Climate change and peak oil - threat or opportunity?
Some businesses see climate change and peak oil as a vague, long term threat. Others see it as a specific, short term opportunity. In the turbulent decade that lies ahead of us, those organisations that seize the opportunities will survive and flourish; those that respond defensively will probably fail.
As we move into a low carbon economy, energy costs will rise and customers will increasingly look for low carbon products and services. Here are three business opportunities:
- Reduce your energy costs
- Make your existing products and services low carbon
- Create new products and services for a low carbon economy
No one would describe Tesco boss Terry Leahy, of being a tree hugging, sandal wearing vegetarian. And yet in 2007 he announced:
I am determined that Tesco should be a leader in helping to create a low-carbon economy.
For Tesco this involves something much more than listing a series of environmentally friendly actions, although those do play their part. It demands that we transform our business model so that the reduction of our carbon footprint becomes a central business driver.
Why did Leahy make this commitment?
…to satisfy a new consumer need, and grow our business. That is the goal of a sustainable business.
Here's how Tesco is seizing opportunities:
Opportunity one – reduce energy costs. Tesco halved the energy costs of all its buildings between 2000 and 2008
Opportunity two – make existing products and services low carbon. In 2007 Tesco reduced the CO2 emissions from its distribution network by 10%. In another five years they'll have reduced them by 50%. Produce that is airfreighted is labelled as such. The company is working on labelling every one of their 50,000 products with its carbon footprint so that consumers can make an informed choice.
Opportunity three – create new services and products. According to some scenarios, private motoring will be an expensive luxury within the next ten or twenty years, which is a bit of a threat for Tesco's huge out of town stores. But with its locally based Tesco Metro and Tesco Express brands, the company is well placed to thrive in a world where people return to shopping locally.
Many other companies have similar stories to tell, and Tesco is far from being a perfect role model: many people are very critical of its current business model, and the decision to support biofuels is not very sensible. But if a successful, profit driven, focused business like Tesco is already grasping the opportunities of the low carbon economy to come, what should your organisation be doing?
If you can equip your business for the next decade, rather than relying on what's worked for the last decade, you'll gain a real competitive advantage. But it's not going to be easy. As Leahy puts it:
I do not underestimate the task. It is to take an economy where human comfort, activity and growth are inextricably linked with emitting carbon, and to transform it into one which can only thrive without depending on carbon. This is a monumental challenge. It requires a revolution in technology and a revolution in thinking.
We are going to have to re-think the way we live and work.