ETHICAL & ECONOMICAL

APPROACHES TO SUSTAINABILITY

Angus Copeland C3400985Design Product 3,067(Inc. references)

“If our existence as a civilisation was relative to an hour, we would of used the majority of fossil fuels available to us, in the last 40 seconds.” Brian Cox

INTRODUCTIONIn my personal brief I mentioned that

I wanted the product to have an eco-friendly theme to it. After writing my last essay on sustainability it made me realise the controversy and hypocrisy surrounding the sustainable products market. I became more aware how common greenwashing is, where a brand portrays itself as more sustainable than it actually is. In fact in a study conducted by TerraChoice, an eco-friendly marketing consultancy, they found that out of 1,018 consumer products 99% had used the greenwashing tool in some form (Garry Henry). This led me to be critical of products that claim to be completely innocent and eco-friendly. The essay also made me consider the point of producing products from eco-friendly materials that perform inefficient functions. I want to take a more holistic approach to producing a sustainable products.

  After performing a life cycle assessment (LCA) I can estimate the total emissions and energy cost related to the product. This cost can then be offset through charitable causes such as preserving forests and funding sustainable projects. To gain a better understanding of how people already use this system I’ve decided to research the Carbon trading industry by looking at articles and scholarly papers on the topic.

ISSUESThere are a number of cynical issues

surrounding eco products and making a product desirable simply through its eco virtues. Global warming is an ever present talking point and a well-documented phenomena. However this mass exposure can also be counterproductive, in a sense that an individual can’t make a significant impact through changing their lifestyle choices. There are another 7 billion people on the planet many of who are not concerned with making sustainable choices.

One issue relating to this, is the growing middle class, the Brookings Institution estimates that “there are 1.8 billion in the middle class, which will grow to 3.2 billion by the end of the decade” (Linda Yeuh). The majority of middle class growth is coming from Asian and African countries, as they adapt their industries to globalisation. Westernisation coupled with a disposable middle class income, leads to an increase in product consumption, which in turn creates more co2 emissions.

The majority of eco-conscious consumers are aware of the colossal scale of global warming, however still find some nobility from buying “eco products”. Living in a capitalist country were encouraged to constantly buy and consume (Peter Joseph). Even if we are buying “eco products” we can still being wasteful in the way we use them. A common example of this is in the use of kettles. A kettle can be designed with sustainable principles, using renewable materials, low energy components etc. however if the user boils the whole tank of water for one cup of coffee the reduced environmental impact of the design is quickly going to be negated by the inefficient way the consumer uses the product.

image from http://www.foe.co.uk/sites/default/files/downloads/overconsumption.pdf . This depicts the mass of energy and resources that go into the life cycle of 7kg of average goods sold in the EU.

INNOCENT SMOOTHIES

A good case study to analyze when debating ethical approaches to sustainability the economic impact is to look at Innocent smoothie’s business model (Anon). Innocent smoothies has been an ethical and charitable brand since its emergence in 1999. It is a frequently promoted fact that they donate 10% of their profits to charity each year, mainly the Innocent foundation that works with international food hunger. Since 2010 when Coca Cola increased their stake in the company to over 90% the ethical values originally set out by its founders have come under a lot of scrutiny. However Innocent still take a holistic approach to providing a sustainable product.

Firstly innocent take consideration into the sourcing of their fruit. For example they use farms certified by organizations such as the Rainforest Alliance. They also set out standards for relevant farm management, environmental, social and economic issues.

Secondly Innocent extend their ethos to the products packaging. They use recycled plastic where possible, they use FSC (Forestry Stewardship Council) certified cardboard in their cartons, and they also design their packaging to use the minimum amount of materials. In fact Innocent state that in 2013 they saved “over 1000 tonnes of plastic by putting our juice carafes on a diet” (Richard Reed).

