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Re imagining consumption stakeholder synthesis report

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  • 1. Re:Imagining Consumption ForumCreating Brand Value & Sustainable GrowthStakeholder Synthesis Report
  • 2. 2Contents1. Introduction pg. 32. Contextualizing Sustainable Consumption2.1 Macro Forces Shaping our World pg. 42.2 Implications for Business pg. 52.3 New Role of Business/Brands pg. 62.4 Attributes of Sustainable Consumption pg. 73. Insights from Stakeholders3.1 Barriers to Sustainable Consumption pg. 83.2 Conditions for Achieving Sustainable Consumption pg. 93.3 Future Actions for More Sustainable Consumption pg. 104. Next Steps pg. 115. Acknowledgements pg. 126. References pg. 12
  • 3. 3IntroductionOn December 10, 2012 L’Oréal USA and Forum for the Future hosted the Re: Imagining Con-sumption Forum and convened over thirty participants from leading retailers, brands, commu-nications specialists, and NGOs to advance the dialogue around sustainable consumption.The objectives of the Forum were to:- Explore why sustainability hasn’t been accepted into the mainstream- Learn from pioneering brand practices in a peer-to-peer environment- Identify practical approaches and solutions for brands and their partners toshape the future of consumerism in the USIt was a challenging day in which the participantsworked in four groups and discussed the follow-ing topics: 2020 vision for, and attributes of, sus-tainable consumption; barriers to achieving sus-tainable consumption; the role for business andbrands in mainstreaming sustainability; and po-tential actions to move the agenda forward. Atthe end of the day, each group developed ide-as for future potential collaboration. In this docu-ment, we have summarized the context andmacro forces that challenge consumer business-es, the role for business and brands in influencingand shaping sustainable consumption, key insights from the day, as well as potential workstreams for future collaborations. Importantly, all the stakeholders convened welcomedthe notion that enterprises and brands need to embrace sustainable consumption as avalue creator in order to ensure sustainable growth.“It is extremely important fororganizations, like L’Oréal, todemonstrate the leadershipby convening pre-competitiveorganizations who work inthe same industry and otherindustries to ask the bigquestions.”Raphael BemporadCo-founder and CEOBBMGPamela AlabasterSVP Corporate Communications, SustainableDevelopment, & Public AffairsL’Oréal USASally UrenDeputy CEOForum for the Future
  • 4. 4Contextualizing SustainableConsumptionGlobal Population GrowthNine billion on the planet by 2050 withan additional 3 billion middle class con-sumers by 20301. This will lead to a dra-matic rise in the demand for materialsand goods and services.Depleting Natural ResourcesPopulation growth will place tremen-dous pressure on the planet’s naturalresources including arable land, freshwater, energy, precious metals, forests,fish stocks and other biological re-sources. Even if these resources are nev-er depleted, on a per capita basis theywill decline significantly because theymust be divided among more people.Land Availability and Food SecurityIn the next 40 years we will have to pro-duce as much food as we did in the last8000 years.2 870 million people in theworld today (13.1%) are hungry.3 Equally,there are nearly 525 million obese4—morethan 10% of the world’s population.5Climate ChangeElevated carbon levels in our atmos-phere are linked to rising sea levels andextreme weather patterns which havedevastated citizens around the world.UrbanizationBy 2050, it is predicted 64.1% and 85.9%of the developing and developed worldrespectively will be urbanized.6Long-term success and continued growth for companies and brands is challenged bythe convergence of declining natural resources and ecosystem services and the in-creasing demands for these resources. Sustainable consumption and our ability tomeet the growing needs and aspirations of the global population within the limits of ourplanet is recognized by leading companies and brands as one of the most significantchallenges in the coming decades. Consumption at today’s rate threatens the globaland local natural resources on which we depend, and the larger eco-systems in whichwe live. Here are some of the macro-forces affecting our world and influencing busi-ness decisions:
  • 5. 5“The natural resources that thisearth provides, that all of ourbusinesses depend on, are inrapid decline. That threatens notonly the health of our business,but the entire planet.”Rick RidgewayVP Environmental InitiativesPatagoniaWater ScarcityNearly one billion people today don’thave access to clean drinking waterand by 20307, people and industry willconsume 30% more water than can benaturally replenished.8DeforestationLarge-scale deforestation, which has leftless than half of the earth’s original foresthabitat remaining, is contributing to cli-mate change by limiting the bio seques-tration of atmospheric carbon dioxideand accelerating biodiversity loss.Digital Explosion, Transparency andConsumer EmpowermentOver 70% of the world’s population hasa mobile phone,9 providing access toinformation and connectivity facilitatingthe spread and adoption of ideas. Dig-ital platforms are transforming econom-ic and social structures and interactions.Open InnovationDeveloping and sharing ideas thatcome from collaborations or crowdsources are providing new creativityand models for problem solving.LocalismThe popularity and support for localproduction and consumption of goodsis creating positive social, economicand often environmental impacts forthe communities around us.
