The rise of the Sustainable Economy


Increasingly, consumers' shopping habits are being influenced by ethical considerations. This is reflected in the rise of goods that are plastic-free, zero waste, vegan in essence, or made from recycled materials; a growing preference for locally sourced products with a low carbon footprint, or else those foreign goods which respect the environment and properly reward the connected workforce. The dissemination of information about global warming, plastic in the oceans, and our carbon foot-print through social media amongst other channels has brought these issues to the fore making it not only mainstream, but a burning issue.


Increasingly new brands are entering the market and choosing to compete on the grounds of sustainability, first and foremost. And while many such companies are powered by idealism, it's hard to doubt their business credentials. What is thought good for the planet, and society, is more and more a source of handsome profits. It is estimated that the sustainability market will be worth in the region of $12 trillion by 2030.  Global Data reports that Millennials are driving the sustainable movement, they are the highest percentage of consumers who would be prepared to pay more for eco-friendly products (61%); followed closely by Gen Z (16-21yrs) at 58%; Gen X (36-54yrs) at 55%; with the Baby Boomers (55-64yrs) coming in at 46%.  In the UK and USA 62% of eco-conscious consumers believe that eco-friendly products are also better for their health.


As a result, these budding start-ups are not alone in staking their futures on ethical behaviour: many long-established players, including large conglomerates, are rapidly changing strategic direction.


This latter trend is evidenced by the example of Unilever, and the recent comments of Alan Jope. its chief executive. When asked about the future of the company's brand portfolio, he gave the following answer:

“Can these brands figure out how to make society or the planet better in a way that lasts for decades?”

Taken at face value, this statement represents a remarkable shift in managerial philosophy for the industry giant, and yet there is clearly substance to it. In recent years, Unilever has committed itself to devising sustainable business plans for its entire portfolio of product ranges. Furthermore, according to rumours, it is willing to divest itself of such household favourites as Marmite, Magnum and Pot Noodle if they fail to meet with future sustainability goals. More tellingly still, three-quarters of the parent company's 2018 turnover growth was accounted for by brands in its Sustainable Living portfolio. Further proof that an ethics-driven approach is not only viable but increasingly key.


Sustainable Europe & The Global Sweet Spot

A recent survey commissioned by the European Union shows that these same trends are well advanced around the continent. Environmentally-friendly goods that embody ethical practices all have wide consumer support. Equally, the sustainable sourcing of products is of central importance to major European retailers.


The survey, conducted by the ITC, drew on data from 550 retailers across five principle markets: France, Germany, Italy, Spain. and the Netherlands.  85% of surveyed companies reported increased sales of sustainable products over the past five years. At the same time, 92% of them predicted that the sale of sustainable products was set to increase over the next five years. As for those 127 companies who shared data from their last financial year, the results were clear: 59% of aggregate sales were earned from sustainable goods.


As a consequence, the majority of firms have created detailed strategies to increase their ethical buying: showing a marked preference for accredited suppliers that adhere to industry standards such as Fairtrade, Rainforest Alliance, and Living Wage amongst others. The cutting of waste, an increase in renewable inputs, and decent working conditions for producers are now top priorities, according to the survey; active considerations that are influencing these large supply chains as never before.


For a more global perspective, we might turn to recent findings from the Nielsen Company. In a comprehensive survey of 30,000 consumers across 60 countries, 68% of them declared themselves willing to pay extra for sustainable goods (up from 50% two years earlier). And as with the European model, an explicit commitment to sustainability was clearly linked to increased profits. Nielsen reported that ethics-driven companies had seen four times the sales growth of less principled competitors.


Another useful point of reference published by Nielsen was their recent report, “What’s Sustainability Got to Do with It?” Although it focuses on the US market, the work seems more broadly indicative of global retail trends. Nielsen concentrated on the performance of ethical goods across three separate categories—chocolate, coffee, and bathroom products. The chocolate category, in particular, yielded a number of interesting findings. None more so than in the case of those brands that made overt environmental claims for their snack bars. Although these made up a mere 0.2% of the total market, their existing share increased by 22% from March 2017 to March 2018; four times the rate of dollar growth enjoyed by the category as a whole. This same explosive growth, and runaway demand, has led to an influx of new brands in all product categories. As with their tech counterparts, these young firms are responding fast to societal changes that have been under-reported and barely acknowledged by larger competitors; although here the focus is less on convenience, and the freemium model, than a strong commitment to ethical values.


The New Model Army

In many ways, the fashion industry is ripe for ethical disruption. We can point to the fact that the average person will consume as much as 11.4 kilos worth of clothes per annum, or the even more sobering statistic that roughly 300 million cotton producers live in poverty. Added to which, the average creation of one kilo of fabric generates 23 kilos of greenhouse gases. Little wonder then that a new generation of fashion brands are tackling these same issues and raising their profiles in the process, with stylishness and sustainability receiving equal prominence in the marketing mix.


