Module Title: Global Challenges
Module Code: QHO536
(Annon, 2022)
Assessment Title: Individual Essay
Student Name:
Student Number: 1
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Evaluation Of Megatrends
Climate Change and Sustainability, And Resource Scarcity
and
How These Impact the Business Landscape
A megatrend refers to a trend that has implications across the entire world (Bhargava,
2020). A few recent megatrends have been recognized as threats to the world in general
(Hajkowicz, 2015). Sustainability is an increasingly relevant megatrend for businesses
featuring aspects such as electrification and mass production which are capable of
having profound effects on the competitiveness and survivability of companies (Thiele,
2016). Climate change is another relevant megatrend featuring aspects like extreme
weather conditions that have caused widespread economic losses all across the globe
(Benoit, 2011). Resource scarcity also constitutes a megatrend because the world’s
burgeoning population has led to tremendous pressure being imposed on the limited
supply of food, energy, and raw materials (Exner, 2015). In this essay, the megatrends
– climate change, sustainability, and resource scarcity – will be evaluated in terms
of their implications for the world of business. Firstly, insights into climate change,
sustainability, and resource scarcity as megatrends will be explored and how they could
impact the business landscape. Secondly, two organizations will be discussed regarding
how they are dealing with the challenges posed by the megatrends. Lastly, will be
explained the future implications of these megatrends for managers and leaders.
Climate change leads to adverse weather extremities, which present a diverse range
of risky situations for businesses (Vielmetter and Sell, 2014). The effects can range from
disruptions in supply chain management to skyrocketing insurance expenses to labour
issues. Natural disasters resulting from climate change account for negative effects on
around seventy percent of overall economic sectors across the globe. Firstly, businesses
are being hit operationally from adverse circumstances caused by climate change. This
includes damages to manufacturing plants, workplaces, and disruptions in the
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workforce. Secondly, businesses have to make heavy investments in capital to ensure
the setup of an emission control system (Esposito and Tse, 2017). This has constituted
excessive expenses for businesses in upgrading their pollution control procedures and
ensuring that businesses comply with governmental legislation regarding greenhouse
gas emissions. Thirdly, businesses have to abide by the cap-and-trade policy developed
by the respective governments. This means that such policymaking restricts how much
carbon and pollution an organization is allowed to emit. Moreover, such policymaking
has curbed organizations’ tendency to sell their unutilized emission allowance to other
organizations. Sustainability has also become a central part of every organization’s
agenda. Firstly, sustainability has impacted businesses by compelling them towards
reducing the amount of energy they consume on average (Caradonna, 2014). This has
resulted in businesses trying to generate less waste and focus more on being efficient.
As a result, every business is now mobilized to make an effort to save the environment
while incurring fewer expenses. Secondly, sustainability has become a key point of
differentiation for a company in relation to its competitors. This means that an
organization can differentiate itself from its rivals by shifting its focus to incorporating
sustainability into the operations (Bansal and Jardine, 2014). In the business landscape,
sustainability has become a means of generating improvements in every organization’s
brand image, and some firms are already using sustainability as a source of competitive
advantage. Thirdly, sustainability has made it necessary for businesses to hire talent
similar to sustainable practices. This has resulted in a reorientation of the human
resources acquisition of businesses as they seek to attract employees who are willing
to work towards helping the business attain its sustainability goals. So, the traditional
approach to hiring employees based on generic criteria is slowly becoming outdated. As
a result, businesses have to work overtime to ensure that the next generation of
employees they hire are motivated to advance the respective sustainability agendas.
Resource scarcity is another megatrend that is capable of having significant
implications for business organizations. Firstly, resource scarcity leads to firms
experiencing volatile and unpredictable pricing strategies (Schulte, 2013). This is
because the supply of raw materials is uncertain, which could raise the production
expenses for businesses. So, the firm’s may be compelled to pass on such increases in
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expenditure as higher prices to the consumers. Businesses face fluctuations in their
supply chain costs because of the risks involved in acquiring adequate resources.
Secondly, resource scarcity forces businesses to rethink their sourcing practices,
especially if they are operating in an industry where high material usage intensity is.
