Retail Horizons: Picture these 4 low-carbon business models
This article is the 10th in a 12-part series about the future of U.S. retail for the Forum for the Future-led 2014 Retail Horizons project in partnership with Retail Industry Leaders Association. For more about the project and the toolkit available in October, read the first post, which also contains a table of contents for the series.
Ten blogs into our series and I'm finally willing to make a prediction: In the future, low- or zero-carbon products and services will have a competitive advantage.
It's easy to be so bold in the face of recent reports that emissions rose in 2012-2013 at a faster rate than any other year since 1984, and with very stark news from the U.N. International Panel on Climate Change about the emissions path that we are on. By now we should be reducing carbon emissions, and because emissions are cumulative in the atmosphere, the longer they continue to go up, the further they have to fall to get to a stable level, and therefore the bumpier the economic ride when they finally do.
We're already seeing climate impacts and feeling their cost. In 2012, the U.S. experienced the world's two costliest environmental disasters, Hurricane Sandy ($65 billion) and a year-long drought in the Midwest ($35 billion) — both the sorts of events we can expect to see more of as climate change impacts hit.
So when we talk about decarbonizing the economy, we need to think very radically. Not some energy efficiency here, reducing some freighting there — but stripping out the carbon from a very carbon intensive value chain: manufacturing, shipping, stores, the use-phase.
Knowing that we need to radically decarbonize, the best way to future-proof your business is to act now as if a (high) carbon price is imminent and start to innovate accordingly. Of course, you could assume that any such tax is passed onto your consumers but such price increases will put you at a competitive disadvantage to those who got ahead of the game and decarbonized.
Here are four ideas of business models that we might start to see more of in the future, all of which are lower carbon than their equivalents.
The sharing economy has been getting a lot of sustainability press of late. On the face of it, it could be bad news for retailers — who wants to hear about customers buying less? But less goods manufactured means huge carbon reductions, and millennials are already fans — so retailers should get in on the act. Rent the Runway is an early example of what this might look like. It started as an online boutique, but recently has expanded into bricks and mortar stores.
Taking waste from one industry and using it as a raw material for another, the carbon reductions here come through reduction in raw materials manufacture. A good example is Interface using discarded fishing nets for carpet fiber through its partnership with Aquafil. Similarly, Foss Manufacturing produces a high-quality polyester fiber from 100 percent recycled bottles.
Remember when you had your shoes or toaster or television repaired when they were broken? It's not so long ago that repair rather than replace was the norm. Patagonia is committed to repairing goods, doing so for free where it's a design problem and charging a fair price for repairs due to normal wear and tear.
Copying nature's best ideas to solve human challenges has been around for a while: Velcro is one of the most famous examples, based on the hook systems on burrs. Recent examples show the use of biomimicry in building design; for example, the world's first bioreactive façade has been built in Hamburg, using algae in the walls to generate electricity. Could this be a model for stores of the future?
[Learn more about next-gen buildings at VERGE SF 2014, Oct. 27-30.]
In all four future scenarios, this type of business model would be successful. The future likely will hold many variants on these themes, and plenty more as yet undreamt of. Returning to the themes of predictions, we don't know which of these will dominate, which will be preferred and how business will shape them up. But we do know that our current take-make-waste paradigm needs to end, or business models will be the least of our worries.
Top image of oil drums by Ann Baldwin via Shutterstock.