By David Born and Christian Krys

In Trend 3 of our Trend Compendium 2050 we address a particularly pressing megatrend: Environment & resources. Here, we look at climate change and various aspects of pollution, the threat of biodiversity under pressure, the challenges regarding water, and the problems arising from the scarcity of in-demand resources and raw materials.

Climate change & pollution: Numerous plans and efforts are rightly focused on curbing global warming. But the pollution of air, land and water also threatens humanity

Ambitions to contain global warming to below 2 °C (compared to pre-industrial levels) are posing considerable challenges to 2050. Ultimately, the Paris treaty thrashed out in 2015 aims to ensure that global greenhouse gas (GHG) emissions peak as soon as possible and that emissions and removals are balanced in the second half of this century – net zero emissions by 2050. Yet the current CO₂ concentration has reached its highest level for many million years.

Historically, countries that have industrialized early are among the highest emitters in cumulative terms – but others have followed suit in more recent decades, and a handful of countries now account for the lion's share of emissions. To reach net zero by 2050, a drastically increased use of renewable energies, electrification, a higher efficiency in energy use, and greenhouse gas capture, usage and storage are a must.

Rising temperatures are not the only concern of global scope: Environmental threats, such as the many forms of pollution, place an alarming global burden on our health, on our economy as well as nature's ability to thrive. For example, air pollution is a universal problem – with 99% of the global population living under conditions that violate WHO air quality standards.

Other forms of pollution such as water and soil pollution have knock-on effects regarding the quality of our food and drinking water. Plastic, the long-time success story of the past century, is coming back to haunt us and our planet as ever smaller particles have been found seemingly everywhere – in animals, oceans, soils, and air. Even if we stopped emitting plastics into our environment today, the legacy of eight billion tons produced over the past seven decades will stay with us for a very long time.

Biodiversity: It's all connected, and we must understand what it means

While climate change and decarbonization have been monopolizing headlines for long, another topic has only gained a similar importance in recent years: biodiversity is essential for all life on earth. It exists on three interconnected levels: ecosystem, species, and genetic biodiversity. Ecologists and other environmental experts have long highlighted that the earth is a series of connected ecosystems – threatened by human activity. All species live under certain conditions which are particularly shaped by climate. But climate change is only one additional stressor when it comes to ecosystems at risk. Land- and sea-use change, direct exploitation, pollution, and the invasion of non-native species combine to be the other main drivers of biodiversity loss.

Human activity continues to erode ecosystems and decrease the biodiversity of species. Over the last two decades, the number of species classified as threatened has more than tripled.

Closely interconnected with ecosystem and species biodiversity is genetic (bio)diversity – the genetic variability within and across populations of species. A high genetic diversity provides resilience against abrupt changes and allows species and ecosystems to adapt, for example, to a changing climate or upcoming diseases. When ecosystems are destroyed, and the number of a species is strongly reduced, genetic diversity is under pressure.

A new awareness is taking hold that our ecosystems need to be protected and restored. In 2022, the global conference for biodiversity – COP15 – ended with a major agreement. The Kunming-Montreal Global Biodiversity Framework (KMGBF) includes ambitious goals not only for the tackling of biodiversity loss but also plans to restore ecosystems and protect the rights of indigenous peoples. Overall, it includes four main goals and 23 individual targets. The most well-known is the 30x30 goal, aiming to put 30% of land and sea ecosystems under protection by 2030.

Water: The vital component of life needs global efforts to save its availability

Fresh water – vital for drinking, food, energy production and other processes – is a precious commodity. Only 3% of global water is fresh water – and only 1% of this is available as drinking water. Millions of people still do not have access to safely managed drinking water, although the situation has improved in recent decades.

Water and climate change are inextricably linked: Extreme weather events exacerbate the water situation. For companies, water scarcity can have detrimental effects and impact raw material sourcing, production processes and transportation.

Demand for water is expected to rise further to 2050 driven by population growth and the desire to increase prosperity. Disturbing the water cycle leads to water stress with severe consequences. Water shortages not only cause human suffering but are also quantifiable in terms of GDP losses.

Many countries can do more to increase the efficiency of water use, but investing in a better water supply pays off. In developing and emerging countries, 200-300 billion US dollars per year would need to be raised to provide access to clean water, sanitation and hygiene by 2030. One important lever would be the introduction of a price for water that includes the external costs of water consumption (such as the impact on the environment).

Resources & raw materials: Their quantity and accessibility are limited, and we must therefore use them sustainably

Beyond water, the world's sustainable development depends on the provision of food, raw materials, and energy resources.

Nearly half the Earth’s habitable land area is used for agricultural purposes – most of which is used for raising livestock. To 2050, the demand for food is expected to rise substantially and more action is needed to feed a growing population. This includes changes to our diet to incorporate more plant- based food. Globally however, the demand for meat is set to peak only by 2070. Circular design approaches can be applied to the food sector to help mitigate GHG emissions as well as food waste.

Raw materials , especially metals and minerals, play a significant role in the transformation of the economy. Raw material deposits are distributed very unevenly around the world. Some countries have a large share of raw materials that are relevant for production processes and end products. For example, China is rich in rare earths. These substances are particularly needed in electric vehicles and wind turbines.

The transition to a more sustainable energy system requires decarbonization through the increase of renewable energy sources and improvements of energy efficiency. Over the past decades, energy prices of renewables, for example in the form of electricity from wind and solar, have fallen and are now competitive with prices for fossil fuels, thus creating incentives to accelerate the transition. Further technological innovations are needed to support this new energy landscape, particularly with a view to energy storage.

Some raw materials are exceptionally well suited for a move away from linear to more circular production processes. Going forward, a circular economy concept based on the four Rs (reuse, repair, remanufacture, recycle) promises a more regenerative, less wasteful economic system. Furthermore, when circular principles are extended to food production and consumption, challenges concerning future food demand, required land use, and arising emissions can be overcome.

How companies can take advantage of megatrends

There are many levers for companies to not only cope with environmental and resource related megatrends but to take advantage from them.

As climate change affects the business model of every company – be it through changing regulation or extreme weather events for example – companies must examine their value chain, their product-market mix, and their revenue models along the lines of possible impacts, and develop solutions for processes and products. Pollution affects essential impact factors of companies, from water and soil to the working environment of their employees. Companies need to ensure to minimize the negative impact of pollution on their business.

In the context of declining biodiversity, companies may be confronted with the fact that they can obtain fewer services from the natural environment, that regulation will become stricter and that their reputation will be threatened if they themselves contribute to declining biodiversity. Companies must address potential risks and therefore adapt their processes and organization.

Water is an essential resource for companies. To secure water supply, companies should optimize their consumption, invest in cycles and check whether it makes sense to obtain water from different sources.

Energy is a critical resource for every business. The clean energy transition is causing a heightened demand for a broad range of commodities. Companies should develop relationships with multiple suppliers to help mitigate shortages of supply. Concerning materials, companies can explore existing alternatives or invest in R&D to find possible replacements. In addition, companies need to understand and consider circular economy concepts beneficial to their business model.