Kowtow Europe, to give one example, ensures that farmers receive a fair price for their cotton, while also supporting gender equality and taking a firm stance against child labour exploitation. Other companies, such as Spanish clothes brand Diarte, only use yarns that have an Oeko-Tex certification that guarantees the responsible use of chemicals. Then there are small clothing brands such as Kitty Ferreira, and Madia & Mathilda, which are created entirely in the UK, drastically cutting down on carbon emissions. An emphasis on recycled materials is also prominent among up-and-coming brands, as in the case of allSisters, who use reclaimed fabrics to create their range of high-end swimsuits.


At the platform level too, we can find examples of an ethics-first approach. Wearth London is a digital marketplace designed to support small UK brands that pride themselves on their eco-friendly and sustainable products: hand-picking vendors to ensure they meet quality control standards. Although this kind of rigorous vetting represents a niche market, all evidence suggests that the niche is growing rapidly; and if the underlying trends continue to accelerate, we can expect a further flurry of new entrants into the space. Enough of them, perhaps, to pose an ethical dilemma for the likes of Amazon and eBay by calling their standard practises into question. Under which circumstances, one might expect these market leaders to respond accordingly and repurpose these stricter guidelines for their own use.



Luxury Brands Return to their Roots


Despite the influx of new players focused on social issues, a number of established luxury brands are also in the forefront of the sustainability movement. Given their scale, and considerable resources, they do have certain natural advantages which the more astute of them are now beginning to make use of. For so long the models of noticeable wealth, and extravagant spending, these glamorous firms are starting to distance themselves from charges of excess and wastefulness. Through a combination of new initiatives, and astute brand storytelling, they've begun recasting their images in a far more virtuous light.


Gucci is a good example, given its recent placing in the Corporate Knights’ Global 100 Index of the world’s most sustainable corporations. In the latest league tables, it came second only to Danish food company Chr. Hansen Holding, judged on ethical criteria. Among other policies that justify this high standing are its 10-year sustainability plan which includes a target to guarantee the traceability of 95 percent of all raw materials by the end of the decade. Also, a new company-wide programme that permits each member of staff to dedicate one percent of their working time to volunteering in local communities. Then there's the company's recent banning of natural furs from its collections, and its ongoing collaboration with Panthera, a non-profit organization dedicated to the protection of large cats.


A broader trend, on the part of established luxury brands, is a renewed emphasis on quality over quantity. This has meant moving away from the excesses of recent decades, in terms of global outsourcing, while placing a far greater emphasis on traditional craftsmanship. With durability being a sustainable virtue in itself, this attractive message is becoming increasingly prominent in marketing campaigns. And by positioning themselves as champions of timeless design, and lasting value, they're able to provide a forceful response to ideas of “fast fashion” and throwaway culture alike.


In an age of content marketing – where the story surrounding a product is all-important – it makes sound commercial sense for these impressive companies to honour their artisanal roots. As well as helping to justify the price of luxury merchandise, it also serves to enhance the brands' perceived relevancy among a new generation of consumers for whom authenticity – and ethical chic – is key.


The Future of Sustainability: Europe as an Ethical Heavyweight

Looking ahead, it seems likely that Europe will continue to lead on sustainability issues for the foreseeable future and set the precedent for other regions and countries. With its consumers amongst the most conscientious and well informed (thanks in no small part to strict labelling controls), we can expect them to wield their purchasing power with ever more distinction, even as citizen action groups, such as Extinction Rebellion, raise their voices and make their views increasingly felt.


At the other end of the political spectrum, the European Union is continuing to take ownership of sustainability issues with a raft of stringent directives and concerted action plans. These include the European Strategy for Plastics, approved in January 2018, which will ensure that all plastic packaging in the European Union is recyclable or reusable by 2030. Also, the EU Platform on Food Losses and Food Waste, one of whose goals is to halve the amount of food waste per citizen by 2030.

While these aims are impressive in themselves, a number of independent member states are going still further and calling for even more radical measures. Eight European countries (Belgium, Denmark, France, Luxembourg, the Netherlands, Portugal, Spain and Sweden) have proposed that a quarter of the EU's budget be spent on tackling climate change in the near future, as well as lobbying for a firm commitment to cut greenhouse gas emissions to a net-zero level by 2050 at the latest.

It's this combined drive – prompted by a mix of consumer sentiment, official policy, and militant action – that is making the continent a world leader on sustainability issues. More and more, the cost of doing business in Europe involves an adherence to the highest ethical standards.


While the highly regulatory landscape in Europe poses a challenge to European companies, it also represents a massive opportunity in the wider sense. As a consequence, such firms are ideally placed to promote themselves as international role models: exporting their ethical credentials overseas while claiming an increasing market share from a like-minded global consumer base. And as more world citizens focus on these social issues and make their shopping decisions on the basis of them, the rewards have never been so potentially great.


The EFMP partners are fully committed to sustainability and have advanced programmes in place that support our sustainability targets. Our partners already meet many ethical credentials that are at the core of the campaigns we run for our clients.

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