The Resource Revolution Trainer
Coupling Sustainability with Excellence. An online self-training guide for business.
SESSION 1: Context - The Global Resource Challenge
Session 1 presents the Global Resource Use Challenge. It introduces the science captured by the International Resource Panel (IRP) through its regulator collection and analysis of latest research on resource productivity trends in different sectors, production clusters and consumption areas. It describes the main drivers behind the trends in global resource use. Highlighting some critical thoughts from the IRP’s decoupling reports, it asks the question whether we can rely on markets to solve the global resource problematique. Moving to the role of business in turning risk into opportunity, it introduces the cycle of the Resource Revolution with its distinct phases.
IRP on global per capita resource use (2011)It has been estimated that within the next 20 years, there will be an additional 3 billion people worldwide enjoying “middle class” income levels. That comes on top of the 1.8 billion with middle income today. As ever-increasing shares of the global population aspire to reach better standards of living, ever-greater resource use is expected. The overall result of growth globally leads to averages that signal warnings related to the direction the global economy is heading. A hundred years ago, average global per capita resource use was 4.6 tonnes. By the late 2000s the average per inhabitant was between 8.5 and 9.2 tonnes annually. See International Resource Panel
World Bank on world commodity prices (2014)The Commodity Super Cycle: Is This Time Different? - Some analysts believe that the commodity price boom of the new millennium has played itself out. However, natural resource–based commodity prices (with the exception of shale gas and its downward pressure on U.S. natural gas prices) have remained high by historical records over the last few years, despite the feeble global economic recovery. The commodity price spike that started at the end of the 1990s has not been signicantly affected by the global downturn, with average prices similar to 2008 levels. Indeed, commodity prices have occasionally shown signs of reviving more quickly than the global economic output level. So the question is: Have we entered a phase of descending commodity prices? This WB note argues that it may be too soon to say that the commodity super-cycle phenomenon is a thing of the past. See World Bank
McKinsey & Company on commodity prices (2016)Since mid-2014, oil and other commodity prices have fallen dramatically, and global spending on many commodities dropped by 50 percent in 2015 alone. Yet companies in all sectors need to brace for a new gale of disruption. We may see “peak” oil—with respect to demand, not supply—around 2030. Renewables will account for about four-fifths of future electricity-generation growth. Resource prices will be less correlated to one another, and to macroeconomic growth, than they were in the past. Today, the underlying drivers of demand for each commodity have changed and are subject to factors that can be highly specific. While iron-ore demand could decline by more than 25 percent over the next 20 years as a result of the weakening demand for steel and increased recycling, copper demand could jump by as much as 50 percent. Electric vehicles, for example, require four times as much copper as those that use internal-combustion engines. See McKinsey Quarterly
- Reflect on the global resource challenge and its drivers of change (population, income and urbanization). Make a list of how this impacts your industry, your company and your business.
- In how far do higher prices, price volatility and resource scarcities impact your business today – either as risk or opportunity? How significant will its impact be in the medium and longer term?
- Are the global resource challenges highlighted in Session 1 addressed in your internal risk management systems? Are they effectively covered in your external reporting? Are your Board members aware?
- Which organization or research institution can you contact to learn more about this theme?
- International Resource Panel (IRP). 2014. Decoupling II: Technologies, Opportunities and Policy Options. Nairobi: UNEP
- Allianz Global Investors. 2010. The sixth Kondratieff – long waves of prosperity. Frankfurt am Main: Allianz Global Investors
- World Economic Forum. 2016. The Fourth Industrial Revolution: what it means, how to respond - www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
- Wuppertal Institute, Material Flow Analysis (MFA) - http://wupperinst.org/en/topics/resources/material-flow-analysis/
- WWF Living Planet Index - wwf.panda.org/about_our_earth/all_publications/lpr_2014/