Full Document Text
More with Less:
Scaling Sustainable
Consumption and
Resource Efficiency
Industry Agenda
In collaboration with Accenture, January 2012
? World Economic Forum
2012 - All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means,
including photocopying and recording, or by any information storage and retrieval system.
3 More with Less: Scaling Resource Efficiency and Sustainable Consumption
ForewordContents
Harnessing the Impatience for Change
There is growing impatience at the lack of speed and scale at which we are
moving towards achieving sustainable growth. This frustration can be seen in the
boardrooms of companies, in government corridors and in the offices of non-
governmental organizations.
In the four years since the World Economic Forum’s Sustainable Consumption
Initiative started, an estimated 450 million people have been lifted out of
poverty,1 and the number of households in the emerging and developed world
living on an income of more than US$ 3,000 per annum increased by 28%.2 At a
global level, this encouraging progress has come at the cost of higher resource
consumption, continued environmental degradation, and greater social and
health imbalances.
Over the same period, about 21 million hectares of forest were lost,3 9.1 billion
tonnes of municipal solid waste were generated4 and some 50 billion tonnes of
fossil fuels were consumed.5 This pattern of economic growth and development
does not have to continue.
There is both an opportunity and an imperative, especially in emerging markets,
for a much more resource-efficient economy in which economic value creation
is not coupled with environmental depletion and degradation. Innovations are
appearing in products, processes and business models from large and small
companies alike and a host of initiatives are under way to increase sustainable
sourcing.
However, despite these efforts, we are stuck in a case of “pilot paralysis”
where achievements are only creating incremental progress: intergovernmental
processes are slow and not creating the scale of action needed; citizens,
consumers and “the 99%” are confused, often angry and demanding change;
and ahead lies a decade of economic and societal turbulence. It is a gross
understatement to say that action is needed urgently at a greater scale.
This report reveals the opportunities that exist for countries and companies to
act. At least US$ 2 trillion of economic output could potentially be protected in
2030 if the world adapts more rapidly to an increasingly resource-constrained
economy. The “size of the prize” – in economic terms – therefore, is large.
The report also highlights the leading role business can play in transforming
demand, supply and the “rules of the game”. Business can catalyse scale
through improving interactions with citizens and consumers, transforming
business itself through strategies, value chains and operations, and playing an
active role in shaping the policies and investments that define the rules of the
game. This will not be achieved by a small vanguard of leading companies or
countries; decoupling needs to happen in every business and every country
through a commitment to action.
The work of the Forum’s Sustainable Consumption Initiative will continue to
evolve and be shaped by input and dialogue from the private sector and other
stakeholders. The Forum will work with companies and others to aggregate and
scale up the impact of business and specific initiatives, putting the consumer
at the centre of considerations.. This will involve scaling up existing supply-side
initiatives (such as sustainable sourcing of palm oil, soy, cotton, timber, etc.)
to ensure products are sustainable by default, increasing momentum through
stronger business and industry association collaboration, and specific new
initiatives to engage with consumers, such as common disclosure of information
and development of new social platforms.
Chief executive officers and business leaders who participated in this work
see both commitment and action as must-haves, needed to drive long-term
competitive advantage for individual companies, industries and society. It
is hoped that by shifting the focus from defining the case for sustainable
consumption to identifying and accelerating the various actions needed to
achieve it will drive the change that is required.
The following Industry Partners of the World Economic Forum provided
leadership to the Sustainable Consumption Initiative: Aegis Media, Agility,
Alcoa, A.P. Møller-Maersk, Best Buy Co., BT Group, DuPont De Nemours
International, Edelman, Kraft Foods, Marks & Spencer, Metro Group, Nestlé,
Nike, Novozymes, Omnicom Group, Publicis Groupe, Royal DSM, SABMiller,
S. C. Johnson & Son, SAP, SAS Institute, Sealed Air, Tesco, Unilever, Wal-Mart
Stores, Wesfarmers and WPP. Collectively, their insights have been invaluable.
The report has been produced with the support of Accenture, the project adviser
for the initiative.
3 Foreword
4 Acknowledgement of Project Board
CEO Participants
5 Executive Summary
7 Introduction
8 1. The Imperative for Action
14 2. The Size of the Prize
18 3. The Challenges of Scale
24 4. A Vision of Scale
27 5. Solutions for Scale
34 6. A Commitment to Move Together
36 Appendices
36 Tools for Business in a
Resource-scarce Economy
38 Approach and Methodology
for Oxford Economics
Analysis
39 Acknowledgements
41 References
Sarita Nayyar,
Managing Director,
Head of Consumer
Industries, World
Economic Forum
USA
4More with Less: Scaling Resource Efficiency and Sustainable Consumption
Acknowledgement of Project
Board CEO Participants
We would like to thank the following chief executive officers,
chairpersons and presidents for their support and involvement in this
initiative. While the views expressed in this study do not reflect the
totality of opinions, their participation and guidance have been critical.
Nigel Morris, Chief Executive Officer, Aegis Media North America,
USA*
Tarek Sultan Al Essa, Chairman and Managing Director, Agility,
Kuwait*
Klaus Kleinfeld, Chairman and Chief Executive Officer, Alcoa, USA*
Brian Dunn, Chief Executive Officer, Best Buy Co., USA
Michael Rake, Chairman, BT Group, United Kingdom*
Ellen Kullman, Chair of the Board and Chief Executive Officer, DuPont,
USA
Richard W. Edelman, President and Chief Executive Officer, Edelman,
USA*
Irene B. Rosenfeld, Chairman and Chief Executive Officer, Kraft
Foods, USA
Nils Smedegaard Andersen, Group Chief Executive Officer, A.P.
Møller-Maersk, Denmark
Marc Bolland, Chief Executive, Marks & Spencer, United Kingdom*
Paul Bulcke, Chief Executive Officer, Nestlé, Switzerland
Mark G. Parker, Chief Executive Officer, Nike, USA*
Steen Riisgaard, President and Chief Executive Officer, Novozymes,
Denmark
John D. Wren, President and Chief Executive Officer, Omnicom
Group, USA
Maurice Lévy, Chairman and Chief Executive Officer, Publicis Groupe,
France
Feike Sijbesma, Chief Executive Officer and Chairman, Managing
Board, Royal DSM, Netherlands*
H. Fisk Johnson, Chairman of the Board and Chief Executive Officer,
S. C. Johnson & Son, USA
Graham MacKay, Chief Executive, SABMiller, United Kingdom
Jim Hagemann Snabe, Co-Chief Executive Officer, SAP, Germany
Jim Goodnight, Chief Executive Officer, SAS Institute, USA
William V. Hickey, President and Chief Executive Officer, Sealed Air,
USA
Philip Clarke, Chief Executive Officer, Tesco, United Kingdom
Paul Polman, Chief Executive Officer, Unilever, United Kingdom*
Mike Duke, President and Chief Executive Officer, Wal-Mart Stores,
USA
Richard Goyder, Chief Executive Officer and Managing Director,
Wesfarmers, Australia*
Martin Sorrell, Chief Executive Officer, WPP, United Kingdom*
*Chief executive officers, chairpersons and presidents interviewed as
part of the research of the Sustainable Consumption Initiative.
5
Executive Summary
There is an imperative for countries and companies to act to reduce
the environmental consequences of consumption. This report
demonstrates that over US$ 2 trillion in global economic output
in 2030 is at stake, so the need for rapid action to shift towards a
resource-efficient economy is high. Despite some success to date,
change is now urgently required at scale and greater pace than current
initiatives, policies or strategies are likely to achieve.
This report highlights the leading role the private sector can play in
scaling sustainable consumption. Business can catalyse scale through
transforming interactions with citizens; rethinking business models,
value chains and operations; and playing an active role in shaping the
policies and investments that define the rules of the game. However,
this transformation will not be achieved by the usual group of leading
companies or countries: delivery of more resource-efficient growth
needs to happen in every business and every country through the
aggregation of impacts and a commitment to action.
The Imperative for Action
Industry economics are being fundamentally recast not just by the
financial challenges that are at the top of the global agenda, but also
increasingly by pressure on natural resources and environmental
constraints. Current trends clearly show that business-as-usual
no longer works. Unless the present link between growth and
consumption of scarce resources is severed, our resource base,
governance and policy structures are unlikely to sustain the standard of
living societies have grown accustomed to and aspire to.
This report examines the challenge through the lens of consumer
engagement (demand), value chains and upstream action (supply),
and the policies and enabling environment to accelerate change (rules
of the game). Consumers are key to sustainable consumption. They
increasingly want companies to behave more responsibly, and provide
sustainable products at the right price and performance. The power
to grow demand lies in their hands. Meanwhile, price volatility and the
interdependence between resources such as food, energy and water
continue to contort supply. At the same time, governmental processes
remain slow and are delivering only incremental results.
In the current paradigm, growth is linked with consumption of scarce
resources and negative impact on the environment. These trends are
exacerbating an already volatile business environment and putting
future growth opportunities at stake. Action to decouple business and
economic growth from resource intensity and environmental impact
has never been more critical to the long-term success of business.
The Size of the Prize
Increasing constraints on carbon emissions and amplified scarcity
of resources such as metals could lead to a loss of future economic
output. These losses can be reduced through greater investment
in technology, increased materials substitution and higher rates of
recycling, among other measures.
For this report, Oxford Economics – a leading provider of global
economic research and consulting to governments and companies
– analysed the economic impact of existing emission reduction
commitments and a possible resource scarcity scenario in some of the
world’s largest economies (US, EU, BRICs and Japan):
−− Resource efficiency: A “peak metals” scenario could put US$ 2
trillion (1.7% of GDP) of economic output at risk in 2030 if major
global economies fail to respond to shortages in the supply of steel
and iron. To meet projected steel demand under such a scenario,
recycled content of world steel would need to increase from 38%
to 51% in 2030.
−− Energy efficiency: The costs associated with agreed and
necessary regulatory constraints around carbon could be up to
US$ 1.8 trillion across major global economies (US, EU, Japan and
BRICs) in 2030. However, with faster innovation, more investment
in technology and greater deployment of advanced technology
in emerging economies, potentially US$ 1 trillion of these losses
could be avoided.
The impact of resource efficiency and sustainability on long-term
growth is backed up by the World Economic Forum’s Global
Competitiveness Report, which this year integrated the management
of natural and social wealth on national competitiveness. According
to the results, India, the US and China, applying these new measures,
fell more than 10 places while Brazil, Kenya and the Philippines rose
more than 10 places on the Sustainable Competitiveness Index when
compared with the standard Global Competitiveness ranking.
In the consumer-focused industries and along their value chains,
individual companies will need to consider making resource efficiency
and environmental competitiveness a core element of their strategy
and business models. This will bring new capabilities and stimulate
innovation with far-reaching implications for efficiency and future
growth. The analysis by Oxford Economics suggests the following:
−− Resource efficiency: Steel costs could reach over 2.3% of
consumer goods industry output in 2030 in the event of a “peak
metals” scenario. Under such a scenario, more resource-efficient
approaches to manufacturing and increased recycling rates would
deliver savings of as much as US$ 46.9 billion in 2030, equivalent
to a more than 50% reduction in steel costs.
More with Less: Scaling Resource Efficiency and Sustainable Consumption
6
−− Energy efficiency: If consumer goods companies took action
to increase their energy efficiency to match those in Canada,
considered the most energy efficient in the world, they could save
US$ 37 billion in 2030, equivalent to 1% of projected sector output
in that year. With a 50% increase in energy costs, the 2030 figure
could be as high as US$ 55.5 billion.
Although this analysis focuses on the consumer goods sector, greater
resource efficiency will create similar opportunities for businesses
across the board.
Organizations that effectively weave resource efficiency into their core
strategy and operations can drive revenue growth, cost reduction,
better risk management and improve brand and reputation.
Challenges of Scale
Despite success to date, a step change is required at a larger scale
and higher speed than current initiatives, policies or strategies will
achieve.
Society remains unable to contain the production of carbon, manage
water scarcity or dampen speculative fluctuations in the price and
availability of basic foodstuff. There has been progress towards
decoupling resource consumption from economic output. However,
technical improvements are not keeping pace with rising consumption.
Similarly, in other areas of concern, current approaches such as
certification of fisheries, forestry, palm oil and soya are delivering
results, but not at the speed required.
