AVisionForSustainableConsumption

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1. A vision for sustainable consumption Innovation, collaboration, and the management of choice www.wbcsd.org 4, chemin de Conches, CH-1231 Conches-Geneva, Switzerland,…
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  • 1. A vision for sustainable consumption Innovation, collaboration, and the management of choice www.wbcsd.org 4, chemin de Conches, CH-1231 Conches-Geneva, Switzerland, Tel: +41 (0)22 839 31 00, E-mail: info@wbcsd.org 1500 K Street NW, Suite 850, Washington, DC 20005, US, Tel: +1 202 383 9505, E-mail: washington@wbcsd.org World Business Council for Sustainable Development www.wbcsd.org
  • 2. About this document In December 2008, the World Business Council for Sustainable Development (WBCSD) published a report called Sustainable Consumption Facts and Trends. That report took stock of the recent developments and trends in global consumption patterns, and presented an overview of the relationship between business activities, consumer behavior, and environmental and social challenges. Then, in February 2010, the WBCSD launched Vision 2050, which outlined a pathway for the next four decades, to a time when nine billion people would be living well, and within the resource limits of our planet. Both reports were the result of collaboration between WBCSD member companies from a wide range of business sectors. This report envisions what sustainable consumption could look like in 2050, and how business could help to establish it in the mainstream. It complements Vision 2050, which took a (primarily) production-centric view on sustainable development. By creating this report, WBCSD member companies seek to make a constructive contribution to the global dialogue on sustainable consumption. They wish to help their fellow businesses – whether selling directly to consumers or to other organizations – to take sustainable consumption issues into account in their long-term strategies, innovation and consumer engagement activities. They also wish to help policy makers; civil society organizations and individuals understand the need for business to make an active and constructive contribution. Their ultimate objectives as companies are: to develop and provide the solutions that will enable consumers to meet their aspirations for a better life within the limits of the planet; and to allow their businesses to develop in the long term. This document is part of an ongoing process of thought development and engagement on sustainable consumption, called the Sustainable Consumption and Value Chain Initiative. It has been developed by the following WBCSD members: Accenture, Borusan, Deutsche Post-DHL, Havas, Henkel, Nokia, PepsiCo, Philips, Procter and Gamble, PwC, S.C. Johnson, Solvay, Sompo Japan Insurance and Umicore. It is the result of several workshops hosted by members, including a multi-stakeholder workshop co-organized with the European Environment Agency and the UNEP/Wuppertal Institute Center for Sustainable Consumption and Production. 9 billion people living well, and within the limits of the planet.” “ 17 Sustainable Consumption Workstream Co-Chairs: In 2011, Sustainable Consumption and Value Chain (SCVC) was added as a new Systems Solutions to the WBCSD work program. While the overarching governance structure of SCVC is still being finalized, the WBCSD believed it was important to keep pace with a rapidly evolving agenda and capture the current “state-of-play” in the following thought in the interim. This work was co-chaired by the following Liaison Delegates: Uwe Bergmann (Henkel) Kirsi Sormunen (Nokia) Robert ter Kuile (PepsiCo) Working group participants: Guy Champniss (Havas), Dominique Debecker (Solvay), Erkin Erimez (Borusan), Guy Ethier and Staf Laget (Umicore), Winfried Haeser (Deutsche Post-DHL), Geoff Lane and Gary Sharkey (PwC), Chris Librie (S.C. Johnson), Per Sandberg (Accenture), Masao Seki (Sompo Japan Insurance), Paul Shrubsole and Peggy Goossen-Nachtigall (Philips), Peter White (Procter and Gamble). A special thanks to PepsiCo, Philips and PwC for having hosted workshops and to the Luxury Brand Forum for having provided input to this work. Special thanks to Lars Fog Mortensen and Almut Reichel (European Environment Agency) and Michael Kuhndt (UNEP/Wuppertal Institute CSCP) for having co-organized a multistakeholder meeting with us in Brussels. Secretariat: Olivier Vilaça, Program Manager, Sustainable Consumption and Value Chain Acknowledgements Printed on paper containing 85.9% of PEFC certified fibres and 3.2% of FSC certified fibres. 100% chlorine free. ISO 14001 certified mill. Photo credits: Dreamstime.com and iStockphoto About the World Business Council for Sustainable Development (WBCSD) The WBCSD is a CEO-led, global coalition of some 200 companies advocating for progress on sustainable development. Its mission is to be a catalyst for innovation and sustainable growth in a world where resources are increasingly limited. The Council provides a platform for companies to share experiences and best practices on sustainable development issues and advocate for their implementation, working with governments, non-governmental and intergovernmental organizations. The membership has annual revenues of USD 7 trillion, spans more than 35 countries and represents 20 major industrial sectors. The Council also benefits from a network of 60 national and regional business councils and partner organizations, a majority of which are based in developing countries. www.wbcsd.org