Finally Innocent make sure consumers are aware of their mission by promoting it in the products advertisement. In their 2015 ad campaign they say “This is Badrill. He looks after our mangos, hand turning them until they are perfectly ripe. Thanks Badrill”. By addressing the farmer in his first name, they highlight the relationship they have with the ingredients they source. This also give consumers the notion that they are a considerate company. The ad finishes with their strapline “tastes good does good” coupled with the text reading “10% of profits go to charity”. It is important for Innocent to promote their ethical values as it can be used as a USP. It also helps consumers justify the cost of the product which is relatively expensive when compared to competitor products. For example if you compare their 250ml bottles to Tesco’s own brand there is a difference of 80p (Tesco’s own: 99p Innocent: £1.79). Richard Reed, founder of Innocent, explains the importance of the brand in a talk he did at Loyalty Word. He states that if your product is doing “a slightly more ethical job than the next guy, it might be enough to put you in their shopping bag rather than the competitor”.

Image from Innocentdrinks.com

CONSCIOUS CAPITALISM ISN'T A NEW CONCEPT OF CONDUCTING TRADE, HOWEVER IT ISN'T VERY COMMON AS IT GOES AGAINST SOME OF THE CORE PRINCIPLES OF CAPITALISM. A CAPITALIST COMPANY’S MAIN GOALS SHOULD BE TO PRODUCE AS MUCH MONEY FOR INVESTORS AND THOSE WITH A STAKED INTEREST AS EFFICIENTLY AS POSSIBLE. HOWEVER A COMPANY WITH A MORE ETHICAL ETHOS MAY CONDUCT ITS SELF IN A MORE ECONOMICALLY INEFFICIENT WAY TO FOLLOW ITS PRINCIPLES. ONE ARTICLE THAT OUTLINES THIS MODEL IS JOHN MACKEY’S, FOUNDER OF CONCIOUSCAPITALISM.ORG, INTERVIEW WITH FORBES MAGAZINE ( JOHN MACKEY ).

MACKEY DEFINES THE FOUR TENETS OF CONSCIOUS CAPITALISM AS:·  HIGHER PURPOSE– A COMPANY’S ECONOMIC/POLITICAL CAN BE USED FOR MORE THAN MAKING MONEY· STAKE HOLDER INTEGRATION· CONSCIOUS LEADERSHIP ·  CONSCIOUS CULTURE/MANAGEMENT— THE ETHICAL VALUES SHOULD FILTER DOWN INTO ALL AREAS OF THE COMPANY

JOHN ALSO DESCRIBES THE CORPORATE SOCIAL RESPONSIBILITY MODEL (CSR). THIS IS A CODE OF CONDUCT RELATING TO HOW A CORPORATION SHOULD PRIORITISE ENVIRONMENTAL AND SOCIAL WELFARE BEYOND WHAT IS ENFORCED BY REGULATIONS. FOR EXAMPLE A CAR MANUFACTURER CAN MAKE A CATALYTIC CONVERTOR THAT ADHERES TO EU REGULATIONS AND PRODUCES THE RIGHT AMOUNT OF EMISSIONS, BUT A CSR MODEL WOULD LOOK AT REDUCING THESE EMISSIONS EVEN FURTHER AND TAKE A GENUINE INTEREST IN PRODUCING A PRODUCT THAT PERFORMS TO THE BEST OF ITS ABILITY.

John Mackey

 In this article

Duncan Clark, a visiting researcher at the UCL energy Institute, summarizes the debate of carbon offsetting, in the book “The Rough Guide to Green Living”.

Notes on the article · Simply replanting trees isn't the most efficient way of offsetting. · Much cheaper than I expected. Duncan quotes £8 per ton of CO2 offset · Air travel produces a relatively large proportion of our emissions.  · Offsetting products is already an option for Land Rover customers. This makes sense as 4x4 owners are often vilified by eco groups. · There's an ethical debate on whether it’s better to help people in the 3rd world or our planet’s ecology.· Finally Duncan Clark makes the point that offsetting's only worth it if you use it as a tool to be greener and not just a free pass to be wasteful and guilt free.