Consumers are not demanding more sustainable forms of
consumption. Supply chains are complex. Technology remains
inadequate. Policy incentives remain weak and focused on the short
term. Rather than focus on sustainable consumption, it perhaps
makes more sense to focus on scale where it is already happening.
A Vision of Scale
We live in an era of scale. The US$ 65 trillion global economy is
powered by US$ 210 trillion of financial assets; over five billion mobile
phones are in circulation with penetration rates rising by 35% each
year; and over a period of just two weeks in August 2008, 4.7 billion
people (70% of the world’s population) tuned in to watch the Beijing
Olympics on television.
Four elements demonstrate and drive scale in today’s world: the
reach and mass of citizens and consumer action; business initiatives
and assets; national and city governments’ soft and hard power;
and the connectivity of technology. These elements, particularly with
the consumer and citizen placed at the head of considerations, can
be harnessed to unlock the necessary decoupling of growth from
resource impact.
Solutions for Scale
It is clear from conversations with chief executive officers, government
ministers, business leaders and experts that there is no silver bullet for
achieving sustainable consumption. Different stakeholders will have
different roles to play to trigger scale. However, business can play
both a leading and an enabling role. Leveraging the power and reach
of business to achieve scale, while securing competitive advantage
in a resource constrained world, is not straightforward. It will require
change across three dimensions:
−− Transform demand through interactions with the consumer.
Businesses must reshape demand by making sustainable
consumption more personal and relevant to consumers, leveraging
the power of technology to drive engagement and transparency,
and redesigning products and services to deliver increased value
with fewer resources; thus making the sustainable choice the
default choice.
−− Transform value chains through new business models. Three
essential factors will drive these new business models: visionary
leadership and seamless integration across the organization;
relentless pursuit of a range of strategic options to eliminate
inefficiency, tap into new markets and create an ecosystem of
collaboration and scale around key activities that are beyond the
remit or reach of any one organization; and shaping finance and
investments to enable a longer term perspective in markets and
cash-flows.
−− Transform the rules of the game through public-private
partnerships. Business leaders have a pivotal role to play in
creating substantive policy interactions with governments to unlock
the barriers and inertia in the rules of the game, establishing the
framework for a sustainable economy. Key areas where business
leaders can help shape the policy landscape will be the greening
of public procurement, reform of subsidies that are harmful to the
economy and environment, improving regional trade agreements,
and measuring progress and the role of long-term investments.
A Commitment to Move Together
Judging from the series of conversations over the past six months,
chief executive officers care about making sustainable growth and
consumption mainstream and are committed to taking action to scale
up sustainable consumption. Three actions were discussed during
this project where companies could take a leadership role and move
forward with commitments to scale up actions across demand, supply
and rules of the game:
1. Demand: Collaboration is needed to incentivize sustainable
consumption and make it the simplest and cheapest choice for
consumers. Technology and brands will be critical enablers of
consumer and business engagement.
2. Supply: A concerted, scalable plan of action across key areas of
supply will enable multiple suppliers, manufacturers and retailers to
aggregate their sustainability efforts and provide greater clarity to
consumers.
3. Rules of the Game: More sustained public-private partnerships
will increase trust and create the right enabling environment for the
sustainable choice to become the default choice for consumers
and businesses alike.
More with Less: Scaling Sustainable Consumption and Resource Efficiency
7 More with Less: Scaling Resource Efficiency and Sustainable Consumption
This report focuses on how consumption can be made more
sustainable through decoupling growth from environmental impact at
the scale and speed required. It builds on four years of engagement
by the World Economic Forum with leading businesses around the
issue of sustainable consumption. Through this engagement with chief
executive officers, business leaders and experts, the report aims to
answer six key questions:
1. What are the key trends in sustainable consumption?
2. What is the size of the opportunity for countries, companies and
consumers?
3. What are the barriers to scaling existing models of sustainable
consumption?
4. What does getting to scale look like?
5. What new solutions are needed to get to scale in sustainable
consumption?
6. How can we achieve scale by working collectively and creating
action on new fronts?
A systems view of sustainable consumption has been taken
throughout the report. Rather than focusing just on the demand
side, the discussions that informed this work have taken the lens of
consumer engagement (demand), value chains and upstream action
(supply) and the policies and enabling environment to accelerate
change (rules of the game). However, in this report the narrative always
begins with demand as the consumer and customer are at the heart of
sustainable consumption.
Table 1: Report structure
Introduction
8More with Less: Scaling Resource Efficiency and Sustainable Consumption
1. The Imperative for Action
Summary
−− The imperative to sever the connection between
economic growth and resource intensity is critical
−− Sustainability concerns are changing industry
economics, as well as the forces of demand, supply and
the “rules of the game”
−− These trends are likely to exacerbate an already
volatile business environment, putting future growth
opportunities at stake
In the last 30 years global life expectancy has risen by
six years,6 global GDP has increased six fold7 and the
proportion of people living in extreme poverty has halved.8
However, the resource-dependent models that enabled
these achievements can no longer be sustained, nor can
we expect further advances like this in times of sluggish
economic growth and increased societal turbulence.
Continued growth is needed, but it can no longer be at the
expense of the environment and scarce resources.
Resource and environmental constraints are already
beginning to shape industry economics. Business-as-usual
approaches to supply, demand and rules of the game are
likely to create a major gap between what is needed for
growth and the ability of our resource base and governance
and policy structures to sustain prosperity.
Demand: Billions of new consumers in
emerging markets present an opportunity for
more sustainable consumption, yet uptake of
sustainable products by consumers in more
mature markets is limited
Rapid urbanization in emerging markets
−− The global population is projected to reach over nine
billion people by 2050.9
−− Due to continuing urbanization, the proportion of the
population living in cities will increase from 50% at
present to almost 70% by 2050 (See Figure 1.1).10
Business implication: As cities generate 70% of the
world’s CO2 emissions and consume over 75% of the
earth’s resources,11 they represent a central hub for the
solutions needed to address challenges of supply, demand
and rules of the game.
Given population growth, the
limitations on the planet, changes
in the climate, and the scarcity of
water and other essential supplies,
responsible consumption is
critical.
Sir Martin Sorrell, Chief Executive Officer, WPP
Figure 1.1: Growth in urbanization (1950-2010)
Source: UN World Urbanization Prospects, 2009
9 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Three billion new middle class consumers
by 2030
−− Each year until 2030, at least 150 million
people will be entering the middle class
(in purchasing power parity terms).12 If
this projection plays out, over three billion
people will have joined the global middle
class by 2030, bringing almost 60% of the
world’s population into a middle income
bracket (See Figure 1.2). Over the same
period, energy demand is projected to
increase by 40%.12a
Business implication: Opportunities exist
for business to capture these new markets –
using new business models based on value
delivered and scarcity of resources.
Growing appetite for sustainable
consumption in emerging markets, while
mature markets lag
−− A recent National Geographic survey
suggests that consumers in emerging
markets are increasingly inclined to buy
environmentally friendly goods; 45% of
Chinese respondents said they were
willing to pay a 5-10% premium for green
products.13
−− In developed markets, aspirations and
actions are often mismatched. A 2011
European Commission survey suggests
that 72% of European respondents were
willing to buy green products. However,
only 17% actually did so in the month
preceding the survey (See Figure 1.3).14
−− At a global level, Aegis Media’s Consumer
Connections Study surveyed 10,000
people in over 40 countries and revealed a
similar trend. While 50% of those surveyed
stated they do everything they can to
protect the environment, fewer were
willing to pay a premium for organic and
fair trade products. Only 12% were willing
to take measures such as avoiding air
travel (See Figure 1.4).15
Business implication: In mature markets,
identifying levers to converge citizen and
consumer attitudes will provide growth
potential and opportunities for product
differentiation. In emerging markets,
capitalizing on the latent demand presents
opportunities for business to leapfrog to more
sustainable forms of consumption.
Consumer preferences are driven by price,
not sustainability
−− Cost continues to be the largest influence
in consumer behaviour.
−− 88% of consumers surveyed by Accenture
see cost reductions as the main driver for
better energy practices in their homes;
only 66% also value the environmental
benefits (See Figure 1.5).
−− Consumers increasingly want companies
to behave more responsibly and provide
sustainable products at the right price and
performance.
Business implication: As real earnings are
squeezed by a prolonged recession, any
price premium for addressing resource and
environmental challenges will restrict the
growth of products and services. Reaching
price parity or delivering more cost effective
alternatives (such as services instead of goods
or collaborative consumption) could create
lucrative new markets.
The Imperative for Action
Figure 1.2: Growth in the global middle class (2009-2030)
Source: OECD, 2010
Note: Middle class is defined as people with expenditures ranging from US$ 10 -100 per day (PPP)
Figure 1.3: Misalignment between consumer attitudes and action in Europe
Source: European Commission, 2011
Note: 26,825 inidivuals from different social and demographic groups responded to this survey
Figure 1.4: The gap between consumer attitudes and behaviours at a global level
Source: Aegis Media, 2011
Note: 10,000 individuals from 40 different countries responded to this survey
10More with Less: Scaling Resource Efficiency and Sustainable Consumption
Supply: Price volatility and
squeezed supply
Commodity price volatility creates
uncertainty and limits growth
−− Short-term volatility of key commodity
prices remains high. In July 2011, cotton
prices were the highest they have been
in about 300 years, at 290% higher than
those of the March 2009 mid-recession
low (See Figure 1.6).17a
−− Between 2000 and 2010, prices of widely
used commodities such as cotton, palm
oil and cocoa grew by 75%, 230% and
246%, respectively. In July 2011, cotton
prices were the highest they have been in
300 years.
Business implication: This volatility presents
uncertainty and rising costs for companies
and governments alike. The impact of these
variations could, however, be limited through
decoupling growth from raw material intensity
across the value chain.
Water supply will not keep up with demand
under business-as-usual
Analysis suggests that the world will face
a 40% global shortfall between forecast
demand and current estimates of available
supply by 2030 (See Figure 1.7).18
Business implications: Water is fundamental
to survival and key to business operations.
Pre-emptive, locally-relevant actions will be
required across the value chain to secure the
flow of water needed for long-term growth.
The Imperative for Action
Figure 1.5: Consumer motivations for using electricity management programmes
Source: Accenture End-Consumer Observatory, 2011
Percentage of consumers surveyed
Figure 1.6: Palm oil, cotton, cocoa price volatility (1981-2011)
1981 1986 1991 1996 2001 2006 2011
Source: IndexMundi, 2011
Figure 1.7: Water supply and demand (2010-2030)
Source: Water Resources Group, 2009
11 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Rules of the Game: Markets,
innovation drivers and society’s
resource-dependent model of
growth show change is needed at
a systems level
Some subsidies continue to distort markets
and investment portfolios
−− In 2010, US$ 409 billion of subsidies were
provided to assist fossil fuel consumption
globally.19
−− An IEA study estimates that by 2020 the
continued use of such subsidies will boost
global oil consumption by 3.7 million
barrels per day, resulting in an additional
1.7 gigatonnes of CO2 emissions (See
Figure 1.8).20
Business implications: Amid growing
pressure for the relaxation of such
subsidies, companies will need to ensure
their investments and infrastructure can
be sustained, both in terms of their area of
activity and for long-term viability.
Limited growth in environmental innovation
−− Between 1999 and 2009 on average only
2.7% of all applications for technology
patents under the Patent Cooperation
Treaty were for environmental innovations
(see Figure 1.9).21
−− Despite the creation of patent commons
such as the GreenXchange, there have
been few breakthrough changes in recent
years.
Business implications: Leadership and
investment are required in environmental
innovation to create solutions and
infrastructure to mainstream sustainable
growth.
GDP growth, resource extraction and
environmental impact continue to be
linked
−− Historical models of GDP growth have
depended on fossil fuel consumption, the
extraction of material resources,22 and
growing carbon dioxide emissions, which
which has led to negative environmental
impacts across the world.
−− Despite innovations, resource efficiency
has not improved enough to counter the
impact of growth in demand (see Figure
1.10).
Business implications: A paradigm shift is
required in business models to enable growth
through resource efficiency, closed loops and
decoupling at a systems level.
Trends across demand, supply and the rules
of the game, as summarized above, show
that current models of managing supply-
side constraints and growth are inadequate.
There is an increasing awareness among
chief executive officers and government
leaders that action is urgently needed to
decouple growth from resource intensity and
environmental impact (see Box 1.1). This
represents a core strategic imperative for any
company that intends to thrive and grow in
the years ahead.