  • 3. 1 Contents Contents Figures 1. Consumer segmentation in 2050 2. The five elements of a vision for sustainable consumption in 2050 3. Driving sustainable consumption through innovation, choice influencing and choice editing 4. From the linear model of value chains... 5. To the circular model of value chains... 6. To the sustainable value net 7. Roles and responsibilities of actors in driving sustainable consumption 8. A possible pathway toward a sustainable consumption in 2050 5 6 9 10 10 10 11 12 The need for a vision of sustainable consumption in 2050 Consumption needs to change From niche to mainstream Our vision of sustainable consumption Better products and services Enlightened consumers Maximized total value New measures Cohesive and responsive marketplace A pathway to sustainable consumption Creating and managing choice Moving to the value paradigm Roles and responsibilities A possible pathway “Must-haves” Conclusion Resources Acknowledgements 3 3 3 5 6 7 7 7 8 9 9 10 11 12 13 15 16 17 1. 2. 3.
  • 4. 2 A vision for sustainable consumption – Innovation, collaboration, and the management of choice Message from the Co-Chairs of the Sustainable Consumption working group Businesses around the world recognize that sustainable consumption is a key element in any well-developed and forward- looking sustainability program. Long term success and continued growth depend on offering consumers a way to meet their needs and aspirations within the limits of our planet. We believe that the vision stated in the WBCSD’s Vision 2050 report – “9 billion people living well, and within the limits of the planet” – cannot be achieved with technological innovation alone; we will also need deep transformations in lifestyles and consumption patterns. Downshifting, product labelling, local consumption and other approaches have been offered as solutions to a more sustainable lifestyle, but none has proven itself over the long term, or been sufficiently scalable. Many have had limited relevance to businesses and consumers, or been seen as too confusing, or too restricted in scope or time. It should be a key priority for us to work with governments, consumers and fellow entrepreneurs to shape progress toward the vision for 2050. This is a complex, systemic challenge requiring new ways of thinking, working and interacting. If we rise to this challenge, the prize will be well worth our efforts: we will develop more efficient and profitable ways to offer value to our customers and consumers; we will secure our natural and human resources for good; our brands will be stronger; and the markets will reward us. Long term success and continued growth depend on offering consumers a way to meet their needs and aspirations within the limits of our planet.” “ Kirsi Sormunen Vice President, Sustainability, Nokia Uwe Bergmann Head, Sustainability Management, Henkel Robert ter Kuile Senior Director Environmental Sustainability, Global Public Policy, PepsiCo
  • 5. 3 The need for a vision of sustainable consumption in 2050 The WBCSD’s Vision 2050 report, and the Sustainable Consumption Facts and Trends report that preceded it, both stated that technological innovation will not be enough to address the sustainability challenge; there will also be a need for transformations in mainstream lifestyles and consumption patterns. In this chapter, we address the need to abandon the existing consumption paradigm and address a series of systemic challenges. Consumption needs to change Sustainable Consumption Facts and Trends showed that consumption as usual represents a threat, both locally and globally, to the natural resources on which we depend, and therefore to the wider socio-economic system. Unless tackled proactively and on time, this risk will increase hugely as the global population balloons to a projected nine billion in 2050, and a billion more people join the middle class. The additional demand for materials, energy and other ecosystem services will most likely outpace efficiency gains in the supply chain and overwhelm natural systems. Business has an important role in preventing this, and it is in its own interest to find new solutions for more sustainable consumption patterns. Otherwise, business will face significant consequences, including: • Rising costs: increasing competition for scarce raw materials in the supply chain will drive up costs and squeeze margins. • Uncertainty: as the global climate warms, and the stocks of some resources approach collapse, crises become less predictable and more chaotic. The same may be said of their consequences, including market reforms and cultural shifts. Uncertainty causes inertia in markets and businesses, stifling investment and innovation. • Increasing regulation: resource and environmental crises can cause overwhelming pressure from The need for a vision of sustainable consumption in 2050 voters to introduce more and stronger regulations. These can have dramatic effects on business, and can also be hard to anticipate. They can force companies into a reactive mode, rather than a more proactive (and therefore effective) one. • Friction: the debate over sustainable consumption could become polarized and deadlocked. Innovation, productivity, brand value and sales would all suffer from the tensions between corporate objectives, consumer behavior, and sustainability. Furthermore, consumers