December 22, 2009
With climate negotiations reaching an inconclusive end in Copenhagen last week, the action swings back from national governments and the intergovernmental process to you and me.
For many years, the idea of sustainable consumption has been embraced by NGOs and others but widely shunned by business.
This is changing fast. Not only that, the signs of growing interest are coming from unlikely locations.
In Bentonville, Arkansas, last summer, new Wal-Mart CEO Mike Duke called on his company to “develop the tools to help enable sustainable consumption.” Who would have guessed that the chief executive of the world’s largest retailer, which sells US$400 billion of goods each year, would say that?
In Dubai last month (just before the recent bond crisis struck the Emirate), under the auspices of the World Economic Forum, I chaired a “Global Agenda Council” on this subject. A dozen experts from business, academia, and NGOs from the United States, the U.K., Brazil, Germany, and elsewhere, were asked to deliver recommendations on how to shift to more sustainable consumption patterns. We developed three priority recommendations: mobilize and inspire consumers, explore new business models, and create innovative public policy. The topic will be on the agenda again at the WEF’s annual meeting in Davos next month.
Why has this issue come out of the shadows now? After all, the UN has been working on this issue for almost a decade, through the Marrakech Process, which aims to develop guidelines for production and consumption.
The answer may well lie in the pre-recession events of 2008. Before the financial crisis hit late last year, we experienced a mash-up of food/fuel/water-security problems. All the graphs and charts that predicted a disconnect between the supply and demand of basic commodities came to life in the form of shortages and price shocks in the months before Lehman Brothers collapsed. This meant higher prices for companies, and higher prices for consumers, who saw their food and energy bills rise.
And while the recession has brought a temporary pause to all this, the long-term trends suggest that the question of whether existing business models can—literally—be sustained is squarely on the table. To address the coming consumption crunch, new products, services, and production processes are needed.
The keys to progress rests in the same formula I discussed in my recent e-blast about climate change: innovation, efficiency, mobilization, and collaboration.
The need to develop new consumption patterns is the mother of all innovation challenges. The race to dematerialize is on. Some of this will come from the digital revolution, as newspapers can now be delivered wirelessly to e-readers instead of plopping dead trees on the doorstep. But some of the innovation will come from redesigning business models. Electronics retail leader Best Buy is looking to enter the transportation business. Through its emerging business unit, the company is experimenting with electronic transportation devices like “e-bikes,” building a mobility business to capitalize on its expertise selling and servicing very different kinds of consumer devices. One well-known beverage maker is looking at selling packets of soluble powder to avoid the need to ship water and containers around the globe.
Efficiency holds additional promise. That is why the zero-waste movement is gaining steam, with the New York Times proclaiming last month that it has moved from the fringes to the mainstream. Companies including Nestlé, Wal-Mart, and Honda are taking aim at garbage by revamping production and distribution processes. Cities across the United States, which maintains the crown as the world’s biggest per capita garbage producer, have set targets of zero waste by 2020.
The holy grail, however, may come in mobilizing—and inspiring—consumers. This is the only way to develop markets that de-emphasize natural resource use, which in turn will create rewards for companies that make the shift. SAP, Siemens, and Coca-Cola are the founding partners of www.hopenhagen.org, an effort to build a global consensus for strong action on climate change at the recently closed summit. Coca-Cola, in addition to experimenting with plant-based bottles, has invested in Recycle Bank, a start-up that rewards consumers for recycling products.
Collaboration is the only way to get this done. New business models will mean new partnerships. Google and GE have gotten immense attention for their initial efforts to create smart energy grids. Shai Agassi’s Better Place, a potentially disruptive force in private transportation, is partnering with auto incumbents Renault and Nissan, as well as the governments of Israel and Denmark, to build the needed infrastructure for an electric vehicle network. Ford and AT&T are working together on low-emission vehicles. These unlikely partners are looking across established industry lines to innovate.
Strangely enough for an idea that hinges on less consumption, progress may rest on marketing. After all, “sustainable consumption” is one of those “eat your spinach” phrases that hardly inspires people, and that’s a problem.
In fact, this is an idea that can be very exciting—maybe even sexy. After all, it may be that a resource crunch is the spark that catalyzes innovative ways to meet human needs—for all seven billion of us. And that’s a lot more exciting than a plate of spinach.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.