SCP LECTURE 3

SUSTAINABLE

BUSINESS

ESPM 60

Environmental Policy, Administration & Law

Spring semester 2014

DR. RUTH DOYLE

rdoyle4@tcd.ie

LECTURE OUTLINE

• Behavior change

– What is sustainable consumption?

– Models of behavior change

– Example initiatives

• Sustainable business

– Drivers for business action

– Action: a) upstream, b) downstream, c) company-level

– New business models

WHAT IS SUSTAINABLE

CONSUMPTION?

“The use of services and related products which respond to basic

needs and bring a better quality of life while minimizing the use of

natural resources and toxic materials as well as emissions of waste

and pollutants over the life cycle of the service or product so as not to

jeopardise the needs of future generations”

(Norwegian Ministry of Environment, 1994).

Contested:

Disagreement over the nature & extent of changes required by

individuals, policy & business…

HOW MUCH IS ENOUGH?

“…The use of services and related products which respond to basic needs and

bring a better quality of life…”

• Needs & quality of life – difficult to define…How / should social expectations

& values be shaped?

Hierarchy of needs (Max-Neef, 1992)

1. Basic needs: subsistence & survival (shelter, housing, clothing, nutrition)

2. Higher needs: non-material (leisure, participation, affection, freedom,

understanding, creativity, and identity)

• In higher income societies, evidence shows that non-material needs can be

replaced with material purchasing leading to marginal increases in

happiness

DOES SC MEAN…

Different interpretations:

Depending on different interests & philosophies

1. CONSUMING MORE EFFICIENTLY

1. CONSUMING LESS (SUFFICIENCY)

(Hinton & Goodman, 2009)

1) CONSUMING MORE EFFICIENTLY

(MAINSTREAM APPROACH)

CONSUMING MORE EFFICIENTLY

Mainstream, liberal model:

• Problem of SCP as market failure =>

eco-taxes, procurement initiatives,

eco-labeling, consumer information etc.

• Consumption of greener / more efficient

products “green consumerism”?

THE MILLENNIALS

Millennials include people in their late teens & young adults under 30

(born 80’s – 2000’s).

2011 Pew Survey:

• Most likely to pay more for responsibly made products

• Many are choosing buses and bikes over cars.

• More supportive of stricter environmental laws

• More likely to attribute global warming to human activity

• More likely to favor environmentally friendly policies such as green energy

development and tax incentives for hybrid vehicles.

• Roughly 80% want to work for companies that care about their impacts

• Consuming differently – role of responsibly & ethics

BEHAVIORAL ASSUMPTIONS

Information provision

EnvironmentalProblems

Environmental Awareness & Attitudes

Environmental Action

INFORMATION-DEFICIT MODEL

Assumptions of neo-liberal ‘efficiency’ approach

• People are rational, self-maximising individuals (Behavioral economics)

Responses

• Price it!

• Informational (information-deficit model)

GOVERNMENT AWARENESS

CAMPAIGNS

http://www.youtube.com/watch?v=SDthR9RH0gw

http://www.youtube.com/watch?v

=SCiS5k_uPbQ

THE CHANGE CAMPAIGN

• http://www.youtube.com/watch?feature=player_detailpage&v=

fcty0eRFaPo

ASSUMPTIONS & EVALUATION OF

MAINSTREAM APPROACH (1)

1. Information on social and environmental

issues can change consumption habits

- However sometimes information is

incomplete / confusing “green washing”?

- There are other barriers to action –

we may know about environmental

issues & have environmental values, but

aren’t translating this into action

ASSUMPTIONS & EVALUATION OF

MAINSTREAM APPROACH (2)

2. People have the motivation & ability to act on that knowledge.

- Locked-in to patterns of consumption – especially in everyday habits

- Not everyone cares / has money / time / resources to act

- Focus on individual – can overlook social & infrastructural context

ASSUMPTIONS & EVALUATION OF

MAINSTREAM APPROACH (3)

3. Consumer actions will transform systems of production &

consumption

- Market still remains distorted – environmental externalities & GDP

- Voluntary actions - “carrot” v’s “stick” approach

- Overlooks role of regulations, institutions, political & corporate power.

