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Consumption

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    Consumption


    THE CHALLENGE: DECOUPLING CONSUMPTION AND ENVIRONMENTAL FOOTPRINT


    Our current model: a global “over-consumption”…

    We are currently a global population of 7 billion people, taking up the equivalent of 1.5 Earths! Our current consumption habits rely on a continuing increase in resource usage and environmental impacts. Given the increasing demographic and economic growth forecasts in emerging countries, the strong increase in middle class consumers will reinforce this pressure on the planet.


    …full of significant imbalances

    At the same time, more than a billion people are still living with less than 1.25$ per day, which does not allow them to satisfy their basic needs. Another example is that the number of people suffering from chronic hunger is still very significant, though the number of overweight people has surpassed this figure.
    So, how can we improve the quality of life of an increasing population whilst at the same time preserving our natural capital?


    Increasing awareness of these issues amongst consumers

    The answer to this question lies primarily in the hands of the consumers themselves. Sustainable development consumer awareness is increasing, not just in Europe (72% of Europeans say they would be prepared to buy ecological products despite them being more expensive, according to Eurostat(5)), but equally in emerging countries (e.g. 45% of Chinese people say they would pay more for an ecological product, according to a National Geographic study(6)).

    Although there is still a discrepancy between these statements and the act of buying, these figures are continuing to rise. Likewise, an underlying trend around natural products, health and wellbeing is becoming concretely apparent in consumer behaviour around the world.  In 2011, the global health and wellbeing market was estimated at more than 600 billion USD according to Euromonitor International(7).


    New business models to develop

    These challenges constitute more of an opportunity for businesses in the consumer sector: bring more value, whilst at the same time reduce the environmental footprint of their products throughout their whole life cycle, and actively encourage client behavioural change.
    Numerous initiatives already exist (fair trade, sourcing of raw materials from sustainable origins, high nutritional value products, etc.) but they remain marginal.

    In order to address the challenges of sustainable consumption, a change of scale is required. Actors offering robust and integrated solutions as part of their business model will be favoured for this investment theme.

     

    SOLUTIONS IDENTIFIED BY MIROVA
     


    (Click to enlarge)
     

    REVIEW OF CSR QUALITY


    In addition to the identification of business models that respond to sustainable development challenges, a CSR policy review of quality is systematically carried out prior to stock selection (management systems analysis, investigation of controversy, etc.). This is done to confirm that the company is relevant to the investment theme and ensures that the overall business operations are consistent with the sustainable development positioning of the company’s products and/or services. This analysis focuses on key areas, for example in retail: personnel management, working conditions at manufacturing sites for private label products, CO2 emissions from infrastructures and the logistics chain, etc.

    (1) “Active” consumers in this context refers to the adult population (over 20 years of age) whose daily spending is between 10 and 100 US$ (PPA), i.e. the “middle class” and above.
    (2) OECD (2010 ) Emerging Middle Class in Developing Countries
    http://www.oecd.org/social/povertyreductionandsocialdevelopment/44457738.pdf
    (3) Global Footprint Network
    http://www.footprintnetwork.org/en/index.php/GFN/page/earth_overshoot_day/
    (4) FAO :
    http://www.fao.org/publications/sofi/en/WHO : http://www.who.int/mediacentre/factsheets/fs311/fr/index.html
    (5) European Commission Directorate General (2011) Special European Barometer 365. Attitudes of European Citizens towards the Environment (Provisional Summary).
    http://ec.europa.eu/environment/pdf/EB_summary_EB752.pdf
    (6) National Geographic (2012) Greendex 2012, Consumer and the Environment : A World Tracking Survey
    http://images.nationalgeographic.com/wpf/media-content/file/NGS_2012_Final_Global_report_Jul20-cb1343059672.pdf
    (7) Euromonitor International
    http://blog.euromonitor.com/2011/06/health-and-wellness-by-prime-positioning-the-us.html