The Imperative for Action
Figure 1.8: Global fossil fuel subsidies (2007-2010)
Source: International Energy Agency, 2011
Figure 1.9: Environmental and non-environmental patent applications (1999-2009)
Source: OECD, 2011
Note: For the purposes of this analysis, patent applications were considered environmental if they were in the following fields: Pollution
abatement, waste management, renewable energy, electric & hybrid cars, and energy efficiency in building and lighting
Figure 1.10: Global GDP and resources extraction (1980-2010)
Sources: World Bank, 2011.; World Steel Association, 2011.; BP, 2011
12More with Less: Scaling Resource Efficiency and Sustainable Consumption
What is decoupling?
Decoupling is the process of breaking the links between economic
growth and environmental degradation. It can enable sustained
advancement in economic growth and quality of life, while
simultaneously reducing resource extraction and its environmental
impacts.17
We have thus far seen two different types of decoupling: resource
decoupling, where the focus is on material throughput, and impact
decoupling, which covers actual environmental damage (See Figure
1.11).
−− Resource decoupling is reducing the resources used to generate
a unit of GDP.23 For example, between 1990 and 2005, the OECD
reduced the fuel used per unit of GDP by 19%.24
−− Impact decoupling is reducing the negative environmental
impacts of GDP.25 For example, between 1990 and 2005, the
United Kingdom reduced its nitrogen oxide emissions per unit of
GDP by 54%.26
Despite all the undoubted progress that has been made around issues
like fuel efficiency, total resource consumption continues to grow and
impact on the environment continues to be negative. In most cases,
efficiency actually increases total resource use with consumers buying
more cars or driving for longer distances. For example, over the last
10 years or so, 166 million additional passenger cars have entered
the roads across the OECD.27 Any improvements made in resource
efficiency should also account for increases in demand to ensure lower
The Imperative for Action
Figure 1.11: Decoupling
Source: UNEP, 2011
A number of trends are
coming together: the rapid
growth of people on the
planet and, with it, a need
for more energy and more
efficient food production.
History will judge us not just
by what we produce but
also by what we preserve. It
is time to rethink tomorrow.
Steen Riisgaard, President and Chief Executive
Officer, Novozymes
13 More with Less: Scaling Resource Efficiency and Sustainable Consumption
The Imperative for Action
$37bn
the savings generated
by the consumer goods
industry in 2030
through energy
efficiency!
72%
of Europeans are
prepared to pay a
premium for
green
products
35%
the annual growth
in global mobile
phone
subscriptions
$21bn
value of the e-waste
recovery market
in 2020
y market
80%
!
the an
products y
in 202
$2tr
the potential savings
generated by adapting
to resource
constraints
in 2030
e waste
$409bn
of fossil fuel
subsidies were
distributed globally
In 2010
p
th
6th
Ranking of the top 50
consumer goods
Companies and their value
chains by CO2 emissions
when compared
with countries
of emerging market
consumers say they have
more trust in a brand that
is ethically and socially
responsible
of
pr
Only 2.7%
of all applications
for technology
patents are for
environmental
innovations
s
e
150m
the number of
people joining the
global middle class
each year until
2030
oods
0
y
in
the
1.2bn
people live
in water
scarcity
290%
the increase in
cotton prices
between
March 2009 and
July 2011
54 to 179%
the increase
in agricultural yields
if sustainable
farming practices
are
adopted
14More with Less: Scaling Resource Efficiency and Sustainable Consumption
2. The Size of the Prize
Summary
−− Rethinking business for resource and environmental constraints
creates significant opportunity, but there are also risks and costs
associated with inaction
−− At the macro level, preparing for a resource-constrained economy
across carbon and key metals such as steel and iron could
preserve US$ 0.9-1.9 trillion in major economy output in 2030, in
2010 US dollars
−− More proactive seeking of efficiencies by consumer goods firms
could result in savings of US$ 7.1 billion in 2020 (equivalent to
roughly 0.3% of projected sector output in that year), rising to US$
37 billion in 2030
−− Long-term growth with reduced resource impact depends on
action today from individual companies: optimizing supply chains
and efficiency, creating new growth opportunities through existing
capabilities, innovating to create new business models and
partnering with key stakeholders
Opportunities at a Global Level
Analysis by Oxford Economics of the economic impact of existing
emission reduction commitments and a possible resource scarcity
scenario in the major economies (US, EU, Japan and BRICs) suggests:
−− Resource efficiency: US$ 2 trillion (1.7% of GDP) of economic
output is at risk in 2030 if a “peak metals” scenario emerges and
the response is “business as usual” (i.e. business behaviour and
regulatory measures in major global economies continue in line
with current practices and do not adapt effectively to shortages
of supply of steel and iron). To meet demand in such a scenario,
recycled content of world steel would need to increase from 38%
to 51% by 2030.
−− Energy efficiency: The economic losses imposed by already
agreed constraints on carbon emissions could be up to US$ 1.8
trillion across major global economies (US, EU, Japan and BRICs)
in 2030 under business-as-usual assumptions. However, with a
“progressive” response, including targeted policy and regulatory
measures, faster innovation, more investment in technology
and greater deployment of advanced technology in emerging
economies, potentially US$ 1 trillion of these potential losses could
be avoided.
This analysis reflects the output that could be preserved in 2030.
In general terms, the earlier that companies and countries embed
resource efficiency into the core policies and strategies, the more
gradual the changes. The later companies and governments respond,
the greater the magnitude of change and disruption. Furthermore, this
analysis reflects the value at stake in relation to only carbon, steel and
iron. If the analysis was extended to other key resources such as water
the numbers could be much larger.
This data is corroborated by the Forum’s Global Competitiveness
Report, which this year integrated the management of natural
and social wealth into its rankings in the form of a Sustainable
Competitiveness Index. The impact on national rankings of introducing
new measures as drivers of long-term competitiveness has been in
many instances dramatic, with long-time leaders falling down the
table and others emerging as potential winners in the long-term race
for economic health and competitiveness. India, the US and China,
applying these new measures, all fell more than 10 places last year,
while Brazil, Kenya and the Philippines rose more than 10 places
on the Sustainable Competitiveness Index when compared with the
standard competitiveness ranking.28
The goal has to be managing resources – materials, energy, food,
forests and water – better across the board, using an integrated
approach to environmental strategy and action. Some of the additional
opportunities and value at stake from other resources are highlighted in
Box 2.1.
Making your business
sustainable in today’s world
is an absolute imperative.
The business case for
sustainable growth is
clearer than ever and the
urgency of the issues we
face means that business
leaders have no choice but
to act.
Paul Polman, Chief Executive Officer, Unilever
15 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Box 2.1: The Value at Stake from Investments in
Agriculture, Forests and Water
Agriculture and Food: According to the United Nations Environmental
Programme (UNEP), sustainable or green farming practices could
increase yields between 54% and 179%, generating an additional
US$ 1.5 trillion to US$ 6.4 trillion for the global economy.29 Increased
crop yields mean that farmers not only have enough food to feed
themselves and their families, but they also have a surplus that they
can sell at local markets, promoting economic growth. Estimates
indicate that for every 10% increase in farm yields, the poverty rate can
be reduced by 7% in Africa and by more than 5% in Asia. Additional
opportunities lie in limiting crop and food waste.30
Forests: Halving deforestation rates by 2030 would reduce global
greenhouse gas emissions by 1.5- 2.7 gigatonnes of CO2 per year (equivalent to halving the CO2 emissions of the US in 2008), thereby
avoiding some of the damages associated with climate change
estimated at more than US$ 3.7 trillion in net present value terms.31
Water: Green investments of US$ 100-300 billion per year over
2010-2050 could reduce demand for water by about a fifth by 2050,
according to UNEP.32 This would reduce pressure on groundwater and
surface water in both the short and long term, and create a sustainable
supply for both citizens and businesses. In India, the National Rural
Employment Guarantee Act underwrites at least 100 days of paid
work for rural households; under the Act, close to US$ 6.4 billion is
invested in water conservation, irrigation and land development. This
investment has generated more than three billion working days worth
of employment, benefiting close to 60 million households.33
Opportunities at a National Level
At a national level, resource efficiency can secure the growth of new
markets, industries and jobs. Based on existing studies, we can see
potential for more sustainable growth in both developed and emerging
markets.
−− In the Republic of Korea, the Green New Deal is expected
to create 960,000 jobs while the country’s policy of Extended
Producer Responsibility (for products such as tyres and packaging
such as paper and glass) is expected to have an economic benefit
of US$ 1.6 billion.34
−− Brazil’s recycling already generates returns of US$ 2 billion a year
while avoiding ten million tonnes of greenhouse gas emissions
and landfill waste, according to some estimates. A fully recycling
economy in Brazil could be worth 0.3% of GDP.35
−− In India, a drive towards resource efficiency through the
development of a green sector could generate 821,000 new jobs
by 2020 and boost growth. With appropriate regulation, skills
development, investment incentives and technology spillovers, this
sector could raise India’s GDP by 458 billion Indian rupees (US$ 10
billion) by 2020, 0.3% above the current trajectory.36
−− In the United Kingdom, savings opportunities from low- or no-
cost investments in resource efficiency have been estimated at
a total of about US$ 35.9 billion, with US$ 28.1 billion savings
opportunity in waste and US$ 6.2 billion savings opportunity in
energy. Savings opportunities with a payback greater than one
year have been estimated at around US$ 51.5 billion. This gives a
total opportunity of about US$ 86 billion.37
The Size of the Prize for the Consumer Goods
Industry
In the consumer goods industry, individual companies will
need to consider making resource efficiency and environmental
competitiveness a core element of their strategy and business models.
This will bring new capabilities and stimulate innovation with far-
reaching implications for efficiency and future growth. The analysis by
Oxford Economics suggests that:
−− Resource efficiency: Steel costs could reach over 2.3% of
consumer goods industry output by 2030 in the event of a
resource scarcity scenario. More resource efficient approaches and
increased recycling rates would deliver savings of as much as US$
46.9 billion in 2030, equivalent to a more than 50% reduction in
steel costs.
−− Energy efficiency: Energy costs are projected to be 8% of
consumer goods industry output in 2010. If consumer goods
companies took action to increase their energy efficiency to match
those in Canada, considered the most energy efficient in the world,
they could save US$ 7.1 billion in 2020, and US$ 37 billion in
2030, a cost savings equivalent to 1% of total sector output in that
year. If energy costs increase by 50% (which is quite possible given
current geopolitical stresses and rising demand), the 2030 figure
could be as high as US$ 55.5 billion.
Although the analysis focuses on the consumer goods sector, greater
resource efficiency will create opportunities for businesses across the
board. For details on assumptions used for the macro and consumer
industry analysis, please see the Appendices.
The SIze of Prize
Sustainability is
synonymous with the
prudent use of our natural
resources, which for all
practical purposes, is a
primary objective of our
business.
William V. Hickey, President and Chief
Executive Officer, Sealed Air
The size of the opportunity available and actually realized will depend
on a range of uncertainties. For example, regulation and targets
could become increasingly stringent, or new sources of supply and
innovation could emerge. The size of the opportunities also depends
on each major world economy’s ability to switch to more resource-
efficient technologies and the ability of companies to innovate.
However, the bottom line is that the greater the scale of action taken
now to prepare for an uncertain future, the greater the opportunity and
benefits in terms of preserving economic growth.
16More with Less: Scaling Resource Efficiency and Sustainable Consumption
The SIze of Prize
Driving Competitive Advantage at a Company
Level
For individual businesses, the emerging resource constraints have
urgent implications that demand action. By adjusting business
practices and products to be more resource efficient, companies can
create new business opportunities and gain the benefits of improving
the environment at the same time.
To survive in the long term, organizations must weave solutions to
resource scarcity and environmental challenges into the core of their
strategy and operating models. This will enable companies to create
the new capabilities and process innovations they need to stay in
control of costs and revenues (see Figure 2.1).
Revenue: In a more resource-constrained world, companies can
protect revenue by closely examining and responding to shifts in
consumer attitudes, particularly in emerging markets and pre-empting
regulatory pressures.