  • 6. 6Sustainability is no longer a “nice to have”In order to successfully manage futurerisks and opportunities, organizationsmust integrate sustainability into theiroperations and business strategy. Sus-tainability has become an accepteddriver of long-term growth.No business is an islandCollaboration is key to advanceknowledge, skills, resources and compe-tencies that can address and acceler-ate solutions for complex problems anddrive change.Managing uncertainty is a certaintyThe only thing organizations can counton is the rapidly changing global land-scape. Long-term risk mapping can helpan organization identify the most likelyareas of pressure.Shake out those supply chain skeletonsCompanies should be proactively re-viewing the practices and operations oftheir partners downstream with particu-lar emphasis on their environmental andsocial impacts. Increasingly, the publicviews companies as responsible for theactions of their partners and suppliers,and expects brands to be responsiblefor how their products are made.Make sustainability normal and easy forconsumersSustainability has to be integral to abrand’s or product’s proposition and notpresented as an added attribute orbenefit. Brands need to build long-termmeaningful connections with consumerswho share their values. Above all,sustainable products need to performand be priced in line with less sustainableoptions.Implications for BusinessThe macro-forces outlined will have profound and wide ranging impact on business’soperating context. Some businesses are already taking steps to ensure that they willthrive in this new landscape. We’ve outlined some of the implications we see for busi-nesses below. The scale of the challenge demands a new role for businesses andbrands and a redefinition of consumption.
  • 7. 7Experiment with new business modelsand systems innovationOrganizations need to contemplate dis-ruptive models for continued growth,whether that is shared or collaborativeconsumption, the provision of services,expertise or experiences, opportunitiesfor swapping/recycling and reuse,closed loop design, systems innovationand ways to drive qualitative growthand not just selling more stuff.Valuing nature and social capitalOrganizations need to make decisionsthat fully value nature and labor.More than ever, business has an obligation to create the conditions for a sustainablefuture and to use its influence, assets and know-how to overcome the system barriersthat prevent sustainability from becoming more mainstream, including: Investors who don’t yet value sustainability despite the fact that companieson the DJSI outperform those that are not. Consumers who do not understand sustainability despite wanting to do theright thing. Lack of enabling policies to promote sustainable behavior despite the bestintentions of government.Greater collaboration and partnering with government and civil society will be criticalto accelerating and scaling solutions that address the most complex and challengingissues. In addition, viewing the economy as circular, not linear—where someoneswaste is another’s input — will be essential to transforming and reframing businessmodels and approaches.A New Role for Business“We need to build a coalitionwhere we are sharing bestpractices.”Coleman BigelowGlobal SustainabilityMarketing DirectorJohnson & Johnson
  • 8. 8Brands also have to change their behavior and evolve to integrate sustainable attrib-utes in their long-term strategic vision and embed the values of their brand in a waythat is authentic and reinforces the brand proposition.A New Approach for Brands“We as an industry, owe it toconsumers to simplify what themessage is, to simplify whatmatters and then to deliver onthose promises.”Jonathan AtwoodVP Sustainable Living andCorporate Communication
  • 9. 9If business and brands were to embracethese new roles, we would see the deliv-ery of new models for sustainable con-sumption which provide economic suc-cess and social value, all within the con-straints of our declining environment. Spe-cifically, the following will be delivered.Smart GrowthWhere economic growth is not deliveredat the expense of the environment, andwhere the overall environmental foot-print of business has been reduced.Smart UseWhere impacts associated with productuse and disposal are minimal.Positive Social ImpactWhere, what and how we buy promoteswell-being in individuals, communitiesand supply chains.A Better Choice of ChoiceWhere the unsustainable product or ser-vice is no longer available and consum-ers are choosing within a set of sustaina-ble options.“We have been training people to buy more stufffor a very long time, and so how do we changethose behaviors?”Tiffany WestDirector Head of AgricultureFood and BeverageWorld Economic ForumAttributes of Sustainable Consumption
