ESG Alert: Is your company about to rise or fall due to ESG? 🌍
The world is changing, and so are the strategies that drive our businesses.
ESG factors are no longer just buzzwords; they're concrete forces reshaping industries and supply chains. 📦🔄
The Big Picture
Our global economy, business activities, and value chains are ultimately based on natural resources. These resources—whether it's minerals, water, biodiversity, or forests—are finite 🌿🌍 and under increasing pressure from environmental degradation and geopolitical shifts. 🌡️🌪️
Let's take a couple of examples:
💊 Pharma Companies like Merck, Pfizer, Sanofi, and Roche utilize natural compounds from plants and animals to develop medications. The connection between biodiversity and health care is clear—without a stable supply of biological resources, this sector could face serious challenges.
📱⚡Tech Companies like Apple, Tesla, and Samsung rely on minerals like cobalt, lithium, and rare earth metals, which are essential for the production of batteries and electronic components. As demand for electric vehicles (EVs) and renewable energy storage rises, competition for these minerals will continue to intensify.
🏗️ 🏢 Construction Companies such as LafargeHolcim and HeidelbergCement extract limestone and other raw materials to produce cement—essential for infrastructure development. The increasing scarcity of these resources, combined with pressure to reduce carbon footprints, is forcing the industry to rethink production methods.
🥤 Food & beverage companies like Nestlé, Danone, and Pepsi, rely on agricultural resources and natural ecosystems. With water scarcity, soil degradation, and climate shifts, these companies are at risk of supply chain disruptions unless they invest in sustainable practices. And what will that mean for the Retailers? 🛒
🌲Forestry, paper, and biomaterials companies like like Stora Enso and UPM-Kymmene showcase the importance of Europe's forests for paper and biomaterials. Managing these forests sustainably is critical not only for their business but also for climate stability and biodiversity conservation.
What this means for Consumers (yes, that's you and me!): The ESG supply chain challenges we’re facing could lead to higher costs 💸 for everyday items, like electronics, cars, and groceries.
But when companies invest in sustainable supply chains, they help ensure that the natural resources they rely on don’t run out as quickly 🌍♻️ or they find alternative resources.
It’s like a cookie jar 🍪—if you keep taking cookies without restocking, it eventually empties. A sustainable supply chain works by both reducing how many "cookies" (resources) are taken and ensuring they are replenished, so there’s always enough to keep businesses—and consumers—going! 🛍️👍
❓The Big Questions
Without a robust, resilient supply of natural resources—be it plants, animals, forests, agricultural land, or rare earth minerals—how many of these businesses would still thrive or even exist? 🌾🔋
What are they doing TODAY to anticipate, identify, and prepare for opportunities and risks related to ESG? 🌱🔮
Real-Time Examples
Let's explore two compelling, real-time examples:
1. UK Agriculture: Adapting to a Warming World
I recently came across this article by The Economist:
Fact: 🌡️ Global warming is rapidly changing the UK's agricultural landscape. According to the Royal Meteorological Society and LSE's Grantham Research Institute, the UK faces more floods, wildfires, and erratic weather patterns, along with reduced water availability in the summer. 🌊🔥
Implications: 🚜 This threatens traditional farming, requiring a pivot to alternative crops, innovative farming methods, and strategic support for farmers. Perhaps we’ll also need to admit and accept that the UK may simply generate less and less income from farming… hence having to find alternative sectors for its exports. 📉
What companies should do: 🌿 This shift requires a fundamental strategy change, from focusing solely on traditional crops to embracing diversification, innovation, and building resilience to meet new environmental challenges. 🌾💡
How it resonates with ESG considerations: 🌍 Environmental (adapting to climate change), 👩🌾 Social (ensuring food security and supporting farmers), and 🏛️ Governance (policy changes and industry collaboration).
2. The EV Revolution: A Software & Battery-Driven Future
Fact: 🚗🔋 Today, the core value of EVs lies not in the vehicle itself, but in its software and battery technologies—components largely controlled by suppliers like Tesla, LG, and Panasonic. This shift away from traditional manufacturing has dramatically affected the valuations 📉 of traditional European car manufacturers. Since 2022, many legacy automotive companies have seen their stock prices decline 📉 by up to 40% as the industry transitions toward electrification. ⚡🚙
Implications: 🏭 Incumbents may have to merge or disappear as a result!
Battery Supply Chains: As the EV industry grows, it places enormous demand on the supply chains for minerals like lithium, nickel, and cobalt. How to secure a steady and ethical supply of these critical raw materials? 🌍⛏️ With much of the supply chain concentrated in countries like China, certain manufacturers are increasingly vulnerable to geopolitical risks and resource scarcity. 🌐
New Competition: The rise of Chinese EV manufacturers, such as BYD, has introduced significant competition. 🚙📈 China is now the second-largest car manufacturer globally, and its focus on EVs is accelerating its dominance in the industry. EVs rely heavily on software for battery management and autonomous driving features. 📱⚙️
Carbon Footprint: 🌍♻️ While EVs reduce emissions during their operation, their production, particularly the batteries, is energy-intensive and reliant on finite resources. Automakers are increasingly being held accountable for reducing the overall carbon footprint of their supply chains, not just their end products.
What companies should do: These shifts are transforming the automotive industry 🚗. Traditional carmakers face existential threats from new competitors and must transform quickly or risk becoming obsolete. Those failing to make this transition may quickly lose ground...Business-as-usual is not a great option. 📉
How it resonates with ESG considerations: 🌍 Environmental (reduced emissions), 👷♀️ Social (job creation and ethical sourcing), and 🏛️ Governance (new regulations, trade/customs barriers, and industry standards).
💡Will your company rise or fall with ESG?
ESG considerations are no longer optional—they are central to the survival and growth of companies in today’s world 🌍📈. Whether it’s navigating the EV revolution or managing resource scarcity in agriculture, businesses must adapt to new realities.
At Koaloo.Fi, we’re at the forefront of this transformation, optimizing global supply chains to support ESG goals. 🔗♻️ We believe that collaboration is key to driving sustainable change. By working together, we can create a more resilient, equitable, and environmentally conscious future. 🌱🤝
And you...What strategic shifts have you seen in your industry due to ESG factors?
Let's discuss! 💡🌱
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