 “Carbon offset schemes allow individuals and companies to invest in environmental projects around the world in order to balance out their own carbon footprint. The projects are usually based in developing countries and most commonly are designed to reduce future emissions. This might involve rolling out clean energy technologies or purchasing and ripping up carbon credits from and emissions trading schemes. Other schemes work by soaking up CO2 directly from the air through the planting of trees.

Offset schemes vary widely in terms of the cost, though a fairly typical fee would be around £8/$12 for each tonne of CO2 offset. At this price, a typical British family would pay around £45 to neutralise a year's worth of gas and electricity use, while a return flight from London to San Francisco would clock in at around £20 per ticket.

Increasingly, many products are also available with carbon neutrality included as part of the price. These range from books about environmental topics through to high-emission cars (new Land Rovers offer offsets for the production of the vehicle and the first 45,000 miles of use). Is the whole concept of offsetting a scam?

Traditionally, much of the criticism of offsetting relates to the planting of trees. Some of these concerns are valid, but in truth most of the best-known carbon offset schemes have long-since switched from tree planting to clean-energy projects – anything from distributing efficient cooking stoves through to capturing. Energy-based projects such as these are designed to make quicker and more permanent savings than planting trees, and, as a bonus, to offer social benefits.Ultimately, the question of whether the concept of offsetting is valid must come down to the individual. If you offset to assuage guilt and to make yourself feel better about high-carbon activities such as flying, that can't be good. If you offset as part of cutting your footprint, or as an incentive to be greener (after all, the less you emit, the less it will cost you to go carbon neutral) then that can't be bad – especially if the offset projects offer extra benefits such as poverty reduction in the developing world.“(Duncan Clark)

THE KYOTO PROTOCOL IS AN INTERNATIONAL AGREEMENT THAT AIMS TO REDUCE C02 AND OTHER GREENHOUSE GAS EMISSIONS BY SETTING COUNTRIES TARGETS. IN 1997 MOST COUNTRIES SIGNED THE AGREEMENT THAT ALL INDUSTRIALISED COUNTRIES SHOULD REDUCE THEIR GREENHOUSE GAS (GHG) EMISSIONS BY 5% (USING THEIR EMISSIONS IN 1990 AS A BASE RATE) FROM 2008-2012. COUNTRIES THAT TAKE PART IN THE PROTOCOL ARE SPLIT INTO 2 CATEGORIES. ANNEX REFERS TO DEVELOPED NATIONS SUCH AS THE UK WHEREAS NON-ANNEX REFERS TO DEVELOPING NATIONS. L IMITATIONS ARE ONLY SET OUT FOR ANNEX COUNTRIES. IF THEY EMIT MORE GREENHOUSE GASSES THAN THEY SHOULD, THE L IMIT IS REDUCED THE FOLLOWING YEAR. NON-ANNEX COUNTRIES ARE ENCOURAGED TO INVEST IN PROJECTS THAT REDUCE THEIR OWN EMISSIONS. BY DOING SO THEY ARE AWARDED CARBON CREDITS TO TRADE WITH ANNEX COUNTRIES.

A CARBON CREDIT IS A COMMODITY THAT REPRESENTS A NEGATIVE EMISSION OF ONE TONNE OF C02. ONE TONNE OF C02 IS THE EQUIVALENT TO FIVE MONTHS’ WORTH OF DRIVING FOR THE AVERAGE NORWEGIAN OR ONE PERSON FLYING FROM OSLO TO BANGKOK. CARBON CREDITS CAN BE SOLD BETWEEN COUNTRIES AND COMPANIES TO REDUCE THEIR LEVEL OF EMISSIONS. THIS INDUSTRY IS KNOWN AS CARBON FINANCE. THE VALUE OF CARBON CREDITS FLUCTUATES AS IT IS A COMMODITY EFFECTED BY SUPPLY AND DEMAND.

