BUILDING SUSTAINABLE BUSINESSES FIT FOR A SUSTAINABLE WORLD 54 Preparing for future disruptions We know that the implications of climate change will be disruptive to our businesses and we are already seeing water depletion, land scarcity, ocean acidification, desertification and unplanned worker migration amongst other impacts. Many of these have the capacity to disrupt our supply chains, our operations and our markets. Recognising these implications means that our response to climate change needs to be about much more than simply the energy efficiency measures described in the Responsible Stewardship section of this report. In the past, insurance mechanisms have safeguarded against potential threats. The new global issues that we face are however, likely to be uninsurable. For example, our operations cannot be insured against closure because the aquifers we rely on to run our power plants have run dry due to climate change. It is up to us to make our businesses sustainable and resilient to these forces. This is future proofing. It is different from forecasting as it recognises that only limited factors can be predicted with any accuracy. Even with the knowledge gained from our expert strategic stakeholders there is limited certainty, only trends and statistics on which to base our decisions. This changes the rules of business planning and requires managers to develop new skills to carve out success in a constantly evolving world. Scenario Planning To help us manage business uncertainties, we are using a technique called Scenario Planning to create business-relevant feasible scenarios for the world that we might find ourselves operating in. Scenarios explore the complex interplay of different external factors shaping the future. Scenarios are most often used to develop and refine strategies or to drive innovation. By exploring different possible futures, our businesses are realising that some factors are more unpredictable than others and that by understanding this uncertainty we can be more proactively prepared. Through the scenario planning exercise we are challenging our leadership to explore the answers to some tough questions. What if their source of raw materials is no longer available? What if we see a global rise in nationalism? What if global governance fails on climate change? How will transparency and traceability requirements change as IT becomes more widely available and data collection decentralised? Having these conversations alone enables a more sophisticated understanding of what operating a truly sustainable business really means. Areas that have been discussed during our scenario planning and future-proofing exercises include: 1. What might the future consumer need? Taking into account how they will be living, what might they desire? What challenges do they face? For instance, will they prefer access over ownership of goods? Will people be living in large or small households? Where will they live? The businesses that can meet the needs of their consumers will be the ones that capture the increasing market share and are able to maintain growth. 2. What resources will and won’t be available to us? Will we have access to the amount of energy we require at a reasonable cost or investment? Does our product rely on a material whose long- term viability is in question like cotton or tea or derivatives of the oil industry? What chemicals will be restricted or banned in the countries we operate? 3. How might our products and services shape the future we want to see and how will current unsustainable products be legislated anyway? Products and services can enable people and businesses to live and operate in new, more sustainable ways. How might our products and services empower and engage the disenfranchised? How can our products build trust and empathy in communities? How can they restore our natural ecosystems? But they can also do the opposite. We want our products and services to be creating a better future, not undermining it. Scenario planning is not a one-time exercise and we work with our businesses to maintain a watch on how the operating landscape is evolving, spotting signs of change that may trigger their future-proofing actions.