2011 UNEP-Business and Industry Global Dialogue Strengthening the Role of the Private Sector in the transition to a Resource

Efficient and Green Economy: On the Road to RIO+20

Discussion Note for Panelists and Participants (Draft April 1, 2011) Group 7.3: Date: Moderator: Rapporteur: Presentation: The Power of Consumers: Stimulating demand through informed consumers 12th April 2011 (Day 2) Mike Longhurst, Senior Vice President, EMEA Corporate Affairs, McCann WorldGroup Carlos Busquets, Deputy Director, International Chamber of Commerce Randall Krantz, Director, Head of Sustainability Initiative, World Economic Forum

Panel: - Valerie Sejourne, Communications Director, AISE (International Association for Soaps, Detergents and Maintenance Products) - Dario Liguti, Marketing Director, General Electric International - Nupur Bahl, Manager, All India Artisan and Craftworkers Welfare Association - Luis Flores, Consumers International Note Taker: Liazzat Rabbiosi, UNEP DTIE

Objective This session is aimed at identifying the key actions that could be taken by the principal stakeholders, including business and industry, policy makers, civil society and international organizations, in stimulating consumer demand for sustainable goods and services. The session is, based on experiences and lessons learned from existing support initiatives and the outcome of the discussion on Day one1 and the opening plenary of Day two of this conference. The session will address the role of information tools, such as marketing, advertising, eco-labeling, and corporate responsibility as well as education for sustainable consumption, in stimulating consumer demand for green goods and services, and therefore in expanding green markets. In this respect, the session will also discuss what support SMEs need to develop markets for green products, and particularly SMEs in developing countries trying to enter developed country markets. Challenges - Consumer willingness to make sustainable purchasing decisions, does not always translate into sustainable consumer behaviuor, due to variety of factors, including availability, affordability, product performance and behavioural biases. - Diversity of consumers groups (e.g. niche consumers vs. mass consumers; demographic and cultural profile); changing consumers preferences and demand patterns. - Business lack of or poor access to strategic knowledge and information that would allow a better understanding of demand (consumers perceptions, motivations and purchasing choices) and of market dynamics. - Limited capacity to use technical and marketing resources. - Lack of policy and financial incentives to invest into production of more sustainable goods and services.
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This will be presented at the beginning of Day 2.

Opportunities - The world market of environmental products and services is growing. For example, according to an OECD study, goods and services provided by eco-industries is estimated to represent around 2.5% of the EU GDP2. - Consumers are increasingly concerned about environmental and social issues, and increasingly act on those concerns. - Informed consumers stimulate new economic opportunities, allowing the potential for better goods and services, and altering the current infrastructure and regulatory framework that lock consumers into unsustainable behaviour. - As the global middle class increases (expected to triple by 2030), there will be increased market opportunities. This increase not only means that sustainable goods and services can be further mainstreamed in developed countries, but also represents purchasing power opportunities within previously small markets in developing countries3. - Sustainability is increasingly influencing the brand image. There is evidence that well informed consumers are willing to shift their brand loyalties to green companies. Sustainability is becoming a key consideration factor in choosing a brand, in addition to price and performance4.

Discussion Questions 1. What is the role of informed consumers in expanding green markets? How do we progress from the informed niche consumers, to less aware mass consumers in expanding green markets? 2. What are the key lessons learnt and experiences from existing initiatives on stimulating consumer demand for sustainable goods and services? Does knowledge and interest have to precede more sustainable purchase decisions? 3. What can business and industry do and what are concrete measures to expand sustainable markets through stimulating consumer demand? 4. Considering the key conclusions and recommendations that came out of the discussion on Day 1, what are the key steps and measures that need to be taken by full range of stakeholders (e.g. including policy makers, researchers and NGOs) in expanding green markets?

Background Consumers are a powerful ally in supporting the transition towards a resource efficient and green economy. They are increasingly concerned with not only pollution, natural resource depletion or health effects of the consumption of products, but also the social impacts that production has on workers and local communities. Support from consumers is crucial to make markets for green goods and services work effectively. To play this active role in the marketplace, however, consumers need to: (i) be informed about the environmental attributes of the products that they are purchasing; (ii) be aware of the environmental consequences of their decisions; and (iii) know what they can do to be environmentally responsible and make choices which support sustainable development. Many existing initiatives and information-based tools to empower consumers in their sustainable choices are already effectively implemented in the marketplace. Business and industry are using different information tools, such as marketing, advertising, information and education campaigns, voluntary standards and eco-labeling, product design, to inform consumers and stimulate their demand for sustainable goods and services. Various initiatives have been developed jointly by the major stakeholders, i.e. business and industry, governments, civil society and international organizations. These initiatives include stakeholder dialogues, sharing emerging best practices in
2 Eco-Innovation in Industry: Enabling Green Grow, 2010
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World Economic Forum, Driving Sustainable Consumption, Consumer Engagement Ibidem

promoting sustainable lifestyles and consumption, inspiring partnership on innovation and improving understanding of key corporate responsibility issues on the global sustainable development agenda. For example, UNEP, in cooperation with the key stakeholders, has been providing a framework for stakeholders discussion and information exchange on consumer behaviours and related policies: (i) the activities targeted at the marketing and advertizing sectors (i.e. Advertising and Communication Forum on Sustainability, communication guide, education tools; (ii) the research on consumers aspirations through the Global Survey on Sustainable Lifestyles; (iii) the awarenessraising activities including the UNEP/UNESCO YouthXchange Programme on sustainable lifestyles, recommendations and guidelines on Education for Sustainable Consumption Here and Now!. Another example constitutes the eco-labelling project, where UNEP with some key stakeholders focus on capacity building and technical assistance for industries and governments in developing countries (Brazil, China, India, Kenya and the South East African Region, Mexico and South Africa). This project helps business to secure the EU Eco-label for their products and governments to understand the role of eco-labelling as policy tool in advancing sustainable consumption and production.5 Despite positive trends and other similar initiatives, sustainable markets tend to remain as a niche markets. Many challenges, technical but also strategic considerations, can prevent companies from investing in eco-innovation and sustainable marketing. Among these challenges is a lack of or poor access to strategic knowledge and information that would allow a better understanding of demand (consumers perceptions, motivations and purchasing choices) and of market dynamics. Limited capacity to use technical and marketing resources may also be an issue. Lack of policy and financial incentives to invest into production of more sustainable products is another constraint. Yet, applying these tools and making the related investments are essential in reaching out to consumers in more compelling way and stimulating their demand for sustainable goods and services. There is a need for more concerted actions of all stakeholders to change consumers behaviour in the area of sustainability/ stimulating consumers demand. One possibility could be a multistakeholder programme on sustainable lifestyles and consumption developed for inclusion in the 10 Year framework of Programmes (10YFP) that is expected to be endorsed at the 19th Session of the Commission for Sustainable Development (CSD 19) in May 20116. This 10YFP was called for at the World Summit on Sustainable Development in Johannesburg in 2002, and will support regional and national initiatives to accelerate the shift towards SCP.

Contact name of the persons organizing session Magdalena Olczak-Rancitelli, Magdalena.olczak-rancitelli@unep.org, UNEP DTIE Garrette Clark, Garrette.clark@unep.org, UNEP DTIE Sonia Uribe, Sonia.uribe@unep.org, UNEP DTIE

More information on the UNEP and other stakeholders joint activities on stimulating consumers demand is available at: www.unep.fr/scp/
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More information on the 10YFP and CSD 19 process is available at: www.un.org/esa/dsd/dsd_aofw_scpp/scpp_tenyearframprog.shtml