Drought, urbanization and climate: big business opportunities for long-term thinkers

Resource scarcity is a major business challenge, but evolving market conditions mean companies that can adapt quickly could reap big profits

As Sio Paulo, Brazil, suffers from the worst drought in its history, multinational pulp company Fibria, which is headquartered in the city, is one of many that has felt the pinch. At times, water has been shut off to 40% of the city and even now, after the rainy season, only 6-13% of the city's reservoir's capacity has been filled. In response, the company is working to reduce the amount of water it uses for forest irrigation.

This isn't the first time that Fibria has had to adapt to a shifting environment. Over the last several years, the rising scarcity of several essential resources - including water, fertilizer, labor and land - has pushed the company to reconsider its business model. It has diversified into renewable energy, biofuel production and sustainable real estate development. Fibria's goal is to make these portfolio additions 20% of total free cash flow by 2025, making the company less pulp-dependent and giving it alternative options for future business growth in light of looming sustainability challenges.