Greening the post-crunch consumer

The first seminar, summarised here, looked at sustainability in the suburbs. The second seminar, summarised here, explored the issue of sustainable consumption. In this third seminar, entitled ‘Greening the post-crunch consumer’, we examined the possible impacts of the current economic downturn on long-term consumption patterns. We explored some key questions such as:

• What changes to consumer behaviour are we currently seeing that will be really important in the long-term?
• Are post-crunch consumers likely to be more sustainable consumers?
• Will current thriftier, greener patterns of consumption continue as we come out of the recession or will there be a ‘rebound’ back to more unsustainable behaviours?
• What practical steps can retailers and branded manufacturers take to enable the credit crunch to be a catalyst for a more sustainable future?

The seminar was held on 1st July 2009, at the Innovation Centre in Holborn. The Panel consisted of:

Joel Levy - Managing Director, Penn, Schoen & Berland, EMEA, the market research and consulting firm

David North – Community and Government Director, Tesco

Jessica Sansom – Head of Sustainability, Innocent Drinks

Andy Hobsbawm – Co-founder of award-winning public service Green Thing (Dothegreenthing.com) and European Chairman of Agency.Com

Sally Uren - Deputy Chief Executive, Forum for the Future – chaired the event

Opening comments

Sally Uren opened by suggesting that the consumer needs to be part of driving the whole-scale transformation we need to see. If the post-crunch consumer demands more sustainable products and services, then retailers will go further and faster. But questions remain over how retailers should best engage consumers, and how we can make ‘sustainability stick’.

Joel Levy argued that the post-crunch consumer is likely to be greener. He dismissed the suggestion that the ‘cold winds will drive the green consumer into hibernation’ when we come out of the recession.

PSB has done some recent research into key purchasing drivers for consumers. 1,500 consumers in the US, UK and Japan were given a range of factors - categorised into ‘price’, ‘quality’, ‘convenience’, ‘ethics’ and ‘green’ - and asked to choose the one that was most important to them in their purchasing decision and choice of where to shop. They were asked this retrospectively for before the recession, currently (during the recession) and what they expected to happen after the recession.

The research findings gave some encouraging signals about the potential ‘greenness’ of post-crunch consumers. Not surprisingly, price came out as by far the most important purchasing driver during the recession. However, green values have remained resilient during the recession, and the proportion of consumers saying that green will be the most important factor will rise from 16% during the recession to 22% after it (a rise of one third). The research therefore suggests we can look forward to a resurgence of green – a green bounce, rather than a ‘rebound’ away from more sustainable behaviours.

Joel suggested a number of reasons why this might be the case:

• Momentum - there is a strong momentum already built up on ‘green’
• Growing recognition of the value of thrift - the recession is encouraging people to be more thrifty in their behaviours – ranging from ‘reduce, reuse, recycle’ to consumers turning their heating down to fixing appliances themselves (rather than buying new ones)
• The intersection of recession and climate change is encouraging greener lifestyles - for example by cycling or walking more
• Green becoming cool - Joel noted that we’ve all heard of “frugal cool”, but that there is a growing sense of ‘green cool’ too. ‘Green’ has been cool for a minority of consumers for a long time, but now over half of consumers (55%) say that living a greener lifestyle is cool
• But there are still some evident barriers for consumers, who often cite price and lack of information

David North talked about some of the practical steps retailers could take to help green post-crunch consumers. He began by highlighting that consumers were beginning to act on a sense of climate change before the recession. He gave the example of energy-saving light bulbs: Tesco halved the price before the downturn and saw a quadrupling of sales. This ‘greener purchasing’ has persisted into the recession, as shown by the fact that Tesco sold more than 2.3 million energy-saving light bulbs in one week in January – more than in the whole of 2006.

David suggested that (perception of) price, information and ‘disempowerment’ are the three key consumer barriers to more sustainable purchasing, but argued that great things can happen if we tackle all three.

