Skanska's 'Future Day'

Tony spoke at Skanka's 'Future Day' in London on October 22nd. He highlighted the importance of leadership in addressing the challenges unfolding around us

One thing that I have noticed about the future is how before you know it things that looked like they were quite far away arrive with us in the here and now. When in the mid 1980s I began my career as an advocate for saner environmental policies and practice, climate change was one of those big picture trends that seemed to have implications only in a distant future. So abstract was the idea that some doubted it was even happening. 

And now here we are, nearly 30 years later, and the Earth’s climate has indeed changed and will change more, and apparently do so faster than models presented a couple of decades ago suggested it might. Records are being broken worldwide, for high temperatures, droughts and rainfall. The Arctic sea ice this year shrunk to the lowest extent recorded since satellite monitoring began. A clear warming trend has taken hold and is being fueled my higher and higher emissions of greenhouse gases.

Looking forward, and when it comes to this particular challenge, it seems the future we need to worry about is more immediate than the one some of us tried to raise concern about in the 1980s and 1990s. Scientists now tell us that if we are to avoid breaching global danger thresholds in relation to climatic disruption, then a steep drop in greenhouse gas emissions needs to begin this decade and be sustained until we cut pollution levels by at least four fifths compared to 1990. To say that we are unprepared for this, or what happens if we don’t do it, is a gross understatement.

Whether we do what is necessary to avoid dangerous global average temperature increase, or carry on with business as usual, it is clear that the world is about to change in fundamental ways. And of course when it comes to the environmental aspects of sustainability it is not only a matter of cutting climate-changing pollution. We need to do that at the same time as becoming much more efficient in our use of natural resources, both renewable and non-renewable ones, while at the same time averting a mass extinction of animals and plants that is also almost upon us, as among other things pollution and habitat destruction take an ever greater toll on economically essential ecosystems ranging from coastal wetlands to tropical rainforests. 

As if all that wasn’t challenging enough, during the next four decades we will need to simultaneously find the means to meet the needs of at least two billion more people. And of course people in the future, like those today, are not going to want to be poor, meaning that at the same time as more people we also have to plan for a bigger economy in which more and more people will be living like us in the West. There is no doubt that the future holds multiple challenges. And not only are these individually not small, but when placed together, with the interactions and dependencies between them taken into account, then a profoundly complex conundrum is placed before us.

For those who work in construction and engineering one of the future trends that will shape your work and that is embedded in this multi-layered context, is the continuing process of urbanization. Started in England during the early 19th century, the expansion of urban areas is progressing faster than ever. In 2007, at the same times as the world population was approaching seven billion people, for the first time in human history more than half of us lived in towns and cities. By 2050 it is expected that between two thirds and three quarters will be urban dwellers, and by then and the population will be over nine billion.

A back of the envelope calculation as to what this might mean in practice I find rather shocking. Assuming that the population of London is about 7 million, then between 350 and 570 times the capacity of that city will be needed by mid-century to accommodate the level of urban expansion projected. Just pause for a moment to consider the implications of this, not only in terms of land and construction materials needed, but also the water, food and energy. Where is all that going to come from? And if our ambition is sustainability, then what kind of infrastructure and development will be needed to do it? Will it look like a continuation of business as usual? I really don’t think can. The numbers just don’t add up.

So what might it mean, as rising demand for food, water, land and energy meet the limits of what can be supplied, and as climate change impacts and ecosystem degradation become more pronounced? It seems to me that the economic, social and ecological drivers for new policies and practice will be ever more powerful, and that those organisations that anticipate these drivers will be better placed to thrive and compete. Those who have built relationships with like-minded organisations, through joint ventures, client relationships, coalitions and other routes, and who have also developed new business models and modernized their technological capabilities, will be more able to design and implement the solutions needed to cope in such a fast-changing world. Those who behave as if the future will be rather like the present are I fear in for something of a disappointment, and will also find themselves at a competitive disadvantage.

On the other hand, the correct kind of leadership action taken in anticipation of change, rather than reacting to it too late in the day, will deliver advantages that are becoming ever more clear. Those companies who are investing in serious and ambitious sustainability strategies are already finding benefits, ranging from better cost control and more effective risk management to more inspired workforces and stronger engagement with investors. Some are building reputational advantage and new opportunities for partnership with other like-minded companies.

Anticipating the future through a clear and ambitious plan for sustainable business also helps in better understanding how markets are likely to change. For the construction sector powerful insights can be derived from a sustainability-led approach. For example, some clients will benefit from reputational enhancement, others will cut costs, new business models might be adopted by others while some will be assisted in meeting their own sustainability goals or policies.

