September Nuggets to Accelerating Your Sustainability Strategy: Prices Increase, Social Unrest, and Climate Change Worsening.

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Nuggets for Strategy

September Nuggets to Accelerating Your Sustainability Strategy: Prices Increase, Social Unrest, and Climate Change Worsening.

Prices Increase

The increase in raw material prices will further boost consumer price inflation worldwide, reaching 9.6% this year, the peak in 26 years.

  • The war between Russia and Ukraine (two of the world’s largest agricultural exporters) has caused sharp price increases. It risks creating a global shortage of cereals and fertilizers (which are crucial for crops) by 2023. The world could face a prolonged period of scarcity of crops and skyrocketing prices, which increases the risk of food insecurity (or even famine).
  • China’s zero COVID policy and supply chain interruptions also affect global scarcity.
  • In Europe, most of the industrial sector would be forced to ration the use of energy and reduce its workforce, the adverse effects of which will spread to the economy as supply chains are paralyzed. High energy prices would lead to an increase in bankruptcies as companies cease to be profitable. Governments could also stop price protections for households, further increasing heating costs and eroding the purchasing power of consumers.

Social unrest

The cost-of-living crisis is felt in all regions as inflation reaches record levels. Larger cities are less exposed to inflation, reflecting local spending patterns and regional inequalities. This could fuel social unrest if inflation is much higher than wage increases, preventing the poorest households from buying commodities. Such protest movements have been seen in India, South Korea, Sri Lanka, Ecuador, and Argentina, and could spread worldwide, which poses a risk to political and social stability. They could increase in countries with weaker labor organizations, where workers cannot coordinate to negotiate inflation-sensitive wages. Such movements could paralyze entire countries, weighing heavily on global growth. Systemic collaboration is needed to alleviate global food security concerns with economic benefits, while appropriate measurement could help evaluate efforts to minimize price increases.

Climate crisis worsening

Climate change models point to a higher frequency of extreme weather events. So far, these have been sporadic and in different parts of the world, but they could begin to occur more synchronously and for prolonged periods. Droughts and record heat waves have been reported this year in Europe, Brazil, India, and the United States.

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