themselves are increasingly aware of environmental and social challenges, and looking to companies for solutions. They will reward brands for addressing their aspirations, including the need to “tread lightly”. They will increasingly avoid brands that feel unsustainable or irresponsible. From niche to mainstream For a variety of reasons, including price, performance and false perceptions, more sustainable products and services have tended to appeal only to niche markets, with limited impacts. For consumption to become sustainable, mainstream consumers also need to adopt sustainable solutions and behaviors. To help with this, companies need to develop offerings that are attractive, accessible and affordable. A demand-side challenge Surveys have shown for many years that people are increasingly concerned by environmental and social issues, and want to make better and more sustainable choices; but relatively few of them translate this willingness into behavior. The reasons for this were explored in Sustainable Consumption Facts and Trends, and are often related to issues such as: a lack of information, or a surplus of confusing information and labels; higher prices; higher up-front costs; an unwillingness to act alone; lower convenience or product performance; and the “rebound effect”1 . 1 The tendency for people to use “green” products more than they would use “ordinary” products; for example, replacing a petrol-engined car with a hybrid, then driving it more. Section 1
  • 6. 4 A vision for sustainable consumption – Innovation, collaboration, and the management of choice This can be frustrating for companies that have put a lot of effort into developing more sustainable, affordable and effective alternatives, only for those alternatives to attract small shares of the market. It is also frustrating for consumers, who wish to purchase more sustainable solutions to their needs, but fail to find them; or find them unaffordable, inconvenient, unattractive, confusing, or functionally inferior. Many products have significant environmental and social impacts in their use phase; greater, sometimes, than in their production and distribution. Cars, washing powders and electrical goods are examples. Perishable products are often thrown away without being used at all. Purchasing a more sustainable product without using and disposing of it in a sustainable manner can be more damaging than purchasing traditional options, using them efficiently, and then recycling them. These messages and concepts can be confusing and opaque to people preoccupied with other priorities. Consumers rely on businesses to provide goods that have been made in a more sustainable way. They also look to businesses for help and guidance on which products and services to choose, how to use them efficiently, and how to ensure that they are re-used or recycled. A supply-side challenge Most businesses have spent years refining their processes and business models, and are operating efficiently and profitably, according to the signals they get from the marketplace. While production efficiencies have helped to drive down the cost of some products and services, some more sustainable offerings can often be more expensive than their traditional versions. A switch to more sustainable product portfolios and business models can require additional investment, changes in corporate culture and practices, different skill sets, and better integration throughout the value chain. For these reasons, new, more sustainable products, processes and services can struggle to get to scale, and to compete with established offerings. The need to understand, manage and report impacts throughout the value chain also poses a new challenge, since supply chains can be opaque and highly complex. Their increasing complexity makes it difficult and expensive to assess and manage the impacts of a specific product, process or service. Changing these supply chains can be time consuming, and require new types and levels of collaboration. Existing regulatory frameworks – for example, with relation to anti-competitive behavior – can interfere with this process. A policy framework challenge Laws, regulations and fiscal incentives are inconsistent from one country to another, and we still lack a globally binding agreement on climate change. The inconsistencies in national frameworks can provoke capital flight from tightly regulated countries to countries with more laissez-faire regimes, often with no net financial, environmental or social benefit. Furthermore, the lack of an effective international framework allows importer countries to avoid responsibility for the impacts of production abroad. While laws, regulations and incentives are sometimes inconsistent in these respects, they are often consistent in another way: they give existing business models competitive advantage over more sustainable ones. Despite various grants and subsidies to “green” business practices, more sustainable businesses often face higher costs, even if they stand to gain more in the long run; they have to invest more, earlier, and with longer pay-off periods. Politicians set the framework conditions for trade; business has a clear role to play in advising them wisely and encouraging customers and staff to vote for change. This is a tough challenge that will require the business community to work in partnership with each other, with consumers and with other key stakeholders.
