Resource crunch – the risks to business

carbon-trust-report“The last five years have seen global attention fixed firmly on the financial crisis and economic recovery,” says Tom Delay of the Carbon Trust. “But while this has been playing out a far more fundamental risk to our long term economic development has remained in the background: the rapidly expanding use of our scarce natural resources, combined with the planet’s ability to cope with the multiple impacts of their use.”

As I posted last week, rapid development in many parts of the world has led to soaring demand for metals and minerals. Prices have risen to record highs, and suppliers are scrabbling to keep up with demand. They can only keep up for so long, and the Critical Materials Institute foresees shortages of some metals as early as 2016. Heady days for mining companies, but a real challenge to those who need the copper or tantalum for their business.

It’s not just metals either. In their report Opportunities in a Resource Constrained World, The Carbon Trust identify a number of different potential problems:

  • Energy shortages are a growing risk to businesses as demand for fossil fuels grows and supply tightens.
  • Water scarcity is a problem that will be made more acute by climate change and a growing population. Estimates from the Water Resources Group suggests a global shortfall of 40% by 2030.
  • Land is increasingly scarce in many places, with competing priorities in a world of food price spikes.
  • It’s easily missed in a list of resources, but the Carbon Trust points out that there is a shortage of places to put waste.

These shortages manifest themselves in different ways. It isn’t about ‘running out’ of something, but about rising prices, disruption to supply, the difficulty of planning ahead in a volatile market. When resources run low, governments can be tempted to intervene, as many countries have done in holding back oil production for domestic use, or limiting rice exports. Large companies might carve themselves a monopoly, as we saw in the cocoa market a couple of years ago. Speculators can pile in on rising prices to grab a quick profit at the expense of those who actually need the materials.

Of course, businesses have had plenty of time to think about this, if they’d be paying attention. Groups like the Club of Rome warned about resource depletion in the 1970s, but critics managed to spin their work as scaremongering. (The Limits to Growth actually stands up very well today, as I’ve detailed elsewhere.) We’re a decade into the peak oil movement and as predicted, conventional oil production has peaked. However, as the Carbon Trust says, “the majority of companies have yet to understand what sustainability really means beyond carbon, why this is important, and what they can do to take action.”

Some companies do get it though, and have successfully reduced their environmental impact while improving their business performance. I don’t want to let this post get too long, so I will write about them tomorrow.

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2 Comments on “Resource crunch – the risks to business”

  1. Jonathan Rutherford February 18, 2014 at 10:01 pm #

    We are headed for ‘catabolic capitalism’ in my view. More here
    http://truth-out.org/news/item/10572-meet-catabolic-capitalism-globalizations-evil-twin
    http://truth-out.org/news/item/11173-cannibalistic-capitalism-and-green-resistance

    So fingers crossed for ‘green capitalism’ or build the real alternative: a simpler eco-socialism?

    • Jeremy February 19, 2014 at 9:43 am #

      From an individual point of view, I’m with you in working towards simplicity. But if I put myself in the shoes of a BT board member, I’m not sure what else they can do but try their hand at green capitalism. Big corporations aren’t going to have a moment of enlightenment and shut themselves down, and the fallout would be pretty spectacular if they did.

      So it looks like we have to do both, at least in the medium term. Of course, environmentally conscious corporations are still unsustainable without a social transformation too. Eventually you have to address the profit motive and the growth imperative. I just don’t think the alternative can be built without engaging with the commercial power structures of the world that we have, and for that reason any small step in the right direction is welcome.

      There is a tension here, but not an irresolvable one. We can work on greening the system we have while still working to transform that system.

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