The planet has a problem. We’re using its resources significantly faster than our global ecosystems can renew them. This year, according to international research organization Global Footprint Network (GFN), we reached the breakeven point on August 1. GFN has a name for it: Earth Overshoot Day. In other words, humankind has exceeded the earth’s ability to restore its natural resources to the point at which it started the year. So, for the remaining five months of this year, we’re living beyond our means.
The results of deforestation, overfishing, increases in carbon dioxide emissions and other wasteful manmade activities are triggering a sort of planetary revolt, which is manifesting itself in severe droughts, wildfires, hurricanes and other natural catastrophes. The earth is clearly angry.
Mathis Wackernagel, GFN’s chief executive officer and cofounder, says: “We are borrowing the earth’s future resources to operate our economies in the present. Like any Ponzi scheme, this works for some time. But as nations, companies or households dig themselves deeper and deeper into debt, they eventually fall apart.”
To address this imbalance, GFN has identified four areas of focus, which are
1. the ongoing migration of people from rural to urban environments (by 2050, 80 percent of all people on earth will live in cities)
2. changing the way we meet demand for food by sourcing more food locally and avoiding processed foods
3. addressing unsustainable population growth
4. decarbonizing the economy by phasing out fossils fuels, the effects of which have been thoroughly diagnosed as having the foremost negative impact on the planet’s renewable resources.
As awareness of the harm that fossils fuels cause to the environment has grown, oil and gas producers have come under increased scrutiny and have, in fact, been portrayed in some circles as environmental villains. That characterization, however, is evolving. In the last installment of “Working Green,” we pointed out some of the advances being made on the renewable-energy front. Companies including Exxon, Shell, Chevron, BP and Total are investing in renewable energy, marking a critical shift in the industry. Today, those and other companies are directing billions of dollars into the research and development of low-carbon technologies, while making equity investments in startup companies, acquisitions and joint ventures, with a focus on renewable energies such as solar, geothermal and wind.
This transition, spurred by demands for change by shareholders and consumers alike, has gained traction, as oil and gas companies have come to recognize that the migration to renewable energy is not a question of if, but when. The biggest challenge for those companies, nonetheless, is managing their capital allocations between businesses that are very different in nature with distinct cash-generation profiles.
Among those adapting to a fundamental reordering of their industry, none have surpassed in scope the radical transformation undertaken by Statoil, a Norwegian-based multi-billion-dollar company with operations in 36 countries. To signal the overhaul of its business model, the company changed its name to Equinor, ridding the reference to oil in its previous name. In 2017, the company developed a climate strategy that will take until 2030 to fully implement. While continuing to produce oil, Equinor is broadening its investment in renewable technologies, committing 25 percent of its research dollars to new energy solutions. The company also has pledged to reduce annual emissions from its operations by 3 million tons by 2020 and to reduce carbon dioxide emissions by 20 percent per barrel by 2030.
While the role oil and gas companies are playing in moving back Earth Overshoot Day continues to expand, it’s critically important to understand our — that is, supply chain professionals’ — responsibility to assure that we live within our planet’s capacity to sustain the lives of everyone who inhabits it. Reducing waste, improving operational efficiencies, and investing in breakthrough technologies and processes are essential elements in that effort. We all have a role to play.
Antonio Galvao, CSCP, CLTD, is chief supply chain officer at DuBois Chemicals. He may be contacted at firstname.lastname@example.org.
Mike Dries is a retired business journalist and corporate communications executive now working as a freelance writer. He may be contacted at email@example.com.