Environmental challenges
Today’s business leaders must balance the long-term future of their businesses and environments, the top line and green line, alongside the short-term need to preserve the bottom line. A sustainable enterprise is no longer a nice-to-have ethos for a business; it’s a must and it’s driven by consumers as they use their power of choice to move away from unsustainable, environmentally damaging products and services. In this section, we will look at not just sustainability challenges but additional external factors that are environmental.
Sustainability challenges
A report released by the World Economic Forum in early 2020 reported that 50% of Europeans and 75% of Chinese consider climate change a major threat to society (https://www.weforum.org/agenda/2020/01/climate-change-perceptions-europe-china-us/).
This was backed by Pew Research, which found similar concerns of the public in the US, putting the economy at the top but environmental issues being of significant concern and coming a close second (https://www.pewresearch.org/politics/2020/02/13/as-economic-concerns-recede-environmental-protection-rises-on-the-publics-policy-agenda/).
The IBV report also showed that 67% of organizations consider environmental issues of significant concern and they feature in strategic decision-making (https://www.ibm.com/thought-leadership/institute-business-value/en-us/report/sustainability-consumer-research).
In fact, we do not have to rely on surveys and research anymore; we only have to look at the news to see for ourselves that climate change is here and it has started to impact all our daily lives. We can no longer hope to find a solution in the coming years – we must act now.
Businesses are now expected to deliver on the Paris Accords and COP26, and for each proceeding year to rapidly real sustainable products and services that are delivered with minimal impact on the environment.
COVID-19
As the COVID-19 pandemic becomes part of the new normal, one cannot ignore the devastating impact it has had on everyone. Millions died. Millions more were left with the long-term effects of COVID, and millions of livelihoods were at stake.
We may never truly be able to estimate or even fathom the long-term impact of COVID-19 but it has changed the way we do business forever. The question remains how do businesses adapt to change and build resilience to external forces to weather the storm and then return even stronger?
We are already seeing predictions made in IBV research come true, where it stated that when organizations emerge from the pandemic, there will be an environment of more disruption. That change is already at full pace in a hyper-dynamic environment. Business leaders cannot sit back and need to push forward to use the fluid business environment to their advantage.
Political polarization
Since 2016, we have seen increased polarization in politics, swinging from the extreme right to the left wing of the political spectrum. Political uncertainty since Brexit has led to there being five prime ministers in the UK since the Brexit referendum, leading to poor decision-making, and other recent events have both directly and indirectly impacted the economy. Economic indicators resemble an ECG scan, making forecasting very hard for the CXO suite. The abolition of the 45p tax rate and a reduction in corporation tax, in the hope of putting more money into the pockets of the top 1% of consumers, resulted in a run on the GBP, and this led to interest rate hikes on UK gilts and pensions, leading to the Bank of England investing £65bn in propping up UK bonds in pension funds.
With such devastating effects on the economy, for consumers and businesses alike, what can business leaders do to protect their top and bottom line?
Impact of the war in Ukraine
The war in Ukraine is in its eighth month at the time of writing and the impact of the war has been seen to affect its closest service markets, particularly in Eastern Europe. An IDC paper analyzed the impact of the Russia-Ukraine war on the services market, as well as the global impact of the conflict, as of 2Q22. It presented its findings in the near-term IT services forecast pertaining to Russia, Central and Eastern Europe, and Western Europe, as well as IDC’s assessment of how the crisis is affecting service providers sourcing locations.
