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Economy

Sustainability and the worrying consumer-company gap

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As sustainability moves centre-stage across the world, a global study indicates a worrying communications gap between consumers and companies.

It underlines the urgency and importance of business leaders in the C-suite to find better ways to develop sustainability strategies that chime with consumer expectations, needs and hopes,

From Marketing to Mattering, a study of 30,000 adults across 20 countries on five continents, finds that 72% believe that business is failing to live up to expectations.

This surprisingly large majority of the adults polled believe that business is failing to take care of the planet and society as a whole.

Interestingly, in economies with a large, emerging middle-class, people are less sceptical and public confidence is significantly greater: two-thirds of respondents in Nigeria and India, for example, believe that business is playing its part.

The report by management consultancy Accenture and Havas Media RE:PURPOSE, a communications and marketing company, follows up the UN Global Compact-Accenture CEO Study on Sustainability published last autumn, in which two-thirds of CEOs admitted their companies were not doing enough to address sustainability challenges.

The study identifies:

– What consumers expect from business and other institutions
– What sustainability means to their choices and attitudes
– How sustainability issues influence their purchasing decisions
– How superior performance on sustainability can better engage consumers, driving value creation and genuine competitive advantage

As the current study points out, consumers have been consistently identified by business leaders as the most important stakeholder in guiding their action on sustainability.

But chief executives are finding challenges in interpreting consumer signals that add to the difficulties in embedding sustainability at the core of business and across varied global markets.

And it is the emerging markets that will define commercial success for most companies over the next 20 years.

The study authors say, “Consumers expect more from companies, from greater honesty and transparency to greater impact on global and local challenges and a more responsible stewardship of natural resources and the environment.

Yet among business leaders there is a sense that companies have failed to engage the consumer on sustainability; that companies’ reputation and performance on environmental, social and governance (ESG) issues are not informing consumers’ purchasing decisions; and that industry leaders on sustainable business practices are not being rewarded by the market.”

The study underlines that people think business is as accountable as governments for improving their lives. From the optimistic countries in Asia, Africa, and Latin America to the more despondent consumers in Western Europe and North America, there is an expectation that brands and companies should impact positively on lives.

And the degree of people’s optimism correlates directly to their level of expectation of how business can improve their quality of life.

In countries where respondents are optimistic and express high expectations of business, consumers are more likely to consider sustainability in their purchasing decisions and actively seek information on sustainability performance.

The study authors also say, “Consumers worldwide identify critical challenges – job creation, economic growth, pollution, clean energy, ending corruption etc – for businesses to address. Consumers (81% of respondents) expect more from their expenditure than the acquisition of products and services – and this is affecting their perception that companies are failing (42% believe that) to meet their expectations.”

Clearly, people are demanding leadership from brands to meet the most pressing human and environmental challenges, which reinforces our view that all companies cannot wait for consumer demand to drive their actions: people expect business to take the lead.

As Joel Makower, chairman and executive editor of GreenBiz Group, comments, “The survey found that companies’ conventional social responsibility and sustainability reporting activities aren’t sufficient.

Today’s citizen consumer has higher expectations of business. Dissatisfaction may be regarded as the product of traditional approaches to communicating sustainability, centred on philanthropy and corporate social responsibility, with no clear integration into the products and services people consume, or the connection through their products that brands share with consumers.”

We’ve argued consistently that companies and the brands they rely on would benefit hugely from connected corporate social responsibility (CSR). We also firmly believe that sustainability is not dead; just the opposite. Sustainability strategies which are coherent, consumer-connected and cohesive are absolutely essential to commercial survival.

To highlight just two findings in support of this, ‘young optimists’ aged 18-34 are the most engaged on sustainability. Two-thirds of this group actively buy sustainable brands and almost a quarter say that they “always” consider social and environmental ethics of brands when making purchasing decisions.

And here’s a showstopper for us – young men globally (aged 25-34) are consistently more likely to consider sustainability factors in purchasing decisions, seek information on company sustainability performance, and recommend ethical and responsible brands to their friends. Young women, especially new mothers, are more engaged as consumers on environmental and social issues.

There’s the sustainable commercial future, right there!

How, then, can companies and their leaders address the twinned connectivity and communications challenge? The report makes three main recommendations.

1. Promote a commitment to honesty and transparency

Companies must embed the principles they espouse in marketing and communications throughout their operations: consumers form perceptions based not only on the messages companies promote, but also on the way they define and articulate their purpose, and act upon it in the most transparent way possible.

2. Innovate to improve health, prosperity, and livelihoods

For business, this would need two important shifts in the innovation process: one, align product and service innovations to meet the broader needs; and two, innovate manufacturing and production processes through circular economy models to improve impacts throughout the value chain.

3. Enhance credibility through communicating real, tangible impacts

Companies and brands simply must demonstrate more effectively why they matter to consumers and how they make a meaningful difference to quality of life. Awareness and authenticity are important motivators to purchase.

The study shows to us that all companies need to revisit their CSR policy, focus on sustainability strategies and understand fully how best to connect with and communicate these positive, beneficial elements of their business culture to the people they exist for – their customers, the consumers.

Mark Sait is managing director of energy-saving specialists SaveMoneyCutCarbon.com. He is among the speakers at Blue & Green Tomorrow’s Sustainable September conference, which you can find out more about here.

Photo: Maciek PELC via freeimages

Further reading:

Lessons in sustainability from the city that touches the clouds

21st century leadership: from business as usual to business as a force for good

Sustainability isn’t about being fluffy; it’s about being strategic

Why businesses must ‘shape and innovate’

We need more people with complete sustainability literacy

Mark Sait is managing director of SaveMoneyCutCarbon, a uniquely positioned full-service efficiency partner to organisations and homes that want to reduce energy, water and carbon to improve sustainability. Clients include major hospitality groups, property ownership groups, distribution centres, theme parks and corporate offices as well as SMEs and private residences.

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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