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This is a guest post about the UN Climate Summit in Copenhagen from Peter Lacy, Accenture
So what’s the link between Shakespeare, consumers, and sustainability? Well, after listening to Muhtar Kent, Coca Cola’s president and CEO, speak at Kronborg Castle in Copenhagen—apparently the Castle that inspired Shakespeare’s Elsinore in Hamlet—I believe it is clear that the big consumer brands are significantly stepping up their activities on sustainability.
Muhtar Kent and Paul Polman, the CEO of global consumer-goods giant Unilever, launched a major new sustainability initiative on Friday at the Copenhagen Summit ‘Business Day,’ aiming to better understand the potential to shift global supply chains to a low carbon trajectory. This would certainly be a substantial contribution to climate change if Paul Polman is right and 5 billion tons of C02 are embedded in the consumer goods supply chain (10%-plus of global emissions).
But to be or not to be? That is the question really on everyone’s lips around consumers and sustainability. Are consumers really likely to be a driving force in the shift to a low-carbon economy, or when it really comes to it, are we likely to see spending driven by traditional triggers such as quality, availability, and price, particularly the latter in turbulent economic times?
According to Kent, discussions at Coca-Cola's retail research council suggest advisers from Terry Leahy at Tesco to Rajendra Pachauri believe, "The consumer is at the heart of a low carbon economy." It's a statement of aspiration that sounds right, and Kent is certainly acting on it—for example, by shifting from HFC to other refrigerants in Coke's staggering 10m fridges around the world—reducing their emissions by a factor of 1400:1. But evidence and opinion on whether consumers care is mixed.
A recent survey from the Pew Center demonstrates that U.S. citizens and consumers have apparently lost much of their interest in climate change and environmental issues in general, and the U.S. is one of the few places in the world where belief in the science is actually decreasing rather than increasing. For example, only 35% of Americans saw climate change as a serious problem as of October 2009, down from 44% in April 2008.
Nevertheless, other studies suggest consumer interest is steady even in tough times. Accenture's own Climate Change Consumer Observatory—based on an annual survey of 11,000 consumers across 22 countries over the last 3 years—indicates that consumer interest in climate change has held and there appears to be an increasing number acting on this with their dollars, cents, and euros (albeit from the margins and a low base).
This seems to resonate with Kent's statement that about one third of Coke's customers show a strong interest in sustainability on a range of issues from climate change to water to recycling. That concern is also apparently growing. But much of the debate about consumers and climate change, or sustainability more broadly, focuses on whether customers are prepared to pay premium prices. This is a mistake and leads down a dead-end. It's clear from most studies that, given other cost concerns, most consumers are decreasingly likely to want to pay a premium for sustainability performance. Niche markets are seemingly becoming less attractive.
But the lack of willingness to pay a differentiated price for the sustainability credentials of goods or services doesn't mean that consumers aren't prepared to differentiate based on sustainability performance with all other things being equal—e.g., price, quality, and availability. In that sense, sustainability has become a tie-breaker for mass market consumers who can't be, or perhaps simply aren't, prepared to pay more but who would still like to align values and concerns with their purchasing power.
Smart consumer goods companies and retailers such as P&G, M&S, Wal-Mart, Coca-Cola, and Unilever are recognizing this and rethinking their value proposition—both in terms of the product itself and how it is marketed and their value delivery—the way they structure their global manufacturing, supply, distribution, and even recycling policies, and 'value capture' (revenue and cost models), all in light of growing consumer interest in sustainability that is beginning to translate into some interesting early buying signals (particularly among Generation X and Y around the world).
And if there's one thing Coke understands perhaps better than anyone else, it's how to tap into powerful consumer trends. So again, "to be or not to be" on consumers driving a low carbon transition? I will leave you to answer that. I still have some doubts. But I think that with all of the Copenhagen and climate media momentum, corporate activity, and indeed government intervention to create a level-playing field for consumers through labeling and standards, Coke may be onto a good bet. So perhaps by learning from Coke's moves, we have more to learn from Shakespeare's Venus and Adonis than Hamlet: "Make use of time, let not advantage slip"!
Peter Lacy, based in London, is managing director of Accenture Sustainability Services for Europe, Africa, Middle East, and Latin America. He is blogging this week on the UN Climate Change Summit in Copenhagen.
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