PROJECTS AND BUSINESS THAT ARE SET UP TO EARN CARBON CREDITS AS A REVENUE STREAM ARE REFERRED TO AS CLEAN DEVELOPMENT MECHANISMS (CDM). DAVID DISCH, FOUNDER OF GVEP INTERNATIONAL, AN ORGANIZATION THAT REDUCES POVERTY THROUGH ACCESS TO ENERGY SOLUTIONS, ESTIMATED THAT THERE ARE AROUND “6000” CDM’S “MOST OF WHICH ARE IN CHINA , 2% OF WHICH ARE IN AFRICA” (DAVID DISCH ) . CDM’S ARE ONLY ECONOMICALLY VIABLE IF THERE IS A REAL EFFECT OF REDUCING GHG EMISSIONS. FOR EXAMPLE, IF YOU IMPLEMENT A SOLAR ENERGY PLANT IN KENYA, YOU MAY NOT BE REDUCING THE GHG EMISSIONS COST OF THE ELECTRICITY. MOST OF KENYA’S POWER SUPPLY IS PRODUCED THROUGH HYDROPOWER STATIONS NOT FOSSIL FUEL BASED PLANTS. AS A RESULT THERE IS A STRICT ADJUDICATION ON CDM’S BEFORE CREDITS ARE AWARDED. IN FACT DISCH STATES THAT “LESS THAN 50% OF EMISSION REDUCTION CLAIMS (MADE BY CDM’S) ARE ACTUALLY REACHED”. CLAIMS HAVE TO BE ASSESSED BY INDEPENDENT AUDITORS.

I M A G E F R O M W E A R E C H A N G E . W O R D P R E S S . C O M

CARBON CREDITS

CARBON 4 WATER A good case study to look at when debating the effect of CDM’s, and how they provide evidence for adjudication, is Mikkel Vestergaard’s company Carbon for Water (Mikkel Vestergaard). The company seeks to improve the way developing African nations such as western Kenya purify their water, whilst simultaneously creating a unique revenue for carbon trading.

It is vital to purify Kenyan water to remove parasites and illnesses such as Cholera. There are many issues with the traditional practices for purifying water in Kenya. Water is often boiled by burning firewood. Firstly it is usually women who go out to collect the firewood. This is a dangerous activity there are widespread reports of sexual predator's preying on the women , even having to perform sexual acts on the park rangers to gain access to the resources. Secondly, there are many pollutants released from burning the wood as well as health issues related to inhaling too much of the smoke whilst indoors. Finally there is a significant thinning of the Kenyan forests used to gather the firewood as trees are not replaced at the rate they are felled.

Vestergaards Company seeks to help these women and affected families by equipping them with a product they developed called the LifeStraw. LifeStraw can purify water without the need for burning firewood. It has a long life cycle. One straw will work for several years before needing replacement filters which are supplied by the company for free.

To launch the project Carbon for Water invested $30 million in distributing the straws and hiring people to teach the families to use the product. They also distributed over 4000 smartphones so users could document how much water was being purified through the straws, how many people used the straws, family sizes, GPS data of where the straws where being used and images of the straws in use. This data was so important and well gathered that Vestergaard claims “it’s more accurate that the national census”. This extensive data collection is vital to the company’s success as they are only awarded carbon credits after an independent auditor has assessed how much water was purified and how much wood was saved through this alternate method to firewood. The project was a great success saving over 1.2 million tonnes of carbon emissions in the first six months of its operation in western Kenya. Using California carbon dashboards figures for April 2015 ($12.70/carbon credit) this equates to $15,240,000 in equity if all of the carbon credits were liquidated.

This is a really innovative business model, which not only provides carbon credits and a reduction in emissions but also positively impacts the lives of people in Kenya. It is a refreshing concept that a western business can thrive and profit in a developing nation, without exploiting the environment or inhabitants of that nation. It is an attractive prospect for my project as is combines carbon offsetting with a charitable cause relevant to my product (the Marimo moss ball purifies water by removing nitrates and other pollutants).

WILL A MORE SUSTAINABLE

APPROACH LEAD TO A MORE SUCCESSFUL

PRODUCT?

