7 Min Read
Energy Day at the 2021 United Nations Climate Change Conference (COP26) was dominated by the message: ‘consign coal to history’.
Seventy-seven countries signed up to the Global Clean Power Transition Statement, committing to the drive for net zero carbon emissions by scaling up clean power and ceasing investing in coal, ultimately phasing it out altogether.
Civil society organisations such as the Climate Action Network, however, criticised the commitments made on Energy Day as insufficient. COP26 made progress toward delivering on the Paris Agreement goals of limiting global warming to ‘well below’ two degrees Celsius (C) on pre-industrial levels, but the concern is that many of the new net-zero targets announced provide limited detail on near-term plans to help reduce emissions — which is essential to any chance of limiting global warming to 1.5C.
While COP26 focused on global governments’ actions to combat climate change (and on which coal-intensive countries, such as South Korea, China and Japan, remain averse to reducing coal production), less was said about how corporations and consumers could contribute to achieving net zero targets.
When discussing the customer of the future, one thinks mainly of consumers increasingly demanding seamless personalised experiences, frictionless tech and impeccable service. But with each passing day Consumer 2.0 is also becoming more ecologically aware – and rewarding organisations who walk the environmental talk. This has serious implications for businesses, both B2B and B2C, whose climate and carbon commitments already face intense scrutiny from investors, consumer organisations, individual customers and society as a whole.
This scrutiny of private-sector decarbonisation plans, therefore, is only going to intensify. This is especially true in the UK, where climate risk disclosures will be mandatory for large companies from 2022, and for all companies by 2025. A new regulatory requirement also obliges listed companies to produce net zero transition plans by 2023. But it is how responsibly organisations behave in the eyes of consumers that could spell success or disaster.
People increasingly want to know how socially responsible the financial institutions with which they bank are. Whether in day-to-day banking experience, income and expenditure, investments or mortgages, how ethically their bank conducts its business is becoming more and more important.
Investors are showing increasing interest in which funds their pensions or ISAs benefit. The popularity of ESG (environmental, social and governance) investment is skyrocketing, with some of the world’s most influential investment firms urgently seeking to grow these aspects of their portfolios.
Financial services is a highly regulated industry. But while government mandates around climate risk disclosures and net zero transition plans will force these institutions to do what they must to remain in business, customers will want to know how sincere the institutions with which they bank truly are. A two-line paragraph somewhere in their annual report is unlikely to satisfy Consumer 2.0: companies are going to have to put their environmental cards on the table – front and centre.
When choosing whom to bank with, customers not only investigate institutions’ net zero transition plans. They also want to know where their money is being invested: in oil and gas companies located in countries which don’t adhere to targets like the Paris Accord, or in more sustainable industries? Financial institutions need to meet their clients’ own ethical ambitions, and to make it crystal clear that they do so.
Transport and utilities
Much of the conversation around carbon footprints centres on modes of transport. This is, in part, because the link between customer behaviour changes and reducing environmental impact is so clear and simple. Sales of electric vehicles are on the rise as motorists ditch petrol and diesel for more sustainable alternatives. UK citizens – those not working increasingly from home – are replacing motor commutes with cycle journeys (especially as growing cycle lane networks make this a safe alternative), domestic flights with train journeys and so on. When they do opt for international travel, tourists often look for other ways to offset the carbon impact of their journey.
Similar trends are seen in the utilities industry; people are intensely conscious of the need to conserve power and water – or to self-generate the former through renewable means and store or sell any excess back to the National Grid. These same customers want to know where their power company derives its jet power: from renewable sources or from fossil fuels?
Data and communications
When it comes to the carbon footprint generated by data, cryptocurrencies such as bitcoin tend to grab the headlines. The “mining” aspect (which refers to the validation of transactions) does indeed consume vast quantities of electrical power – estimated in mid-2021 to equal the amount used by Sweden.
Less attention-grabbing, although far more relevant to the average citizen, is “Dirty Data”, research published recently by the Institution of Engineering Technology. The ability afforded by smartphones to take unlimited numbers of photos, and the ease of storing them in the cloud, has led to a glut of data with a massive carbon footprint. Britons’ unused photographs (those “rejects” not used for posting on social media, etc) contribute over 355,000 tonnes of CO2 to the atmosphere every year. Ninety percent of the world's data was generated in just the last two years. If we continue that trajectory, the amount of data in the world will increase exponentially – along with its environmental impact.
What few people realise is that all their cloud-stored data – whether in the form of emails, photos, videos or documents – is stored in data centres, which need a vast amount of power to run, using hardware whose carbon impact is opaque. The average person’s photo storage carbon footprint contributes 689kg of CO2 emissions – more than a 1,674-mile car journey in an average-sized car (600kg CO2). Simply performing a regular cull of one’s data stash can have a remarkable effect on one’s carbon footprint.
Perhaps the greatest contribution individuals can make to the environment comes down to their shopping choices. People increasingly ask: what is it I’m buying? What materials is it made from? Where am I buying it from? How sustainably is it produced?
According to Professor Mike Berners-Lee, the average Briton produces three tonnes of carbon per year, or 8.2kg per day, from the food and drink they consume. From methane-producing mass-scale meat farming, to the impact of imported goods, to deforestation for grazing land, to processing and packaging, the food choices we make can be critical.
Eco-conscious consumers are also driving a demand for ethical fashion. The clothing industry is a source of huge waste and environmental degradation. It’s estimated that 12% of fibres are discarded on the factory floor during production. Plastic-based fibres such as acrylic and polyester contribute to ocean pollution and can enter the food chain. Even “sustainable” materials – leather, for example, and wood-based cellulose fabrics like viscose and rayon – when produced cheaply and unethically lead to the destruction of rainforests and other ecosystems.
Environmentally-aware fashionistas are voting with their wallets. Mycelium leather, a vegan fungi-based alternative to animal hides, is catching on in the higher echelons of fashion. Meanwhile, middle-class consumers are opting for “vintage” and “pre-loved” clothing online via sites such as ThredUp, which styles itself as “an online consignment and thrift store for your closet, your wallet, and the planet”, and Preloved.
What does all this mean for the customer experience?
Individuals want to act responsibly as consumers, and they will reward the organisations that make this easy for them. Capita’s core competencies around customer contact management, customer acquisition and retention and the transformation of the customer experience – as well as our specialism in data analytics in all of these areas – can help facilitate this.
Our data and analytics capabilities enable us to profile consumers and reliably predict their preferences and behaviours. Through data analysis of your customer base, we can reliably predict their propensity to buy certain categories such as green products. We can also look at individuals and determine how likely are they to be interested in the green credentials of an organisation, and even how likely they are to abandon an organisation that undersells its green credentials.
Our social media analytics tools allow us to scan social sentiment and “listen in” on the conversations customers are having en masse about certain organisations and their responses, decisions and attitudes toward climate change. This gives us access to vast amounts of data around consumer trends, opinions and how seriously consumers take corporate carbon commitments.
The time for corporate and international reflection on COP26 has passed. Pressure on businesses will only increase as customers continue challenging the carbon commitments made by suppliers of their goods and services. Businesses therefore need to invest carefully not only in honouring their net zero commitments, but also in making certain their customers know it.
There has never been a greater imperative for personal ownership at home and at work – understanding where we use fossil fuels, how our choices can contribute to greenhouse gases and deforestation, making conscious decisions and using our purchasing power wisely. Together our actions can move the dial and influence changes.