More than 17 million households accounted for the middle class in India in 2011. Of the major economies, India will still have a young population in 2030 at a median age of 31.5, and is expected to be an urban majority country by the late 2030s. With a growing, young and urban middle-class, consumption in India must meet the needs of the present generations without compromising the ability of future generations to meet needs. However, research shows that there is a clear gap between consumers’ intentions and actions when it comes to sustainability.
There are examples of companies having made progress in making their supply chains more sustainable. However, achieving scale in sustainable consumption cannot be done without engaging consumers. To better understand the demand side, the WEF and ten partner companies are currently running a project called “Engaging Tomorrow’s Consumer” (ETC). The aim is to understand how companies can engage consumers to trigger simple behaviour shifts that enable more sustainable lifestyles, grow demand for more sustainable products, and create business value.
The WEF project team believes that India, with its growing middle class and increasing urbanisation, has an excellent opportunity to engage consumers in sustainability early and avoid problems later. It has come to the conclusion that there are several elements to be ensured to decouple growth from its environmental impact – such as, pricing and people’s needs and aspirations.
First, realistic input prices would make sustainability an economic necessity. The cost of fossil fuels is artificially low because it does not include the price they incur on the environment (and therefore on society) such as global warming and more extreme weather (e.g. Hurricane Sandy). US climate scientist James Hansen has suggested that the prices of all fossil fuels should be gradually raised. This would also spur investments in clean alternative energy, which in the medium- to long-term would be priced almost similar to unsustainable fossil fuel energy, and hence become the preferred choice of consumers.
Secondly, sustainability must fit into people’s existing needs and aspirations. No matter what, though, the product must perform to the highest quality standards. People buy energy-efficient light-bulbs and fuel-efficient cars for the performance embedded in the product, not necessarily because they “value” sustainability. Thus product design changes could influence consumer behaviour towards sustainable consumption.
The ETC project recognises that there are barriers to scaling up sustainable consumption. First, sustainability is currently seen as a sacrifice. People assume that they must give something up in order to be sustainable. Shifting the connotation away from sacrifice and toward benefits is therefore key. Second, there is a clear gap between the intentions and actions of consumers when it comes to sustainability. Past research has shown that 72 per cent of consumers surveyed around the world say they are willing to buy green products, but only 17 per cent actually do. (This gap has to be closed.)
Third, if the consumer does not see a direct relevance in day-to-day life then sustainable consumption is not seen as relevant. Fourth, people often feel that they are individually insignificant and their actions cannot possibly make a difference.
Finally, most companies are not yet embedding sustainability throughout the product development cycle. ETC is therefore trying to understand how to engage not just consumers but corporate decision-makers at all levels in sustainability. By doing so, sustainability can be made part of the entire product development process, and can be made a critical assessment factor when deciding which products make it through development and which don’t.
The ETC project team will discuss with its partner companies the possible ways of achieving scale by working collectively and creating action on new fronts. In 2013, the project team hopes to run some collaborative pilot programmes to test some hypotheses it has developed over the course of 2012.
In the meantime, says Tiffany West, Director, Head of Agriculture, Food and Beverage Industry, at WEF, there are three “platforms” that are already showing good results:
- Collaborative Consumption – In the West, especially the US, there has been a rapid explosion of “collaborative consumption” through traditional sharing, bartering, trading, renting, gifting, and swapping reinvented through network technologies on a scale and in ways which had not been possible before. This can be seen from online marketplaces such as eBay and Craigslist, to car-sharing and ride-sharing.
- Open innovation – Open innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at the University of California, Berkeley. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions from others.
- Crowdsourcing – By putting questions or problems “to the crowd” we access the minds of many rather than the minds of just a few.
