At a time when the United States is formally withdrawing from the Paris climate agreement, American consumers are making a diametrically opposite statement: they want to buy greener products that have a minimal carbon footprint and they are willing to pay extra for that.
The movement is certainly shifting corporate policies. And while it is unlikely to change Donald Trump’s mind, it will no doubt have an impact on national elections going forward. Companies are swept up by market forces while politicians are followers of public opinion. To this end, a new survey says that more than half of all Americans want greater transparency when they buy consumer goods — information that tells them the carbon content of a given product.
“Americans are looking to buy products with good environmental credentials,” says Lord Barker, executive chairman of the EN+ Group, the world’s largest producer of low carbon aluminum and hydropower, which is based in Great Britian. “This trend will continue. And the message is whether you are selling cars, hairspray or aircraft, you need to think about the consumers of tomorrow.”
Lord Barker was the United Kingdom’s Minister for Energy and Climate Change for Prime Minister David Cameron’s conservative government. In a conversation with this reporter, he advocated for greater transparency: consumers want companies to share data on the carbon emissions created during the manufacturing of products.
Specifically, 53% of American consumers said that they believe it is important to buy low- emission products and 45% said they would be willing to pay an extra premium for a lower carbon car, according to EN+ Group and YouGov. In the United States, 55% of consumers said that they would likely choose a vehicle that is manufactured with a lower carbon footprint.
U.S. consumers are aligned with those in Germany and the United Kingdom, Lord Barker says, in that they are mindful of their eco-footprint. China, which has the largest manufacturing economy in the world, lags behind. That is because a vast majority of electricity is generated using coal, although the country is committed to reducing that and to increasing its use of green energy.
In other words, it takes electricity to produce everything from mobile phones to laptops to electronic games. And if that power is generated with low-carbon fuels, the production process will be more environmentally benign. The good news, he adds, is that millennials are the driving force everywhere in the world. And they are a massive bloc that will move economies and political winds.
“Although I was a conservative politician, there was a market failure,” Lord Barker says. “We are not calling for government intervention. The market will sort itself out. American consumers are calling for environmentally clean products and they are willing to pay a premium.”
As for the aluminum industry, it contributes 4% of the world’s CO2 emissions. But low carbon aluminum has a carbon footprint that is 20 times smaller, he adds, noting that it is a “building block of a low-carbon economy.” That is because it is not just recycled but also used to make so many consumer goods — and it is even replacing plastics used for packaging.
With the exception of the United States, the Group of 20 nations endorse limiting CO2 releases. Leading institutions, municipalities and businesses, meanwhile, support the G-20. WeAreStillIn, for example, is comprised of such companies as Acer, Adidas, Adobe, eBay, Amazon, Mars, Evian, Nest Labs, Nestle, Netflix and Nike. They are among many companies that are eco-aware, not just for environmental reasons but also for economic ones.
Consider the hospitality business: major conferences may send out a “request for proposal” that seeks to know exactly the tack that hotels use to address climate change and water shortages. If a particular one is unable to account for such things, it will get passed over. “Customers will tell us they didn’t pick us because they didn’t have visibility into our standards,” Denise Naguid, vice president of sustainability at Marriott International, told this writer. “There is high risk if we don’t do certain things, we would lose certain business.”
It’s all about giving stakeholders more visibility into companies’ processes. Consumers started the trend. Investors are enforcing it: shareholders want to know if a company is getting out ahead of market forces and whether their stock will be worth more a decade from now. Institutional investors want to ensure that they are backing companies that future-proof themselves against the risk posed by climate change.
“Companies may not want to change a time-tested business model,” says Lord Barker. “But they need to move in the same direction that their consumers are going. It’s a one-way street — to a lower-carbon future.”
It’s ironic that the United States government is bucking this current and especially as it is getting stronger. Most American companies, however, are taking action to minimize their carbon trails — a movement that is manifesting itself in the global economy and in some political circles.