Businesses may be looking to solidify their respective sourcing activities whereby they
can ensure a steady supply of required resources in the long run. As such, firms’ focus
has shifted towards forming reliable partnerships with major suppliers. Lastly, resource
scarcity has made it necessary for businesses to adopt a circular business model
instead of traditional business models (Bell, Mollenkopf and Stolze, 2013). This means
that organizations have to embrace a system of operations that has less reliance on
extracting virgin materials, delivering increased output from using such materials, and
reusing resources at every available opportunity. Such a business model emphasizes the
usage of efficiencies when handling resources and the usage of renewable sources of
energy. This business model also acknowledges the fact that natural resources are being
depleted at an alarming rate, so pre-emptive measures need to be taken by the business
to prepare for the future.
Firstly, British Petroleum (BP) is dealing with the effects of climate change by
supporting the idea of a carbon price. This means that the producers and the customers
are responsible for paying for the amount of greenhouse gases they emit. Secondly,
British Petroleum (BP) has emphasized the idea of ensuring the supply of natural gas.
Around 50% of BP’s operations are focused on supplying natural gas with numerous newer
large gas projects expected to be unveiled in many different countries (BP, 2017). In
terms of sustainability, BP has made sustainable practices a cornerstone of its strategic
planning. Firstly, British Petroleum (BP) plans to become a net-zero organization within
the year 2050 and is also vowing to assist the world’s initiatives in reaching the goal of
net-zero. Secondly, BP has been striving to establish healthy societies that are
conducive to the general welfare of people and employees. This may involve providing
employment opportunities, respectfully interacting with customers, stakeholders, and
general people, and creating a diverse and inclusive workplace. In terms of resource
scarcity, BP is proactively committing to adopting nature-based solutions for delivering
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value and contributing to the organization’s overarching people and planet goals
through organizational tasks (Plumer, 2020). British Petroleum (BP) has been
contributing to the cause of reducing global deforestation so that resource scarcity is
not precipitated. The company has committed to adopting a circular business model for
unlocking newer avenues of value. They strive to utilize raw materials for more lengthy
periods of time over the span of their life cycle. Such a circular business model is
expected to be incorporated into the firm’s efforts of designing, operating, and
decommissioning for the greater good.
Shell is another large organization taking measures to cope with the forthcoming
megatrends. In terms of climate change, Shell has set the goal of becoming a net zeroemitting energy organization within the year 2050 (Waldman, 2018). Shell is committed
towards aligning its climate change efforts with those of societies globally to achieve
the aim of the United Nations Paris Agreement stipulations for climate change. The
company, Shell, has been collaborating with its customers for assisting them in
addressing their production of greenhouse gas emissions when using products purchased
from them. Shell has proactively helped its consumers figure out newer methods for
reducing their total carbon footprint and has also advocated for governmental
policymaking related to climate change. Shell is proactively collaborating with
environment and development institutions globally in terms of sustainability. Such an
approach is focused on reducing Shell’s impacts on the environment and society and
improving the quality of lands and waters in the vicinities of Shell’s operations. The
company has committed towards promoting sustainable development by developing
specialized principles for the entire organization ever since 1997.
Moreover, such principles in combination with Shell’s organizational code of conduct
governs the company’s interactions with the community. In terms of resource scarcity,
Shell is taking measures to eradicate water scarcity throughout its operations by
transforming it into a self-sufficient organization (Vetter, 2021). This has been achieved
through developing robust water management planning in each of Shell’s production
plants so that the company never runs short of water. Shell is also trying to ensure the
minimization of its usage of freshwater. They have invested heavily in technologies
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facilitating the treatment, reusing, and recycling of water from the company’s own
operations. Shell is compliant with globally recognized guidelines such as the IFC
Performance Standard 5. The company is reliant on procedures that are capable of
treating water naturally. Shell closely collaborates with Wetsus to develop cutting-edge
technology that facilitates recyclability and reusing of water across a wide range of
purposes, especially in monitoring how much water it uses on a year-on-year basis.
