Retailers need to up their game to address the global resource crisis
This post is by Thomas Fischer, head of the Circular Economy Programme at Environmental Action Germany (DUH)
This week we celebrated a rather tragic landmark: the point when we used up all the resources that our planet can regenerate in one year. The fact that Earth Overshoot Day happened in early August points to the gravity of resource overconsumption, but the costs are already visible in ocean acidification, water pollution, destruction of forests and nearly every other environmental problem. Fortunately, there is a solution: a resource efficient circular economy. Germany has pursued a circular economy agenda for the past decade in industry, but retailers haven’t been keeping up.
Words, but little action
Fast moving consumer goods (FMCG), such as food and cosmetics, are the face of global overconsumption and resource wastage. They are sold and used quickly and are relatively resource intense, but their environmental cost is mostly not reflected in the price we pay for them. In Germany, 37 per cent of all materials consumed by households are FMCGs, but they represent only 17 per cent of income spent by German households. Despite all the talk about the circular economy, the situation on the ground is getting worse, with retailers moving towards more packaged, single use and non-recyclable products.
A study by the Wuppertal Institute has shown that FMCG companies could cut their resource use by 20 per cent almost immediately just by switching to better alternative products. The switch could take place in several ways: by reducing packaging, enhancing product innovation, such as compressed or concentrated products, or by moving towards reusable bottles for beverages or more recycled paper products. There is even more potential if the companies shift to more sustainable business models, which offer services over products. The fact is that solutions exist, but the question is whether the companies are anywhere close to putting them into practice?
Lack of leadership from the sector
Here at Environmental Action Germany (DUH), we investigated this question with regards to German supermarkets, which make up five of the ten biggest European food retailers. Such powerful retailers hold an important gate-keeping position between producers and consumers: they decide which products are sold in their shops and, with their policies, they can influence consumer choice. A lot of them also have their own branded products that they can influence directly and, with their gigantic purchasing power, they exert a massive influence over suppliers and supply chains.
Consumers want to see change
It was quite a surprise though that none of these giants have a comprehensive resource efficiency policy in place for the products they sell, even though such policies could lead to significant financial and environmental benefits. The policies would also be popular with customers: our research resulted in a SumOfUs petition against Lidl, which gathered over 214,000 signatures , clearly showing that people want this retailer to “cut the crap”.
More recently, we looked at personal care retailers, including well known brands like Boots, dm – Drogerie Markt and Superdrug. Here, we found a similar picture to the supermarkets. Although the sector is highly innovative, this innovation hasn’t translated into the uptake of circular economy practice. None of the companies we investigated takes a strategic approach towards resource efficiency, as both high-level goals for resource reduction and information on resource impacts of their products is absent from their reporting.
Our conclusion is that these companies’ attitudes to the resource crisis is similar to corporate attitudes to the climate crisis a couple of decades ago. But the planet’s capacity is limited by physics and not by wishful thinking. Change will have to happen and the companies that embrace the principles of a circular economy soonest will be the economic winners of the future.