3. Will a move to a “Green Economy” be the solution?
The UNEP Green Economy Coalition define the green economy as:
• An economy that results in improved human well-being and social equity, while
significantly reducing environmental risks and ecological scarcities. In its simplest
expression, a green economy can be thought of as one which is low carbon, resource
efficient and socially inclusive.
Without a clear definition of “green” industries, however, it is hard to determine the size
of the “green economy” and/or put in place policies and practices to support it.
Definitions are therefore increasingly shifting from “what is it” to “how is it measured”
• Industries that provide products or services related to renewable energy, increased
energy efficiency, clean transportation and fuels, agriculture and natural resource
conservation, and pollution prevention or environmental cleanup. (Michigan
Department of Energy, Labor & Economic Growth)
Most green business activities are, however, still bundled with those that are not. So who
decides what is a green business? Traditional accounting and Economic methods haven’t
helped: Organic food processors are typically categorized no differently from other food
processors when collecting and reporting typical production and employment data.
So where does this leave a firm like PwC, with its traditional service lines of
Assurance, Advisory and Tax services?
April 2012
PwC 3
4. 8 key megatrends
Mega trend Business Implications
Transformation of global business practices to function in a
carbon constrained world with costing of carbon related
Climate change
externalities in several major jurisdictions (EU, US, Japan, Korea,
Australia)
Investment in renewable energy and increased focus on demand
Energy challenge
side reduction activities
Natural resource depletion and Reduced material consumption across the value chain and
ecosystem collapse widespread deployment of closed loop operating systems
Securing access to water resources for both industrial production
Water and food availability
and human consumption
Transformation of recruitment and retention strategies including
Population demographic
global labor mobility and empowerment of women in declining
change
population regions
Development and deployment of integrated business solutions
Digital convergence offering “smart systems” such as “smart energy grid”, “smart
transportation” and “smart city” systems
Analysis of sovereign risk and country/ city level barriers and
Geopolitical trend to Asia
incentives to resource allocation
Enabling capital flows to emerging economic opportunities to
New financial system generate long term value flows with reduced “bubble” speculation
PwC
5. What this means to our clients…
Business operations focus
BASF
GRUPO SANTANDER TRIODOS
CO-OP
PUMA
Maintaining embedded
VODAFONE sustainability through
Value creation
THE COCA-COLA continuous Improvement
Business strategy focus COMPANY
HSBC Embedding sustainable
business practices and ways
GOLDMAN SACHS BARCLAYS
of working
ALLIANZ
ARCELOR MITTAL Identifying and building a Sustainability Maturity
sustainable business model
CR focus AXA and engaging employees
Value erosion
Developing and integrating
sustainability into strategy
Complying with local /
industry regulations through
Sustainability – license to
operate
CSR function driven Sustainability Sustainability initiatives Embedded
PwC initiatives influencing integrated into operational Sustainability
strategy & commercial strategy
6. PwC what it means to us One Firm services map
And Sustainabilityn
Strategy development & implementation
Policy & regulation development and
research studies Risk & opportunity analysis
(business impact analysis)
Education & training services Governance & regulatory
compliance services
Data measurement & reporting Systems development
& implementation
Integrated/ CSR report assurance
Stakeholder engagement &
Process & compliance assurance framework development
M&A and project finance
Internal audit & third party assurance
services
IFRS & carbon accounting
Value chain design & strategy
services
development & implementation
Taxation services (R&D, corporate tax, TTC)
8. Implications: Modelling the Green Economy
How we help
The Challenge We work with a range of government, donor and
Most economic growth models fail to value the services private sector organisations to accelerate
that nature provides such as carbon sinks, water and air economic growth whilst reducing pollution,
purification, flood protection and pollination. greenhouse gases and resource use.
As a consequence, the world’s ‘natural capital’ is being
eroded faster than it can be restored. This reduces its We use bespoke economic modelling and
availability to support economic activity and reduce programme management techniques to develop
society’s exposure to natural disasters and climate and implement strategies that transform economic
change. activity by balancing the different risks and
There is an alternative that does value natural capital , opportunities facing society today.
and that has the potential to create new jobs, products,
services and wealth. This is named ‘green growth’.
Key Questions
How will you capitalise on and accelerate green
growth opportunities?
Are you exposed to and managing risks that are
associated with unsustainable growth patterns?
Do you have the skills, capacity, policy and strategy to
develop and implement economy-wide reform?
