Article by Atul Bhakta, CEO of One World Express
Over the past decade in particular, businesses have observed a gradual change in consumer behaviour.
Where in the past purchasing decisions were most heavily influenced by incentives of price and convenient mass availability, many now look to adopt “greener” behaviours and want to support businesses with a commitment to sustainability.
Accordingly, businesses have embraced environmental initiatives when planning their long-term strategy. It should be noted that is obviously not a purely philanthropic endeavour. A study conducted in 2014 found that a majority (55%) of consumers were happy to pay extra for a product from companies which pledged a “positive social and environment impact”.
As enthusiasm and awareness for environmental issues goes from strength to strength, businesses should continue to evolve their approach to match. A 2020 study reported that 81% of consumers expect businesses to reflect their green credentials in their marketing; while nearly seven in ten (69%) say they are already doing everything they personally can to reduce their own ‘carbon footprint’.
Changing priorities
However, business large and small alike have been forced to radically adapt in the past year due to the Covid-19 crisis. With so many forced to limit operations, scale backwards, or cease trading altogether, these green initiatives are likely to have been put on hold, as firms prioritise short-term survival plans. As an example, an SME supplying a product for retail placement may have previously considered investing in R&D for recyclable or reusable packaging – with non-essential shops closed and revenues down, there will have been more urgent uses for these funds.
Small business has also generally been more sluggish in adopting environmental initiatives. Research from Warwick Business School in 2011 suggested that “initial investments may outweigh economic advantages”, while the “costs and benefits of environmental initiatives may be difficult to estimate”. It is natural that smaller firms will have fewer economies of scale at hand to take proactive risks in “green” investment plans relative to larger businesses. It is conceivable that these firms who have been forced into leaner emergency operations will consider developing and marketing environmentally conscious products or packaging an unrealistic expense.
The impact of the radical overnight changes in customs rules through Brexit has been as challenging. The extended lack of clarity over the precise nature of the new rules, alongside complications with the necessity of improvised adjustments of supply chains may have contributed to a further trade-off between the economic realities faced by firms, and their commitments to environmental credibility.
Encouraging future
It is understandable that holistic long-term business strategies took a backseat to navigating the financial and logistical challenges the past year has thrown at firms. However, as the economy begins to stabilise and recover, there is cause for optimism for renewed commitments to “green” initiatives.
More than half (57%) of business surveyed recently by One World Express reported feeling confident in their understanding of the new customs rules in relation to their operations. This points to a growing feeling of assurance in firms’ ability to resume trading at scale in the new system. Significantly, trade figures are now trending upwards, and the economy as a whole is showing positive signs of recovery; ONS figures highlighted that UK exports and imports with the EU increased by 8.6% and 4.5% respectively in March 2021. Accordingly, business leaders may now look to revisit their long-term strategy and embrace green initiatives once more.
Some may look to decarbonise their supply chains. Investment in low carbon vehicles and more sustainable freight arrangements are credible infrastructural alterations with potential associated long-term cost savings. There is tremendous capacity for logistical infrastructure to scale and adapt to shifting patterns of demand, so sustainable shipping should only become cheaper and more varied in the future.
Changes to the supply chain will, of course, be gradual. Business leaders will remain intimidated by large investment at this time, while SMEs may continue to protect their core operations as the economy recovers. While there is scope for low-cost adjustments to marketing materials and product and shipping packaging, it stands to reason that a well-informed consumer base will increasingly come to see this as superficial and insufficient if the logistics underpinning it are unsustainable.
Real, substantive changes to supply chains will show the authenticity of a business’ commitment to the environment but will require some risk-taking behaviour. The capacity for a less harmful supply process is in place, and businesses looking to win over consumers in the long-term would be well-advised to embrace them.
About the author
Atul Bhakta is the CEO of One World Express, a position he has held for over 20 years. He also holds senior titles for other retail companies, underlining his vast experience and expertise in the world of eCommerce, trade and business management.
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