Bridgepoint   |   The Point   |   December 2019   |   Issue 36
Analysis
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Lifestyle 2.0

As climate change moves increasingly into the spotlight, there is a growing awareness that consumers need to alter their behaviour – radically. While some companies might baulk at the prospect, it presents a number of opportunities for smart-thinking businesses

It is a typical holiday scene. A group of German tourists loll on a sandy beach, shaded by palm trees. Nearby, other holidaymakers admire a group of flamingos feeding in an equatorial pond. But this is not a vision from a Malaysian oasis. Instead, it is an artificial tropical resort housed in a giant airship hangar on a former Luftwaffe airfield. 

 

The owners of the Tropical Islands resort, which lies 60km south of Berlin, have gone to great lengths to replicate the faraway holiday experience, importing plants from rainforests across Africa and the Pacific, along with a huge Balinese temple gate. However, they have also striven to make the resort as environmentally friendly as possible, and have installed a foil that is transparent to ultraviolet light on one side of the hangar to trap heat and solar panels to meet much of the site’s prodigious energy needs.

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A wide range of lab-grown meats – created by cultivating stem cells to produce genuine animal flesh – look set to hit the market over coming years

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Guilty footprint

Such quirky tourist curiosities could become more common, as consumers cut back on activities causing high carbon emissions, such as long-haul flights. Aviation emissions have risen by about 70 per cent since 2005 as more travellers have taken to the air. Yet a round-trip flight from San Francisco to New York has the same warming effect per passenger as running the average American car for three months.

 

“Pride in having flown all over the world is likely to give way to flight guilt over coming years,” says Kimberly Nicholas, associate professor of sustainability science at Sweden’s Lund University. “By 2050, long-distance aviation will need to be rare and extremely expensive. That means consumers will demand more local forms of tourism, focusing perhaps on culture, or with an emphasis on virtual experiences.” 

 

In 2017, Nicholas co-authored a study looking at lifestyle choices that consumers could make to reduce their climate impact. Four loomed large: having fewer children, living car-free, eliminating air travel and switching to a plant-based diet. Children aside, adopting the other changes would roughly halve the emissions of the average citizen of a rich nation, which the Organization for Economic Co-operation and Development estimates is equivalent to 9.2 tons of carbon dioxide a year.

 

But the study cites many other changes, too, which suggest that lifestyles may need to alter radically in the coming years. For businesses seeking to appeal to ecologically aware consumers, this presents a cornucopia of opportunities. 

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The difference in energy used by scooters and cars suggests there is huge potential for reducing emissions

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Going car-free

“Almost everything we do needs to change, from our weekend clothes shopping trips and our carnivorous barbecues to our tropical holidays,” says Milena Buchs, associate professor of sustainability at the University of Leeds. “Disruptive companies have a role to play in that change.”

 

On the transport front, living car-free ranks as the second-most significant step people can take to reduce emissions, accounting for roughly the equivalent of 2.5 tons of CO2 a year. The makers of electric scooters, which have become ubiquitous in large cities around the world, are among the companies that have been trying to lure urban travellers out of their cars.

 

A report from Boston Consulting Group found that a dozen electric scooter firms have received more than $1.5 billion in funding, even though the ecological credentials of the urban scooter have been called into question. Indeed, a recent study by North Carolina State University found that scooter users were cutting back on walking rather than driving. And e-scooters are only as clean as the electricity they are charged with – 63 per cent of which is generated from fossil fuels in the US.

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Increasing impact

Nonetheless, entrepreneurs like Torge Barkholtz, co-founder of e-scooter rental company Circ, believe their services are already limiting emissions and will have an increasing impact over time. “At the moment, we are certainly displacing rides by taxis and ride-sharing services, and that provides a net emissions benefit,” he says. “As the business develops, we could see more people commuting with scooters rather than cars.”

The difference in energy used by scooters and cars suggests there is huge potential for reducing emissions. The average car weighs about 1,800kg, or roughly 23 times more than a person inside – and there is usually just one person. A scooter, by comparison, weighs around 13kg, making it significantly more energy-efficient in a city. While a petrol-powered car can travel less than a mile on the equivalent of one kilowatt-hour of energy and a Tesla electric car manages about four miles, an e-scooter can travel more than 80 miles.

 

Another major consumer shift that has garnered headlines over the past year has been the arrival of plant-based meat on supermarket shelves. Los Angeles-based Beyond Meat, whose vegan burgers are engineered to look, smell and taste like beef, has been the standout public offering of 2019, with its shares trading 500 per cent above their issue price at one stage. Meanwhile, a wide range of lab-grown meats – created by cultivating stem cells to produce genuine animal flesh – look set to hit the market over coming the years.

