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What is the business value in driving sustainable lifestyles?

 
Westfield Shopping Centre, London

Shoppers at Westfield shopping centre in the west London, England. Big brands are making a great show of helping their customers take the green option but will it work? Photograph: Oli Scarff/Getty Images

 

Powered by Guardian.co.ukThis article titled “What is the business value in driving sustainable lifestyles?” was written by Oliver Balch, for theguardian.com on Tuesday 24th September 2013 13.30 UTC

There’s something a little odd going on in the world of sustainable living. Whether it’s recycling your old jeans or eating home-grown kale, consumers are increasingly up for the idea of less is more and all that jazz. Big brands too are making a great show of helping their customers take the ‘smart’ option. So they’re chivvying us into more fuel-efficient cars and urging us into organic cotton t-shirts.

The odd thing is that corporations are struggling to articulate not why we should bother with it all, but why they themselves should. The arguments outside the boardroom are plenty clear. As WWF’s One Planet Living project spells out, we simply can’t keep going as we are. Ever greater consumption of ‘stuff’ will eventually render the whole shebang – the natural environment, the global economy, modern consumer society – on its knees. That’s a maybe. But the suits still need persuading.

“There’s a clear and obvious golden chalice waiting of innovation, market share, etcetera, but there’s some serious heavy lifting to do to get the business case up to par to bring this to scale”, said Elisa Niemtzow, associate director of consumer products at the business-led group, BSR.

Together with UK communications specialist Futerra, BSR recently released a survey of top business leaders that suggests the vast majority (98%) of consumers will be interested in sustainable lifestyles by 2018. This “near total market transformation” should see a doubling in the number of businesses (currently 40%) already pushing sustainable products and services, the survey indicates. That’s ambitious, even with the buy-in of the chief finance officer. Without him or her, the idea of a future in which we’re all living sustainably ever after is woefully wishful.

Squishy economics

So why is it so difficult to construct a compelling business case? First, the selling points stink. Sustainable lifestyle advocates continue to insist on being way too defensive. Typically, their arguments revolve around issues like reduced risk, better reputation and regulatory compliance. That’s fine if you’re selling life insurance and want to cover the prospect of the world caving in but it’s not a winner if you’re trying to usher in a consumer revolution. For that you need dollar signs.

The Sustainable Lifestyles Frontier Group, a business-led network whose opinions form the basis for the survey results, understand the need for cash-centred thinking. The group’s members, which include representatives from global brands such as Mars, eBay and Carlsberg, anticipate a shift in future debate. So going forward, expect to see terms like ‘increased marketshare’, ‘sales growth’, ‘future proofing’, ‘brand loyalty’ and ‘business model innovation’.

While these arguments are welcome, many suffer from still being just a tad “squishy”, admitted Solitaire Townsend, co-founder of Futerra. Three in five (61%) of those interviewed in the survey, for example, identify “difficulty quantifying intangible outcomes of action” as a major stumbling block. Finance director understand increased sales, certainly. But future proofing? Customer loyalty?

“You can make promises about how much money we will save if we are more energy efficient, but it’s very difficult to say how much money we will make or save by helping our consumers be more energy efficient”, Townsend admitted.

Other barriers exist as well. The most commonly cited obstacle was short-term market pressures (75%), followed by a lack of hard data about the business benefits (63%) and decision-makers “not understanding the concept” (51%).

Escaping pilot purgatory

The report throws up various ways to bridge the apparent “value gap” that affects the cause of sustainable living. The most convincing are also the most obvious: create new products and services, and change business models. Both are already happening. BSR’s Niemtzow points to the Kindle e-reader from Amazon as a classic example of a “disruptive” product. AirBnB, the online travel rental platform, which now operates in 192 countries, provides a similar example from the perspective of transformative business models.

Yet great individual case studies don’t necessarily translate into a great collective business argument. At the moment, we’re stuck in “pilot purgatory”, said Townsend: “It’s only at scale that you get the sales and innovation benefits. You can’t get those from a pilot.”

For scale, you need consumers. At present, sustainable living appeals to a handful of eco-types but precious few others. Despite the survey’s upbeat assessment of future consumer trends, it’s forced to concede that only 2% of the public are currently “very interested” in the topic.

 

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