Mankind is steadily exhausting the planet’s natural resources. Fresh water, fossil fuels, clean air, precious metals, fish stocks, arable land – the depletion of these resources and many others is of profound concern. But, as will be discussed later in this report, there is also real cause for hope because innovation is flourishing in some unusual forms – and in some surprising places.
For now, the rise of promising innovative responses does not diminish the magnitude of the challenge. In fact, it is exacerbated by rapid population growth and surging economic expansion, particularly in emerging markets. By 2050, the world’s population is expected to be about 30% greater than it is today. By 2025, Brazil, China, India, Indonesia, the Russian Federation and South Korea together will account for more than 50% of the world’s growth.1
Together, population and economic growth will reinforce expectations and aspirations for a better life among the world’s newest consumers. New approaches to growth and development will be essential if the expanding requirements and wishes, as well as the basic needs of this emergent middle class, are to be met.
Clean water is one of the resources under greatest threat. By 2030, people and businesses will consume 30% more water than nature can replenish. Unless current water use and conservation practices shift dramatically, shortages will lead to increasingly severe consequences. Agriculture currently accounts for about 70% of the world’s freshwater use and reports already warn of potential outcomes of this usage. For example, if Egypt lacks the access needed to water from the Nile – a real possibility – it may struggle to feed its fast-growing society.2
Farmland and forests are also at risk. Large-scale deforestation is considered responsible for climate change, threatening indigenous peoples and causing loss of biodiversity. At the same time, up to 30 million hectares (74 million acres) of agricultural land are lost each year as land becomes infertile or toxic, is ploughed under for industrial use or yields to urban expansion.3 Of that land, less is available for growing food: more than one-third of large- scale land acquisitions – which last year reached some 45 million hectares4– are intended for biofuel production.5
Alternative food sources face challenges of their own. The United Nations Food and Agriculture Organization (FAO) report on The State of World Fisheries and Aquaculture 2010 states that the per capita supply of fish as human food reached a new record in 2008.6 More than one-quarter of the world’s monitored fish stocks are overexploited, depleted or slowly recovering, meaning that they are unavailable for fishing.7
There is little to suggest that regulation alone, or companies or governments acting in isolation, can do much to improve – let alone significantly alter – the long-term outlook. Economic health is first and foremost assessed by measures of consumption and exchange. The standards by which economic growth and progress are measured will not change quickly. There is no global balance sheet for the world.
The solutions lie with innovation and the efforts of business leaders committed to societal and environmental improvement; and it is mostly likely to be innovation driven by economic opportunity rather than by corporate conscience or regulatory fiat. Already, many large multinationals are doing much to “green” their product portfolios while satisfying shareholders’ expectations.
What is most interesting, however, is that innovation of all kinds is burgeoning in emerging markets – the very regions where the pressures of resource depletion will be felt most keenly. That fact is doubly interesting given the challenges faced by companies in those countries. They must deal with multiple problems in parallel – from inadequate infrastructure and weak environmental regulatory regimes to shortages of experienced talent and underdeveloped governance practices.8