Philip Smith, COO and EVP of Europe Delivers, Xynteo, looks at how businesses can help nudge consumers to “do the right thing”.
European consumption patterns are unsustainable – and consumers are becoming increasingly aware of this. Many understand that our consumption comes with a host of negative impacts: plastic waste, resource scarcity and social injustice to name but a few. This rising awareness, however, does not mean businesses can delegate responsibility to consumers and rely on them to lead change.
While consumers can make choices within what’s available, we need businesses to take charge when it comes to moving away from our current linear consumption model. A move away from this system, which relies on taking resources to mass produce single-use products with short shelf lives (also known as the ‘take-make-waste’ model), and towards a circular model based on maximising our resources, will only be possible if corporations lead the way.
Our consumption model is broken
We know that 55% of Europe’s economy is dependent on consumer spending. Rapid consumption drives our current growth models and supply chains – meaning customers are driven to buy a lot and waste a lot, and then buy more again. Many consumer products, from washing machines to mobile phones and clothes, are designed to stop working artificially early or go out of style quickly, to drive maximum sales. But this creates unnecessary waste.
The recent surge in use of behavioural insights and access to consumer data is frequently used to nudge consumers to buy more. But could it also be used to make them make better choices?
The recent surge in use of behavioural insights and access to consumer data is frequently used to nudge consumers to buy more. But could it also be used to make them make better choices?
Xynteo’s recent Europe Delivers report, which gathered views of over 27 European CEOs, showed the conscious consumer is very much on the minds of CEOs. According to a survey from Deloitte, 42% of millennials began or deepened their relationship with a business because of its perceived positive impact on society and/or the environment, while 37% ended or lessened their relationship because of the company’s perceived unethical behaviour.
Indeed, shift to circularity makes not just social and environmental sense; it represents serious economic value. Research shows it could add €900 billion to Europe’s GDP by 2030 and increase household income by €3,000 a year, while halving CO2 emissions compared with 2015 levels.
The danger of a rapid response
However, the rise of the conscious consumer has brought with it the increased risk of knee-jerk reactions from companies eager to attract their attention. For example, in response to the public’s rejection of plastic, we’ve seen a raft of retailers and manufacturers committing to going plastic-free – and at speed.
As part of the New Plastics Economy Global Commitment which launched in 2018, 123 companies have pledged to eliminate all plastic deemed to be unnecessary by 2025.
We’ve also seen a consumer swell in Europe and elsewhere for companies to ban plastic straws – but plastic straws account for just 0.03% of total plastic waste, with fishing nets and microplastics from clothes making up the bulk of the plastics in our oceans.
Another pitfall to avoid is ‘woke-washing’, where companies seek to capture conscious consumers through marketing campaigns that speak to environmental and social goals without actually advancing them
While recognising consumer preference is vital, companies should avoid reactive approaches and lofty promises – or they run the risk of either focusing on the wrong part of the problem or tinkering at the edges of a fundamentally flawed model.
Another pitfall to avoid is ‘woke-washing’, where companies seek to capture conscious consumers through marketing campaigns that speak to environmental and social goals without actually advancing them.
Earlier this year, Alan Jope, Unilever’s CEO, commented, ‘purpose is one of the most exciting opportunities I’ve seen for this industry in my 35 years of marketing…[however] there are too many examples of brands undermining purposeful marketing by launching campaigns which aren’t backing up what their brand says with what their brand does.’
Therefore, moving to a new form of consumption that meets human needs, supports healthy economies but is realistic is a challenge that demands truly strategic, credible and trustworthy leadership from business.
What do businesses need to do?
There are a variety of ways businesses can start to move away from a ‘take-make-waste’ consumption model.
Some businesses simply remove unsustainable choices altogether, in a practice sometimes known as ‘choice editing’. Use of technology and more meaningful use of customer data are further means for companies to nudge consumers towards sustainability. Retail giant Tesco is putting this into practice to help move its customers towards more sustainable choices while purchasing.
In partnership with Oxford University, it has used data from its 16 million Clubcard customers to measure the impact of small nudges on the environmental impact of the basket that people are buying, and plans to extend this initiative further to educate consumers on their carbon footprints across its stores.
However, neither choice editing, nor nudging are sufficient on their own to build a sustainable consumption model. This will require restructuring the industrial systems that underpin production.
As part of its ambition to become climate, forest and water positive, the retailer [IKEA] is moving partially from a products-led business model to a circular, services-led one, with plans to lease furniture as well as sell it.
IKEA is an example of one company which is making some impressive moves in this area. As part of its ambition to become climate, forest and water positive, the retailer is moving partially from a products-led business model to a circular, services-led one, with plans to lease furniture as well as sell it.
IKEA will also design all new products using circular design principles – meaning they will be intentionally designed to be repurposed, repaired, reused, resold, and recycled. By 2030, the company is aiming for all its products and packaging materials to be based on renewable and / or recycled materials, with virgin fossil plastic removed from products.
Others, including tech giants Nokia and Intel, are also prioritising waste reduction across their supply chains. Nokia has institutionalised remanufacturing in its supply chain, so that used products are returned to the original manufacturer, allowing components and materials to be used again to produce new products. Since 2008, Intel has recycled 75% of waste generated in its operations, through upcycling, recycling, recovery and reuse of materials.
The clock is ticking
The OECD has predicted that by 2060 we will need double our resource base to sustain current consumption levels. This prediction takes into account efficiency improvements and technological progress – reiterating that the time for tweaking around the edges of a linear ‘take-make-waste’ model is over. We need a radical, far-reaching and urgent overhaul.
As beneficiaries of the current consumption model and a powerful driver of consumer decisions, business needs to take a front-seat role in this shift. The commercial benefits are sizeable, not least as millennials make up an ever-larger share of the consumer base.
Ultimately, businesses must leverage their influence over consumers, through using technology and data collection in more meaningful ways to shape supply chains, product design and consumer choice to orchestrate a shift to a circular model of consumption.
