92% of CEOs believe the integration of sustainability will be important to the future success of businesses – but only 48% say they are actually implementing sustainability into operations.
The lack of comprehensive solutions and global regulatory frameworks to standardise the incorporation of sustainability has resulted in a very slow implementation by businesses and governments.
While economic incentive for the adoption of sustainable practices is not yet fully formed, there has been increased pressure from three key sources:
Consumers are increasingly demanding greener products and are now demanding greater transparency across the entire supply chain for sustainable products.
Sustainability issues are increasingly important to investors, with a view that there will be a reallocation of capital in the near future due to climate risk.
Increasing political pressure, due partially to sustained campaigning from major international organisations, has led the government to build sustainability into policy planning.
Technology significantly contributes to the transition to a green economy. Environmentally sound technologies (ESTs) are technologies that protect the environment, are less polluting, use resources in a more sustainable manner, recycle more of their wastes and products, and handle residual wastes in a more acceptable manner. DMCC’s Sustainable Trade Index measures growing trade in ESTs, and acts as a proxy to show the growing interest among businesses worldwide in moving towards sustainability.
Companies that are looking to become more sustainable have realised that their supply chains have far greater environmental costs than their own operations. Greening supply chains have the potential to increase efficiency, reduce resource use and costs, improve access to new markets, and increase resilience and resistance to economic shocks.
A much more holistic way approach of sustainability in products across industries is the ‘circular economy’. Circular economy policies can have a global impact on trade. A shift to circular economy systems will primarily impact primary and secondary resource flows, and thus demand and trade in such resources.
There are clear indicators that sustainability will begin to shape future demand in the coming years, but the lack of global regulatory frameworks to standardise the incorporation of sustainability has resulted in piecemeal implementation by businesses and government. Future trade negotiations will have to include more discussion and enforcement of sustainability issues.