Innovation Challenges: Sustainable Consumption & Carbon Product Labels

The need to develop new consumption patterns is the mother of all innovation challenges. The race to dematerialize is on, says Aron Cramer. Some of this will come from the digital revolution and some from redesigning business models. While according to new research by the Newcastle Business School in the UK, 72% of consumers want carbon labels on food products.
By  Aron Cramer for BSR, a global business network and consultancy focused on sustainability.This article first appeared in GreenBiz.com/Greener World Media (12 January 2010):

With climate negotiations reaching an inconclusive end in Copenhagen, 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, Ark., 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?

Recently in Dubai (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 this 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 rest 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 in November 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 RecycleBank, 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 inspire 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 7 billion of us. And that’s a lot more exciting than a plate of spinach.

Source: www.planetark.org, www.bsr.org and www.greenbiz.com

Daniel Palmer in Australian Food News (11 January 2010):

As some of the world’s largest grocery retailers look at ways to put carbon labels on their products, research has showed strong consumer interest in the idea.

According to new research by the Newcastle Business School at Northumbria University in the UK, 72 per cent of consumers want carbon labels on food products.

The news supports assertions from UK-based Tesco and American-based Walmart that shoppers are actively looking to cut their carbon footprint. Tesco has already begun adding carbon labels to their range of private label goods while the world’s largest retailer – Walmart – is looking to add an eco-label to every product in their stores within a decade.

Zaina Gadema, a logistics and supply chain management researcher at Newcastle Business School, completed the first stage of her study to gauge consumer perceptions on green issues when food shopping at the end of December.

The shoppers surveyed across all of the UK’s major supermarkets were questioned on their demand for carbon labelling, their knowledge of their personal carbon footprints, whether they think climate change is an important issue when buying food, and whether current carbon labels are easily understood.

Around four-in-five of shoppers do not know their own personal carbon footprint, but almost three quarters of respondents said that clearer carbon labelling on food products would help them to think ‘green’, the study concluded. Additionally, 63% thought that carbon labels were a useful indicator for comparing environmental standards, although quality and taste (76%) were still deemed more important when purchasing food than environmental issues such as carbon (44%) and food miles (42%).

However, 68% claimed their purchasing behaviour had changed significantly in the past ten years. Consumers stated that their spending habits had shifted towards purchasing more free range (46%), more fair trade (42%), more locally sourced food (32%), and more organic and less processed food products (32%).

“In light of the high proportion of consumers expressing a definite shift in shopping habits, these initial findings suggest that concern is indeed high with respect to climate change and food purchasing simultaneously,” Ms Gadema said.

“Overall the dominant theme arising from this research is that consumers would generally like carbon labels on their food products. However, because there is little understanding or knowledge surrounding such information, as well as little in terms of availability of products with carbon footprints, it is difficult for consumers to compare environmental standards via carbon labels even though the majority of respondents think labels would help to do so.”

Source: www.ausfoodnews.com.au