Re:Imagining Consumption Forum Creating Brand Value & Sustainable Growth

Stakeholder Synthesis Report

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Contents

1. Introduction pg. 3

2. Contextualizing Sustainable Consumption

2.1 Macro Forces Shaping our World pg. 4

2.2 Implications for Business pg. 5

2.3 New Role of Business/Brands pg. 6

2.4 Attributes of Sustainable Consumption pg. 7

3. Insights from Stakeholders

3.1 Barriers to Sustainable Consumption pg. 8

3.2 Conditions for Achieving Sustainable Consumption pg. 9

3.3 Future Actions for More Sustainable Consumption pg. 10

4. Next Steps pg. 11

5. Acknowledgements pg. 12

6. References pg. 12

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Introduction

On December 10, 2012 L’Oréal USA and Forum for the Future hosted the Re: Imagining Con-

sumption Forum and convened over thirty participants from leading retailers, brands, commu-

nications specialists, and NGOs to advance the dialogue around sustainable consumption.

The objectives of the Forum were to:

- Explore why sustainability hasn’t been accepted into the mainstream

- Learn from pioneering brand practices in a peer-to-peer environment

- Identify practical approaches and solutions for brands and their partners to

shape the future of consumerism in the US

It was a challenging day in which the participants

worked in four groups and discussed the follow-

ing topics: 2020 vision for, and attributes of, sus-

tainable consumption; barriers to achieving sus-

tainable consumption; the role for business and

brands in mainstreaming sustainability; and po-

tential actions to move the agenda forward. At

the end of the day, each group developed ide-

as for future potential collaboration. In this docu-

ment, we have summarized the context and

macro forces that challenge consumer business-

es, the role for business and brands in influencing

and shaping sustainable consumption, key insights from the day, as well as potential work

streams for future collaborations. Importantly, all the stakeholders convened welcomed

the notion that enterprises and brands need to embrace sustainable consumption as a

value creator in order to ensure sustainable growth.

“It is extremely important for organizations, like L’Oréal, to demonstrate the leadership by convening pre-competitive organizations who work in the same industry and other industries to ask the big

questions.”

Raphael Bemporad Co-founder and CEO

BBMG

Pamela Alabaster

SVP Corporate Communications, Sustainable

Development, & Public Affairs

L’Oréal USA

Sally Uren

Deputy CEO

Forum for the Future

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Contextualizing Sustainable Consumption

Global Population Growth

Nine billion on the planet by 2050 with

an additional 3 billion middle class con-

sumers by 20301. This will lead to a dra-

matic rise in the demand for materials

and goods and services.

Depleting Natural Resources

Population growth will place tremen-

dous pressure on the planet’s natural

resources including arable land, fresh

water, energy, precious metals, forests,

fish stocks and other biological re-

sources. Even if these resources are nev-

er depleted, on a per capita basis they

will decline significantly because they

must be divided among more people.

Land Availability and Food Security

In the next 40 years we will have to pro-

duce as much food as we did in the last

8000 years.2 870 million people in the

world today (13.1%) are hungry.3 Equally,

there are nearly 525 million obese4—more

than 10% of the world’s population.5

Climate Change

Elevated carbon levels in our atmos-

phere are linked to rising sea levels and

extreme weather patterns which have

devastated citizens around the world.

Urbanization

By 2050, it is predicted 64.1% and 85.9%

of the developing and developed world

respectively will be urbanized.6

Long-term success and continued growth for companies and brands is challenged by

the convergence of declining natural resources and ecosystem services and the in-

creasing demands for these resources. Sustainable consumption and our ability to

meet the growing needs and aspirations of the global population within the limits of our

planet is recognized by leading companies and brands as one of the most significant

challenges in the coming decades. Consumption at today’s rate threatens the global

and local natural resources on which we depend, and the larger eco-systems in which

we live. Here are some of the macro-forces affecting our world and influencing busi-

ness decisions:

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“The natural resources that this

earth provides, that all of our

businesses depend on, are in

rapid decline. That threatens not

only the health of our business,

but the entire planet.”

