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Our Insights 21 Dec 2011

Ten Words. Ten Trends for 2011.

By Mohammed Al-Shawaf

1. Transitions

In a year that saw an Arab Spring take hold and unseat entrenched autocrats in Tunisia, Egypt and Libya (TBD on Yemen and Syria), the withdrawal of the last American troops from Iraq, a European Union on the brink of transformative change (and potential collapse), a titan of technological (and economic) innovation pass away, and the growing acknowledgement (in the form of the Occupy protests), that the entanglement of the American political and financial system is a Faustian bargain that must be actively fought and protested against, the theme of transition feels all too apt.

So too in the sustainability field, where in a world of seven billion inhabitants and growing, the five most urgent issues on the sustainability agenda are all perceived less urgently than they were in 2009. It is no surprise that stakeholders like generation Y, responsible for catalyzing many of 2011’s most unlikely transitions, are no longer seen as “nice-to-engage” on the sustainability agenda, but an imperative.

2. Leadership

There is insufficient leadership. Everywhere. This is evident in President Obama’s unfavorable ratings (though the White House still looks like a giant compared to the historically low approval of Congress). It is evident in the desperate wrangling and constant specter of collapse in the EU. It is evident in the global community’s penchant – despite glimmers of ending the gridlock at COP 17 – to kick the can down the road on combating climate change. And it’s evident in Occupy protests around the world, which cast business not as a steward of sustained global prosperity, but rather an untrustworthy instigator of rising inequality, unemployment and short-term thinking. Is it any surprise that one of the most heralded attributes of Occupy is its insistence on being leaderless?

The clarion call for new energy and leadership is being sounded at an increasing clip, and while it aims to reinvigorate traditional forms of leadership, there is also the cautious acknowledgement that we’ve entered into a “new normal” where mayors and city councils, multi-sectoral coalitions (see Alliances trend), and social entrepreneurs fill the gaps.

3. Alliances

Perhaps in reaction to the uncertainty of ongoing transitions and the disillusionment with traditional forms of leadership, we’ve seen an uptick in alliances forged to tackle the increasing scale and complexity of sustainability issues. But these aren’t just the alliances we’ve come to expect (those from high-profile businesses and NGOs collaborating on an areas of mutual interest/concern). No, we’ve seen “enlightened competition” from hardened foes in the auto sector, who are partnering to develop hybrid powertrain systems (Ford and Toyota) and new fuel cell technology (GM and BMW). We’ve seen a steel trade association take up the mantle of environmentalists advocating for an LCA-based global fuel standard. We’ve also seen nontraditional coalitions form on the issues of toxics (footwear and apparel brands collaborating to eliminate toxic discharge from their supply chains by 2020), clean energy (ConocoPhillips, NRG Energy and GE Capital’s $300 million joint venture) and climate change adaption (the cross-sectoral Partnership for Resilience and Environmental Preparedness), to name a few.

In talking about the pressing nature and scale of the issues our society faces today, there is a realization that it’s simply impractical to wait for the genius of one company’s R&D team or a particular NGO’s issue expertise and influence to develop the kind of breakthroughs that are required to advance sustainable development. Systemic change, the kind increasingly called for on a wide range of issues, requires strength in numbers and friends in unlikely places.

4. Øwnership

Access over ownership, collaborative consumption, recommerce – or whatever your favorite term for the “sharing economy” may be – isn’t a trend germane to 2011; it’s been steadily (and stealthily) building over the last few years, spurred by a weak economy, consumers on a constant quest for what’s next, and the “eco-status” that comes from sharing, not buying (among other reasons). Signs of this trend are everywhere and one of the most visible is likely occurring in a city near you, as the urban bike renaissance continues to be spurred by bikeshare programs from Washington D.C. to Hanghzhou, China.

