How Will Fourth Industrial Revolution Affect Environment and Consumers?
By : Sarita Nayyar
Taiwan has one of the highest household recycling rates in the world at roughly 42 percent, up from 5 percent in 1998, according to Taiwan’s Environmental Protection Administration. (Reuters Photo/Kim Kyung-Hoon)
So far, economies and businesses have benefited from cheaper and better imports and improvements in efficiencies in production, as growth has come from selling at a greater scale and has been achieved through volume.
Unfortunately, in the past 50 years, 60 percent of the earth’s ecosystem has been depleted and natural resource consumption is expected to rise three- to six-fold by 2050. The world’s population is expected to increase to more than 9 billion people by 2050 and the global middle class is expected to triple by 2030. With this in mind, how long can we sustain this development model without further damaging the environment and aggravating existing inequalities?
The Fourth Industrial Revolution will further increase the efficiencies of the value chain through data analysis, robotics, sensors and 3D printing. We are already seeing the impact this revolution has on business and society.
Currently, companies still try to produce ever more to decrease the cost of each product as quantities increase. However, huge gaps between the forecasting decisions and the consumer demand create an estimated 30 percent waste of all manufactured goods.
There is waste created at every step of the supply chain – the energy used to produce and ship the goods, the packaging and the waste of land used for landfill. The good news is that 3D printing and hyper-connected consumers might be able to help bridge this gap.
Technology Can’t Do It Alone – Consumers Have to Adapt
Avery Dennison, a packaging and labeling company, has joined forces with Evrything, a London-based Internet-of-things startup, to create a web identity for over 10 billion pieces of apparel over the next three years . This partnership will enable companies to track products for supply-chain purposes and decrease waste. It will also empower customers to check the manufacturing history of these products and provide them with recycling options.
Emma Watson embodied the possibilities of recycled materials and high fashion during this year’s Met Gala, through the Green Carpet Challenge. Every part of her gown had been made from recycled materials and the inner bustier has been crafted using organic cotton.
But these technological advances are only one part of the equation; consumers will also need to re-evaluate their lifestyles and their environmental and social and economic impacts. The consumer will need to assess how they choose and use products and services.
Even as consumers demand better accountability from companies, few change their own consumption patterns. This demand seldom translates into sustainable consumption. Most consumers are blocked by availability, affordability and their own skepticism. Transparency offered by technology and consistent and effective customer service can alter the public perception about green claims.
Companies are slowly breaking down these barriers, by incorporating data and analysis provided by this new industrial revolution. They are producing better products with maximum societal value and minimizing environmental cost. Nike, for example, managed to reduce waste by 80 percent for its new running shoes compared to traditional footwear. It did so by a design that requires 35 fewer pieces to assemble than previous models – and that equates to a considerable reduction in terms of waste.
Companies are also trying to influence and raise awareness among their consumers to encourage and enable them to choose and use the companies’ products more efficiently and sustainably. The WEF has already started encouraging such behavior with the creation of the Positive Change Effie Award, which recognizes and rewards brands emphasizing sustainability in their marketing programs.
As the new generation’s consumption patterns are also changing, millennial consumers are increasingly looking for products that make them look and feel good, and are also good for the planet and society according to the WEF’s Engaging Tomorrow’s Consumer project. The hashtag #WhoMadeMyClothes tied to the Rana Plaza factory collapse calls for a renewed customer focus on supply-chain transparency and the millions of people who are a part of the industry’s enormously complex value chain.
Governments and civil society will also need to encourage the removal of “unsustainable” products and services from the marketplace. This editing process will be critical and will also be fueled by the new pace of change and disruptive companies.
Taiwan, where the headquarters of several major technology companies such as Asus, Acer and HTC are located, produces more electronics per capita than any other country. Revenue of over $2.2 billion in 2012 – along with a government fund and increased consumer awareness – have helped clean up the country. Taiwan has one of the highest household recycling rates in the world at roughly 42 percent, up from 5 percent in 1998, according to Taiwan’s Environmental Protection Administration.
The government also started the Taoyuan Environmental Science and Technology Park industrial complex, which offers incentives for recyclers of glass, plastics and electronics that use advanced technologies and invest in research and development to increase the island’s reuse rates. The W Taipei luxury hotel has embraced this initiative and has turned the 300,000 plastic bottles it discards as waste every year into coasters, games and key- and change-holders for use throughout the property.
Organizations such as Cradle to Cradle are helping companies manage resources, and address the impact at the local level. But companies, international organizations and governments still need to establish how they can work together to improve their water management. These disruptions will multiply as we collide between our existing expansionary development models with the natural limits of the planet.
To achieve a future where the consumer will be better equipped to lead more sustainable lifestyles based on informed purchase business, governments and civil society need to come together. We must take the necessary action today and explore new models of consumption to ensure the needs of future generations and prevent the continued degradation of our environment.
Sarita Nayyar is the managing director of World Economic Forum USA. She is responsible for operations, finance, accounting, human resources and legal issues.