An interesting 2009
5 januari 2009
1) The government will have a hard time with respect to sustainability. On the one hand the call for regulation will intensify. More business leaders will for example demand clarity in the area of carbon emissions. Without this it is hard to make robust investment plans. On the other hand there will be resistance against new regulation, not only because of the need for a level playing field. The Dutch government’s ambition to be 100% sustainable in purchasing in 2010 is already being criticised for being too bureaucratic.
2) But more important, the government now is the country’s biggest shareholder in financial institutions. It will be interesting to see how it will promote sustainability in it’s role as dominant shareholder in this sector. Can it translate its overall ambitions in a practical approach in its role as shareholder and supervisor? No doubt there will be tensions when the number of jobs has to be reduced, tensions with respect to management remuneration, and tension in balancing national aspirations in a hyper competitive global business. It can be done, but it will not be a walk in the park.
3) International governmental agreements and regulation on CO2 reductions or other sustainability themes are unlikely to materialise. Or when they do they will be merely void ambition statements.
4) The average consumer will push the breaks with respect to sustainability. Given job losses and overall economic concerns the number of consumers that is willing to pay a premium price for green products will drop dramatically. A first example is the sharp fall in hybrid vehicles sales as US, see the FT. Whether this drop is temporary is yet to be seen. But by all standards it will imply that the prices of green products have to be in line with there ‘less green alternatives’. This is a challenge for all companies.
5) Talking about companies: it will require ever more robust business cases for sustainable investments. The time is over that a plan ‘with only a hint of green’ was enough for new financing: sound economical back up is now a condition. The hype is over and that is a good thing. But by all standards companies will pursue the drive towards sustainability. Less so because of “green threats”, but primarily because they want to reduce oil and resources dependency. Communication on sustainability will be ever more business like: no hobbies, no bubbles, but proof about the link to value creation and impact. Moreover I expect that non-listed companies will become more vocal. They were often in the shade of listed companies. However these are facing a competitive disadvantage because of the drop in the share prices and the related problems with their financial positions. Non-listed companies have less pressure from this end and therefore more room for manoeuvring.
6) I expect that the dialogue between companies and their stakeholders will intensify: not the least because of the inclusion of sustainability in the Dutch governance code. This will obviously also require initiative from stakeholders: a dialogue needs two parties. I expect NGO’s to become more vocal. The financial crisis impacts their profit and loss accounts, so they will have to make sure that they stay on the radar screen of private donors. The best way to do this is through effective campaigning: targeting some companies will be part of the parcel. Taking on companies can be an efficient way to buy sympathy amongst some audiences.
7) A theme that I expect to become more prominent in 2009 is ‘a clash between generations’. Pension funds have taken hard hits from the financial crisis to the extent that their “cover factor” (dekkingsgraad) has dropped below 100%. This means that the premiums of current payers are used fully for current pension pay outs. In a volatile context the younger generation will protest ever more about this. They do not want to subsidise today’s pensioners when it will be evermore challenging to secure ones own pension.
2009 will be an interesting year.
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