In the last eight years, growth in commodity prices has undone 100 years of
declining prices. Price volatility is now greater than at any time since the
1970s and is expected to remain so for at least the next 20 years.38
Wal-Mart plans to reduce packaging by 5% by 2013, with an expected net
saving of US$ 3.4 billion. If the retailer extended packaging reductions to its
entire supply chain, a saving of US$ 11 billion could be achieved.40
Xerox saved US$ 400 million in 2009 (85% of its net income) by designing for
and using remanufactured parts in its production lines, eliminating 42% of
carbon from equipment production.41
The global market value of low-carbon environmental goods and services
industry was over 3 trillion Pound sterling (US$ 4.5 trillion) in 2007-2008. The
United Kingdom industry employs around 880, 000 people.42
Innovative business models such as car sharing (e.g. Zipcar) have significant
environmental impact and are expected to be a major market with about 10
million car-sharing members expected in the US by 2016.43
80% of emerging market consumers say they have more trust in a brand that
is ethically and socially responsible.44
Fast-moving consumer goods companies that do not mitigate against risks
posed by environmental pressures, including climate change policy, water
scarcity and deforestation, will risk up to 47% of their earnings before tax and
interest by 2018.45
The shoe company Puma has created an environmental profit and loss
account that shows that the direct ecological impact of its operations equates
to 7.2 million euros (US$ 9.6 million) but an additional 87.2 euros (US$ 116.7
million) in equivalent costs falls across four tiers of the supply chain.39
Figure 2.1: Key value drivers from resource constraints
Resource and environmental issues also open doors to new markets
and increase revenues for forward-looking companies. Estimates
suggest that the global market value of low-carbon environmental
goods and services in 2007-2008, for example, was over 3 trillion
Pound sterling (US$ 4.5 trillion) and is expected to grow by half by
2015.46
Costs: The threat to costs today comes from inefficiencies and waste
across the supply chain. A cost increase in commodities such as oil,
coal, wheat and cotton has more impact on consumer goods than any
other industry. Recent analysis suggests that a 10% increase in the
price of these commodities corresponds to a 13% impact on earnings
before interest, tax, depreciation and amortization.47 By tackling
this situation head on, companies can make very worthwhile cost
reductions.
In the future, greater pricing of externalities and intensifying
competition for resources are both likely and will drive up company
overheads. Shoe company Puma and its parent company PPR have
responded, for example, by integrating an economic valuation of
their environmental impact to create an environmental profit and loss
account.
Source: Various sources, Accenture analysis, 2011.
17 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Creating Value for the Consumer
Resource efficiency creates value not just at a macro or national
level, but the benefits are passed down to the individual consumer.
New business models can include rewarding consumers for specific
behaviours, and/or offering cost savings and other financial incentives
on greener products. As countries and companies scale up their
efforts, these benefits will be amplified.
Rewarding sustainable consumption: Consumers can extract a
lot of value from their waste goods through recycling. RecycleBank,
for example, creates a multistakeholder win-win by bringing together
consumers, communities, municipalities and consumer goods in
a range of programmes.48 Consumers can gain reward points for
curbside recycling, for using the RecycleBank digital platform, as well
as for walking and cycling in a congested city. The amount of recycling
done is monitored using radio frequency identifier (RFID) technology.
Mobile phones are used to track how much walking and cycling
people do, thereby reducing pollution and congestion. The points that
reward these responsible behaviours can be redeemed for discounts
and other benefits from companies such as S. C. Johnson & Son,
The Coca Cola Company, Unilever and Marks & Spencer. In the US,
Recyclebank members save, on average, upwards of US$ 133 a year
by taking everyday green actions, demonstrating that it can pay to be
sustainable at a corporate and individual level.49
Creating cost savings: Online market places can reduce both
costs and resource use, and create opportunities for collaborative
consumption, not just between consumers but also between
consumers and businesses. Shiply, for example, is a company that
runs an online market place for couriers. Consumers can decrease
their costs of shipment by up to 75% by shopping around on the site,
and small courier firms that are already taking items on a given route
can expand their load to reduce their carbon per kilogram quotient.50
True environmental
advances come when
companies take a holistic
approach to responsibility
and commit to progress in
the long term – when they
consider opportunities from
products to processes to
power sources.
Fisk Johnson, Chairman and Chief Executive
Officer, SC Johnson
The SIze of Prize
18More with Less: Scaling Resource Efficiency and Sustainable Consumption
3. The Challenges of Scale
Summary
The last 30 years have seen successes in scaling up solutions to
environmental challenges, often involving complex sets of stakeholders
with conflicting interests, for example in addressing acid rain and
chlorofluorocarbons (CFCs)
−− Despite this progress, society is still not equipped to fully address
the challenges of sustainable consumption of finite resources.
Solutions such as certification of fisheries or forest products
are unlikely to decouple growth from resource intensity and
environmental impact at the scale and speed needed
−− Barriers to scale include weak consumer pull, supply chain
complexity, and inadequate technology, limited policy incentives
and short-termism
Stakeholders have jointly created some successful responses to
resource scarcity and environmental degradation. Regulatory driven
multistakeholder actions have tackled systems challenges like acid
rain and CFCs. Currently, we are seeing bottom-up initiatives led by
business, such as the Forest Stewardship Council and the Roundtable
on Sustainable Palm Oil.
Tackling Systems Challenges:
Examples from Recent History
US Acid Rain Programme and Cross-State
Air Pollution Rule
It was proven in 1966 that sulphur dioxide
(SO2) and nitrogen oxide (NOX) released
during the combustion of fossil fuels were key
contributors to acid rain and hence damaging
US forests and freshwater ecosystems. In
response, the US Environmental Protection
Agency (EPA) spearheaded the development
of a cap and trade market for SO2.51 Written
into the US Clean Air Act in 1990, it required
energy businesses to reduce their SO2
emissions by half, but let them decide how
to do it. Businesses were incentivized to act
by the ability to sell extra allowances if their
emissions reduced by more than required.
Following the success of this programme,
a similar approach for NOX emissions was
launched in 2003.52 These market-led
initiatives have contributed to a reduction in
SO2 and NOX atmospheric concentrations of
76% and 50%, respectively (see Figure. 3.1).53
Figure 3.1: SO2 and NOX atmospheric concentrations in the US (1980-2009
Source: US Environmental Protection Agency, 2011
“The first step towards
addressing the barriers to
sustainable consumption is
to articulate ambitious goals
and not merely incremental
ones. The second step is to
adopt transformational
technologies and
techniques since business
as usual will not give radical
results.”
Kris Gopalakrishnan, Executive Co-Chairman,
Infosys
19 More with Less: Scaling Resource Efficiency and Sustainable Consumption
The Montreal Protocol
Since their invention in 1928, CFCs were used
to increase the performance of refrigerators,
aerosols and circuit board cleaners.
However, their severe ozone depleting
impacts were detected in the 1970s.
This sparked an international regulatory
response. Governments joined in multilateral
environmental agreements to eradicate their
use, encouraging business to develop new
alternatives. These actions led to critical
stabilization and reduction of CFC emissions
(see Figure. 3.2).54
Current Initiatives
The Forest Stewardship Council (FSC) and the
Roundtable for Sustainable Palm Oil (RSPO)
are two examples of successful initiatives
created over the last 20 years to establish
sustainable sources of essential raw materials,
create new supply chains and commercial
models, and drive demand.
FSC: Global deforestation rates reached
a peak of 8.3 million hectares per year
in the 1990s.55 In response, concerned
business representatives, social groups and
environmental organizations formed the FSC
to improve forest management worldwide.
The FSC’s notion that higher profits would
incentivize responsible forest management
has been effective. In 15 years the area of
FSC-certified forest has grown to 144 million
hectares (see Figure. 3.3).
RSPO: Global demand for palm oil has
grown annually at 13% per year since
1990.56 However, it can only be cultivated
in tropical regions.57 Producing enough to
meet rising demand has contributed to acute
deforestation in Indonesia and Malaysia.
Companies such as Unilever and Nestlé from
the private sector and NGOs such as WWF
established the RSPO to promote low impact
palm oil cultivation. Other corporate members
include DuPont, Kraft, Marks & Spencer,
Metro Group, S. C. Johnson & Son and
Tesco. In seven years the RSPO has certified
10% of all palm oil production as sustainable
(see Figure. 3.4), and with time-bound
commitments from major palm oil producers
its success looks set to continue.
These initiatives are important steps in the
process of scale. But forward projections of
FSC-certified timber and certified sustainable
palm oil show that in the next 10 years supply
from these sources is likely to remain modest.
If trends over the last five years continue FSC
will account for roughly 12% of the market in
2020.58 RSPO-certified palm oil could make
up around 20% of the total supply (based on
existing company commitments and some
uptake in key emerging markets) in 2020.59
Such proportions are not enough to make
sustainable products mainstream and alone
are unlikely to have the impact needed.
However, in combination with approaches
that aim for system changes, they could
help to scale up decoupling and sustainable
consumption.
The Challenges of Scale
Figure 3.2: Global CFC emissions (1986-2009)
Source: UNEP, 2011
Figure 3.3: FSC-certified forest area by forest type (1995-2010)
Source: Forest Stewardship Council, 2011
(million he
ctares
)
Figure 3.4: RSPO sustainable palm oil supply (2008-2011)
Source: RSPO, 2011
20More with Less: Scaling Resource Efficiency and Sustainable Consumption
The Challenges of Scale
The Barriers to Scale
Sustainable consumption has reached its own “valley of death”
– stuck between proof of concept and reaching mass markets
and scale. Consumers today are offered greener choices through
dematerialization, rentalized markets, renewable power, environmental
standards and other innovations, but examples remain isolated.
Current and past efforts are not yielding solutions at the right scale,
creating a serious case of “pilot paralysis”. Society remains unable
to contain its production of carbon, manage the scarcity of water, or
dampen speculative fluctuations in the price and availability of basic
foodstuff. While political and business leaders increasingly recognize
the challenge, we are still not equipped to deliver change at scale.
Transformation is needed, but we are stuck in incremental change.
Interviews with chief executive officers and research conducted for
this study have uncovered a common set of barriers to scale across
the sectors represented in this project (e.g. palm oil, cotton, electronic
waste, plastics and forests). The five barriers identified have their roots
in demand, supply and the rules of the game (see Figure 3.5)
Society needs sustainable
consumption but each
customer has a different
response. A lot of people
say ‘we support your
activities’ but this is often
not matched by action in our
stores.
Takeshi Niinami, President and Chief Executive
Officer, Lawson
Demand Low consumer pull and engagement: Limited pull all along the value chain from consumers often due to
cost and convenience and confusion caused by mixed messaging and the proliferation of ecolabels.
Supply
Insufficient technology/infrastructure: In some cases the technology or infrastructure is not yet in place for
scaling up initiatives. In other cases the challenge is to ensure best practices are used across the board.
Complex supply chains: Multiple links in supply chains, and inability to track components across them,
present difficulties in accurately assessing the scale of challenges and the ability to assure sustainable
sourcing.
Rules of
the game
Perverse subsidies and limited trade incentives: Trade systems and tariffs rarely differentiate between
unsustainable and more sustainable alternatives. Perverse subsidies and mixed market signals are also a
barrier.
Short-termism, lack of a systems view and traction in emerging markets: Lack of long-term focus among
governments, business and investors, and a continued focus on the symptoms rather than systemic
challenges with limited traction in emerging markets, continue to hamper progress.
Figure 3.5: Barriers to scale
1. Demand: Low consumer pull and engagement. Consumers
say “buying green” matters to them, but demand for sustainable
products from consumers, companies and governments is low.
The lack of consumer pull denies business and governments the
license to scale up these products and solutions. So, they remain
a fraction of total revenue streams or a peripheral policy platform.
For example, in 2011, purchases of certified sustainable palm oil
accounted for just over half the total certified sustainable palm
oil produced, with the rest remaining unsold (see Figure 3.6).60
Companies said their demand for palm oil was influenced by low
consumer visibility (palm oil is a “hidden” ingredient found in over
50% of packaged goods in supermarkets).61 Low visibility means
low-consumer pull; combine this with the additional costs of
certified sustainable palm oil and companies lose interest.
Even worse, consumers are being alienated by mixed messaging
and a proliferation of standards and green labels (see Figures
3.7 and 3.8).62 Survey results show that despite the presence of
eco-labels, 70% of British consumers remain uncertain about the
environmental performance of the products they buy.63 Consumers
want the new products, services, cost savings and value delivered
by radical thinking from the brands they trust. But they also need
greater clarity and transparency around labelling systems, and they
need competitive pricing.
