'It's the economy, stupid'. Or is it?

18 October 2018

'It's the economy, stupid' was coined by Bill Clinton's election strategist, James Carville, in 1992 to emphasise the single most important issue to voters. The mantra became established thinking; the economy was thought to trump all other areas of policy. However, is that still the case? Do we care about money above everything else?

Scientists have long warned of the serious risks of rising global temperatures and the message is getting through. Earlier this month the UN’s Intergovernmental Panel on Climate Change (IPCC) gave its gravest prediction yet: we have 12 years to limit climate change catastrophe. Unless urgent changes are made, global warming will cause irreversible damage and worsen the risks of drought, floods and extreme heat.

However, reassuringly, study after study shows consumers are switched on to sustainability. They’re willing to put their money where their mouth is and pay for greener brands. Going green is mainstream.

Just as people are changing their ways, big brands are too. Household names are embedding sustainability into their core mission. It seems that we have moved to an era where for businesses, the (albeit less pithy) mantra is, 'It's the economy AND environment, stupid'.

The green movement has led to a seismic shift in how businesses work: rather than being forced to meet their green obligations, businesses are exploring clean growth as an opportunity. Businesses are turning their back on fossil fuels in favour of renewables. This is environmentally and economically savvy. Last week the World Bank Chief Jim Yong Kim explained his support for green energy: “We are required by our by-laws to go with the lowest cost option and renewables have now come below the cost of coal.”

Renewable energy is just the tip of the iceberg. We at WRAP have been promoting business models that don't depend on selling large volumes of products and materials to meet market demand. The goal is to extend product life, conserve resources and prevent materials from becoming waste. We have championed a number of different business models.

What does that mean for consumers? There’s a variety of ways businesses are updating their service models.

  • Product service system: The business model is based on the idea that people don’t need to own a product, they just need access to it. For example, Xerox sells contract ‘print services’ rather than printers;
  • Hire & leasing: We’re seeing an expansion in businesses offering the  long-term hiring of products, for example clothes, electronics and furniture, so items can be returned after use;
  • Dematerialised services: Products and services don’t need to physically exist - Spotify and Netflix have eliminated the need for each household to own and store hundreds of DVDs, tapes and CDs;
  • Incentivised return & reuse: Incentivised return & re-use models encourage customers to return used items for an agreed value; and
  • Long life: You could describe this as a return to old fashioned design principles with products designed to last.

This is by no means an exhaustive list. The government is seeking to promote green growth as a business opportunity and BEIS has introduced the first ever Green GB Week – an annual week designed to highlight the opportunities clean growth offers the UK and raise understanding  of how business and the public can contribute to tackling climate change.

We expect the landmark Resources and Waste strategy later this year. Chris Preston, deputy director for waste and recycling at Defra said innovation was key and the Government would be setting the framework to encourage it. “Business is up for change,” Preston said, calling it a ‘misnomer’ to suggest that you could not protect the environment and boost the economy at the same time. The new policies offered “a huge opportunity to drive up resource efficiency” and “the landscape has changed in so many ways”.

Businesses and governments the world over are adjusting to the new economic and physical climate. Climate change is fundamentally changing the world and business need to be at the forefront of the fightback to ensure their future survival, and ours.