  • 10. 10Insights from Stakeholders ConvenedThe previous section explored themes driving the need to transition towards more sus-tainable consumption. During the Forum, stakeholders collaborated across sectors todetermine the existing barriers to change, the conditions needed to achieve sustaina-ble consumption, and the future actions necessary to facilitate a shift. These insightsare outlined in the following section.The current configuration of the capitalmarkets doesn’t reward sustainablebusiness practiceToo often the emphasis is on profit andcommunications of profit, driven byshort-termism and risk aversion of main-stream investors. The behavior of capitalmarkets is slowing down the transition tosustainable business models.Lack of industry collaborationCompanies are often looking for exclu-sivity, and there are few incentives forcollaboration. There is a need for morepre-competitive forums/coalitions to ad-dress systemic challenges.Lack of common standards and public policyPublic policy currently fails to create alevel playing field for sustainability efforts,too often pushing way ahead of thecompetition is uncompetitive. Public poli-cy doesnt act as an incentive for sustain-ability, and in some cases is a barrier toprogress. There is no clear scorecard forsustainability that is universally acceptedand communicated to consumers.Current role of marketingThere is a need to redefine the role ofmarketing. Marketers need to make sus-tainable living more appealing and beequipped to sell value and utility. Thereare currently few incentives to shiftmainstream marketing behavior.Lack of demand from consumersThere is a lack of pull from consumersaround sustainability, a lack of educationamong consumers, and no universal ex-perience of the need for sustainability.CostThere are misconception that sustainableproducts are more expensive. This is a bar-rier to mainstreaming sustainable productsas consumers won’t pay more for a prod-uct based on sustainability alone.Barriers to Sustainable Consumption:
  • 11. 111. A universal, accessible language forsustainability for consumers and com-panies.2. Marketers need to make sustainabilityaspirational and normal. Brands need toinfluence consumer behavior and em-power consumers to live sustainably byincentivizing them to want and use lessand/or use more efficiently. Brandsshould experiment with new models thatconsider ownership and value loyalty.3. Sustainability must be affordable andaccessible. Edit out unsustainablechoices and make them an uncon-scious choice for consumers.4. Businesses need to integrate sustaina-bility across all business operations.5. Financial models must begin to inter-nalize externalities, recognize new mod-els of ROI, be more long-term focusedand embed sustainability metrics.Goods and services need to include fullenvironmental and social costs. Thereneeds to be financial incentives to cre-ate more sustainable products.6. More pre-competitive collaboration isnecessary to allow businesses to tacklethose issues which are too big for oneorganization to tackle alone.7. Business should embrace a circulareconomy and be willing to create a shiftfrom products to services.8. We need to redefine happiness andsuccess so that it is no longer synonymouswith acquisition of goods. Successfulbrands create value and provide purpose.9. A clear, consistent vision from busi-ness leaders is critical.10. More sustainable business models(e.g. TerraCycle) are needed to helpothers recognize business opportunities.Conditions Needed to Achieve Sustainable Consumption:Insights from Stakeholders Convened“We’re trying to take sustain-ability from niche and make ita new normal.”Sally UrenDeputy Chief ExecutiveForum for the Future
