www.wbcsd.org

future leadersWBCSD Liaison Delegate Meeting

Sustainability Issues & Sustainability Issues & Opportunities Opportunities for for Brands Brands & Luxury& Luxury

Cheryl Hicks, WBCSDCheryl Hicks, WBCSD

WBCSD membership 200 multinational corporations

The Business Role & the Work Program

WBCSD Work Program

What are the world’s biggest brands saying about sustainability issues core to their businesses?

Sustainability issues key to Brands incl. Luxury & Jewelry

Sustainable production & consumption

WBCSD membership & workstream on Sustainable Consumption & Consumers

A business perspective on

sustainable consumption

Facts & Trends on Sustainable ConsumptionDecember 2008

• efficiency gains and technological advances alone will not be sufficient to bring consumption patterns to a sustainable level

• changes will also be required to consumer consumer lifestyleslifestyles and the ways in which consumers use and choose products and services…

• business needs to play a leadership role in fostering more sustainable consumer choices …to achieve more sustainable lifestyles.

What is driving brands & sustainability?

The consumer of the future…

Increased consumer awareness & concern

• 96% of Europeans say that protecting the environment is important for them personally. Two-thirds of this group say that it is “very important”

• Nearly ¼ US adults now subscribes to a new set of values that typically includes “environmentalism, feminism, global issues and spiritual searching”. These “cultural creatives” are well educated, relatively affluent, and typical of the kind of consumer responsible for the success of hybrid cars.

Increased consumer willingness

“I would be more likely to purchase products or services from a company with good reputation for environmental responsibility”

Attitudes vs. behavior

There is a large gap between consumer attitudes and willingness and ACTUAL BEHAVIOUR CHANGE

Barriers to behavior change – Why is it so difficult?

The consumer will not compromise on performance, performance, convenience convenience or price price

Consumers are confused about which products are more sustainable

On pack claims do not explain the complexities of life cycle analysis and global supply chains

What is driving brands & sustainability?

If the consumer isn’t enough,what about the regulators…

UN Global policy recommendations 2010

Current status

The Marrakech Process is a global multi-stakeholder process promoting a global framework to support regional and national implementation of policy on sustainable production and consumption

A 10 year framework of programmes which began in 2002, post WSSD Johannesburg The UN CSD will review recommendations on SCP in 2010-2011 Drafting of recommendations has begun

Policy input - Marrakech

What does it look like?

Observations: Long list of ‘priorities’ – short list of activities, proposed programs / actions Production heavy – Consumption light Policy support for sustainable products life-styles – but little on solutions Influenced by current EU Action plan on SCP

ObservationsSept. 15, 2008

Draft

UN Global policy recommendations 2010

Regional policy – EU Action Plan on SCP

What are the implications for business?

Business Europe on the EU Action Plan on SCP – Oct 08:“Supports overall objective to foster efficient framework conditions that boost innovation, promote continuous improvement in production processes and a wide choice of sustainable products for consumers and new business opportunities for companies.”

However, the current action plan is yet to adequately address:→ involvement of stakeholders throughout the full supply chain – ie where manufacturers and retailers set the agenda together→ lifecycle thinking including all relevant SD aspects→ actions based on sound scientific evidence→ leveraging innovation in process, product and service solutions→ relevant communication to shape consumer behaviour→ pursuing voluntary approaches wherever possible – flexibility on how goals are achieved

Where do the world’s biggest brands see opportunityopportunity in 2009?

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Innovation

Choice-Influencing

Choice-Editing

More Sustainable Consumption: Business (& Regulatory) Approaches

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Innovation: development of new and improved products, services and business models incorporating provisions for delivering maximum societal value at minimum environmental cost

Choice-Influencing: the use of marketing communications and awareness-raising campaigns to enable and encourage consumers to choose and use products more efficiently and sustainably

Choice-Editing: the removal of “unsustainable” products, product components and services from the marketplace. In partnership with other actors in society such as policy makers and retailers

More Sustainable Consumption: Business (& Regulatory) Approaches

Business innovation for sustainable consumption: eco-efficiency measures

product innovation and design

production and supply chain management

business model innovation

The business case:Products and services have to perform better, have a competitive price, AND be more sustainable

They must minimize environmental impacts and deliver value to society

Many consumer products use more energy (and emit more CO2) during use than they do during sourcing, manufacturing, distribution & retail

81% of CO2 emissions from cars are caused after sale

Lowering the dish washing temperature by 10% leads to a 20% decrease in the energy demand within the use phase

The business case:Business needs to create the market for sustainable products by working in partnership with the consumer

…and by using marketing and communications to influence consumer choice and behaviour

The business case:Choices to edit the availability of certain products are often in conflict…business, governments and society must work together to define sustainable products and lifestyles

Sustainable consumption is a systemic challenge that requires all actors in society to work together.

Business cannot do it alone…

What will consumer brands do in 2009?

Sustainable Consumption 2009 Action Plan

1. Advocate Facts & Trends on SCPolicy-makers, retailers, marketers

2. More sustainable products & consumptionDevelop principles & criteria from a business perspective

3. Sustainable lifestylesDevelop business view on lifestyles that support the vision

of a sustainable world

                         

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SourcingProduction + Packaging

Trade + Logistic

Use Disposal

In partnership with other actors in society

Principles for more Sustainable Consumption

Identify desirable improvement options

Identify relevant challenges / impacts

Identify suitable approach(es)

Identify key step along value chain

What is a sustainable lifestyle?

What can business do?

Leverage BRAND & creative marketing expertise

Are these actions relevant for the jewelry and luxury brands?

Is the consumer driving change?Regulators?Supply chain?

Where are the opportunities?

NGO pressure Luxury brands & sustainability

2007 study

L’Oréal

Hermès

LVMH

Coach

Tiffany & Co

Swatch

PPR

Richmont

Bulgari

Tods

N

2008Sustainability & Luxury under fire in mainstream press

2009Key issues facing luxury industry: environmental issues and the role of “values” for the consumer

Are these actions relevant for the jewelry and luxury brands?

What can we learn from other industries who have faced ethical sourcing and fair trade issues?

Fair trade

Ethicalsourcing

What are the FACTS & TRENDS from a

business perspective?

There will be 9 billion people in 2050

World GDP expected to grow 325% by 2050

Number of middle-class consumers projected to triple by 2030

Culture of “consumerism” causing greatest per capita share of global consumption and environmental footprint

2/3 of the earth’s ecosystems are already in decline

Natural resource consumption already 125% over carrying capacity

…and expected to reach 170% by 2040

Higher levels of consumption and wealth do not necessarily co-relate with well-being

Happy Planet IndexNew Economics Foundation, 2006