In traditional business terms, having a sustainable business usually meant growing and scaling your business with a long-term strategy in mind. In the last year, sustainability – the eco definition – has not only become a mainstream concern for people around the world, but more importantly a focal point for consumers; so much so that brands, and now big business, are having to re-evaluate their business models. Radically. Suddenly there's a tipping point when environmental concerns became crucial business policy.
In 2010, an explosion on the BP-owned oil rig, Deepwater Horizon, caused one of America’s worst environmental disasters. Not only did 11 people lose their lives but 140 million litres of oil spilled into the Gulf of Mexico in the first month after the explosion. In the next three months a further 180 million litres leaked into the Gulf causing widespread environmental damage. The disaster initially cost BP US$4 billion to contain and clean up the mess, but eventually around US$65 billion in penalties.
Ten years ago, this is what big business understood as their role in not harming the environment: cleaning up a mess (and the PR collateral damage) after an “unfortunate accident”. Fast forward to 2020, and global businesses are realising they are facing a very different environmental responsibility, and their nemesis is in the unexpected form of a 17-year-old – Greta Thunberg.
Greta Thunberg evokes what I call a “marmite response” – you either love her or hate her. Tellingly, older white males in particular are irrationally irked by her. These detractors are the same demographic of businessmen who always thought of environmental activists as “tree huggers” and brushed them off accordingly. But the “Greta effect” can’t be brushed off that easily. In just under 18 months, her lone protest on the steps of the Swedish parliament managed to rouse millions of protesters in 71 countries, and the anger of the protesters is being directed at large multinational corporations. That anger is rising.
Climate change activism is joined by another environmental cause that has grown globally and exponentially – the war on plastic. Retail brands have had to rethink their products, reconfigure their supply chains and reinvent their corporate communication. Basically, they’ve been forced to reassess their business models, and the pressure is not abating. New environmental movements are mushrooming around the globe, like the radical Extinction Rebellion in the UK, and while their methods are disruptive, they are gaining support, as well as funding.
Extinction Rebellion and hedge fund support
The UK-based climate change activist group, Extinction Rebellion (ER), has a far more radical approach to protest than Greta Thunberg and her Gen Z cohorts. ER advocates civil disobedience, including breaking the law to make a point – a positioning traditional philanthropy would normally steer clear of. However, their unorthodox approach has garnered attention on both sides of the Atlantic and received funds from surprising sources. Besides some celebrity support, which includes actor Emma Thompson, and the band Radiohead, ER received £50,000 (R928,000) from Christopher Hohn, head of TCI hedge fund.
The USA charity, the Climate Emergency Fund, also contributed $350 000 (R50 million), which pushed their fundraising total to over £2.5 million (R46 million) since they formed just over a year ago.
B Corp listings and ESG ratings
In 2007, a company called B-Lab created a new guideline for businesses – a B Corporation certification. They envisaged a new type of corporation (and the rise of a new economy) that would use business as a force for good, and most importantly, one which is purpose-driven and creates benefit for all stakeholders, not just shareholders. To do this they shifted the emphasis from corporate social responsibility (CSR) to environmental social governance (ESG). Their “declaration of interdependence” uses the following guidelines:
· We must be the change we seek in the world.
· All business ought to be conducted as if people and place mattered.
· Through their products, practices and profits, businesses should aspire to do no harm and benefit all.
· To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.
To qualify for, and to maintain, a B Corp certification, companies are subjected to a rigorous assessment of a company’s impact on its workers, customers, community and environment. To date, over 2,600 companies have achieved a B Corp listing including Danone, Patagonia, GAP, Ben & Jerry’s and the Unilever subsidiary, Seventh Generation.
Unilever have reported that their sustainable brands have grown 46% faster than others in its portfolio over the past few years. This claim indicates that there is not only consumer awareness, but also demand for sustainable products. Brand loyalty now hinges on a very different USP. But even brand loyalty, in the traditional sense, is fast approaching its sell-by date.
The anti-consumerist movement
The fashion industry has always been a reliable bellwether of change. After technology, it is the second-fastest indicator of change, so when something fundamental starts to shift in the global retail fashion industry, then it would be prudent to investigate the cause and ripple effect.