  • 12. 12Create more sustainable business models- Create a new model for ROI- Eliminate quarterly reporting- Put a price on or value natural andhuman capital- Encourage new types of financialreporting that moves from short-termto long-termFully integrate sustainability acrossthe business- Decision making that changes thewhole organization not individualbrands- Consistent visionary leadership- Building sustainability metrics intoperformance evaluations to createincentivesMake sustainability aspirational- Make sustainability the cultural norm- Sustainable behaviors are rewardedMake closed loop products and services- Leverage principles of eco-designand consider waste as a resource ormaterial inputCreate the systemic conditions tosupport sustainability- Create political pre-conditions tofacilitate level playing fieldRedefine the role for brands- Build sustainability in from inceptionand conception, don’t just add onsustainable attribute- Define collaborative versus competitivespace to support sustainabledevelopmentInsights from Stakeholders ConvenedFuture Possible Actions for More Sustainable Consumption:“I think for us it is criticalthat we begin to think aboutwhat our role is going to bein making consumptionmore sustainable.”Freya WilliamsGroup Planning DirectorOGILVY Earth
  • 13. 13As part of the next steps of the day’s exchange, workshop participants were asked toconsider their unique assets and competencies and to brainstorm ideas that might ad-vance us toward more sustainable consumption. Several potential future work streamconcepts were generated.Next StepsOption One: “Make sustainability hip/cool/trendy”Barrier Addressed: Lack of demand from consumersOutcome: Sustainability is a societal normLaunch a consumer facing campaign to communicate sustainability in acool, hip, modern and aspirational way that encourages consumers to pur-sue more sustainable lifestyles. Create a coalition with culture leadingbrands/companies from social media/IT (Facebook, Twitter, Apple,Google…), fashion and luxury (L’Oréal, PPR, Nike, Green Carpet Challengeteam..) to lifestyle (Coca-Cola, Pepsi, Toyota…) and draw on their unique as-sets like access to digital platforms and celebrities to carry the messages.Option Two: “New model to measure return on investment”Barrier Addressed: Capital markets don’t reward sustainabilityOutcome: Clear links between sustainability and value creationDevelop a universal way to calculate ROI of sustainability by surveying cur-rent models that evaluate brand equity over time i.e., Nielsen for sustainabil-ity. Brands, communications and sustainability experts, and a 3rd party verifi-er would work together to help ensure buy in. Information would need to bemade public, add value, and tie to POS data/impressions.
  • 14. 14Option Three: “Integrate sustainability across the business functions”Barrier Addressed: (indirectly) Current role of marketingOutcome: All key functions within a business understand the relevance ofsustainability to their role, and are equipped to deliver on this agenda.Create a corporate shift in sustainability by eliminating the sustainability roleand integrating sustainable business solutions and education across the en-tire organization. Then align personal performance and KPIs to sustain suc-cess using metrics akin to other performance metrics.Option Four: “Collaboration 2.0 (vertical exploration on specific topics, i.e.,water conservation)”Barrier Addressed: Lack of industry collaborationOutcome: Accelerated progress toward tackling key sustainability issuesthat are too large for one organization to tackle alone.Reconvene the stakeholder s to explore, share and collaborate on verticalsustainability topics and challenges such as water scarcity, consumer usephase, product innovation, tools to measure social and environmental im-pacts, production and consistent metrics. The group would invite differentstakeholders to contribute and challenge the Forum to take action.Summary of Next Steps:Recognizing the need for synthesis and collaboration we have committed to investi-gate the work being conducted by other organizations in similar work streams andhow we might extend their learning to advance and accelerate progress. Past par-ticipants will be invited to continue their engagement and new organizations will beconsidered to contribute to specific work streams with the second forum to be held inthe second half of 2013.
  • 15. 15References:1 http://www.mckinsey.com/insights/energy_resources_materials/resource_revolution2 http://worldwildlife.org/blogs/on-balance/posts/our-footprint-in-seven-facts3 http://www.fao.org/publications/sofi/en/4 http://www.worldometers.info/obesity/5 http://www.who.int/mediacentre/factsheets/fs311/en/6 http://esa.un.org/unpd/wup/pdf/WUP2011_Highlights.pdf7 http://www.unicef.org/media/files/JMPreport2012.pdf8 http://www.weforum.org/issues/water/index.html9 http://www.digitalbuzzblog.com/2011-mobile-statistics-stats-facts-marketing-infographic/Special thanks to the organizations and individuals that participated in theRe:Imagining Consumption Forum.Acknowledgements
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