Facts

1
Sustainability Issues Opportunities for
Brands Luxury
Cheryl Hicks, WBCSD
2
WBCSD membership 200 multinational corporations
3
The Business Role the Work Program
WBCSD Work Program
4
What are the worlds biggest brands saying about
sustainability issues core to their businesses?
5

• Sustainability issues key to Brands incl. Luxury
  Jewelry
• Sustainable production
• consumption

6
WBCSD membership workstream on Sustainable
Consumption Consumers
7

• A business perspective on
• sustainable consumption

• Facts Trends on Sustainable Consumption
• December 2008
• efficiency gains and technological advances
  alone will not be sufficient to bring consumption
  patterns to a sustainable level
• changes will also be required to consumer
  lifestyles and the ways in which consumers use
  and choose products and services
• business needs to play a leadership role in
  fostering more sustainable consumer choices to
  achieve more sustainable lifestyles.

8
What is driving brands sustainability?The
consumer of the future
9

• Increased consumer awareness concern
• 96 of Europeans say that protecting the
  environment is important for them personally.
  Two-thirds of this group say that it is very
  important
• Nearly ¼ US adults now subscribes to a new set
  of values that typically includes
  environmentalism, feminism, global issues and
  spiritual searching. These cultural creatives
  are well educated, relatively affluent, and
  typical of the kind of consumer responsible for
  the success of hybrid cars.

10
Increased consumer willingness
I would be more likely to purchase products or
services from a company with good reputation for
environmental responsibility
11
Attitudes vs. behavior
There is a large gap between consumer attitudes
and willingness and ACTUAL BEHAVIOUR CHANGE
12
Barriers to behavior change Why is it so
difficult?
The consumer will not compromise on performance,
convenience or price
13
Consumers are confused about which products are
more sustainable On pack claims do not explain
the complexities of life cycle analysis and
global supply chains
14
What is driving brands sustainability?If the
consumer isnt enough,what about the regulators
15
UN Global policy recommendations 2010
Current status

• The Marrakech Process is a global
  multi-stakeholder process promoting a global
  framework to support regional and national
  implementation of policy on sustainable
  production and consumption
• A 10 year framework of programmes which began
  in 2002, post WSSD Johannesburg
• The UN CSD will review recommendations on SCP
  in 2010-2011
• Drafting of recommendations has begun

16
Policy input - Marrakech
UN Global policy recommendations 2010
What does it look like?
Observations Sept. 15, 2008 Draft

• Observations
• Long list of priorities short list of
  activities, proposed programs / actions
• Production heavy Consumption light
• Policy support for sustainable products
  life-styles but little on solutions
• Influenced by current EU Action plan on SCP

17
Regional policy EU Action Plan on SCP
What are the implications for business?

• Business Europe on the EU Action Plan on SCP
  Oct 08
• Supports overall objective to foster efficient
  framework conditions that boost innovation,
  promote continuous improvement in production
  processes and a wide choice of sustainable
  products for consumers and new business
  opportunities for companies.
• However, the current action plan is yet to
  adequately address
• involvement of stakeholders throughout the full
  supply chain ie where manufacturers and
  retailers set the agenda together
• lifecycle thinking including all relevant SD
  aspects
• actions based on sound scientific evidence
• leveraging innovation in process, product and
  service solutions
• relevant communication to shape consumer
  behaviour
• pursuing voluntary approaches wherever possible
  flexibility on how goals are achieved

18
Where do the worlds biggest brands see
opportunity in 2009?
19
More Sustainable Consumption Business (
Regulatory) Approaches
Choice-Influencing

• Innovation

Choice-Editing
20
More Sustainable Consumption Business (
Regulatory) Approaches
Choice-Influencing the use of marketing
communications and awareness-raising campaigns to
enable and encourage consumers to choose and use
products more efficiently and sustainably

• Innovation development of new and improved
  products, services and business models
  incorporating provisions for delivering maximum
  societal value at minimum environmental cost

• Choice-Editing the removal of unsustainable
  products, product components and services from
  the marketplace. In partnership with other actors
  in society such as policy makers and retailers

21

• Business innovation for sustainable consumption
• eco-efficiency measures
• product innovation and design
• production and supply chain management
• business model innovation

22
The business case Products and services have to
perform better, have a competitive price, AND be
more sustainable They must minimize
environmental impacts and deliver value to society
23
Many consumer products use more energy (and emit
more CO2) during use than they do during
sourcing, manufacturing, distribution retail
81 of CO2 emissions from cars are caused after
sale Lowering the dish washing temperature by
10 leads to a 20 decrease in the energy demand
within the use phase
24
The business case Business needs to create the
market for sustainable products by working in
partnership with the consumer
and by using marketing and communications to
influence consumer choice and behaviour
25
The business case Choices to edit the
availability of certain products are often in
conflict business, governments and society must
work together to define sustainable products and
lifestyles
26
Business cannot do it alone
Sustainable consumption is a systemic challenge
that requires all actors in society to work
together.
27
What will consumer brands do in 2009?
28
Sustainable Consumption 2009 Action Plan
                         

• 1. Advocate Facts Trends on SC
• Policy-makers, retailers, marketers
• 2. More sustainable products consumption
• Develop principles criteria from a business
  perspective
• 3. Sustainable lifestyles
• Develop business view on lifestyles that support
  the vision of a sustainable world

29
Principles for more Sustainable Consumption
In partnership with other actors in society
Identify relevant challenges / impacts

Identify key step along value chain

Identify desirable improvement options
Identify suitable approach(es)
Sourcing
Production Packaging
Trade Logistic
Use
Disposal
30
What is a sustainable lifestyle?
What can business do?
Leverage BRAND creative marketing expertise
31
Are these actions relevant for the jewelry and
luxury brands?Is the consumer driving
change?Regulators?Supply chain?Where are the
opportunities?
32
LOréal Hermès LVMH Coach Tiffany
Co Swatch PPR Richmont Bulgari Tods
NGO pressure Luxury brands sustainability
2007 study
33
N
2008 Sustainability Luxury under fire in
mainstream press

34
2009Key issues facing luxury industry
environmental issues and the role of values for
the consumer
35
Are these actions relevant for the jewelry and
luxury brands?What can we learn from other
industries who have faced ethical sourcing and
fair trade issues?
36
Fair trade
Ethical sourcing
37
What are the FACTS TRENDS from a business
perspective?
38
There will be 9 billion people in 2050
39
World GDP expected to grow 325 by 2050 Number
of middle-class consumers projected to triple by
2030
40
Culture of consumerism causing greatest per
capita share of global consumption and
environmental footprint
41
2/3 of the earths ecosystems are already in
decline
42
Natural resource consumption already 125 over
carrying capacity and expected to reach 170 by
2040
43
Higher levels of consumption and wealth do not
necessarily co-relate with well-being
Happy Planet Index New Economics Foundation, 2006