Shaping Demand...A First Look

Today, there is a refreshed focus on how best to enhance public engagement, shape consumer behaviour and shift societal preferences to support sustainable resource use. This in part stems from a growing understanding that technologies and investments alone may not deliver needed sustainability outcomes. With disruptive technologies and business models on the horizon, there are enormous opportunities to shape future consumption patterns in ways that will have significant implications for sustainability and human wellbeing, whether on climate change, food, water and energy security, or other UN Sustainable Development Goals.

Societal preferences are shaped by many evolving trends and forces. Economic prosperity, population growth, technological advances, and changing societal and cultural norms already alter the volume and type of goods and services demanded by populations around the world. As a consequence, the long-held assumption – based on historical experience – that income and demand for resources grow hand-in-hand may not be an accurate predictor of the future. New technologies and business models offer opportunities to decouple resource use from economic growth and to do more with less.

Due to advances in computing power, artificial intelligence, digitalization, material science, information technology and design, there are novel products, production methods, services and markets that reshape consumer expectations and behaviours. Digital platforms supported by big-data analytics not only mean that markets are less defined by geography, but insights from these are also increasingly used by companies to respond to individual preferences. Together with 3D printing, advanced robotics and the internet of things, which are creating agile, automated and localised supply chains, this will offer ever more opportunities for speedier mass customization of products and services.

There are signs that consumer attitudes and behaviours can change rapidly. The rise of Uber and other sharing platforms suggest that easy access to car services could be preferred to ownership, especially by younger generations. The same could be said about Airbnb in relation to hotels. Looking to the future, more of these disruptive business models and new forms of peer-to-peer exchange will challenge established production methods and service delivery.

Geographical context matters, whether inside or outside the household. The level of household energy and material use results from many decisions, from the design and layout of the home to the choices made around cooling, lighting and appliances, and to the extent to which occupants are mindful of the economic implications of usage, such as through the use of smart meters. Each of these factors could become an entry point for initiating change. Similarly, people’s car use depends on history, urban design and inherited land-use decisions that determine the level of accessibility afforded by public transport and pedestrian infrastructure.

Additionally, people’s attitudes and consumption are a function of a complex mix of socio-psychological factors including their values, history, and social and cultural identity. Relationships and social surroundings, along with the information and narratives people encounter in their daily lives also matter. But belonging to the same social group does not necessarily mean people having the same value systems. A wind farm might represent a blight on the landscape to one environmentalist but a key tool to combat climate change to another.

Clearly, it is difficult to anticipate the scale, timing and impact of various demand-side trends, as well as the implication of their interactions. This makes it challenging to develop a fixed set of tools and mechanisms that can be used by companies, governments or communities to move the dial on sustainability. One helpful starting point could be learning from past attempts to influence consumption – with varying degrees of success – through NGO campaigns, nudges, regulations or new products and services.

A single message may not resonate with everyone. Some messages, such as on waste minimization and prevention, have been shown to have broad appeal as they play to core values across the political spectrum. However, most campaign narratives need to be adapted to ensure resonance with different target audiences and to avoid the unintended alienation of specific groups. A campaign promoting building renovations and retrofitting could, for example, be designed around: (1) social justice (as more energy-efficient buildings would help mitigate fuel poverty), (2) infrastructure development (which is central to economic growth and employment), (3) heritage (viewing renovation and retrofitting as preservation of national culture) or (4) money-saving (to help reduce heating costs). The challenge is to come up with a unifying solution that speaks to all these different priorities.

In an era of information overload, authenticity is key. Traditional media, including television, radio and print, will continue to be important channels for sharing information and raising awareness, while social media is a more interactive platform that allows customers to provide direct feedback to companies. With the volume of information and competing messages vying for people’s attention, robust evidence and a compelling narrative are, now more than ever, key to convincing them of the authenticity of campaign messages.

Credible messengers vary across communities and individuals. Trust in government or the media as sources of information differs across countries depending on social, cultural and political norms. Advocacy by celebrities has been shown to be effective at key moments in different countries – for example, on climate change, species extinction or poverty reduction – but it remains unclear whether this can bring lasting change to behaviour.

Shifting attitudes, beliefs and behaviours is an inexact science, necessitating frequent review. Cognitive biases often come into play, bringing unintended rebound effects.1 An individual may use token behavioural change to justify other consumption choices that could have larger environmental impacts – e.g. ‘I always turn the lights off when I leave the room and I’m good at recycling so I feel I can take a long-haul flight for my summer vacation’. And it remains extremely difficult to predict how targeted messaging will be interpreted, as well as the timeframe for response.

