My Prediction for 2014: The Year of the Resource Crunch
Back in 2009/10 when I was writing The Green Executive, I interviewed 18 senior sustainability practitioners to generate fresh case studies. I asked all of them what were the key drivers for sustainability in their organisation. The answers ranged from legislation to cost to customer demand – even the value of assets, but nobody mentioned resource scarcity.
This year I’ve interviewed 5 new, but similar practitioners for Building A Sustainable Supply Chain and my next book and all of them mentioned resource scarcity or security of supply. OK, it’s hardly resounding proof, but it makes me think something is definitely up. And if you look at the MGI Commodity Price Index (below) you can see why. After falling for the duration of the 20th Century, save the odd glitch,commodity prices (energy, food, minerals, fibre) have shot up so they are more expensive than any time in the industrial era.
Business is all too aware of this – and not just my 5 interviewees. A recent EEF survey found 80% of senior manufacturing executives thought limited access to raw materials was already a business risk. For one in three it was their top risk.
What frightens me even more than that surge in commodity prices is that politicians and the mainstream media seem completely oblivious to this. Take energy prices – the right blame subsidies for renewables, the left cartels, but everybody ignores the fact that the cost of oil and gas is crazily high.
Why does this matter? Well, non-renewable energy will can only get more expensive as demand outstrips supply. Conversely renewables only get cheaper as technologies evolve and economies of scale come to bear. But they need subsidy, investment and political support to accelerate up to the point where they can stand on their own two feet.
I would argue that the same is true of non-energy resources. Virgin plastics will only get more expensive as oil prices rise, secondary plastics will only get cheaper as reverse logistics networks mature, sorting and recycling technologies evolve and economies of scale kick in – the circular economy. But this process needs accelerating and fast.
In other words our choice is not ‘green or growth’ but ‘green or stagnation’.
So my optimistic prediction for 2014 is that this message will finally filter from the sustainability and business world through to the mainstream of politics and media – my pessimistic prediction is we’ll hit the crunch first.