 

This is just as well, perhaps. In terms of carbon emissions, livestock cultivation is a giant – accounting for about 14.5 per cent of greenhouse gases – and the United Nations’ Food and Agriculture Organization expects the demand for meat to rise 70 per cent by 2050. “If consumers can be induced to switch to plant-based or lab-grown alternatives – which produce 80 to 90 per cent fewer emissions – that is a huge win for the environment,” says Peter van der Werf, engagement specialist for Netherlands-based asset management firm Robeco.

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Almost everything we do needs to change, from our weekend clothes shopping trips and our carnivorous barbecues to our tropical holidays. Disruptive companies have a role to play in that change 

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Beckie Calder-Flynn, operations co-ordinator at Dutch firm Mosa Meat, estimates that cultured meat production will result in only four per cent of the emissions of conventional production. While the firm’s first burger made of lab-grown meat was produced at a cost of €250,000, the company is on track to bring this down to around €9. “Our goal is to hit the market in 2021,” Calder-Flynn says. This depends on finalising processes for mass production and winning regulatory approval from the EU – which could push the launch back to 2022, she says.

 

Surging demand for plant-based meat, which is now on the menu at chains like Burger King, suggests that alternative meat products could devour a big share of the market. Global management consultancy AT Kearney has forecast that by 2040, normal

meat will still account for around 40 per cent of consumption, but lab-grown meat will come a close second at 35 per cent and plant-based meat 25 per cent. In as little as 10 years, the alternative meat sector could be worth $140 billion globally, according to Barclays. Aside from nimble start-ups like Beyond Meat and California-based Impossible Foods – which is now servicing more than 15,000 restaurants – traditional giants like Nestlé and Conagra Brands have been entering the market.

Fast fashion a growing threat

Even firms in industries that are bit-part players in global carbon emissions have been tapping into the eco-conscience of consumers. The fashion industry, for example, accounts for only about five per cent of man-made emissions, but that is still significant – and its share is rising. Fast fashion is the main culprit. Worldwide, clothing utilisation – the average number of times a garment is worn before it stops being used – has decreased by 36 per cent in the past 15 years, according to the Ellen Macarthur Foundation, a charity that promotes a circular economy. Around half the goods produced by the global fast fashion industry are thrown away within a year. On its current trajectory, the fashion industry could be responsible for around a quarter of the world’s carbon emissions by 2050.

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On its current trajectory, the fashion industry could be responsible for around a quarter of the world’s carbon emissions by 2050 

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Credentials in question

Concern over this trend has been helping to fuel the rise of fashion rental firms. New York-based Rent the Runway, launched in 2009, gives customers access to upmarket brands from Jason Wu to Diane von Furstenberg. The firm now has 10 million members and a valuation estimated at close to $800 million. Californian rival Le Tote focuses more on mid-market brands, from J.Crew to Banana Republic and Zara.

 

As with e-scooters, the eco-credentials of such businesses are challenged by some. “It’s not clear that the emissions savings from repeated use offset the downside from frequent transportation,” says Nicholas.

 

But Le Tote founder Rakesh Tondon believes that his firm clears this hurdle. He estimates that each item of clothing his firm rents gets worn about 20 times before being discarded, compared with just two to three times for the average owned item. The carbon footprint of circulating clothes among a community of users, he argues, is far lower than the buy-to-own average.

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We can’t rely on consumer self-sacrifice to avert harmful global warming. But if innovative firms can produce products that consumers love, while appealing to their ecological conscience, the odds improve considerably

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Rental firms also seek to reduce their footprint by using recyclable packaging and green dry-cleaning technology.

 

Many more disruptive firms are seeking to help consumers trim their carbon emissions. Smart home technologies can reduce energy by turning off lights and appliances in empty rooms. Crowdfunded start-up Ovie aims to help consumers reduce food waste with app-linked smart containers that turn from green to yellow to red as food nears its expiry date. At the other end of the spectrum, electric car giant Tesla is selling the latest generation of rooftop solar panels that look like standard roof tiles and a “Powerwall” battery to provide electricity for the home when the sun isn’t shining.

 

“We can’t rely on consumer self-sacrifice to avert harmful global warming,” says Nicholas. “But if innovative firms can produce products that consumers love, while appealing to their ecological conscience, the odds improve considerably.” n