KPMG’s Richard Andrews explores how company sustainability and resilience are more and more aligned and supply a brand new path to drive business worth
Sustainability has typically been framed as a transition problem: how rapidly companies can cut back emissions and meet prescribed targets. That also issues, however it’s now not the entire story. In a world formed by local weather shocks, geopolitical volatility, useful resource shortage and financial uncertainty, sustainability has a extra advanced function to play in constructing resilience.
Viewing sustainability by a resilience lens sharpens the strategic focus. It helps companies perceive the place sustainability-related dangers might have an effect on efficiency, provide, price, status and licence to function – but in addition the place motion can create alternative, from safer vitality and provide chains to stronger communities, higher adaptation and extra trusted progress.
On this context, resilience means the flexibility of companies and the methods they rely on to anticipate, soak up and adapt to disruption whereas persevering with to create worth.
KPMG’s newest “Reframing sustainability” report explores 5 areas the place that perspective could make a sensible distinction: vitality safety, provide chain disruption, bodily impacts, human components and water provide.
Power: transition as safety
Power safety is more and more about whether or not the system can soak up disruption, preserve provide and cut back publicity to exterior shocks, from geopolitical battle and commodity volatility to assaults on vital infrastructure. For companies, that makes vitality resilience a query of price, continuity and competitiveness, not solely decarbonisation.
The vitality transition is due to this fact a diversification technique in addition to a local weather response. Renewables, storage, electrification, effectivity and grid modernisation can cut back reliance on imported fuels and unstable markets, whereas supporting cleaner progress. The primary takeaway: deal with the transition as a path to higher management, not simply decrease carbon.
Provide chains: from simply in time to only in case
Provide chain resilience has grow to be a board-level subject as a result of disruption is now not uncommon, native or short-lived. The shift from “simply in time” to “simply in case” shouldn’t be a name to stockpile stock; it’s a name for intentional design and a transparent view of weakest hyperlinks. It additionally means understanding the place dependencies sit throughout suppliers, logistics routes, infrastructure and communities.
Good planning ought to think about impacts on the enterprise, its suppliers and the communities it depends on. The precedence is to determine the vital pinch factors, agree resolution thresholds earlier than disruption hits and check restoration plans with companions, not simply inner groups.
Bodily threat: adaptation creates worth
Local weather and nature hazards are more and more appearing as contagion vectors throughout the worth chain, disrupting provide, creating monetary shocks and damaging infrastructure. An organisation could shield its personal websites, but when suppliers, logistics routes, clients or vitality methods are uncovered, its steadiness sheet stays susceptible.
Neither diversification nor insurance coverage is sufficient as losses rise and safety gaps widen. Adaptation must be handled as worth safety: quantifying publicity, investing early and redesigning susceptible elements of the worth chain earlier than local weather impacts grow to be balance-sheet impacts.
Human components: social sustainability strikes centre stage
Human and social themes are materials resilience points. Labour disruption, inequality, human rights dangers, expertise gaps and social instability can have an effect on competitiveness, continuity of service and licence to function. Additionally they affect belief, productiveness and the flexibility of organisations to ship transformation.
A resilient social technique ought to transcend compliance reporting. Companies have to know the place workforce and human-rights dangers sit within the worth chain, have credible routes to deal with points and join transformation plans – together with AI and productiveness programmes – with reskilling and workforce transition. This isn’t philanthropy; it’s worth preservation and worth creation.
Water: the hidden systemic dependency
Droughts, floods and declining water high quality are now not secondary issues. They’re systemic shocks that disrupt provide chains, constrain financial exercise and amplify inequalities throughout areas and sectors. Water threat can due to this fact have an effect on operations instantly, but in addition by suppliers, infrastructure and the communities companies depend on.
Water shouldn’t be a background utility; it’s a strategic dependency. The takeaway is to grasp publicity to shortage, flooding and high quality dangers, enhance effectivity and reuse, and work with others to guard shared water assets. That’s the shift from reactive water administration to proactive stewardship.
The brand new resilience agenda
The message is obvious: sustainability and resilience can now not sit in separate silos. Sustainability addresses the drivers of shocks and resilience addresses the capability to resist them. The companies that reach bringing the 2 collectively will likely be higher positioned not solely to guard current worth, however to create new worth – contributing to stronger corporations, communities and societies.
Reaching this implies transferring from short-term response to long-term functionality – constructing partnerships, investing in adaptation, redesigning provide chains, strengthening workforce resilience and treating vitality and water as strategic dependencies.
Richard Andrews is head of sustainability at KPMG UK.
To discover these themes in additional element – together with sensible actions and case research throughout vitality, provide chains, bodily threat, human components and water – learn KPMG’s newest report: Reframing Sustainability: Constructing Resilience.
This text is sponsored by KPMG UK.