Role of collective citizen action rather than consumer behavior

HOWEVER, WE HAVE TO START SOMEWHERE & MAKE

CHANGES WITHIN THE BOUNDS OF THE CURRENT SYSTEM.

BUSINESS ACTION

1. Drivers for business action?

1. Kinds of action: Food case studies

a. Upstream action (e.g. McDonalds)

b. Downstream (e.g. Walmart & Chipotle)

c. Company level (e.g. B-Corps & shared value)

PERSPECTIVES ON BUSINESS

Why would business act?

• Push strategies: regulatory compliance – forcing change (1970’s formation

of EPA)

• Pull strategies: reduced costs (waste minimization & efficiency), new

markets, competitive advantage, public pressure (reputational drivers).

Responses depend on perspectives (Hoffman, 2000)

• The Win-Loose Perspective: sees corporate profit generation and

protecting the environment as incompatible. Trade off between economic

efficiency and socio-environmental gains)

• The Win-Win Perspective: sustainability providing opportunities for

innovation in corporate operations, leads to new markets, products, and

customers.

BUSINESS ACTION

1. Upstream: sustainable sourcing often supported by certification

schemes, aimed at eradicating unsustainable production and

inhumane working conditions in the supply chain.

1. Downstream: provision of information on product/service co

components and ingredients; choice editing; sustainability marketing;

product information.

2. Company level: scaling up integration of sustainability (social and

environmental) issues into strategy, making technologies and

operations as sustainable as possible; investing in radically more

sustainable innovations; new business models

1. Upstream (sustainable sourcing)

More at:

http://www.aboutmcdonalds.com/mcd/sustainability/signatu

re_programs/beef-sustainability.html

McDonalds actions

- MSC certified white fish

- “varying quantities of coffee” from Rainforest Alliance Certified farms

- Packaging certified by Forest Stewardship Council

- Created - Global Roundtable for Sustainable Beef – multi-stakeholder group,

drafting principles & best practices

2. Downstream (choice editing)

Walmart:

• Working with suppliers to reduce salt & sugar.

• Positioning of heathy food in isles, cheaper healthy produce

• “Great For You” label.

2. Downstream – Chipotle Values Branding

• Linked with their upstream policy of sourcing “as much Responsibly

Raised® meat as possible and more local produce than any other

restaurant company in the world”.

• Responsibly Raised meat: “raised in a humane way, fed a vegetarian

diet, never given hormones, and allowed to display their natural

tendencies.”

• Local produce = defined as being grown on farms within 350 miles (560

kilometers) of a restaurant.

• GM free goal by 2014

• Vocal critic of industrial agriculture

• Values branding - advertising method

CHIPOTLE

http://youtu.be/aMfSGt6rHos http://youtu.be/lUtnas5ScSE

• Massive growth in market share

• Does Chipotle practice what it preaches?

• Poor sustainability reporting practices – hard to assess

Back to the Start (8 million views) The Scarecrow (12 million views)

3. Company-level: shared value

• Beyond pursuit of shareholder value alone…and beyond ‘Corporate Social

Responsibility’ where sustainable action is an add-on / slight modification to

existing way of doing things

• “Shared value involves creating economic value in a way that also creates

value for society by addressing its needs and challenges…businesses must

reconnect company success with social progress” (Porter & Kramer, 2011:

64)….“Businesses are the most powerful force for addressing the pressing

issues we face”

• Company level: sustainability (social and environmental) issues at heart of

business model, mission-driven, investing in radically more sustainable

innovations to meet societal needs.