2. Supply: Insufficient technology and infrastructure. To transition
to a world in which growth is delinked from resource intensity and
negative environmental impacts, technologies and infrastructure
are needed that are currently capital intensive and/or not used at
scale.
Many of the technologies needed for resource efficiency and more
sustainable forms of consumption are already available, as can
be seen by the range of options for energy efficiency, recycling,
generating renewable energy, and sustainable farming and forestry
techniques. But to jump-start the shift to a resource-efficient
economy, these technologies need to be improved to make them
relevant, affordable and accessible across industries, geographies
and locally.
Consider the recycling of e-waste. The Massachusetts Institute of
Technology (MIT) recently noted that only 13 facilities in the world
are certified to melt down and recycle the cathode ray tubes of
old television sets, and all are in Asia64. Electronic waste therefore
needs to travel across multiple continents for disassembly, and
then certain parts are sent off to various certified locations around
the world. While this process focuses on price and competitive
advantage, it does mean a significant amount of resources
are consumed during the recycling process, putting the net
environmental impact of recycling into question.
21 More with Less: Scaling Resource Efficiency and Sustainable Consumption
The Challenges of Scale
3. Supply: Complex supply chains. Supply
chains are becoming even more global
and interdependent, and increasingly
complex. Multiple layers can lower visibility
across supply chains, so it is harder to
assure the implementation, certification
and segregation of sustainably sourced
inputs. This barrier is particularly prevalent
in commodities. In the cotton industry, for
example, there are eight stages between
the field and shop floor (see Figure 3.9).65
During the production stages there are
many opportunities for different types
of cotton to be blended, thus limiting
assurance around the sustainable
sourcing credentials.
4. Rules of the game: Subsidies and
limited trade incentives. Financial
support packages for fossil fuels, transport
and water continue to distort markets in
favour of unsustainable consumption and
growth. Arguably, many (not all) subsidies
create a negative price for resources that
are increasingly scarce or more costly to
extract, making such subsidies harmful
to both the economy and environment.
Furthermore, trade systems and tariffs
rarely differentiate between unsustainable
and more sustainable alternatives.
Better understanding of the true cost of
unsustainable products could deliver an
increase of 7-13% in the traded volumes
of sustainable products.66
5. Rules of the game: Short-termism,
lack of a systems view and traction in
emerging markets. Current approaches
to boost sustainable consumption too
often fail to address the central issues
because of short-term thinking, lack of a
systems view and limited traction in fast-
growing markets.
Figure 3.6: RSPO sustainable palm oil supply and sales (2008-2011)
Source: RSPO, 2011
Source: XKCD.com
Figure 3.7: How standards proliferate
Figure 3.8: The proliferation of standards and labels (1950-2011)
Source: Ecolabel Index, 2011
Note: This graph records the total number of eco-labels recognized by the Ecolabel Index
Figure 3.9: Stages in the cotton value chain, stages in general public awareness (in green).
22More with Less: Scaling Resource Efficiency and Sustainable Consumption
The Challenges of Scale
Figure 3.10: Timeframes for sustainability targets of the FTSE 100
Source: The Carbon Trust, 2011
Short-termism: A recent study showed that
55% of FTSE 100 company sustainability
targets were to be achieved within 1-2
year timeframes while only 4% looked
beyond 2030 (see Figure. 3.10).67 These
quick wins and short-term returns must be
complemented by longer term planning and
goals to drive up sustained growth.68 As
Alistair Ulph, Acting Director of the Sustainable
Consumption Institute, suggests: “Without
a long term framework, it is difficult to justify
short-term costs to the general public”.
Lack of a systems view: Business,
government and society more broadly tend
to overlook the interdependences that exist
between different challenges. They lack the
systems view that is needed when designing
solutions. Consider bioplastics, which is a
promising and viable solution. If all plastics
in the world were replaced by bioplastics
(assuming necessary improvements in quality,
performance and cost) and the energy used
in the process came from renewable sources,
the fossil fuel savings would be equivalent to
approximately 3.49 million barrels of oil a day.
That is 4% of the world’s fossil fuel usage.
However, if only food feedstocks were used in
making the plastic there could be tremendous
implications for agriculture and food security.69
Technologies do exist that enable the use of
non-food feedstocks, which could address
many of these trade-offs, but this example
highlights the systems view that is required
when developing solutions.
Figure 3.11 presents some of the
interconnections between the challenges
that emerged during interviews with chief
executive officers, stakeholder dialogues and
workshops and research for this project.
Another example that highlights the lack of a
systems view can be found in how electronic
waste is addressed. The European Union has
one of the most ambitious targets for recycling
e-waste, with targets to ensure that 85% of
Europe’s annual e-waste generation will be
collected by 2020.70 However, this target
deals only with an outcome of consumption.
Action is also needed to address the high
number of products “consumed” and the
design of future generations of these products
(see Figure 3.12).
Figure 3.11: The interdependence between supply, demand and rules of the game
Demand
Rules of
the Game
Supply
Consumer relevancy
Consumer awareness
Transparency
Traceability
Product innovation
Market pull Leadership
Policy Political will
Vision
Collaboration
Buyers groups
Industry fora
Industry/Govt
partnerships
Corporate targets
Price Quality/experience
Ethic/Values
Stability
Economy
Fashion
Desires/hopes
Customer
engagement
End of life Recovery
schemes
Business model
innovation
Product leasing
Trade
policy
Enforcement
Fiscal
incentives Regulation
Tariffs
Funding
R&D
Obsolescence
Pace of technology
Long termism
Consistency
Clarity
Internalisation of
externalities
Disclosure
Social media
Performance metrics
Competition
Supplier
engagement
Producer
performance
Access to
capital
Micro-
finance
Producer responsibilities
Livelihoods
Extension
services
Productivity
Data systems
Access to information
Standards
Collectives
NGO engagement
Land use
planning
Land
ownership
Figure 3.12: E-waste per capita in selected countries
Sources: UNEP, 2007 & 2011.; IndexMundi, 2011
23 More with Less: Scaling Resource Efficiency and Sustainable Consumption
The Challenges of Scale
Limited traction in fast-growing markets:
Any approach to sustainable consumption
needs to focus on areas of greatest impact.
The Marine Stewardship Council (MSC), for
example, promotes sustainable fisheries
management, yet only operates in 3 of the
10 largest fishing countries: Russia, Japan
and the US (see Figure 3.13). Despite efforts,
MSC has not gained significant traction in
the most prolific fisheries in countries such
as China, which catches over three times as
much fish as the US.71 This could change with
the first Chinese fishery currently undergoing
assessment for MSC certification.72 However,
there is still a long way to go.
Figure 3.13: MSC operations in the world’s 10 largest fisheries
Source: Food and Agricultural Organisation, 2010
If business looks at
sustainability on an end-to-
end basis, so from the
design of a product to
production and sales, it can
create a win-win scenario.
Companies can develop
better products at the right
price that people want to
buy with less negative
impacts on the environment.
Mike Rake, Chairman, BT Group
Individual companies may
take voluntary initiatives to
further improve protection
of the environment, but what
really matters are
international rules that
commit the whole industry.
Nils Smedegaard Andersen, Group Chief
Executive Officer, A.P. Møller-Maersk
24More with Less: Scaling Resource Efficiency and Sustainable Consumption
4. A Vision of Scale
Summary
−− Historically, society has achieved scale as a result of action by
citizens and consumers, companies and governments, and the
application of technology
−− Citizens and consumers are at the centre of the interaction
between government, market forces and technology, and are the
real powerhouses of what is needed to drive scale
−− Business has throughout modern times been the driving force
behind much of society’s economic dynamism, catalysing
technological as well as institutional and financial innovation
−− Governments drive scaled change in large part by establishing
through law what behaviours are deemed acceptable, and creating
long-term ambitious targets
−− Technology has been a key instrument for scale, from the industrial
revolution to the Internet revolution and beyond
As a society, we must continue to scale up existing initiatives and
examples of more sustainable consumption, but we still face a critical
question: How can we rapidly enable countries, companies and
consumers to achieve growth with significantly less resource intensity
and environmental impact at scale?
To answer this question, scale needs to be understood in the context
of modern society, rather than through the lens of sustainability.
Living in an Era of Scale
We live in an era of scale. Our US$ 65 trillion global economy is
powered by US$ 210 trillion of financial assets. Over five billion mobile
phones are in circulation with penetration rates rising by 35% each
year.73 In August 2008, 4.7 billion people, or 70% of the world’s
population, tuned in to watch the Beijing Olympics over a period of just
two weeks.74
A new vision of scaling up efforts to decouple growth from resource
impact requires using the existing impact of public policy, business
initiatives and citizen action, and putting the citizen at the heart of
efforts.
Leveraging Business, Governments, Citizens and
Technology
Citizens and consumers, markets, governments and technology have
been society’s four historic instruments for achieving scale (see Figure
4.1).
Citizens and consumers are at the centre of the interaction
between government, market forces and technology, and are the
real powerhouses of what is needed to drive scale. Companies and
governments are catalysts and enablers for citizen action through
policies, products and services, long-term commitment and action, but
ultimately the consumer is “king or queen” of scale.
Citizens and consumers acting in concert are society’s way of
disrupting and replacing whatever is no longer considered acceptable.
In 2004, demonstrations in over 125 US cities, as well as the launch of
a paid media campaign featuring the rock band R.E.M., encouraged
Staples to adopt an environmentally friendly paper policy and reverse
the impact previous paper purchasing policies were having on
endangered forests in the country.75 Today, an explosion in citizen
action is being witnessed from Cairo to London on some of the causes
and consequences of an unsustainable economy. Within months of
its first appearance on 17 September 2011, Occupy Wall Street had
spread to over 600 communities across the US and is present in over
1,500 cities worldwide.76 In China, within days of a tragic train crash
in mid-2011, 26 million micro-blogs were posted.77 Similar citizens’
actions have erupted in the face of contaminated milk, the collapse of
poorly built schools during the Szechuan earthquake and other events.
Business has been the driving force behind much of society’s
economic dynamism in modern times. Of the world’s 100 largest
economic entities in 2009, 44 were corporations.78 Business can
rapidly sell billions of packets of food products, tens of millions of cars
and millions of mobile phones. Different industries demonstrate scale
in different ways. In the consumer goods industry there is a direct line
to the consumer. For example, globally one in three households use
a Unilever laundry product – if they all used concentrated variants, it
would save four million tonnes of CO2 per year, equivalent to taking one
million cars of the road.79 Financial markets make millions of dollars of
investments every minute. Every minute the global foreign exchange
markets turn over US$ 2.8 billion.80
25 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Figure 4.1:Four elements for driving scale
Citizen
s Busines
s
Gove
rnmen
tTechnolog
y
Scale
In just two months, the occupy
protest had spread from
New York to 1500 cities
world wide
There are more than
2 billion internet users
world wide
Public procurement
amounts to US$ 4-5trillion
annually
In 2009. 44 of the world’s top
100 economic entities were
corporations
Governments drive scaled change in large part by using regulatory
tools (i.e. law, taxation and markets to dictate what should and
should not be done) and creating long-term ambitious targets. The
South Korean government, with its powerful culture of leadership and
collective action in the national interest, is driving forward with the
nation’s business community an integrated green economy, with every
intention of taking global markets by storm. More broadly, countries
as diverse as China and Switzerland have envisioned how their
development interests are aligned to sustainable growth outcomes and
have successfully mobilized diverse interests to this cause.
Governments have soft as well as statutory and fiscal instruments that
drive consumer behaviour. The decline in smoking throughout wealthier
nations resulted from a combination of public education and a gradual
restriction in the social space for exercising the habit. Governments
are also big spenders, with public procurement globally accounting for
6-8% of GDP, amounting to US$ 4-5 trillion annually.81 Some, like the
member states of the European Union, have moved (albeit slowly) in
greening this large purchase of goods and services.
Just as economic power begins to shift from the West, changes in
centres of political power are also being seen. It is not just national
governments that have scale at their fingertips. The 21st century is
often heralded as the urban century. With more than half of the world’s
population now living in cities, urban areas hold significant political and
people power. The mayors of the world’s 25 largest cities are each
responsible for more people than many national leaders. London has
more residents than countries like Paraguay, Denmark, New Zealand
or Ireland. If Karachi, the most populous city in the world, was a
country it would be bigger than Greece, Portugal or Hungary. The
combined population of the world’s 11 megacities – cities with more
than 10 million inhabitants – roughly equals that of Japan.82
A swelling chorus of voices
is calling for businesses to
be smarter and more
conscientious in their use of
all their resources – human,
economic and
environmental.