He gave the first of three quotes that underpin his philosophy when tackling issues like climate change. The first is from Al Gore: "As more and more people understand what's at stake, they become a part of the solution [and share both in the challenges and opportunities presented by the climate crisis]”.

Likewise David argued that – notwithstanding the huge impacts of recession on growth – the recession could be seen as an opportunity and not a threat for more sustainable consumption. He suggested that if we want to keep pushing ‘green’ in a recession, we have to:

1. explain the linkage – between green, low carbon and saving money; and
2. make people feel good about it.

In his view, ‘carbon budgets’ and ‘choice editing’ don’t help make people feel good. He prefers a more positive, incentive-based approach and gave the example of Tesco’s Green Clubcard initiative, which has helped reduce the total number of carrier bags by over 50% since it was introduced, by rewarding consumers for reusing them. This has had a longer-lasting effect than the Irish bag tax, which initially had a bigger impact, but then gradually slipped back.

David’s emphasised the need for all of us to be adaptable, with a second quote, this time from Charles Darwin: “It’s not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

He suggested there are a number of ways that retailers can help on the journey:

• Promote the carrot, not the stick – make sustainability possible, easy and affordable for consumers
• Be at the forefront of research – as Tesco are doing through the Sustainable Consumption Institute, but also through work with organisations like PSB
• Keep going on the information revolution – in Tesco’s case, including through carbon labelling
• Keep on tackling your direct impacts – he noted that Tesco would open the world’s first zero-carbon food store at the end of this year in Ramsay, Cambridge.

David closed with a quote from Robert Kennedy: “All of us might wish at times that we lived in a more tranquil world, but we don’t. And if our times are difficult and perplexing, so are they challenging and filled with opportunity.”

Jessica Sansom opened with a frank assessment of the impact of the recession on Innocent Drinks. In the latter part of 2008, Innocent sales were down 40% on the previous year. Jessica explained that the slump was a category shift, with smoothies in general being seen as a luxury during the recession. This is now moving back in the other direction – with sales expected to get back into growth by September this year. Jessica argued that the decline had everything to do with the premium nature of the product and nothing to do with Innocent as a green and ethical brand. This was shown by the fact that the ‘Coke’ investment in Innocent had no discernible impact on sales.

She went on to outline how the recession has only strengthened Innocent’s sustainability push, including an expansion of the Sustainability team during the past few months. Innocent doesn’t own its supply chain – therefore it has had to convince its suppliers and to see how Innocent can help them through the challenges, efficiencies, technological innovation etc. The focus on efficiency for example has helped one of its suppliers reduce its energy consumption by 26%, whereas previously it had been happy simply to source 100% of its energy from renewable tariffs (something it could not continue into the recession).

When it comes to more sustainable consumerism, the recession is a welcome change, as consumers are reassessing what value for money really means. We’re seeing a rise in the local food market, people going back to farmers markets, and people swapping rather than buying new clothes. But, on the other hand, we’ve seen for example discount fashion retailers – whose ethics have often been questioned by critics - experience significant sales increases during the recession months. So, it’s not a completely rosy picture. And for companies, big questions still remain - like how do we grow in a ‘smart’ way and how do we decouple growth from environmental impacts?

Jessica noted that Innocent will continue to do a lot on sustainability. Recently they have begun exploring the question of ‘what is sustainable nutrition?’ For Innocent to demonstrate its added value, it has to demonstrate the nutritional benefit of its products. It’s also unashamedly going after Government money in this tough economic climate, e.g. money from WRAP has enabled Innocent to explore the potential to use ozone instead of heat to pasteurise its products.

Jessica finished by emphasising the importance of getting consumers engaged and excited and suggested that green is gradually becoming cool.

Andy Hobsbawm picked up on this theme and gave an engaging presentation of the importance of aspiration in creating the permanent behaviour change that we need to see as we come out of the recession. He described what he saw as an opportunity to use marketing rigor and consumer psychology to drive more sustainable behaviours.

