Isra-Mart srl:Report: Green firms face scarce resource challenge

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Increasing demand for scarce resources will force green businesses to adopt efficiency measures if they are to maintain recent growth, according to a major new report from Defra.

The report, 'Review of the Future Resource Risks Faced by UK Business', warns that companies must factor resource issues into long-term decision-making, while also working to develop alternatives to many of the materials they currently use.

According to the research, which was carried out by environmental consultancy AEA, a wide range of materials will face constricting supplies over the next few decades as the global population rises towards an estimated nine billion by 2050.

As flagged by earlier surveys, the report warns that the supply of rare earth elements is likely to be particularly constricted. The Defra report warns that companies will have to increase recycling rates and make better use of metals such as indium (a component in solar panels), as well as cobalt and lithium (elements in electric car batteries and solar cells).

Palm oil, fish stocks, timber, aggregates and phosphate rocks, commonly used in fertilisers, will all face potential supply shortages, according to the report, increasing pressure on the UK agriculture and fisheries sectors.

However, the report argues that implementing efficiency measures that cost nothing, or deliver payback within a year, could save British firms more than £6bn a year.

"There are some major challenges ahead for government and businesses that require a co-ordinated approach," said Phil Dolley, resource efficiency director at AEA. "Even businesses that don't consider themselves affected by the issue of resource scarcity may be vulnerable through their supply chain. It is imperative that organisations start looking at how they will manage resource risk to ensure their future prosperity."

Speaking to BusinessGreen, Dolley stressed that small and medium-sized enterprises (SMEs) were likely to be less well prepared for supply constraints compared with larger corporations.

"Broadly, large-scale business is probably aware to a reasonable extent, but the level of SMEs is less clear," he said. "My feeling is that SMEs are not aware and you can see why – larger corporations can afford a sustainability manager focusing on these issues, but smaller organisations do not have the luxury of having such a person on the payroll."

The report stresses that it is the potential for new businesses to prosper by identifying business models and technologies that can address resource shortages.

Companies should be considering the opportunities available to them, Dolley said, which could result in cost savings, open up new business areas, or kick-start a new technology.

For example, he said that recycling scarce metals from discarded products, such as the rare earth minerals found in computer hard drives, could represent a lucrative revenue stream for some firms.

"Opportunities for innovation do exist commercially in terms of substitute inputs, alternative or diversified existing markets for recycling and recovery, development of new raw material sources and through product innovation," he said.