John Wren, President and Chief Executive
Officer, Omnicom Group
Big companies can actually
bring scale to the problem
and deliver sustainable
solutions globally.
Lucy Neville-Rolfe, Executive Director, Tesco
A Vision of Scale
26More with Less: Scaling Resource Efficiency and Sustainable Consumption
A Vision of Scale
Technology has been a key instrument for scale, from the Industrial
Revolution to the Internet revolution and beyond. Growing Internet
penetration is shifting the fabric of the world’s economies and
societies. As of March 2011, there were over 2 billion Internet users
around the world.82a It took the radio 38 years to reach a market of 50
million people, the television 13 years, and Facebook just two years.83
Today, technology and social networking sites are further planting the
citizen in the centre of the action. The flow of information is no longer
one way. Instead, we see a complex interplay of knowledge cross-
flows and access to information, allowing consumers to make more
informed and ethical decisions. Technology affords transparency and
power to the citizen, as witnessed by events like the Arab Spring,
which can promote the activities of businesses and governments, but
also lead to their downfall.
These four elements of scale highlight what is required to mobilize
change at the scale and speed required. Collective experiences
of scale to date show us four key lessons and insights into some
important systemic triggers of scale and models of change (see Box
4.1 and Figure 4.2)
Box 4.1: Key lessons from existing scale
1. Understand that scale brings risk and opportunities; there are
always winners and losers
2. Start with scale as the end goal of sustainable consumption when
designing initiatives
3. Understand and exploit the respective capacity, capabilities and
resources of citizens and consumers, governments, businesses,
technologies and citizens
4. Focus on commercially viable, genuinely scalable, market-driven
initiatives; enable interaction between different instruments of
scale such as using technology and citizen action, or government
purchasing power and business actions to create a multiplier effect
System Triggers
The potential for consumers, business, governments and technology
to deliver systems change is significant (see Figure 4.2 for examples of
the scale that is possible). The challenge we face is harnessing these
wide-scale processes to decouple consumption and growth from
resource intensity.
Actors Systemic triggers for scale Examples and ideas of scale
Consumers Consumer emotions and values: These drive behaviour and are
reinforced in different ways
−− Millions of protestors came together in Tahrir Square in
Egypt for 18 days in 2011 to bring down the regime of Hosni
Mubarak
−− The Campaign for Safe Cosmetics is “liked” and followed by
52,873 people on Facebook; more than 1,500 companies
have pledged to meet the campaign’s goals to eliminate
harmful chemical from cosmetics and personal care
products. Consumers have been pushing Johnson &
Johnson to remove potentially dangerous chemicals from all
its personal care and baby products
Business Business coalitions:
Businesses can act collectively to aggregate the scale and impact
of their actions
−− The Consumer Goods Forum (CGF) brings together CEOs
and senior management of over 650 retailers, manufacturers,
service providers and other stakeholders across 70
countries. Forum Member companies have combined sales
in excess of US$ 2.8 trillion. The CGF has far-reaching
targets to work towards ending deforestation and to phase
out the use of many refrigerants84
Finance and investment: Financial markets have great transforma-
tional power and billions of assets at their disposal
−− The five largest sovereign wealth funds (UAE, Norway, two
from China and Saudi Arabia) are estimated to have assets of
approximately US$ 2.7 trillion85
Government Government purchasing power: Public procurement can create
significant markets and tip the economy as a whole towards
sustainability
−− Governments are the largest consumers in an economy;
in many Asia-Pacific countries government consumption
can represent as much as 20-25% of GDP86 while OECD
member countries spend on average 12% of their GDP on
public procurement87
Subsidies: In some cases, the use of subsidies creates market fail-
ure; however, the use of subsidies can also promote new markets
and job creation
−− Reducing fuel subsidies by 80% globally (mainly in the
Middle East, Venezuela and Mexico) could reduce global
demand for road transportation fuel by 5%, reducing
demand for oil by just under three million barrels per day88
Technology Social media and the Internet: Technology enabled communication
channels can connect billions of people around the world
−− 80% of Fortune 500 companies are using Web 2.0 (e.g.
Facebook, Twitter, company-generated social media
platforms)89
−− On average, more than 250 million photos are uploaded
onto Facebook per day; every month, more than 500 million
people use an app on Facebook or experience the Facebook
platform on other websites90
Figure 4.2: Systemic triggers and examples of scale
27 More with Less: Scaling Resource Efficiency and Sustainable Consumption
5. Solutions for Scale
Summary
−− Business leaders increasingly recognize the enabling role that
companies can play in achieving scale
−− Transformational change is needed to leverage the power and
reach of business to achieve scale while securing competitive
advantage in a resource constrained world
−− Action will be required across demand, supply and rules of the
game
Over the past year, chief executive officers, government ministers,
business leaders and experts were asked what could be done to
decouple growth from resource and environmental impact at increased
speed and scale. These discussions, through interviews and regional
events, clearly show that there is no single solution.
Different stakeholders must get involved and collaborate to trigger
scale. Governments will need to provide clear, stable and long-term
policy frameworks, and use their scale to enable the creation of new
markets. Consumers will need to engage more actively in redefining
consumption and growth. And technology developments must
continue to drive efficiency and connectivity.
Business, however, does have a leading role to play. If the consumer
goods industry, for example, aggregate their impact, it could have an
effect as large as many countries. The impact of businesses across
sectors moving together will be even greater (see Box 5.1).
Discussions uncovered an impatience for change and desire for more
action-orientated engagement. Business leaders increasingly recognize
that their companies can and must act to enable scale, and to
ensure the success of businesses themselves. Harnessing the power
and reach of business to achieve scale while securing competitive
advantage in a resource-constrained world will require transformational
change across three dimensions:
−− Transform demand through interactions with consumers
−− Transform supply through value chains and new business models
−− Transform the rules of the game through public-private partnership
Behind each of these business imperatives sits a set of required
actions to achieve speed to scale (see Figure 5.1). Successfully shifting
the forces of demand, supply and rules of the game will not happen
without collaboration across sectors and elements of society. None
of these dimensions is new in its own right, yet the holistic approach
involving different stakeholders to bring solutions to scale is silently
absent. Business must – and can – play a leading role.
Box 5.1: The potential impact of business actions
When combined, the top 50 consumer goods and retail
companies have a carbon footprint across scope 1, 2 and 3
equivalent to the combined footprint of Germany and France.
If the industry was a country it would be ranked the 6th
largest emitter in the world
Looking specifically at consumer goods companies
the top 50 companies in this sector have a carbon
footprint across scope 1, 2 and 3 similar to that of
the United Kingdom and Ireland, and a reduction of 25 percent
would have a equivalent effect to removing the emissions of the
Netherlands
Source: Various sources, Accenture analysis (2011)
28More with Less: Scaling Resource Efficiency and Sustainable Consumption
Solutions for Scale
Figure 5.1: Business imperatives for scale
Transforming Demand through Interactions with
the Consumer
−− Make sustainable consumption more emotional: When
criticized for lack of action on more sustainable consumer goods,
both companies and governments often hide behind survey results
showing that consumers increasingly want more sustainable
products but do not match this with their buying patterns. This
viewpoint is misguided as it isolates the consumer’s decisions at
the point of purchase from their values as citizens. Opportunities lie
in converting these aspirations into action at the point of purchase/
consumption through aspiration, emotion and relevance.
Making sustainable consumption as simple as price and quality
for consumers and communicating this in a simple way will be
key to engage with consumers at an emotional and value-based
level. Emerging research on this topic focuses on leveraging the
reach and trust of NGOs, demand-side messaging, linking to
practices in the home such as washing and cooking, and using
the experiences and design of games to engage consumers (see
Box 5.2). Businesses are approaching this issue today in many
ways, including creating a direct link between the outcomes for
consumers and desired business outcomes.
Clothing retailer Patagonia is asking consumers to match its
pledges to reduce, repair, reuse, recycle and re-imagine Patagonia
products before buying a new one. The company’s offers include
free repairs of damaged equipment, supporting product re-sale
through a partnership on eBay and donating unsold clothing.
Patagonia placed an advertisement in the New York Times on
“Black Friday”, the day after Thanksgiving and the largest shopping
day in the US, with the tag line: Don’t buy this jacket. This bold
move reflects Patagonia’s commitment to reducing consumption
through innovative business models and in turn, reducing harmful
impacts on the environment.94
Creating shared value is a fundamental part of Nestlé’s way of
doing business, focusing on shared outcomes for shareholders
and society. The company forges partnerships with communities
to improve societal and environmental benefits at each step of
the value chain, creating a link between the outcomes for the
consumer and the outcomes for the company. This shared
approach is reflected in Nestlé’s approach to food security
through a focus on tackling food waste and improving nutrition. By
consuming Nestlé products, society gains access to safe, quality,
nutritious food and a greater knowledge of health issues, while
Nestlé gains deeper understanding of nutrition and diet as well as
greater links with key stakeholders and brand recognition.95
To build and sustain brands
people love and trust, one
must focus not only on
today but also on tomorrow.
It’s not easy…but balancing
the short and long term is
key to delivering sustainable
and profitable growth.
Irene B. Rosenfeld, Chairman and Chief
Executive Officer, Kraft Foods
NGOs are the most trusted
institution – they fill a void in
trust. Now they need to be
sufficiently branded to
appeal to the masses and
shift behaviour.
Richard Edelman, President and Chief
Executive Officer, Edelman
Transform demand through
interactions with the consumer
−− Make sustainable
consumption more emotional
−− Drive transparency through
technology
−− Redesign products and
services
Transform supply through
value chains and new
business models
−− Integrate visionary leadership
embedded at all levels
across the organization
−− Follow a range of strategic
options to optimize supply
chains, maximize efficiency
and partner with key
stakeholders
Transform the rules of
the game through public-
private
−− Fix finance and investment
−− Reshape public policy
through multi-stakeholder
dialogue
−− Pursue sustained public
private interactions to co-
design new frameworks
29 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Box 5.2: Emerging research and trends in how to
make sustainable consumption more emotional
Learn from NGOs: Non-governmental organizations are key to
building trust and engagement. Increased co-branding will be one way
to increase trust in the future, even more powerfully if done through
consortia rather than one to one.
Use demand-side marketing: Advertising is a key form of news
consumption for billions of the world’s consumers. Connecting
sustainability issues to the intimate relationships people have with their
favourite products is a smart way to get the word out. Demand-side
campaigns can focus on shifting behaviours and steering demand
towards more sustainable forms of consumption. Such campaigns
encourage consumer demand for new, healthier, resource efficient
products that they never thought possible.
Understand social practices: Rather than looking at consumers
and products at an individual transactional level, researchers are
increasingly focusing on social practice theory, which looks at cultural
norms, and the regulations, technologies and infrastructures that
shape them. Eating and washing habits, for example, are often born
from cultural habits, incomes and norms that differ from country to
country. These are, in turn, affected by an interdependent global
economy, which links business, governments and other actors.
So strategies that only focus on individual choices are unlikely to
have much impact. Looking at social practices in combination with
technological innovations based on people’s way of life is likely to reap
greater rewards.
Engage through games: An emerging trend in engaging with
consumers around sustainable consumption is that of “gamification”.
Game design thinking for non-game applications is being used to build
on the powerful and positive emotions that arise when playing games,
to engage consumers around sustainable consumption. The use of
points, badges, levels, challenges and rewards to engage users can
make sustainable behaviours viral and increase take-up and brand
recognition.
SAP has recently been exploring the idea of engaging people in
sustainability through gamification using online competitions and
rewards systems. For example, SAP launched the Facebook app
Green Soap, which calculates the carbon value of online shopping
and creates competition amongst participants. The Seeds app targets
the consumer as citizen, enabling friends, neighbourhoods and
communities to recognize and reward sustainable behaviours with
seeds that are grown in virtual flowerpots.94
−− Drive transparency through technology: Technology enables
companies to engage with millions of consumers, presenting both
opportunities and risks. Innovations such as machine-to-machine
technologies can help build transparency around the performance
of products. Technology can be used to program all devices in
the home to operate at more efficient levels, as well as provide
meaningful information to the consumer in simple terms that can
cut through the noise created by the proliferation of labels and
standards.