He set up Green Thing (Dothegreenthing.com) - an environmental behaviour initiative - to address the fact that existing communications in this area are either too activist, too scary (fear is an important part of information, but tends to paralyse rather than mobilise people), too preaching or too confusing. Andy described how environmental behaviour change has been tarnished in the past by being thought of as a chore and something we ‘should’ do, rather than ‘wanted’ to do.

He argued that many people see ‘sustainable living’ as a life of deprivation, a life ‘without’. The challenge is how can we reframe sustainable living as sexy, fashionable and fun – whilst remembering that time is not on our side. He argued that at least 50% of the change we need to see has to be from behaviour change. He reflected how back in 1993, people round the table at a dinner party rarely knew what the internet was – and look at where we are now. Could the same be true for sustainability?

Andy suggested that consumers get mesmerised because huge amounts of resources go into tempting them to lead an unsustainable life. Taking the example of cars, an enormous creative energy has gone (and continues to go) into making us want cars. The design of cars is seen as an expression of status and identity; the ‘spell’ of music and driving have been cleverly interwoven to entrance us with an adrenaline rush, supplemented by the entrancing ‘spell of speed’ and the sense of ‘adventure’ associated with cars.

To date, we’ve seen nothing like that effort go into the aspiration of walking, rather than driving – so the ‘counter spells’ have been pretty feeble. So - as advocates for more sustainable living -- we’re facing an ‘unfair fight’. Someone needs to tell ‘the other side of the story’. This is what Green Thing is trying to do. Andy talked about how they had made the world’s first ‘walkcast’ (at 105 beats per minute to match optimum walking speed). He then showed a short Green Thing film – demonstrating how the experience of everyday walking can be made adventurous and dramatise the benefits of a slower journey with the right storytelling approach.

What needs to happen next? Andy argued that we need to get busy building new products and services, but with a different filter. We need to take the same amount of resource that has been used to ‘cast spells’ on unsustainable behaviour to cast alternative spells. He concluded by stating that the world needs a positive vision for sustainable living – not a life with less, but a life with more (particularly more sense of togetherness and community post-recession). Being greener is actually a healthier, happier, smarter, kinder, friendlier… better way to be.

Discussion

The first few questions were all about what retailers could do to enable more sustainable consumption. The first question was about the role of choice editing in retail. David North acknowledged that every business edits choice (e.g. in Tesco they would not sell endangered species), but that he prefers an incentive-based approach to what he sees as a restrictive approach. Building on that, David was challenged by an audience member about the need to provide consistent messages to consumers, giving the example of Tesco’s “Turn Lights into flights” campaign. David acknowledged that this was probably a mistake, but the fact that most of us were still flying as much as ever showed how much further individuals and organisations, including Tesco, had to go to integrate sustainability.

On carbon labelling, David North said that Tesco was committed to carbon labelling, but they recognised that it wasn’t the only solution. That’s why Tesco will soon be doing more on providing consumer information. For example, they will be encouraging consumers to drive in a lower-carbon way (by changing gears more smoothly, removing excess luggage etc. which can all reduce carbon emissions).

Andy Hobsbawm emphasised the point that its manufacturers who need to do a lot too. He stressed that consumption is out of control and that we need to move to dematerialise products (as e.g. Nokia is looking to do by upgrading the software in its handsets instead of replacing them) and shift from products to services (as per the Interface example). On choice editing, he said we shouldn’t underestimate how important this is and that retailers already choice edit according to some criteria (“the McDonald’s Happy Meal is choice editing”), so why not environmentally too?

A follow-up question explored further this question of dematerialisation and asked whether it could be good for everyone, or whether someone always had to lose out – using the example of walking rather than driving, which might be better for our health and our planet’s health, but not very good for manufacturers of cars. Andy said that he believed it was a question of building new business models and that it might be possible to the same profit from lower revenue growth balanced with greater consumer loyalty. No industry has a God-given right to exist simply because that’s the current status quote – after all, the abolition of slavery was opposed on the basis that it would destroy the economy. We may be suffering pain in the economic downturn, but we have to figure out what is right and true.