But 2011 is a watermark year for this reason: big business finally (and in some cases, reluctantly) embracing it. Look at car sharing. Industry leader Zipcar (which became profitable for the first time in 2011) began a partnership with Ford on US college campuses, while Volkswagen and BMW announced plans for their own car-sharing schemes. Meanwhile, General Motors made an even more ambitious entry to the space, partnering with peer-to-peer car-sharing company RelayRides to let drivers rent out their cars by the hour. Witness also the Common Threads Initiative, launched by eBay and Patagonia, which asks customers to not buy something if they don’t need it, and if they do buy, to repair what breaks, and resell their old items. Even Amazon’s decision to allow Kindle users to loan books to friends and family is an example of businesses beginning to get more comfortable with and experiment around sharing. And while a promising development, experimentation without the intent to fully integrate is not an end in itself; our November survey with GlobeScan indicated that businesses have a duty to offer sustainable product lines instead of, rather than in addition to, unsustainable ones.

5. Transparency

“You never want to hear about the guys who run the supply chains for multinational companies. When you do, usually it means something really bad has happened.” This quote from Bob Ferrari, a leading supply-chain consultant, may be all too true for Intel, which cut its revenue forecast for the fourth quarter by 7%, and more ominously, Toyota, which halved its profit forecast for 2011. Indeed, the traditionally opaque supply chain came out of the shadows this year when the twin disasters in Japan and historic flooding in Thailand spelt delays and disruption in the lean, globalized supply networks that have become the norm since Toyota itself popularized them.

In spotlighting potential emerging trends earlier this year, we wrote that “more awareness (across a greater breadth of stakeholders) of the disparate parts and components that make up our favorite products should lead to greater demands for transparent supply-chain practices.” But this “new normal” of transparency transcends the supply chain, important as it may be. At one of the four business roundtables we convened this year, the notion of transparency historically being a response to crisis was found to be at least an incomplete, if not outdated view. Rather, “there was a sense that more organizations now understand how regular and proactive transparency begets trust, so are more committed to consistent, proactive disclosure[.]” Speaking of…

6. Trust

National governments are seen as being the least equipped to advance sustainable development, and a first step to that transformation, trust, has cratered in a stream of government scandals across the globe. From the litany of UK controversies (News of the World’s phone hacking, UK Defense Secretary Liam Fox’s resignation, Bell Pottinger and the influence of lobbyists) to China’s bullet train crash cover-up to the constant specter of corruption in India (resulting in “watershed” demonstrations across the country), we’ve seen the products of mistrust from our elected officials. Businesses and their neglect – or what’s more often the case, sidestepping – of ethics have come into sharper focus too in our current economic malaise. When two major banks this year received record fines for taking advantage of the elderly, it’s hard to disagree with the need to occupy Wall Street.

While trust is a basic tenet to the sustainability agenda, it’s also a catalyst to another trend we’re highlighting this year, alliances. Since there is every expectation that nontraditional (and in some cases, uncomfortable) collaboration will be critical to rapid development and scaling of sustainable solutions, trust will be the essential currency to breaking down traditional mindsets and building up ambitious coalitions.

7. Campaigns

You need search neither far nor wide for examples of mass mobilization in 2011, but lost in the shuffle of the spontaneous, viral and breathtaking displays of people power from Tunisia’s toppling to India’s anti-corruption assault to Russia’s response to election rigging was the welcome re-emergence of the campaigning NGO. Whether through coalition (the range of environmental NGOs, such as, that mobilized successful protests against the XL pipeline), partnership (NRDC and EDF’s “What’s your number” campaign) or the strength of their own constituencies (Sierra Club’s “Beyond Coal” campaign and Greenpeace’s string of victories from “zero discharge” to “unfriend coal”), NGOs reclaimed and rejuvenated their activist spirit, a critical tool arguably overshadowed in recent years by a pure-play strategy of business engagement.

And while no company would publicly ask for direct confrontation, in the context of our business roundtables this year, we heard some companies express an appetite for more of this type of pressure: “Without agenda-driven NGOs, or proactive, but restrictive policy, it is harder for internal changemakers at companies to make the case for course correction.” So here’s to 2011 being the (re)start of pragmatic collaboration on areas of shared interest and relentless campaigning on issues that aren’t.