Rick Ridgeway

VP Environmental Initiatives

Patagonia

Water Scarcity

Nearly one billion people today don’t

have access to clean drinking water

and by 20307, people and industry will

consume 30% more water than can be

naturally replenished.8

Deforestation

Large-scale deforestation, which has left

less than half of the earth’s original forest

habitat remaining, is contributing to cli-

mate change by limiting the bio seques-

tration of atmospheric carbon dioxide

and accelerating biodiversity loss.

Digital Explosion, Transparency and

Consumer Empowerment

Over 70% of the world’s population has

a mobile phone,9 providing access to

information and connectivity facilitating

the spread and adoption of ideas. Dig-

ital platforms are transforming econom-

ic and social structures and interactions.

Open Innovation

Developing and sharing ideas that

come from collaborations or crowd

sources are providing new creativity

and models for problem solving.

Localism

The popularity and support for local

production and consumption of goods

is creating positive social, economic

and often environmental impacts for

the communities around us.

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Sustainability is no longer a “nice to have”

In order to successfully manage future

risks and opportunities, organizations

must integrate sustainability into their

operations and business strategy. Sus-

tainability has become an accepted

driver of long-term growth.

No business is an island

Collaboration is key to advance

knowledge, skills, resources and compe-

tencies that can address and acceler-

ate solutions for complex problems and

drive change.

Managing uncertainty is a certainty

The only thing organizations can count

on is the rapidly changing global land-

scape. Long-term risk mapping can help

an organization identify the most likely

areas of pressure.

Shake out those supply chain skeletons

Companies should be proactively re-

viewing the practices and operations of

their partners downstream with particu-

lar emphasis on their environmental and

social impacts. Increasingly, the public

views companies as responsible for the

actions of their partners and suppliers,

and expects brands to be responsible

for how their products are made.

Make sustainability normal and easy for

consumers

Sustainability has to be integral to a

brand’s or product’s proposition and not

presented as an added attribute or

benefit. Brands need to build long-term

meaningful connections with consumers

who share their values. Above all,

sustainable products need to perform

and be priced in line with less sustainable

options.

Implications for Business

The macro-forces outlined will have profound and wide ranging impact on business’s

operating context. Some businesses are already taking steps to ensure that they will

thrive in this new landscape. We’ve outlined some of the implications we see for busi-

nesses below. The scale of the challenge demands a new role for businesses and

brands and a redefinition of consumption.

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Experiment with new business models

and systems innovation

Organizations need to contemplate dis-

ruptive models for continued growth,

whether that is shared or collaborative

consumption, the provision of services,

expertise or experiences, opportunities

for swapping/recycling and reuse,

closed loop design, systems innovation

and ways to drive qualitative growth

and not just selling more stuff.

Valuing nature and social capital

Organizations need to make decisions

that fully value nature and labor.

More than ever, business has an obligation to create the conditions for a sustainable

future and to use its influence, assets and know-how to overcome the system barriers

that prevent sustainability from becoming more mainstream, including:

Investors who don’t yet value sustainability despite the fact that companies

on the DJSI outperform those that are not.

Consumers who do not understand sustainability despite wanting to do the

right thing.

Lack of enabling policies to promote sustainable behavior despite the best

intentions of government.

Greater collaboration and partnering with government and civil society will be critical

to accelerating and scaling solutions that address the most complex and challenging

issues. In addition, viewing the economy as circular, not linear—where someone's

waste is another’s input — will be essential to transforming and reframing business

models and approaches.

A New Role for Business

“We need to build a coalition

where we are sharing best

practices.”

Coleman Bigelow

Global Sustainability

Marketing Director Johnson & Johnson

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Brands also have to change their behavior and evolve to integrate sustainable attrib-

utes in their long-term strategic vision and embed the values of their brand in a way

that is authentic and reinforces the brand proposition.

A New Approach for Brands

“We as an industry, owe it to

consumers to simplify what the

message is, to simplify what

matters and then to deliver on

those promises.”

Jonathan Atwood VP Sustainable Living and

Corporate Communication

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If business and brands were to embrace

these new roles, we would see the deliv-

ery of new models for sustainable con-

sumption which provide economic suc-

cess and social value, all within the con-

straints of our declining environment. Spe-

cifically, the following will be delivered.

