Sustainability: which wave do we want to ride and when? - KPMG Belgium
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Sustainability: which wave do we want to ride and when?

Sustainability: which wave do we want to ride and when?

Sustainability: which wave do we want to ride and when?

Mike Boonen | Partner,

For several years in a row, environmental risks have dominated the WEF Global Risks Report and 2019 is no exception. Despite increasing activist wake-up calls, our world appears to be sleepwalking into a climate change crisis – or at least it is if we choose to take a pessimistic, even cynical, view on the environmental aspects of sustainability. Steven Pinker’s more positive case for reason and science in Enlightenment Now focuses strongly on societal aspects of progress towards prosperity. Can reason and science also save our planet before it’s too late?

To support the exponential growth of human kind on Earth, we made a mistake in globally implementing a linear, fossil fuels based economic model. Admitting this as a rookie error and sacrificing our sacred cows takes time for humans, especially against a backdrop of geopolitical tension. Nonetheless, we are slowly transitioning to a circular economy based upon renewable energy.

In particular, our progress with renewables has been powered by the significant contribution of hydropower generation, and green field emerging markets are now also propelling the steep ascent of wind and solar energy growth. Once found too expensive to expand beyond subsidized niche markets, wind and solar now beat conventional energy sources on price and increasingly match their performance thanks to sometimes invisible (nano)technological innovation and price parity being approached both on and off the grid - although offshore wind and concentrated solar power are still exceptions.

That said, there is a very long and winding way to go for both the renewable and circular transitions. Even with double-digit growth rates predicted, the share of renewables in meeting global energy demand is expected to reach only twelve percent in 2023. Meanwhile, our current economic model is only about ten percent circular, whereas to decouple material throughput and energy from economic growth, it needs to be around eighty percent circular, combined with a total annual material consumption growth rate of maximum one percent.

True decoupling is far from happening at the scale and pace needed: decreased material throughput and cheaper renewable energy cannot have a rebound impact by generating perpetual economic growth themselves. We need to learn from past mistakes and design a genuinely circular economic engine that doesn’t spin out of control unchecked.

Meanwhile, the United Nations’ Sustainable Development Goals (SDGs) are reframing Corporate Social Responsibility (CSR). We are not on track to achieve these by 2030. The Sustainable Development Report 2019 calls for major transformations and clear roadmaps. Too many corporations are currently still ‘greenwashing’, ‘SDG spinning’ or silent on their true CSR performance.  As shown by our international and national KPMG surveys, Belgian CSR reporting and assurance rates are particularly low. Increased adoption of the Global Reporting Initiative (GRI) Standards seems essential for Belgium to catch up with the rest of the world. Our sustainable finance evolution will only be a catalyst to the actual transition of our real economy if  we reduce the ‘fifty shades of green’ labeling landscape, and establish a truly independent impact verification process.

Levelling the playing field using independent validation will more fairly determine the winners of the future economy. CSR pretenders are increasingly being outperformed by pioneers that are truly purpose driven, adopt ambitious science based targets while reorienting their products and services to support our common global challenges. Your level of response to the latter will definitively drive your corporate value in the world of tomorrow, so there is strong a business case to act responsibly.

In her Doughnut Economics model for global improved prosperity with environmental integrity,  Kate Raworth neatly sums it up in a balanced call for sustainability action:

“Don’t be an optimist if it makes you relax. Don’t be a pessimist if it makes you give up. Be an activist and ask, what can I do?”