In the last year, the fashion industry has, surprisingly, borne the brunt of eco-warriors and environmental activists. It has emerged via various documentaries like Fashion’s Dirty Secret by journalist Stacey Dooley, that the fashion industry rates as the second most polluting industry after oil. Debates have raged on whether this claim is based on carbon emissions to transport clothing, the dyes and chemicals from clothing factories spilling into rivers, the plastic hangers they are transported on or simply the cheap, disposable, fast fashion items that end up in landfills around the world.
Whether this industry ranks second or sixth is not the point. The point is that one of the largest global industries is suddenly being viewed in a different light – and it’s not a positive one. Consumers have been shown the full impact of the fashion industry, and the findings are jolting, to say the least.
...8,000 litres of water are needed to make just one pair of jeans...
Fashion’s environmental impact fall into four disturbing areas: waste, water, toxic chemicals and energy. Some of the more shocking statistics include: 8,000 litres of water are needed to make just one pair of jeans; 1,600 chemicals are used in various fabric dyeing processes, and just one t-shirt can travel up to 3,500 km before it lands in a consumer’s hands. In turn, consumers play a part, too. We now buy 400% more clothing compared to 20 years ago, and the average garment is only worn seven times before it gets thrown away. It’s no wonder than this is the first year that environmental activists have started protesting outside various global fashion weeks.
An EU report pointed out that the average number of collections released by European fashion companies annually has risen from two in 2000 to five in 2011, and the fast fashion cycle has increased since then, as has our mindset of disposability.
Prada’s sustainability loan
In November last year, luxury fashion brand, Prada S.P.A, signed an unusual €50 million sustainability loan agreement with the Crédit Agricole Group. The agreement, which is the first of its kind in the luxury fashion sector, allows for interest rates to be adjusted annually if certain predetermined sustainability targets are achieved. For example, if a certain number of their stores globally receive a gold or platinum LEED certification or if they meet targets for using Re-Nylon (a sustainable nylon substitute) in their garment production.
While sustainability loan agreements are becoming more common in sectors like oil, gas and mining, the fashion industry is coming under increased pressure to become more sustainable. And this pressure will only increase.
According to BNP Paribas the sustainability-linked loan market leapt from US$5 billion in 2017 to US$40 billion in 2018.
Gen Z – here comes (more) trouble
If companies still feel that sustainability is a fringe issue for business, then they are about to meet their new Gen Z customers, who are now coming of age. These digital natives are not only your new customer, but also your new entry level workforce, and their eco-awareness, not to mention their social justice barometer, is at another level – just ask any Gen Z parent.
This generation not only has sustainability embedded into their DNA, but the ripple effect in their lifestyle changes is also being seen in business. The 16-to-24 demographic is driving the global movement of plant-based diets (veganism or vegetarianism), as well as teetotalism, which has forced many alcohol brands to develop non-alcoholic alternatives. This is the dramatic shift in business models that many brands are having to deal with.
But perhaps more surprising is the next generation: generation Alpha (the under 10-year-olds and children of the millennials). In 2018 two sisters – Ella (age 9) and Caitlin McEwan (age 7) – wrote to McDonalds about their concerns for the plastic toys given out with Happy Meals. They tried to hand-deliver their letter to the local corporate headquarters but were rudely brushed aside. Undeterred, they started a petition on Change.org (don’t mess with digital natives), which gradually scaled. Some 330,000 signatures later, the cause was featured on a documentary The War on Plastic in which McDonalds was named and shamed.
McDonalds was then forced to issue a statement – via a tweet – which not only apologised for the way they treated the two sisters when they tried to hand over their letter, but pledged that, “In the UK over the next six months our Happy Meal promotions will include a mixture of board games, books and soft toys, which will see an almost 60% reduction in the number of hard plastic toys given away in comparison to the first half of the year.”
If a seven-year-old and a nine-year-old can change the policy of a global fast food corporation, then big businesses had better sit up and take note. The Extinction Rebellion activists might seem radical now, but when a generation grows up expecting sustainability to be integrated into all business policies, we’ll see which companies had the foresight to change their ways – while there was still time.
The rise of the ecosexuals
Ecosexuality is now a thing. Sustainability now has a “sexual identity” and it has manifested itself in the form of a growing global, ecosexual community. The ecosexual manfiesto states that the movement is about treating the Earth with love and respect: “We shamelessly hug trees, massage the earth with our feet, and talk erotically to plants. We are skinny dippers, sun worshippers and stargazers. We caress rocks, are pleasured by waterfalls, and admire the Earth’s curves. We make love with the Earth through our senses. We celebrate our E-spots. We are very dirty."