David North pointed out that most people’s focus on the ‘way out’ of the recession was on trying to increase consumption and he suggested that we’re years away from where we need to get to. Academics at the Sustainable Consumption Institute are exploring how businesses might make money from ‘less’. Sally Uren agreed that dematerialisation was important, but questioned whether it would take us far enough on its own.

Picking up on the results of the survey, one question was around why we can’t have ‘green’ built into ‘quality’. Joel Levy commented that the findings suggested that consumers generally think green is more expensive. However, a number of brands are increasingly using ‘green’ as a signal of quality, innovation and added value – so smart companies are using green as a signifier. This represented a great opportunity for retailers. Another question asked whether there were false dichotomies in the research, i.e. whether splitting ‘price’, ‘green’, ‘ethical’ etc was helpful. Joel accepted that this wasn’t perfect, but emphasised how this kind of research can be very powerful, in particular for non-experts, as it makes a good case for ‘the cause’.

Andy answered a question about the best way of reaching the consumer on choice by saying that he thinks choice editing is a good thing – whereby a brand should be able to establish trust with the consumer, so that the consumer doesn’t need to ‘read the small print’. A brand can help shortcut the potential consumer confusion over labels. Andy commented that brands should provide information for those consumers that want it, but that for those consumers that don’t want to think too hard about it – i.e. the majority – then it should be a case of ‘here it is, we’ve done the hard work for you’.

On the role of retailers versus government, Jessica agreed that there was definitely a role for regulation, but that we had to be sure it didn’t stifle innovation. Andy believes that there is likely to be enormous government intervention at some point – along the lines of ‘wartime regulation’. Joel too agreed that legislation would play an important part.

Another question was around the potential role for carbon pricing in post-recession world. There was a general acceptance from the Panel that carbon pricing would be a useful mechanism, but David felt it was almost an irrelevant question at the moment because he couldn’t see any governments even close to being prepared to adopt it. Andy made the case that unless companies think radically, carbon pricing will catch them up (and catch them out).

Jessica noted that while we’re a long way away from carbon pricing, Innocent is beginning to see a proxy for carbon pricing hitting its suppliers anyway. She gave the example of mango farmers in India suffering the impacts of climate change, which has led to a huge drop in productivity. So to some extent climate change is being reflected in the increased prices Innocent is facing in its raw material costs.

David North noted that Tesco is introducing Community Champions at its stores (around 100 to date) to engage the community on sustainability issues. He believes there is lots that can be done that doesn’t require us to wait 20 years for politicians to get the courage to act.

The final question was about what was the Panel’s most exciting aspiration for a greener lifestyle. Andy suggested that there was an enormous opportunity for meaningful brands around community and a sense of ‘social connection’ for consumers. People crave a sense of society, particularly as lots of people become isolated in a cocoon of individualism on our journey of consumerism. Jessica echoed this and talked about the importance of starting a conversation with consumers. When employees join Innocent, they’re taught how to write in the Innocent style (e.g. starting e-mails with ‘hello’, rather than launching straight into a request) and they try to do the same with consumers, encouraging them to take action (e.g. by encouraging consumers to ‘go, plant a tree’). David’s aspiration is a vision where households compete to lead the lowest-carbon lifestyles and businesses like Tesco (and government) compete to provide that.

Concluding remarks

Sally summarised by saying that clearly the recession has affected consumer behaviour and that we are seeing some more sustainable behaviours during the downturn. The general feeling from the panel was that post-crunch consumers could behave more sustainably if the right support mechanisms were in place, but that there was a question over which current behaviours will stick. We need to recognise that retailers and manufactured brands can be incredibly powerful agents for change. We need to harness their power to really engage with consumers on sustainability – and quickly.