PwC
9. Implications: Integrated Reporting
Food crisis Water
What is the market scarcity
and regulatory Is your business model
Natural Population and supply chain
landscape today and resource demographics
how is it changing? depletion
designed to be resilient
to the impacts of
Geopolitic climate change,
Biodiversit
al power
ycollapse
shift
technology failures,
cyber crime and natural
Energy Economic disasters?
security rebalancin
g
What assumption has
Climate Natural been made regarding
change Disasters the availability of
resources?
Does your license to Products & Physical
operate look secure? services capital How are the inputs of
business changing, in
Knowledge terms of volumes, price
Is your corporate and IP Human and availability?
contribution in the capital
round something that Employmen
will enhance your What does your business
t
reputation and build Communit Knowledge consumption map look
and IP like and is it sustainable?
trust with key y impacts
stakeholders?
Total tax Financial How will the introduction
What is your weakness Revenues capital of prices on free goods
profit Natural (such as water, carbon and
and who will exploit it? capital
dividends Bio bio diversity) change the
diversity dynamic of your business?
9
11. The value of thought leadership
Adapting to Climate Change in the Green Electricity Making a Difference
Infrastructure Sectors An analysis of green electricity markets in relevant national
PwC study for the UK Government's Infrastructure and and international markets and an overview of the country
Adaptation Project (IAP) on the role of market, policy and specific situation regarding renewable electricity..
regulation in encouraging long term resilience to climate change http://www.pwc.ch/en/dyn_output.html?content.v
within four key economic infrastructure sectors in the UK: oid=19167&collectionpageid=1838&containervoid=
energy, water, transport and ICT. Organisations within the 8923&comefromcontainer=true
energy, water, transport and ICT sectors as well as investors and
insurers were consulted as part of this study. The government
will set out in spring 2011 its future approach on adaptation and
infrastructure as a result of the IAP, of which the PwC report
forms an integral part.
http://bit.ly/e7tHY7
Business Leadership on Climate Change Crisis or not: renewable energy is hot
adaption. Encouraging Engagement and A study on the Europe’s renewable energy market’s
Action potential, a comparison of approached in various countries
This latest study, presents the views of a range of businesses, and recommendations on how governments and companies
from major multinationals to local enterprises, on adaptation to can reap the rewards.
climate change. http://www.pwc.co.uk/eng/publications/renewable
www.pwc.co.uk/eng/publications/adapting-to-climate- _energy_report.html
change.html
Green Race is on, Low Carbon Economy Index Smart from the start. Managing smart grid
2010 programmes
The Low Carbon Economy Index assesses the G20 countries’ A discussion paper reflecting an industry debate on the
achievements since 2000 in cutting their carbon intensity levels smart grid issue.
– defined as the ratio of emissions to GDP http://www.pwc.co.uk/eng/publications/smart_fro
www.pwc.co.uk/west/publications/low_carbon_econo m_the_start.html
my_index_2010_west.html#ns_source=site_search
World Economic Forum - Sustainability 100% Renewable Electricity - A roadmap to
Projects 2010/2011 2050 for Europe and North Africa
PwC has worked on a number of projects for WEF over the past Exploring the potential to transform the energy sector in
year. Sustainability has actively participated in the following: Europe and North Africa.
Corporate Global Citizenship in the Environment (CGCE), http://www.pwc.co.uk/eng/publications/100_perce
Scaling Up Renewables (SUR), Critical Mass Initiative, and nt_renewable_electricity.html
Financing Sustainable Land Use (FSLU). For more information
on these projects including background and the final papers,
please see the following Gateway link.
https://knowledgecurve.com/global/gkg/insurance_g
wy.nsf/1A576D770ECD4381802572C10032D477/076D0
PwC DCD8E83A7CD80257823005C7340 11
12. But also “walking the walk”
• We cannot advise our clients on sustainability
without being serious about it ourselves.
• Regionally, we have over 20 staff working full time
on delivering our internal, award-winning ,
Sustainability strategy, based around our 4 pillars
of Workplace: Marketplace; Community;
Environment
• All PwC staff are encouraged to help bring this
strategy to life through by calling on their expertise
in a way that is good for the world and the Firm.
Examples include:
• Volunteering time to mentoring tomorrow’s
responsible business leaders, whilst raising our
profile.
• Provision of pro-bono support to our charity
partners to strengthen their business skills
whilst enhancing our employees learning.
• Raising US$>6m in donations to charity
partners and disaster relief appeals
• Contributing to thought leadership and
research to strengthen the not-for-profit sector.
PwC
