purchasing decisions of almost all consumers. This can be seen through increased emphasis on recycling and pressure for manufacturers and retailers to use less packaging. (Photo 1 in the slideshow above, by Burt’s Bees, is an example of how brands are conveying more details than ever to consumers about the sustainable packaging materials they use.)

The introduction of a five pence charge for single-use plastic carrier bags in the UK is just one example. In 2012, the government estimates that over 7 billion single-use plastic bags were given out by supermarkets alone in the UK. Since the change in legislation, some retailers are claiming decreases of up to 80% in the number of bags used.

Given that the supply, demand and price of natural resources are at the core of business, natural resources and material risks pose a threat for all companies in all sectors. Companies may struggle to secure supplies of key inputs and this could disrupt production.

In addition, flow-on effects from natural disasters or climate change can resonate around the world and affect supplies of raw materials. The public perception of a brand or a company as a whole can be damaged if the business is exposed as using unsustainable sources of materials or damaging ecosystems or habitats.

Consumers may switch to a competitor’s more efficient or more sustainable products and services as a result of increasing awareness and interest in environmental matters. These business risks combine to create the new normal for companies, which must act to secure their supplies of key natural resources whilst also accommodating the increased demand for sustainable practices from government and consumers alike.

The Top Five Global Risks of Highest Concern for the Next 10 Years

See slide 2 above.
Source: World Economic Forum Global Risks Report 2016
Note: Survey respondents were asked to select up to five risks of highest concern for each time frame. The percentage indicates the share of respondents who selected the specific global risk among the five risks of highest concern for each time frame.

The imperative to change patterns of production and consumption will only grow and those that are ahead of the curve, educating and leading consumers, will benefit. Companies should conduct thorough studies of their reliance on key raw materials, constantly reviewing and updating plans and processes. The simplest way for businesses to manage the risk is to make the most efficient use of their critical resources. Recycling, substitution, repair and re-use offer additional ways for companies to manage their supply of raw materials.

At the extreme end of the range of options available, is a complete or partial change of business model to incorporate ideas such as retaining ownership of products and leasing them to customers or introducing take-back and re-manufacturing schemes. This can have particular resonance in an era of New Consumerism, one where we see consumers reassessing their priorities and asking themselves what they truly value, with interest in paying for “access” to products rather than owning them outright.

Sustainable Development Goals Matter to Consumers

See slide 3 above.

Source: PwC SDG Engagement Survey 2015
Note: % responding likely or very likely to the question “If you knew that an organisation had signed up to the UN’s Sustainable Development Goals, would that make you more or less likely to use their goods or services?”

ABOUT THE AUTHOR
Sarah Boumphrey is Global Lead Economies and Consumers, Euromonitor International