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SD Vision - Halyps Cement

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Productivity of resource utilisation:<br />

a new challenge for business<br />

Companies must rethink their normal planning approach to combat growing<br />

uncertainty driven by increasing use of planet’s resources.<br />

Vittorio Terzi took over as<br />

Managing Director of McKinsey<br />

& Company’s Mediterranean<br />

Complex with offi ces in Italy, Athens,<br />

Cairo, Istanbul and Tel Aviv, in 2004.<br />

Prior to joining McKinsey in 1985,<br />

he worked as a consultant at the EU<br />

Environment Directorate in Brussels<br />

and as a corporate banker at Citibank<br />

in London and Milan. Vittorio Terzi is<br />

a senior leader of the Firm’s European<br />

Banking and European Corporate<br />

Finance Practices. Over his 25-year<br />

career with McKinsey, he has served<br />

Italian and European clients on a wide<br />

range of topics including business<br />

strategy, organisation, organic and<br />

inorganic growth, corporate fi nance,<br />

risk management and performance<br />

improvement. He has also been advisor<br />

on several M&A transactions in the<br />

domestic and international arenas.<br />

sd<strong>Vision</strong> asked Vittorio Terzi to outline<br />

the main trends of companies’ environmental<br />

policies both in the industrialised<br />

and in the emerging countries.<br />

As trusted advisor and counselor to<br />

many of the world’s most infl uential<br />

businesses, you have a wide vantage<br />

Interview with Vittorio Terzi<br />

Managing Director, McKinsey & Company,<br />

Mediterranean Complex<br />

point on the environmental strategies<br />

of the leading companies in the<br />

industrialised world. In your view,<br />

how high do these companies prioritise<br />

environmental issues today?<br />

I’m not convinced that environmental<br />

problems are a top priority for companies<br />

today, but I believe they should<br />

have a much more prominent place on<br />

company agendas than they do. The environmental<br />

question and, more generally,<br />

the availability of the planet’s natural<br />

resources could have a huge effect on<br />

companies from a performance and<br />

business model perspective. We can’t<br />

talk about the environment without considering<br />

the planet’s resources. Companies<br />

must think about several factors that<br />

will have a major impact on the future<br />

availability and volatility of resources: demand<br />

and supply dynamics, increasing<br />

regulation, and heightened awareness<br />

of environmental issues. It is estimated<br />

that the consumption of raw materials<br />

will grow by more than 30% over the<br />

next 10 years and emerging markets will<br />

account for 90% of this. In China alone,<br />

demand for energy is rising by 15% a<br />

year. Supply, however, will remain limited.<br />

Extraction costs will grow as it be-<br />

comes more and more diffi cult to fi nd<br />

and access sources. In addition, many of<br />

the major sources are located in politically<br />

unstable countries: Iran, Iraq, Venezuela<br />

and Saudi Arabia possess 50% of the<br />

world’s crude oil. Rising demand, limited<br />

supply and increasing costs will push up<br />

commodity prices. If we consider that<br />

this sector represents 15% of world GDP,<br />

we can understand how important these<br />

factors are for both the economy at large<br />

and for individual companies.<br />

We can’t talk about the<br />

environment without considering<br />

the planet’s resources. Companies<br />

must think about several factors<br />

that will have a major impact<br />

on the future availability and<br />

volatility of resources.<br />

Growing regulation will also have a big<br />

impact on companies. Some regulatory<br />

schemes currently under consideration<br />

could radically change companies’ business<br />

models. The systems for fi xing coal<br />

and water prices, for example, could<br />

change certain industries dramatically.<br />

In addition, public awareness of envi-<br />

13

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