On a positive note, public campaigns can also empower and create new social movements that challenge the status quo. The divestment movement on fossil fuels is a case in point. It began as a campaign on US university campuses in 2011, encouraging students to challenge the public discourse on the need for fossil fuels in the future. It led to divestment of university endowments in the first instance. Meanwhile, interested campuses and other communities followed suit and set up their own campaigns based on their local context.

Shopping is not a rational or considered process, and is open to influence. Purchasing decisions are often made within 30 seconds (while decisions on menu in restaurants take no more than 60–90 seconds), highlighting the importance of subconscious processes such as intuition and reflex. Marketing tactics such as product positioning and the use of signage and offers have long involved changing the choice architecture of purchasing decisions.

Experience from the private sector suggests that some companies have refrained from using a more value-laden rhetoric of sustainability in their marketing, even when their products meet the highest environmental standards. Method, a producer of cleaning products owned by Ecover, tries to build a base of brand loyalists with products that look good enough to display, emphasizing the fragrance, design and vibrant colors of their naturally derived, biodegradable, non-toxic household cleaning products. Memphis Meats, a leader in producing cultured meat, takes a similar approach, marketing the taste of its meat products rather than their environmental benefits.

For products to have mass appeal, buyers need to see tangible and direct benefits; i.e. a clear, long-term value proposition. This could mean lower costs, a more convenient shopping experience or higher quality and performance to encourage customers to break their usual purchasing habits. Once customers have bought into the benefits of new products, habit can kick in and they become the norm.

Collaboration across industries or supply chains can help bring more sustainable products or services into the mainstream. Innovation often incurs significant risks and costs, especially if it involves a deviation from business-as-usual practices by the end-users. Collaboration across industries and supply chains means sharing the innovation burden. It also helps accelerate commercialization, with shared lessons and best practice that can help reduce the cost of adoption and achieve economies of scale.

Collaboration may bring unexpected partnerships and opportunities. For example, Unilever and IKEA are working together to improve the welfare of animals used in their supply chains. Collaboration is not without its downsides of course. The profitability for individual firms may be lower, even though it is rare that one company alone caters to the whole market. This means that companies may need to balance, at times, conflicting considerations.

Digital technologies and new business models are blurring the distinction between producers and consumers. From peer-to-peer sharing platforms providing accommodation (Airbnb, Oyo Rooms), cars and car rides (Uber, BlaBlaCar, easyCar Club, GO-JEK) and food and drink deliveries (UberEATS, Deliveroo, Hello Fresh) to household-services providers (TaskRabbit, Handy), individuals are now selling goods and services in markets that were traditionally dominated by corporate actors. Some of these new business models deliver more with less by avoiding the use of new resources. For example, without Airbnb rooms, 267 extra hotels would have been required to accommodate all the tourists in Rio de Janeiro during the 2016 Olympics.

Bio-based products have many applications, even from the same biological feedstock. Ecovative Design, a US biomaterials company, uses mushrooms to grow packaging and glue, displacing less sustainable options like Styrofoam and formaldehyde. Dutch company Manure Couture extracts cellulose from manure to produce biodegradable plastics, paper and textiles. Such bio-based innovations increasingly compete with conventional goods on price and performance, which can help build public acceptability.

Data analytics and blockchains can help bring to light the sustainability impacts of consumption choices. Increased computing power, data storage capabilities and blockchain will bring greater transparency and traceability on the energy, materials and greenhouse-gas emissions embedded in products. This information could then be communicated to individual or corporate customers to make them more aware of the financial and environmental implications of their consumption choices.

Efforts to steer global consumption towards more sustainable pathways require a mix of tools, mechanisms and approaches to ensure effectiveness over the long term. While data collection and information sharing is necessary, they rarely suffice on their own. Other tools like public campaigns, a change in choice architecture and regulations are important complements to shift consumers from good intentions to making more sustainable choices.

Governments, businesses, NGOs, media and broader civil society should focus more on demand-side opportunities that could induce larger-scale shifts in societal preferences. A first step in this process is being mindful of strategic openings to shape future demand. These include the following.

• When consumption behaviours are less entrenched: Interventions are most effective when the timing is right. Individuals can be more or less amenable to change in different periods of their life. New homeowners may be more open to retrofitting their properties with energy-efficiency improvements than long-term occupants. Similarly, younger people are more engaged with digital technologies and platforms, signalling more flexible consumption behaviours. As these critical junctures cannot always be anticipated, specific preparations could help build capacity and acceptance around future interventions. In the case of sustainable diets, for example, one could use cookery lessons in schools to improve the understanding and capability of future generations to prepare healthier and more sustainable meals as well as reduce food waste.

Any application of demand-shaping tools needs to be tied to a long-term trajectory or set of targets, such as the UN Sustainable Development Goals, to ensure that a new system of production and consumption is environmentally and socially sustainable, and delivers the scale of change needed.