Consumers can already download smartphone applications that,
through a barcode scan, rate particular brands and products in
terms of their corporate, environmental and social practices, and
other useful information. Technology also opens up the entire value
chain to public scrutiny where a disgruntled worker can transmit
a picture of poor environmental conditions to a mass audience
within seconds. There will soon be ample competition in this new
consumer space.
The GoodGuide i-Phone app (available in the US) rates over
140,000 consumer products against criteria such as the
environmental sustainability and ethics of the companies that
produce them. The consumer is informed with ease and speed
about the values embedded within their selected products. To
retrieve the sustainability rating of their selected product, the
user of the app simply has to scan the barcode on the product
packaging.
Another example uses the idea of a “trust seal”, which makes
public information that companies wish to share on their
environmental performance. The “Blue Butterfly” logo is the seal of
approval from Positive Luxury, though which consumers can see a
description of why a chosen brand or product is deemed to have
a positive impact. Whether it is through the ingredients used in a
particular product or how the product is sourced, manufactured
or sold, this start-up chooses brands that are demonstrating a
commitment to sustainable excellence to make the consumer’s
choice easier.
−− Redesign products and services: Sustainable consumption
means goods will have to be made, sold and used in new ways.
Rather than producing alternatives that stand side-by-side with
unsustainable products, companies will increasingly need to make
the sustainable choice the default choice at the same price and
level of quality.
Kingfisher, an international home-improvement retail business, is
an industry leader in making the sustainable choice the default
choice. All timber products in Kingfisher’s B&Q stores in the United
Kingdom are sourced from “proven well-managed” forests and
supply chains, which are audited to third-party standards such as
the Forest Stewardship Council (FSC). On a global scale, Kingfisher
sources 81% of its timber from sources independently certified to
sustainability standards. In this way, it offers the most cost-effective
home-improvement choices across a wide range of product lines
at the same time as providing the most sustainable choice to
customers across its 900 stores. By making the sustainable choice
the default choice, Kingfisher has taken a first mover stance and
made it the easy choice, accessible to all.
Focusing only on products and services is not good enough. Close
attention is needed on how consumers consume and how needs
and wants are defined and fulfilled. Creating new products using
fewer virgin resources in production and use, and shifting from
ownership of products to enable the collaborative consumption
of services, are two ways in which businesses can create new
markets and also reduce the harmful effects of consumption on the
environment.
Technology will drive ever
greater transparency
throughout supply chains,
empowering customers and
asking for greater levels of
engagement between
sustainable business
models and consumers.
Marc Bolland, Chief Executive Officer, Marks
& Spencer
Solutions for Scale
30More with Less: Scaling Resource Efficiency and Sustainable Consumption
Solutions for Scale
Shared access to products and services (or collaborative
consumption) can provide as much value as ownership in many
instances. RelayRides, for example, currently available in the US,
is a car-sharing business model that allows people to rent out their
own personal vehicles. General Motors (GM) is now partnering
with the company. Through the partnership, the owners of GM
cars equipped with OnStar communication systems ( a form of
telematics) can list their cars for rent when they are not planning
to use them. Cars are rented out, insured by RelayRides, for a few
hours at a time via an online programme run by the car-shairng
company. The renters can even unlock the cars via apps on their
phones. In just under 12 months of operations in Boston and
San Francisco, RelayRides has over 5,000 users with plans for
national expansion. The company has benfitted from this innovative
approach, attracting investment from Google Ventures, August
Capital and GM. Consumers also win with a typical user earning
around US$ 200 per month from renting their car when it would
have otherwise stood idle.
Transforming Supply through Value Chains and
New Business Models
−− Implement visionary leadership and seamless integration
across the organization: Sustainable consumption at scale will
not be achieved unless leadership is shown from the very top.
Business-as-usual leadership will not win the day. Leadership
must be visionary, fuelled by ambition, and driven by the business
imperative for scale. The business leaders ahead of the pack need
to inspire other leaders to build momentum and unleash the power
of business.
Decoupling growth from resource intensity and negative
environmental impact also requires horizontal and vertical
integration, such that every employee’s day-to-day responsibilities
and reward structures reflect the transformation (for some of the
key actions needed for integration see Box 5.3).
Unilever’s Sustainable Living Plan is a prime example of the
ambition and leadership required to decouple revenues and
resource intensity to achieve sustainable growth. Unilever’s new
business model has set a company-wide target to double sales
while halving environmental impact. The plan has two other key
targets: to help people take action to improve their health and
well-being, and to source 100% of agricultural raw materials from
sustainable sources.
Infinite resource intensive
growth is simply not
possible, and we are already
living off our future capital.
We need to think now about
how business services will
evolve in the next two
decades and beyond.
Ian Cheshire, Group Chief Executive Officer
Kingfisher
Box 5.3: Embedding sustainability through
organizational change:
Every business needs to plan for a more uncertain future, embedding
sustainable consumption and resource efficiency into company DNA
and how they do business. Chief executive officers have told us that
five key things are required to achieve this:
1. Lead from the top: Direction and intent is set from the top and
reinforced with key stakeholders: employees, consumers, investors
and partners
2. Align issues with the core aims of the business: The strategic
rationale is clear with public targets that integrate sustainable
consumption into every product, service, factory, truck, office and
shop
3. Establish financial incentives: Bonuses and performance
appraisals across management and the whole company are linked
to measures and rewards around carbon and resource efficiency
4. Embed resource efficiency into operations: Champions sit in
different parts of the company to help employees innovate and
integrate activities into their day-to-day jobs
5. Measure and track progress: Comprehensive and frequent
reporting shows how companies are performing on an ongoing
basis, driving tangible business outcomes
31 More with Less: Scaling Resource Efficiency and Sustainable Consumption
−− Embrace a range of strategic options for the future: Four
strategies will help businesses drive resource efficiency across both
the value chain and the organization (see Figure 5.2):
−− Optimize supply chains , operations and product processes to
eliminate inefficiency to avoid and reduce costs
−− Apply existing capabilities to opportunities beyond core
strengths to identify new sources of growth in an uncertain
resource future
−− Invest in efficient and disruptive technologies to tap into new
markets in the developed and emerging world
−− Partner with governments and industry to create an ecosystem
of collaboration and scale around key activities that are beyond
the remit or reach of any one organization
It’s time to move forward
with building a more socially
and environmentally
responsible supply chain.
We are expecting more of
ourselves at Wal-Mart, and
expecting more of our
suppliers.
Mike Duke, President and Chief Executive
Officer, Wal-Mart Stores
Wal-Mart has replaced nearly two-thirds of its logistics fleet with
more efficient vehicles since 2008. In 2010, this enabled Wal-Mart
to deliver 57 million more cases of products while avoiding 40,000
metric tonnes of CO2 emissions, equivalent to taking 7,600 cars
off the road. The company is looking to double its fleet efficiency
by 2015 and is also road testing a diesel hybrid truck for potential
future implementation.99
DuPont’s new technology, Zytel® PLUS nylon, replaces metal in
applications and with other nylons eliminates 11 kilogrammes of
weight per vehicle while doubling the life of parts exposed to high
heat generated by engines. If this one product was integrated into
the estimated 72 million cars that were manufactured in 2011, this
would eliminate the need for 144 million gallons of gasoline – or
three million barrels of crude oil.100
Decreasing use of fossil energy sources across operations is critical
to scaling up sustainable consumption. S. C. Johnson & Son has
been a long-standing pioneer regarding green power generation.
Currently, the company sources over 40% of its total electricity
usage worldwide from renewable energy. An on-site wind turbine
at the company’s largest European facility can generate up to
two-thirds of its annual electricity. And, the company’s Medan
factory in Indonesia uses waste palm shells as a substitute for
diesel fuel, cutting greenhouse gas emissions by more than 15%
while reducing diesel fuel use by 80%. Recently, the company
announced that it is pursuing a new goal to build wind turbines at
its largest global manufacturing facility in Wisconsin, which, when
approved and combined with other efforts, should enable on-site
production of 100% renewable electricity.
Figure 5.2: Strategic options for capturing value
Solutions for Scale
32More with Less: Scaling Resource Efficiency and Sustainable Consumption
Solutions for Scale
Transform the Rules of the Game through Public-
Private Partnership
Fix finance and investment: Financial markets can accelerate the
transition towards more sustainable business practices and value
creation through actions such as: internalizing externalities to reflect
true environmental costs; setting new standards and expectations
for business leadership; linking incentives in the investment value
chain more with financial performance over the long term; identifying
the key performance indicators to measure the value of sustainable
consumption; and fostering greater collaboration between asset
holders to boost disruptive innovation and share risk.
Reshape public policy: The right rules of the game can catalyse
citizen behaviour, promote sustainable sourcing, create new
opportunities for sustainable development and create new markets.
In South Africa, the Waste Management Strategy was formulated
jointly by the public and private sector and has envisaged creating
300,000-400,000 jobs by 2020. The Waste Implementation Act calls
for a “waste hierarchy” to minimize and recycle waste where possible,
and produce energy out of biomass. Progress to date includes the
establishment of waste exchanges and mechanisms to improve waste
efficiency.102
Business leaders need to work not just with national governments but
increasingly with regional authorities and city mayors to unlock the
barriers and inertia in the rules of the game, and create the framework
for a sustainable economy.
If business and different levels of government are together going
to deliver more than incremental success, they have to do much
better than historic best practice. New models of collaboration are
needed. The toolbox currently used for public-private interaction
is not enough for the coming disruptive growth. The private sector
needs to be involved in most phases of policy-making, along the
lifecycle of policy development (i.e. policy formulation, strategy and
implementation). At the international level, such collaboration should be
forged as a productive adjunct to more traditional inter-governmental
arrangements.
We need a platform where
we can work across
industries and cultures to
get integrated policy
directions, find sustainable
solutions and accelerate
innovation.
Mikael Hagstrom, Executive Vice-President,
Europe, Middle East, Africa and Asia Pacific,
SAS Institute
We have to move away from
the dominant logic that
looks at the pure investment
cost to one that looks at the
entire life cycle of an
investment. Business
leaders have to ask
themselves: ‘How will this
work in 50 years time?’ “In
that way, we can ensure that
longer-term sustainability
principals are appropriately
influencing our investment
decisions.
Klaus Kleinfeld, Chairman and Chief Executive
Officer, Alcoa
33 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Solutions for Scale
The China Greentech Initiative, founded in 2008, is the only
international collaboration platform offering green technology insights
and partnering opportunities to over 100 organizations, including
technology buyers and sellers, service providers, investors and policy-
makers. The initiative is currently focused on identifying areas where
private companies can innovate to help deliver governmental targets
around the 12th Chinese Five-Year Plan. One such area is water. The
Chinese government has made clean water a major priority (US$ 615
billion will be invested to 2020). Investments will be made in waste
water treatment, improving water efficiency and ensuring adequate
supply, presenting opportunities for private sector participation and
innovation.103
The Clean Energy Ministerial Forum, as an informal adjunct to the
ongoing international climate negotiations, is one of a growing number
of attempts to advance blended approaches, leveraging both the
strength of collaboration and the rule-making and fiscal capacities of
governments and intergovernmental platforms.
Key areas where business leaders can help shape the policy landscape
will be: the greening of public procurement; removal of subsidies that
are harmful to the economy and environment; improving regional
trade agreements; measuring progress; and the role of long-term
investments.
There are many private
corporations involved in
public-private partnerships
aimed at addressing a
variety of global issues but
more action is needed. The
private sector has an
enormous wealth of unique
expertise that should be
shared to help realize global
aims.
Feike Sijbesma, Chief Executive Officer and
Chairman, Managing Board, Royal DSM
34More with Less: Scaling Resource Efficiency and Sustainable Consumption
6. A Commitment to Move
Whether it is driven by resource constraints or shifting consumer
demand, or whether recognized by strategists of chief executives,
there is a new understanding of how sustainable consumption is
changing the landscape of business. The imperative for change is
clear.
The questions that will take this project to the next level are: How do
we enact that change deeper into corporate strategies? How do we
collaborate across industries and sectors to bring existing solutions to
scale?
No one doubts the severity and complexity of the resource challenge
and the potential for this to hamper a company’s ability to thrive.
Widespread action is being taken and is delivering some success, but
it is clearly not enough to move us beyond the incremental, beyond
“pilot paralysis”.