  • 7. 5 Our vision of sustainable consumption A vision for sustainable consumption by 2050, and a pathway showing how we might get there, have been developed in response to the challenges set out in the previous chapter. The Vision 2050 report looked to a future in which nine billion people are living well, and within the limits of the planet. While that report took a production-driven perspective, this one explores the same vision through a different lens, focusing on the consumer. The overall vision outlined in this document is this: in 2050, people live well, within the limits of the planet and society at large. “Living well” is decoupled from the consumption of physical products, and the materials that they contain. The system of production and consumption is aligned with economic, environmental and social sustainability. Furthermore, there is not one model fitting all consumers, but a wide range of options to live a better life, within the limits of the planet. Sustai- nable consumption is a mainstream phenomenon. Consumers still vary in their levels of awareness of environmental and social issues, and their willingness to alter their habits accordingly (see Figure 1); but everyone has the skills and/or tools to mitigate their ecological footprint. DELAYED GRATIFICATION INSTANT GRATIFICATION Nurturer Legacy Builder Escapist Pleasure Seeker LOW SENSE OF AGENCY HIGH SENSE OF AGENCY Steward Figure 1: Consumer segmentation in 2050 Section 2 In 2050, there will still be a variety of consumer profiles and segments. The five “personas” presented in the graphic below illustrate the different drivers of sustainable behavior, based on gratification and a sense of agency (i.e. the ability to take action, for example through the purchase and use of sustainable products). Legacy builders Likely to be pioneering reformers, they will be driven by true cost accounting, the valuing of bio-capacity, or the redesign of consumption. Pleasure seekers Unwilling to give up their perceived quality of life, they will accept more sustainable products only if those products deliver traditional personal benefits, such as better performance or a trendier image. Nurturers and stewards They will sacrifice or delay their personal gratification for the good of their family, the wider community, and future generations. Escapists Not particularly engaged, they will favor the default marketplace. Our vision of sustainable consumption
  • 8. 6 A vision for sustainable consumption – Innovation, collaboration, and the management of choice More precisely, the vision for sustainable consumption is made up of five key elements (see Figure 2). According to this vision, products will deliver more value to their consumers, in the form of functional utility, durability, environmental profile, and physical and emotional wellbeing; consumers will be more aware, better informed, and better able to make sustainable choices; signals – and value itself – will pass more efficiently between all actors in the value chain, unleashing innovation and allowing the most sustainable products and services to compete most effectively; and the economic measures related to consumption will be redefined. New measures of success will be applied, and there will be constant dialogue between all actors in the system. Better products and services By 2050, value will be delivered to customers and consumers in a smarter way. Manufacturers, retailers and service providers will help consumers to live more sustainably, by means of better product design, and by replacing physical products with services. Higher value products that are only occasionally used will tend to be rented and shared by consumers, rather than bought and owned outright. When their owners no longer need them, they will recuperate their residu
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