There are, however, limits to what companies and groups of companies can do on their own, in partnership with others through a more sophisticated sense of how client needs are altering. If the playing fields upon which businesses compete are set too low, then those who step up to the challenges at hand can find that they place themselves at a disadvantage, at least in the short-term. There also limits to what companies can do if the economic signals that they must respond to are too weak or contradictory. 

This is why governments need to use a range of policy tools including the tax system, trading regimes and regulation to ensure that companies across sectors are subject to similar policy drivers. Putting in place carbon taxes and incentives to conserve ecosystems, such as regulated ecosystem services schemes, can help everyone rise to the challenge, because there will be commercial advantage in doing so. In this respect, ending what has become for some a race to the bottom, and instead firing the starting pistol on a race to the top, is what is required. This will, however, require more effective dialogue between the private sector and policy makers.

This is not simple to do, however. Part of the difficulty arises from the tendency for companies to say that it is governments who must lead, and the government looking for action from the market, with both looking to the voters and consumers who keep them both afloat to signal the demand for change. The result is a rather unfortunate situation whereby leadership is stifled. This is all the more frustrating considering how there is widespread and in some ways unprecedented agreement among scientists, those who design policy and the companies who make markets work that a rather fundamental problem exists. I described one major aspect of it a few moments ago, as seen in the clash between rising human demand and what nature can sustainably supply. Perhaps one way to at least begin in addressing this problem is for like-minded future-focused businesses to gain a clearer and stronger collective voice?

But even if there were that bolder business voice, is it really possible to meet the needs of nine billion people, while remaining inside planetary capacities? Well yes it is, but will require a rather different approach than the one we adopt now, whereby business as usual, hoping for the best and trusting in technology (while not actually using it) sums up the basis for how we proceed. If it will be possible to meet the needs of a fast-rising population while at the same time as maintaining environmental capacities, then super-efficient resource and energy use and careful management and protection of ecosystems will need to be harnessed in economies that are more effectively geared to meeting genuine human needs (rather than simply more economic growth). Part of that will be about technology and engineering, but also about smarter planning and design, and economic and cultural change.

When it comes to this latter point, that of culture change, what can we expect in terms of social expectations going forward ten, twenty years and beyond? A revolution in information technology is taking place, partly seen in the decline in consumption of mainstream and centralized media and a rise in social media more under the control of citizens. Among other things this has huge implications for politics and decision-making. Whereas a few organisations once had profound influence over how ideas were shaped, that process is now far more dispersed, with influence now much more from the bottom up as well as the top down. Will that trend become more pronounced? I think it will, not least in the emerging mega economies of Asia and Latin America. How best can those who are concerned about shaping new ideas best engage with this trend? 

This might sound like rather a challenging and multi-layered agenda – ranging from policy and technology to economics and culture – and indeed it is that. I would say, however, that although difficult and challenging, rising to it will not be as difficult or challenging as coping with the situation that will emerge should we not do that. 

In embarking on the journey to the future in a planned and informed way, who should be on board? Of course there is no single sector or group that can deliver what is needed. Genuine partnerships and deep collaborations will be needed, especially between the private sector and governments. Companies are often in a better position than governments to think about the longer term, and working in partnerships with legislators and policy-makers could help craft the frameworks and signals that would take us in more sustainable directions.

While working more in partnership is logical, it will not be simple. Some deep chasms need to be crossed, not least in corporate leaders stepping up more to not only the gap between the long and short term, but the gap between the interests of individual organizations and that of groups of organisations, including across sectors. Challenges such as climate change, resource depletion and urbanization will affect everyone eventually, while in the short term anticipating and managing those trends in more sustainable directions for some will be seen as a cost. 

Whatever the apparent difficulties we need to get on with the process of change, and fast. 2050, a time that once seemed so far away, is only as far into the future as 1974 is distant in the past. Lots of people here today will remember 1974, so the journey to 2050 might not seem so long as it might at first glance appear. There are many approaches and tools that will take us safely to 2050 and beyond, and technology, policy, culture and economics are among them. 

There is one thing on top of all those, however, which will be even more important, and that is inspired leadership. Bridging the gap between the short and long term, between the here and now and where we can plausibly expect to be, will need vision, passion and a clear and consistent sense of direction. I see a lot of data warning of potential danger, I see a lot of potential solutions, what I see less of is the leadership needed to make the most of the latter so as to minimize the risk of the former. And while leadership might sometimes be seen as risky, I think we are in an era where not showing it is even more so.