Do we need four planets? My reflections from the World Economic Forum
Ten countries. 50 years. Over 600 million people. 2017 represents the fiftieth anniversary of the Association of Southeast Asian Nations (ASEAN). As I joined over 600 delegates at the World Economic Forum (WEF) ASEAN summit in Cambodia last month, there was much celebration of the region’s rising prosperity.
More than half of ASEAN’s population is under the age of 30. That’s a powerful demographic dividend that will drive growth for years to come. Not surprisingly, consumption is booming: annual consumer spending is estimated to rise to $2.3 trillion by 2020 – that’s some 80 percent more than 2012 levels.
For someone in the consumer products sector like I am, that’s great news, surely? Yes – but with a huge caveat; in fact a planet-sized one.
Consumption explosion: Boom or doom?
As a leading global forum for raising and discussing macro-level issues, the WEF has planted in my mind one huge issue which affects my industry and particularly, emerging regions like ASEAN: if ASEAN, China and India’s consumption per capita reaches anything close to Western levels with current methods of production and consumption, we would need several Planet Earths to sustain it.
There simply aren’t enough natural resources to support anticipated levels of growth. For instance, studies show if the whole world used its land the way the average North American does, it would take 3.9 Earths to sustain us all!
We already face severe shortages – a case in point being water. At the WEF, I learnt that putting one beef burger on the breakfast table uses up 660 gallons of water! No wonder we face a water crisis. It’s not just fresh water: the salty kind of our oceans is struggling badly too: recent studies indicate that by the middle of the century the ocean could contain more plastic than fish by weight. As a recent Economist editorial put it: “The ocean nurtures humanity. Humanity treats it with contempt.”
Similarly, our consumption activities are ruining the air and changing the climate. A fellow delegate at the WEF made an interesting observation: when we think of carbon footprint, we tend to think of vehicular pollution as being public enemy #1, but the fact is that livestock contribute more carbon into the atmosphere than cars, as noted by studies like this one.
It is a result of these shocking findings that the WEF’s 2017 Global Risks Report ranks the risk of “Major bio-diversity loss and ecosystem collapse (terrestrial or marine)” quite highly, saying: “This would result in irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industries.”
A growing footprint needs to be lighter
It’s clear that simply extrapolating the present and growing Asian consumption to Western levels would spell the end of our days. How should the Consumer Products sector respond to this? What can we do differently?
Far from being a linear extrapolation of the past, the future of consumption in Asia needs to make a radical departure from its past. We need to fundamentally rethink both how we consume and how we produce goods and services to meet our rising aspirations.
At the consumer end, it is encouraging to see that millennial consumers are much more aware of the challenge and the stresses being placed on the planet – and are responding with their wallets. In an earlier post I’ve touched on growing consumer interest in brands that are LATTE – Local, Authentic, Transparent, Traceable and Ethical. The rise of the sharing economy with its focus on using shared assets and instead of individually owning them is another mindset shift in the right direction.
But we will also need much more efficient production and distribution methods to be adopted on a wide scale in the consumer and retail industry. For instance, it is borderline criminal that about one-third of all food produced in the world is wasted, as studies show. We cannot continue like this! We need to adopt more circular economy concepts across the entire CP value chain, and we need to find ways to get short-term return focused investors on board with the business case for this.
It is clear that more fundamental shifts will be needed. However, the devil is in the details and the WEF as a global forum does not go into deep industry-level details. As I gear up to attending the annual Global Consumer Goods Forum (CGF) summit later this month, I’m looking forward to hearing some concrete ideas about industry solutions for sustainable consumption and discussing with attendees and EY colleagues at the CGF summit how these can be made real. In my next blog post, I will write about what I learn from these discussions.