Smart Growth

Where economic growth is not delivered

at the expense of the environment, and

where the overall environmental foot-

print of business has been reduced.

Smart Use

Where impacts associated with product

use and disposal are minimal.

Positive Social Impact

Where, what and how we buy promotes

well-being in individuals, communities

and supply chains.

A Better Choice of Choice

Where the unsustainable product or ser-

vice is no longer available and consum-

ers are choosing within a set of sustaina-

ble options.

“We have been training people to buy more stuff for a very long time, and so how do we change those behaviors?”

Tiffany West Director Head of Agriculture

Food and Beverage World Economic Forum

Attributes of Sustainable Consumption

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Insights from Stakeholders Convened

The previous section explored themes driving the need to transition towards more sus-

tainable consumption. During the Forum, stakeholders collaborated across sectors to

determine the existing barriers to change, the conditions needed to achieve sustaina-

ble consumption, and the future actions necessary to facilitate a shift. These insights

are outlined in the following section.

The current configuration of the capital

markets doesn’t reward sustainable

business practice

Too often the emphasis is on profit and

communications of profit, driven by

short-termism and risk aversion of main-

stream investors. The behavior of capital

markets is slowing down the transition to

sustainable business models.

Lack of industry collaboration

Companies are often looking for exclu-

sivity, and there are few incentives for

collaboration. There is a need for more

pre-competitive forums/coalitions to ad-

dress systemic challenges.

Lack of common standards and public policy

Public policy currently fails to create a

level playing field for sustainability efforts,

too often pushing way ahead of the

competition is uncompetitive. Public poli-

cy doesn't act as an incentive for sustain-

ability, and in some cases is a barrier to

progress. There is no clear scorecard for

sustainability that is universally accepted

and communicated to consumers.

Current role of marketing

There is a need to redefine the role of

marketing. Marketers need to make sus-

tainable living more appealing and be

equipped to sell value and utility. There

are currently few incentives to shift

mainstream marketing behavior.

Lack of demand from consumers

There is a lack of pull from consumers

around sustainability, a lack of education

among consumers, and no universal ex-

perience of the need for sustainability.

Cost

There are misconception that sustainable

products are more expensive. This is a bar-

rier to mainstreaming sustainable products

as consumers won’t pay more for a prod-

uct based on sustainability alone.

Barriers to Sustainable Consumption:

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1. A universal, accessible language for

sustainability for consumers and com-

panies.

2. Marketers need to make sustainability

aspirational and normal. Brands need to

influence consumer behavior and em-

power consumers to live sustainably by

incentivizing them to want and use less

and/or use more efficiently. Brands

should experiment with new models that

consider ownership and value loyalty.

3. Sustainability must be affordable and

accessible. Edit out unsustainable

choices and make them an uncon-

scious choice for consumers.

4. Businesses need to integrate sustaina-

bility across all business operations.

5. Financial models must begin to inter-

nalize externalities, recognize new mod-

els of ROI, be more long-term focused

and embed sustainability metrics.

Goods and services need to include full

environmental and social costs. There

needs to be financial incentives to cre-

ate more sustainable products.

6. More pre-competitive collaboration is

necessary to allow businesses to tackle

those issues which are too big for one

organization to tackle alone.

7. Business should embrace a circular

economy and be willing to create a shift

from products to services.

8. We need to redefine happiness and

success so that it is no longer synonymous

with acquisition of goods. Successful

brands create value and provide purpose.

9. A clear, consistent vision from busi-

ness leaders is critical.

10. More sustainable business models

(e.g. TerraCycle) are needed to help

others recognize business opportunities.

Conditions Needed to Achieve Sustainable Consumption:

Insights from Stakeholders Convened

“We’re trying to take sustain-

ability from niche and make it

a new normal.”