Heading into the future, the current state of megatrends is likely to change to a large
extent. In terms of climate change, business leaders and managers need to recognize
that the reputation of the businesses may become linked with the respective stances
of the businesses on climate change. This means attention needs to be given to how a
business is publicly perceived as being committed to becoming environmentally
responsible (Linthorst and de Waal, 2020). It indicates that customers will increasingly
put pressure on businesses to adopt “green” technologies into their operational
activities. Secondly, business leaders and managers should exercise a great deal of
caution in determining prospective office locations for their respective businesses.
Certain regions could be highly susceptible to weather extremities like earthquakes,
wildfires, hurricanes, tsunamis, etc. Such events could prove to be exorbitantly
expensive for companies to deal with in doing business. So, the overall impact on each
function of the business needs to be considered before making any decision for the long
run. In terms of sustainability, business leaders and managers need to recognize that
consumers will increasingly gravitate towards purchasing sustainable goods and/or
purchasing from companies that practice sustainability. This may involve businesses
focusing on ensuring their reduction of usage of plastics which could indirectly appeal
to more consumers. So, these consumers could be incentivized towards purchasing the
products of these companies based on an additional aspect of the product rather than
just the price. Adopting sustainability could prove to be a point of differentiation for
firms in the market (Naisbitt and Naisbitt, 2018). Secondly, business leaders and
managers need to be proactive in incorporating sustainability into the workplace rather
than simply focusing on manufacturing aspects. The newer generation of employees has
shown an excellent preference for working at businesses that holistically practice
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sustainability. If a business is not sustainable inside out, it will experience difficulties
recruiting appropriate talent heading into the future. So, businesses need to make sure
that sustainability is embedded into the organizational culture while ensuring the active
involvement of each employee in realizing the sustainability goals. It may require
businesses to partner with conservation organizations to put in a combined effort to
make the world environmentally better off. In terms of resource scarcity, business
leaders and managers need to recognize the importance of managing resource usage
responsibly and sustainably. This may involve opting for the usage of alternative sources
of energy and renewable raw material and inputs. It could entail organizations adopting
modernized technology and innovation to promote efficient resource usage. Such an
approach needs to be embedded into the strategic agenda of every business so that the
long-run scenarios of the business are taken into account (Lustig and Ringland, 2018).
The reality is that there are finite levels of natural resources which means generating
efficiencies should be given utmost priority by businesses. Every business will need to
change its procuring, producing, distributing, disposing, and recycling activities to
unearth the scope for incremental improvements in each level. Optimization of work
processes and flows of raw materials can make it feasible for organizations to reduce
expenses from their energy and water usage. It would consequently reduce wastage of
raw materials and rejected volumes of goods. The smart factory concept will become
increasingly relevant as the business landscape becomes digitized extensively. The
onset of industrially relevant Internet of Things (IOT) will facilitate a company in
establishing better efficiency in manufacturing using insightful analytics and optimizing
resource usage.
In this essay, the megatrends – climate change, sustainability, and resource scarcity
– have been evaluated in terms of their implications for the world of business. Climate
change leads to adverse weather extremities which present a diverse range of risky
situations for businesses. Sustainability has also become a central part of every
organization’s agenda. Resource scarcity is another megatrend which is capable of
having major implications for business organizations. British Petroleum (BP) is dealing
with the effects of climate change by supporting the idea of a carbon price. BP has
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made sustainable practices a cornerstone of its strategic planning. In terms of resource
scarcity, BP is proactively committing to adopting nature-based solutions for delivering
value and contributing to the organization’s overarching people and planet goals
through organizational tasks. In terms of climate change, Shell has set the goal of
becoming a net zero-emitting energy organization within the year 2050. Shell is
proactively collaborating with environment and development institutions globally in
terms of sustainability. In terms of resource scarcity, Shell is taking measures to
eradicate water scarcity throughout its operations by transforming it into a selfsufficient organization. In terms of climate change, business leaders and managers need
to recognize that the reputation of the businesses may become linked with the
respective stances of the businesses on climate change. In terms of sustainability,
business leaders and managers need to recognize that consumers will increasingly
gravitate towards purchasing sustainable goods and purchasing from companies that
practice sustainability. In terms of resource scarcity, business leaders and managers
need to recognize the importance of managing resource usage in a responsible and
sustainable way.
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References
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