8. Limbo

The renewables (particularly solar) industry achieved high watermarks in a number of indicators this year: in the US, there were more domestic solar installations completed in the third quarter of this year than during all of 2009; in Germany, after Angela Merkel announced the country would close all of its 17 nuclear reactors by 2022, the biggest solar market in the world (and the third largest wind market) placed an “all-in” bet that it could scale its renewables portfolio to make up a large portion of the nuclear gap; and, in China, the latest five-year plan began with the ambition that after 2015, renewables will have reached cost parity with conventional domestic forms of energy.

But that narrative does not include the UK government’s plan to prematurely halve the popular feed-in tariff scheme for solar, putting the industry’s sustained success in question. It does not include the blowback from the solar firm Solyndra’s bankruptcy, which may engulf future US government incentives to advance clean energy after year’s end. And it certainly does not tell the story of how many of the biggest names in solar manufacturing have lost more than two thirds of their value this year as a result of what some commentators have called “a toxic mix of oversupply, falling prices, low-cost Asian competition and lower government subsidies.” The events of 2011 have put the future of (and namely government support for) solar and other renewable energy technologies in limbo in 2012.

9. Personal

Time’s Person of the Year is the Protestor, and while it is difficult to argue with the impact of people-powered protests in the Arab world, Europe and the US in 2011 (see also Campaigns), 2011 also witnessed the power of the personal. The sustainability agenda – stalled and maybe even regressing in perceived urgency – learned a thing or two from the impact people, place and personalization was having across the globe. The XL pipeline – a proposed major supply artery of Canadian tar sands oil through America’s heartland – was halted, as much by a well-organized campaign about GHG emissions outside the White House as by ranchers in Nebraska worried that a spill along the pipeline would devastate their livelihoods. And while the story of Japan’s earthquake, tsunami and nuclear disaster strained the country’s energy grid, the unabashedly large-scale character of this challenge was met by the ingenuity and national pride of Japanese citizens who turned lights on only when they needed to and chose shorts instead of business slacks to avoid using air conditioning.

It should not be understated that for as much as mobile technology and social media spurred previously unfathomable change in the Arab Spring or Occupy Wall Street protests, each relied at least equally on a physical, visible meeting place in the heart of the city. So, in recognizing the global and national inertia in advancing sustainability and the potential of the personal, let’s ask ourselves in 2012, where is the “Tahrir Square” of water scarcity, the “Zuccoti Park” of climate change?

10. Stranded

Stranded – as in, the 80% of the global fossil fuel reserves that would be stranded financial assets if we were to avoid breaching the 2ºC limit (increasingly backed by legislation, such as historically large emitter Australia’s new carbon tax). Stranded – as in an IEA report that ominously declares that the next five years will be critical to whether the global community can hold climate change to safe levels or if the chance of combating global warming will be “lost forever.” Stranded – as in the cogently frightening quarterly letters from Jeremy Grantham, founder and chief strategist of asset manager GMO, on how sustainability issues will affect the investment landscape narrowly, and the human species writ large. As Grantham writes, “modern capitalism attributes no material cost to damage that occurs far into the future. Our grandchildren and the problems they will face because of a warming planet with increasing weather instability and, particularly, with resource shortages, have, to the standard capitalist approach, no material present value.”

While COP 17 in Durban certainly did not produce the life raft hoped for in 2011, it kept the rescue boat in sight, i.e. “the most complex political negotiations ever attempted remain[d] intact, with all 194 Parties – including the world’s largest absolute emitter, the world’s fastest growing emitter, the world’s largest per capita emitter, and the world’s largest historical emitter – committed to negotiating by 2015 a legally-binding deal to cut emissions that will enter into force by 2020.”

Stranded – but still with a decent shot at survival.



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