Sally Uren

Deputy Chief Executive

Forum for the Future

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Create more sustainable business models

- Create a new model for ROI

- Eliminate quarterly reporting

- Put a price on or value natural and

human capital

- Encourage new types of financial

reporting that moves from short-term

to long-term

Fully integrate sustainability across

the business

- Decision making that changes the

whole organization not individual

brands

- Consistent visionary leadership

- Building sustainability metrics into

performance evaluations to create

incentives

Make sustainability aspirational

- Make sustainability the cultural norm

- Sustainable behaviors are rewarded

Make closed loop products and services

- Leverage principles of eco-design

and consider waste as a resource or

material input

Create the systemic conditions to

support sustainability

- Create political pre-conditions to

facilitate level playing field

Redefine the role for brands

- Build sustainability in from inception

and conception, don’t just add on

sustainable attribute

- Define collaborative versus competitive

space to support sustainable

development

Insights from Stakeholders Convened

Future Possible Actions for More Sustainable Consumption:

“I think for us it is critical

that we begin to think about

what our role is going to be

in making consumption

more sustainable.”

Freya Williams Group Planning Director

OGILVY Earth

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As part of the next steps of the day’s exchange, workshop participants were asked to

consider their unique assets and competencies and to brainstorm ideas that might ad-

vance us toward more sustainable consumption. Several potential future work stream

concepts were generated.

Next Steps

Option One: “Make sustainability hip/cool/trendy”

Barrier Addressed: Lack of demand from consumers

Outcome: Sustainability is a societal norm

Launch a consumer facing campaign to communicate sustainability in a

cool, hip, modern and aspirational way that encourages consumers to pur-

sue more sustainable lifestyles. Create a coalition with culture leading

brands/companies from social media/IT (Facebook, Twitter, Apple,

Google…), fashion and luxury (L’Oréal, PPR, Nike, Green Carpet Challenge

team..) to lifestyle (Coca-Cola, Pepsi, Toyota…) and draw on their unique as-

sets like access to digital platforms and celebrities to carry the messages.

Option Two: “New model to measure return on investment”

Barrier Addressed: Capital markets don’t reward sustainability

Outcome: Clear links between sustainability and value creation

Develop a universal way to calculate ROI of sustainability by surveying cur-

rent models that evaluate brand equity over time i.e., Nielsen for sustainabil-

ity. Brands, communications and sustainability experts, and a 3rd party verifi-

er would work together to help ensure buy in. Information would need to be

made public, add value, and tie to POS data/impressions.

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Option Three: “Integrate sustainability across the business functions”

Barrier Addressed: (indirectly) Current role of marketing

Outcome: All key functions within a business understand the relevance of

sustainability to their role, and are equipped to deliver on this agenda.

Create a corporate shift in sustainability by eliminating the sustainability role

and integrating sustainable business solutions and education across the en-

tire organization. Then align personal performance and KPIs to sustain suc-

cess using metrics akin to other performance metrics.

Option Four: “Collaboration 2.0 (vertical exploration on specific topics, i.e.,

water conservation)”

Barrier Addressed: Lack of industry collaboration

Outcome: Accelerated progress toward tackling key sustainability issues

that are too large for one organization to tackle alone.

Reconvene the stakeholder s to explore, share and collaborate on vertical

sustainability topics and challenges such as water scarcity, consumer use

phase, product innovation, tools to measure social and environmental im-

pacts, production and consistent metrics. The group would invite different

stakeholders to contribute and challenge the Forum to take action.

Summary of Next Steps:

Recognizing the need for synthesis and collaboration we have committed to investi-

gate the work being conducted by other organizations in similar work streams and

how we might extend their learning to advance and accelerate progress. Past par-

ticipants will be invited to continue their engagement and new organizations will be

considered to contribute to specific work streams with the second forum to be held in

the second half of 2013.

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References:

1 http://www.mckinsey.com/insights/energy_resources_materials/resource_revolution

2 http://worldwildlife.org/blogs/on-balance/posts/our-footprint-in-seven-facts

3 http://www.fao.org/publications/sofi/en/

4 http://www.worldometers.info/obesity/

5 http://www.who.int/mediacentre/factsheets/fs311/en/

6 http://esa.un.org/unpd/wup/pdf/WUP2011_Highlights.pdf

7 http://www.unicef.org/media/files/JMPreport2012.pdf

8 http://www.weforum.org/issues/water/index.html

9 http://www.digitalbuzzblog.com/2011-mobile-statistics-stats-facts-marketing-infographic/

Special thanks to the organizations and individuals that participated in the

Re:Imagining Consumption Forum.

Acknowledgements

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