Friday, November 02, 2012

Book notes of Ecological Intelligence

Organic Cotton T shirt - No pesticides used - so it should be better for the environment as compared to to a nylon shirt? 

But it takes 27,000 litres of water to grow the cotton for a T shirt. And cotton resists absorbing dye , so a large amount of dye rinses off into factory waste water. 

That is the problem with the symptom of “Greenwashing”.  It is playing up the sizzle and not the steak - a selective display of one or two virtuous attributes of a product meant to impart goodness to the whole thing.  The product was not designed to be green from cradle to grave, but only engineered to tackle a single problem. 

However, if we were to look at it. Eco labeling is still focusing on a particular aspect of the problem - fuel efficiency of the car or water efficiency of the tap - it is not measured if the manufacturing process make uses of child labour in the process.

Daniel Goleman believes that radical transparency is the key to solving the world’s environmental crisis: 

When consumers know the real impact of the products that they buy, they can vote with their dollar.   And in today’s age of twitter, facebook and smartphones, customers are no longer lone individuals, isolated and voiceless. The ability to share information freely creates a collective awareness that can trigger a coordinated reaction. 

In the first place, how many consumers are bothered? 

A survey of 25,000 customers by Marks and Spencer across all economic scales: 
  • 25% are simply not interested in any social or environmental impact of the product. 
  • 10% will go out of the way to buy ethical products. 
  • Roughly 2/3  of the shopper care about ethical choices but want the decision to be easy, or ware vaguely concerned about ethnics but feel that their shopping preferences will not make a difference
Daniel Goleman introduces Goodguide - a website that does a complete Life Cycle Analysis of a product.  This makes it easier for a consumer to know the social and environmental impact of a product.   

I suspect though it is still the motivated 10% that will use this website, even if is available on the smartphone Apps.  Only the motivated 10% will make the effort to whip out their handphone to scan the products. 

To bring the other 65% onboard, you need to make it as simple as possible:

Hannaford Brother Company, a chain of supermarkets in Maine, started to rate nutritional value of the food with a simple 3 star system.  Sales figures representing a billion individual purchase decisions started to reflect a shift towards the healthier food. 

If presented clearly and simply, people are willing to pay more!

Check out this Ethical Towel experiment by Harvard University:

For 2 similar products ( difference being only fair labour labelled) with the same price, the product with the fair labour label had an 11% boost in sales.
Furthermore, a 20% price rise yielded a 63 % sales jump.  But that was at a upscale store at Manhattan.

In another experiment by Oregon State University at a working class neighbourhood, if the two products ( eco and normal ) had the same price, the virtuous label had zero effect:

The higher price made the claim more credible. 

So the context matter: 

  • Highend market - eco product has to be competitively priced
  • Low End Market - eco product has to be higher priced to be believable. 

Does more information really help? 

Baba Shi, neuromarketing researcher at Stanford Business School?:

If the ultimate goal is to help people to choose more eco friendly products by giving them more information, we need to know: does more information necessarily change people’s consumption habits?  Shoppers are distracted, thinking about life preoccupations. 

Throughout the years, consumers have been given calorie, nutrition, contents right on the label. But sales have not really budged on the basis of this information that much.  For most of decisions as consumers, there is no clear decision matrix. Product A has some bad features, some good ones. Product B the same.  In a trade-off decision like this, our emotions settle it.  The opinion that will win or lose is the one associated with the stronger emotion, negative or positive. 

But if you are a concerned mother and you never knew before which product was better for your children’s safety, and suddenly a device gives you information that which item may have toxic risk.  It’s compelling - that kind of information creates “hot cognition, emotionally loaded thoughts”. That can drive consumer decisions to the point that it shifts market share. 

There was the case of the story of dropping of Trans Fats : Hydrogenated vegetable oil from many food. 

When Trans Fats was associated with heart disease and US Food and Drug Administration pondered whether foods be labelled to reveal their amount of trans fats, the food industry protested, complaining that there was no good substitution. But by the time, FDA required food to be labelled with the amount of trans fats, Food companies already found ways to drop trans fats and were proudly labeling once- guilty food as “ trans fats free.”

The most interesting is the mechanism that made trans fats vanish. No government banned trans fats - information was just made available to consumers. That is the power of information - if it threatens one’s health. 

That is also the famous boycott of NIKE products when it was found that child labour was involved in making their products. 

As mentioned in the Chapter “The amygdala goes shopping”, if you talk to a company a product that contains a chemical suspected of carcinogenic, company will say let’s talk about risk assessment. But to a user, even MAYBE is enough to reject the product.

My conclusion in effectiveness of making more information available to consumers:

Only serious transgressions that involve health complications such as trans fats and lead in paint will lead to massive consumer action that shifts entire markets.

System such as Goodguide is not required for serious transgressions, which goes into more of comparisons between products. 

  • The motivated 10% will find eco products anyway. 
    • More information through labeling etc will lead to just easier hunting for them
  • For the 65% in between
    • Just more information will not lead to more ethnical purchasing. 
    • But More INFORMATION presented simply will - Eco Labeling has proven it: Just by number of ticks for water efficiency, number of stars for Healthy food:
      • No need to read the stupid labels for detailed amount of calories etc.
    • But the Singapore Eco Label and contrasting water ticks seems to show that it must be made mandatory for all products to be effective in changing either consumer choices or manufacturers standards.

The 3 keys to effective labeling for ethnical consumers:
  1. Why should they care 
  2. An easy cue for which choices are better 
  3. A right decision that is as accessible as a wrong one. 

Who should do the rating then? 

To change the world in this sense simply required having the informed let the uninformed know the critical information. 

So this transparency of information is definitely useful but who has the incentive to do it? 
Only Government - The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves - in their separate, and individual capacities." Lincoln

Companies suc as Timberland and IKEA that have their own environmental scorecard for their products will not have the neutrality as certification provided by a third party.  A government only exists to do what we can not do ourselves, but even then they usually have bigger priorities like creating jobs.

Combined toxins effect:

Another thing worth mentioning is that currently government agencies only track particular substances that may be harmful for example asbestos and the level at which it becomes poisonous.   However, no one is tracking the combined effect

The various stages of corporate sustainability:

  1. Starting at a place of non-compliance with environmental standards and regulations,
  2. a company moves into the second stage of compliance in response to regulatory demand and public pressure. 
  3. Stage 3 is moving beyond compliance to seeing the possibilities for ongoing cost reductions and reputation or brand enhancement. 
  4. The next stage is making sustainability an integrated strategy for creating business opportunity and managing risk.   Internal signs of reaching this benchmark: shifting of responsibility for sustainability from an executive whose main job focuses on stakeholder management to leaders of business units. It drives the pursuit of significant markets 
  5. The fifth stage is a mission-driven business that places sustainability at the core of its values like Patagonia and Eosta and Interface.

No comments:

No dancing girls on top

You Live only Once