There are many benefits to using a CSR model and to producing sustainable products, such as: reducing in co2 emissions, complying with ever more stringent EU legislation, in some cases it reduces cost by streamlining production and reducing costs of international shipping, meeting a demand for ethical products and increasing brand value. When I began this project I outlined the importance of creating a brand with value, but how does brand value effect the sales and success of my product? Dr.Rajagopal, department of marketing, ITESM-CCM concluded in his research report that “Brands give consumers the means by where they can make decisions and judgements. Based on these experiences, customers can then rely on chosen brands to guarantee standards of quality and service” (Dr.Rajagopal). This quote denotes the repeat buying phenomena that occurs when a user choses a brand, based on a judgement, in my products case a consumer would judge it to be ethical and sustainable. This is often referred to as the customer franchise, the cumulative image of a brand and how it affects a consumer’s behaviour.   An example of a positive consumer franchise can be seen in the case study of Hondas Fit range and fuel efficient Civics’. Honda was an early adopter of fuel efficient cars, in response to a dwindling supply of fossil fuels. Following this decision Honda found that it was the only US car manufacturer to increase profits from 2007 in 2008. Increase in profits and brand value, by 28% from 2004, is credited to Hondas early shift towards more fuel efficient cars (Paula Oliveira).  An example of a negative consumer franchise can be seen when looking at Coca Cola. Coca Cola is the most valuable brand in the world. However the company reported losses of up to $5.1 billion in the period of 2003-2007. This is attributed to the negative customer franchise, affected by the publication of numerous health caveats concerning the brand and its poor reputation in certain countries for mal practice, such as the Indian water shortage. To tackle this issue Coca cola invested in numerous initiatives, such as supplying clean drinking water and sanitation to regions of India. This may have been just as beneficial to Coca Colas plants in India as it was for the people, but by investing in this and many other initiatives Coca Colas brand value increased by 2% the following year (Paula Oliveira).

REFERENCES

Joe Rogan & Brian Cox. (2015). JRE #610. Available: http://podcasts.joerogan.net/. Last accessed march 2015.

Gary Henry. (2009). Green Marketing. Available: http://www.slideshare.net/GaryHenry/green-marketing-2645035. Last accessed march 2015.

Duncan Clark. (2011). A complete guide to carbon offsetting. Available: http://www.theguardian.com/environment/2011/sep/16/carbon-offset-projects-carbon-emissions. Last accessed march 2015.

Linda Yeuh. (2013). the rise of the global middle class. Available: http://www.bbc.co.uk/news/business-22956470. Last accessed march 2015.

Peter Joseph. (2007). Zeitgeist. Available: http://www.zeitgeistmovie.com/. Last accessed march 2015.

John Mackey. (2013). 'Conscious Capitalism': Q&A with Whole Foods CEO John Mackey. Available: http://www.forbes.com/sites/ashoka/2013/03/01/qa-with-whole-foods-ceo-john-mackey-about-conscious-capitalism/. Last accessed march 2015.

anon. (2015). Being sustainable. Available: http://www.innocentdrinks.co.uk/us/being-sustainable. Last accessed march 2015.

Richard Reed. (2012). How Innocent used ethics and trust to create customer engagement - Richard Reed, Innocent Drinks. Available: anon. (2015). Being sustainable. Available: http://www.innocentdrinks.co.uk/us/being-sustainable. Last accessed march 2015... Last accessed march 2015.

David Disch. (2013). An overview of Carbon Trading. Available: https://www.youtube.com/watch?v=zoJo-i2nhUk. Last accessed march 2015.

Mikkel Vestergaard. (2012). Saving lives through carbon offsetting: Mikkel Vestergaard Frandsen at TEDxLausanne . Available: https://www.youtube.com/watch?v=whSAQnO0ZTM. Last accessed march 2015.

Dr.Rajagopal. (2006). Building Customer Values and Brand through Advertising by the Multinational Retail Chain Stores in Latin America . Available: http://prof-rajagopal.com/fullreportrs2.pdf. Last accessed march 2015.

Paula Oliveira. (2008). Sustainability and its Impact on Brand Value. Available: http://www.environmentalleader.com/2008/09/28/sustainability-and-its-impact-on-brand-value/. Last accessed march 2015.