Over the past year many insights have shown what success might
look like. These insights are useful only if they drive action across
demand, supply and the rules of the game: transforming the
interaction between citizens and business, transforming business and
business models, and transforming the enabling environment set by
policy-makers and investors. The business community can only move
forward from dialogue to concerted business action by building on
existing initiatives and focusing on specific targeted deliverables.
We are living in a resource-
constrained world in which
we need to look at
fundamentally new business
models. This platform is not
about rhetoric, it’s about
action.
Mark Parker, Chief Executive Officer, Nike
35 More with Less: Scaling Resource Efficiency and Sustainable Consumption
Chief executive officers have spoken about how they care about
making sustainable growth and consumption mainstream, and are
committed to action. During the course of this project, three actionable
ideas were explored. These actions could help to catalyse progress
to deliver results that support growth without negative impacts on
the environment. Over the next year the World Economic Forum, with
others, will enable such action so that companies can take the lead
and use their scale:
−− Demand: Collaboration is needed to incentivize sustainable
consumption and make it the simplest and cheapest choice for
consumers. Technology will be critical enablers of consumer
and business engagement. Companies can also collaborate with
media agencies and NGOs to make a step change in consumer
engagement. Engaging with consumers to link their consumption
decisions with their values as citizens could open a tide of
consumers towards sustainable consumption.
−− Supply: A concerted, scalable plan of action across key areas of
supply will enable multiple suppliers, manufacturers and retailers
to aggregate their sustainability efforts – and provide greater clarity
to consumers. Having concrete targets for resource efficiency and
sustainable supply can be a first step to achieving scale through
industry associations and partnerships.
−− Rules of the Game: More sustained public-private partnerships
will increase trust and create the right enabling environment for the
sustainable choice to become the default choice for consumers
and businesses alike. At the same time governments will need to
be challenged (particularly the US, EU, Japan, as well as Brazil,
South Africa, India, China and other emerging economies – the
BASIC+ nations) to commit to legal and traceable supply chains,
and to substantial and rapid increases in the production and
uptake of sustainable, renewable sources of energy and materials.
To stimulate the speed to scale required, the World Economic Forum,
together with its Industry Partner companies and key stakeholders, is
committed to applying the necessary time, effort and resources to play
a leading role.
If we want to have an
impact, it is important that
we turn our intentions into
actions.
Ben Verwaayen, Chief Executive Officer,
Alcatel-Lucent
A Commitment to Move Together
36More with Less: Scaling Resource Efficiency and Sustainable Consumption
Appendices
Tools for Business in a Resource-scarce Economy
37 More with Less: Scaling Resource Efficiency and Sustainable Consumption
38More with Less: Scaling Resource Efficiency and Sustainable Consumption
Approach and Methodology for Oxford Economics Analysis
The analysis by Oxford Economics assumes:
Major Economy Analysis
−− Energy-related carbon emissions follow a path outlined in the International Energy Agency’s
“new policies” scenario, which reflects policies that enable governments to meet their
currently-stated commitments on climate and energy
−− A range of adaptation costs that could be incurred based on this emissions path
−− The potential “value at stake” for the major world economies reflects the difference between
the output loss created at the low and high end of this adaptation cost range
−− A “peak metals” scenario for steel is assumed based on peak metal theories, historical steel
output and current US Geological Survey estimates of global iron reserves
−− The metals market is assumed to behave in a similar way to the energy market
Consumer Goods Analysis
−− The consumer goods sector is defined to include food, beverages and tobacco; textiles,
textile products, leather and footwear; and consumer electronics
−− The macroeconomic scenario assumes that carbon emissions are restricted. Adjusting to
this low-carbon future is likely to require increases in energy efficiency
−− We calculate the energy cost savings that result from increasing energy efficiency by
assuming that the consumer goods sector adjusts towards the level of efficiency of the
sector in Canada in 2030
−− This assumption is then applied to 2020 and 2030 projections for the sector using input-
output tables
−− The macroeconomic scenario further assumes that steel availability is restricted. Adjusting
to this resource-scarce future is likely to require increased recycling rates or materials
substitution
−− To estimate the impact on input costs if companies fail to increase recycling rates, the
impact of a “peak metals” scenario on world steel prices in 2030 was calculated using the
Oxford Economics Global Model
−− These steel price impacts were then applied to 2020 and 2030 projections for the sector
using input-output tables
Business-as-Usual Scenario
−− Assumes policies, business practices and technologies continue in line with current practice
Progressive Scenario
−− Assumes a mix of businesses processes, technologies and policies that are more effective,
and integrate resource scarcity as a permanent economic constraint
39 More with Less: Scaling Resource Efficiency and Sustainable Consumption
We would like to thank the following chief executive officers, company
representatives on the Project Board and Members of the Global
Agenda Council for their input
Project Board Members
John Kornerup Bang, Lead Advisor, Environment and Climate Change,
A.P. Møller-Maersk, Denmark
Frank Clary, Senior Manager, Corporate Social Responsibility, Agility,
Kuwait
Kevin McKnight, Director, Alcoa Europe, Switzerland
Mary Capozzi, Senior Director, Corporate Responsibility, Best Buy Co.,
USA
Niall Dunne, Chief Sustainability Officer, BT Group, United Kingdom
Christopher Deri, Chief Executive Officer and Market Leader, Burson-
Marsteller, People’s Republic of China
Tara Moss, Managing Partner, Clownfish, United Kingdom
Dawn Rittenhouse, Director, Sustainable Development, DuPont, USA
Robert Christopher Knott, Global Practice Chairman, Edelman, USA
Perry Yeatman, Senior Vice-President, Corporate Affairs, Kraft Foods,
USA
Mike Barry, Head of Sustainable Business, Marks & Spencer, United
Kingdom
Britta Gallus, Director, Head of Regulatory Affairs, Metro Group,
Germany
Claus Conzelmann, Vice-President, Safety, Health and Environment,
Nestlé, Switzerland
Santiago Gowland, Managing Director, Sustainable Business &
Innovation Mobilization, Nike, USA
Claus Stig Pedersen, Head, Sustainability Development, Novozymes,
Denmark
Eve Magnant, Vice-President, Corporate Social Responsibility Director,
Publicis Groupe, France
Fokko Wientjes, Director Corporate Sustainable Development, Royal
DSM, Netherlands
Cynthia Drucker, Director of Sustainability, S. C. Johnson & Son, USA
Kelly M. Semrau, Senior Vice-President of Global Corporate Affairs,
Communication and Sustainability, S. C. Johnson & Son, USA
Andrew Wales, Head, Sustainable Development, SABMiller, United
Kingdom
John Mayerhofer, Vice-President, Technology Strategy, Open
Innovation SAP America, USA
Alyssa Farrell, Product Marketing Manager, SAS Institute, USA
Mary Coventry, Vice-President, Communications and Government
Affairs, Sealed Air, USA
Helen Fleming, Director, Climate Change, Tesco, United Kingdom
Acknowledgements
Thomas Lingard, Global Advocacy Director, Unilever, United
Kingdom
Andrea B. Thomas, Senior Vice-President, Sustainability, Wal-Mart
Stores, USA
Andrew Charlton, Manager, Business Development, Wesfarmers,
Australia
Additional Chief Executive Officer Insights
Ben Verwaayen, Chief Executive Officer, Alcatel-Lucent, France
Kris Gopalakrishnan, Executive Co-Chairman, Infosys, India
Takeshi Niinami, President and Chief Executive Officer, Lawson, Japan
Gao Jifan, Chairman and Chief Executive Officer, Trina Solar (TSL),
People’s Republic of China
Global Agenda Council – Sustainable Consumption
Global Agenda Council Chair: Simon Zadek, Senior Visiting Fellow,
Global Green Growth Institute (GGGI), Switzerland
Helio Mattar, President and Board Member, Akatu Institute for
Conscious Consumption, Brazil
Ted Howes, Director, Consumer Products/Innovation, BSR
David Runnalls, Distinguished Fellow and Acting Director, Environment
and Energy Program, Centre for International Governance Innovation
(CIGI), Canada
Malini Mehra, Founder and Chief Executive Officer, Centre for Social
Markets (CSM), India
Mindy S. Lubber, President, Ceres, USA
John Wilbanks, Vice-President, Science, Creative Commons, USA
Steve Howard, Chief Sustainability Officer, IKEA Group , Sweden
Mark Halle, Executive Director, International Institute for Sustainable
Development (IISD), Switzerland
Mohan Munasinghe, Chairman, Munasinghe Institute for Development
(MIND), Sri Lanka
Santiago Gowland, Managing Director, Sustainable Business &
Innovation Mobilization, Nike, USA
Helen Mountford, Deputy Director, Environment Directorate
Organisation for Economic Co-operation and Development (OECD),
Paris
Bonnie Nixon, Executive Director, Sustainability Consortium, USA
Michael Kuhndt, Head, Wuppertal Institute Collaborating Centre on
Sustainable Consumption and Production (CSCP), Germany
40More with Less: Scaling Resource Efficiency and Sustainable Consumption
Additional Interviewees
Shannon Herzfeld, Vice-President, Government Relations, Archer
Daniels Midland (ADM), USA
Daniel Lutz, Communications Manager, The Better Cotton Initiative
(BCI), Switzerland
Lise Melvin, Executive Director, The Better Cotton Initiative (BCI),
Switzerland
Aron Cramer, President and Chief Executive Officer, Business for Social
Responsibility (BSR), USASabine Ritter, Executive Vice-President, The
Consumer Goods Forum, France
Greg Norris, Executive Director, Earthster (New Earth), USA
Mark Halle, Executive Director, International Institute for Sustainable
Development (IISD), Switzerland
Oshani Pereira, Programme Officer, International Institute for
Sustainable Development (IISD), Switzerland
Liana Bratasida, Assistant Minister for Global Environmental Affairs and
International Cooperation, Ministry of State for Environment, Indonesia
Duncan Pollard, Sustainability Advisor, Nestlé, Switzerland
Michael Washburn, Director of Sustainability, Nestlé Waters North
America, USA
Eraina Duffy, Sustainable Material Expert, Nike, USA
Jim Goddard, Director of Considered Innovation , Nike, USA
Sarah Severn, Director, Horizons, Nike, USA
Randolf Hager, Director, Sustainability Management and Strategy, SAP,
Germany
Caroline King, International Government Relations, Global
Communications, SAP Germany
Bob Bonham, Director of Information and Technology Services, SAS
Institute
Stephen Sanger, Information Technology Manager, SAS Institute
Thomas Spiller, Vice-President, Global Public Policy, SAS, USA
Dan Lawson, Manager Sustainable Innovation, S. C. Johnson & Son
Katharina Kummer-Peiry, Executive Secretary, Secretariat of the Basel
Convention (SBC), Switzerland
Alistair Ulph, Executive Director, Sustainable Consumption Institute,
The University of Manchester, United Kingdom
Lucy Neville-Rolfe, Executive Director, Corporate and Legal Affairs and
Member of the Board, Tesco, United Kingdom
Gavin Neath, Senior Vice-President, Communications and
Sustainability, Unilever, United Kingdom
Jan Kees Vis, President, The Roundtable on Sustainable Palm Oil and
Global Director Sustainable Sourcing Development, Unilever, United
Kingdom
Matthias Kern, Senior Programme Officer for Persistent Organic
Pollutants, United Nations Environment Programme (UNEP), Nairobi
Bill Guyton, President, The World Cocoa Foundation (WCF), USA
Project Lead
Randall Krantz, Director, Head of Sustainability Initiative, World
Economic Forum
Lead Author
Nijma Khan, Sustainability Services, Accenture, United Kingdom
(seconded to the World Economic Forum)
Project Team
Marie Lam Frendo, Project Manager, Sustainability Initiative, World
Economic Forum
Kiana Ranjbar, Team Coordinator, Environmental Initiatives, World
Economic Forum
Adrian Wain, Analyst, Accenture
Project Advisors
Peter Lacy, Managing Director, Sustainability Services, Europe, Africa
and Latin America, Accenture, United Kingdom
Justin Keeble, Senior Executive, Sustainability Services, Accenture,
United Kingdom
Additional thanks to:
Sarita Nayyar, Dominic Waughray, Belinda Bonazzi, Laura Crivelli and
Jason Shellaby from the World Economic Forum
Anne St-John Hall, Guy Hudson and Mark Purdy from Accenture
Adrian Cooper, Scott Livermore, Abby Samp and Sam Wilkins from
Oxford Economics
41 More with Less: Scaling Resource Efficiency and Sustainable Consumption
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