In India, how can companies, especially in the fast-moving consumer goods (FMCG) space, collaborate with farmers to attain higher sustainability goals?
Firstly, they should build more inclusive supply chains. The trick is to get on to the ground and understand real differences because what works for one crop doesn’t work for the other. So, you need to get in and understand each of your value chains. For instance, an American chocolate maker had to spend about eight months to map out each of their value chains—from the start to the end. It is a detailed work to understand all of the different economics and dynamics on the ground.
Why should FMCG companies focus on turning waste to wealth?
Waste seems to be a problem in India where at least 70% of waste is untreated. I have been in a landfill site in India…most of it is packaging from consumer products like drink cans and wrappers and this is not sustainable.
Sample this: One U.S. retail major thought that there is no cost in their business that they can get rid of and haven’t been taken out already. But, when they started looked at it from a sustainability point of view, they found that there is a lot of money they waste in packaging. They realised that they are going to save so much money by revising all the packaging across their stores and they have now committed to zero-waste policy, which is not just great for the environment but also a huge financial benefit to them.
Companies are also doing things in the back-end to not just get rid of waste but also monetising it. Individual companies can review where they are using plastics and where they shouldn’t. The government legislation can help provide the context that encourages them to do that.
How can companies encourage consumers to pay the premium for sustainable products?
The number one barrier companies still state is that consumers won’t pay. But it is not just convincing consumers to pay more. Companies should try to make sustainable irresistible, which doesn’t mean it has to cost more.
What companies are trying to do now is to find ways to embed sustainability in their products such that consumers will buy the product not because it is sustainable but because it is a great product.
Take the example of cold water laundry detergent by an American FMCG giant—it is better for your clothes, better for the environment, less electricity as you don’t have to heat up water, and it doesn’t cost more.
Eventually, companies across the globe are going to head in this direction.
Do you see the e-commerce boom as a threat to the environment?
E-commerce boom can have positive and negative benefits. E-commerce can be more environmentally friendly for certain purchases depending on the nature of retail landscape. If you have got an omni-channel proposition, retailers need to understand when it is better to encourage consumers to go to the store, and when it is better to encourage them to buy online. They can offer incentives to customers in form of vouchers for store picks-ups, depending on the number of goods that they purchase. An e-commerce giant, for instance, gives customers an option to choose between the next-day delivery and standard delivery—the next-day shipping leads to a lot more carbon emission, as companies will be using flights for such overnight delivery. So, those opting for standard delivery get incentives in form of points or cashback.
Do you see the growing trend of single-serve packs in India a threat to sustainability?
That’s a great example where growth could be quite detrimental, because there’s more packaging, per unit. If you create smaller pack sizes, it could potentially mean more waste. Consumer product companies need to start thinking carefully about innovations they can use to meet the demand for smaller packet sizes without creating a landfill. That’s a challenge, both in terms of materials they use and reducing packaging to the very minimum. They also need to work in the back-end to take the responsibility of the waste they are generating.