• Needs – e.g. Microfinance (Kiva), environmental services, health & wellbeing

B-CORPS: BENEFIT CORPORATIONS

http://www.youtube.com/watch?f

eature=player_embedded&v=V-

VFZUFJwt4

• B Corps = certified by the nonprofit B Lab to meet rigorous standards

relating to 1) governance, 2) workers conditions, 3) community, 4)

environment

• “for people using business as force for good”…“serving society and

shareholders” (for-profit)

• 950 Certified B Corps from 32 countries and 60 industries

2) CONSUMING LESS

(ALTERNATIVE APPROACH)

OVERALL REDUCTIONS IN

CONSUMPTION?

• Patagonia – Black Friday NYT

advert

• Business need to make fewer

things of higher quality.

• Call on people Reduce, Repair,

Reuse, and Recycle.

• Buy Nothing Day campaign

B) Consuming less (“sufficiency”)

• Ecological footprint – shows that we need to achieve absolute reductions in

consumption

• “Voluntary simplicity” (frugality, anti-consumption, lifestyle focus)

• New consumption communities: localisation, self-provision, off-grid

• “Anti”-consumerist, Anti-capitalist, Anti-materialist, or “Alternative

hedonism”? (Kate Soper, 2007)

• Peer-to-peer: lending, sharing,

swapping, bartering, renting

• Product-service-systems: pay for

product without having to own (car / bike

/ clothes /art rental / appliances)

• Redistribution markets: e.g. ebay,

clothes swaps

• Collaborative lifestyles: share

interests, skills, time, money (e.g. Co-

workings, neighbourhood support)

CONSUMING LESS: BUSINESS RESPONSES -

COLLABORATIVE CONSUMPTION

Bay Area

Bike

Share

(BABS)

HOW DISRUPTIVE IS THE

SHARING ECONOMY?

• Juliet Schor - ‘Plenitude’ - a new economics based on sharing could be

an antidote to the hyper-individualised, hyper-consumer culture of

today, rebuilding social ties that have been lost through market culture

• Others comment that new models of collaborative consumption and co-

production are at risk of being co-opted by private interests, and

increasingly geared towards affluent middle-class types – question if

car shares, clothes swaps, co-housing, shared vacation homes etc.

seriously address economic and climate chaos, unjust power

dynamics or inequitable wealth distribution.

• Still others, say we need a new macro-economics of sustainability

with a positive environmental and social logic

• New Economics Foundation - http://www.neweconomics.org/

• See more at:http://www.sharing.org/information-centre/articles/sharing-economy-short-

introduction-its-political-

evolution?dm_i=M4P,24K5C,346SUQ,7OD54,1#sthash.5ACbm0Z2.zzmSmv2w.dpuf

SUMMARY

• Behavior change

– What is sustainable consumption? Efficiency v Sufficiency

– “Efficiency”, information provision & green consumerism

– Flaws of rational actor model, market action only fails to tackle

systemic issues.

• Sustainable business

– Upstream; Downstream

– Company-level changes (shared value), B-Corps

Consuming less?

- Sufficiency strategies

- Collaborative consumption

READINGS

• Porter & Kramer (2011) ‘Shared Value: How to reinvent capitalism and

unleash a wave of innovation and growth’, Harvard Business Review,

Jan/Feb 2011 issue

• http://hbr.org/2011/01/the-big-idea-creating-shared-value

• Seyfang, G. 2005 “Shopping for Sustainability: Can Sustainable

Consumption Promote Ecological Citizenship?” Environmental Politics,

14:2, 290-306

• Hinton, E. & Goodman, M. (2010) ‘Sustainable Consumption:

Developments, considerations and new directions’. Chapter 16 in

Woodgate, G., and Redclift M. (eds) International Handbook of

Environmental Sociology (2nd edition) , London: Edward Elgar Publishing

http://www.kcl.ac.uk/content/1/c6/03/95/42/mike4.pdf

• Fedrigo, D. & Tukker, A. (2009) ‘Blueprint for sustainable consumption and

production’, SCORE! Sustainable Consumption Research Exchange