We need to transition beyond the 'doing good by paying more' model

My PhD research focuses on sustainable building practices. I am exploring how buildings can tackle the sustainability challenges presented in the UN Sustainable Development Goals. In my recent op-ed that the Montreal Gazette published, I discuss the importance of considering these broader challenges — which go beyond the environmental sustainability focus of current building design standards and certifications.

However, for my first blog post, I decided to take a step away from my research to share with you some ideas on the green economy, and sustainable products and services.

Our future

On June 25, a report titled “Climate Change and Poverty” was published by the UN Special Rapporteur on extreme poverty and human rights. It paints a dim — yet realistic — picture of our near future.

Even if by 2100 we do not exceed the 2°C warming relative to pre-industrial levels, more than one billion people will no longer have access to adequate sources of water, 100 to 400 million more people will be at risk of hunger and the amount of people that are pushed into poverty every year will significantly increase above the current 100 million yearly estimate.

Unfortunately, and as disturbing as these figures are, the report does not stop there.

It signals that, if we continue on the current path, we will be witnessing ‘climate apartheid.’ The wealthiest, who produce the most emissions, will be able adapt to climate change and its consequences while millions suffer.

In plain terms, the poor will choke on the emissions of the rich.

What is our role in all this?

Canada is part of this wealthy bunch. With an estimated 18 metric tons of CO₂e per capita, each Canadian is responsible for three times more emissions than the average G20 citizen.

The simple and widely publicized answer is that we, the average consumers, have to buy more green products and keep up our environmentally conscious behaviours. This is certainly a good first step.

Recent evidence is pointing to the fact that Canadians are doing relatively well on that front — more than 80 per cent of Canadians report purchasing green products and services, and one fifth of them are increasing their yearly sustainable product purchases. What is even more promising is that only a relatively small portion indicated that they are not likely to buy any green products.

While the market for green and sustainable products is growing, green products are more expensive. The price of sustainable products is reported as the biggest barrier to green purchasing — green premiums are still beyond the average citizen’s capacity. The green product market is mainly catered to those who have higher disposable incomes — even in the simplest of products. In fact, even in wealthier countries, “doing good” is still beyond the reach of the average consumer.

When looking at larger green purchases, consumers’ decisions, especially those who are more sensitive to upfront costs, are not always easy. Take cars for example. Although the time to recoup the green premium could be as low as three years, the upfront cost difference — added price to go from a standard, to hybrid, plug-in-hybrid or electric car — could be a barrier. The same applies to other green technologies and products — even solar panels.

Green with ‘benefits’ ... everybody wants to be a winner

Companies, especially the ones who are in operation, have to choose between multiple green product strategies: they can ‘green up’ by tweaking existing products, ‘green out’ by offering original, strictly green products, or stick to their ‘brown’ products. Although positive environmental impact and bottom line growth can happen simultaneously, it is rare to see the former as the priority.

Business are looking for returns on corporate social responsibility (CSR) investments — including investments in green products. The most common explanation for why companies invest in CSR is what is known as ‘doing well by doing good.’ The highest reported benefits from product sustainability programs are cost savings (in manufacturing, logistics, packaging, materials, etc.), productivity gains, and trust and brand enhancement. In many cases, companies have their eye on the green premium and better market coverage.

Naturally, customers who buy green or sustainable products want to see the benefits of their purchase. For one thing, they want to make sure that the premium they are paying is put to good use — and they are very skeptical of greenwashing. But in many cases, they are also looking for personal benefits, like cost or energy savings or health benefits. In addition, they also tend to expect the products to be of higher quality.

The green price tag

In many cases, we are told that by buying more green products, the prices will eventually go down. This might have been true in some cases — such as organic food. But things are a little more complicated than this.

Although, the demand on green products has been steadily increasing, green products are still not the norm and they usually exist alongside the so called ‘brown’ products. In many cases, larger companies might offer multiple lines of products — with only some being green. The pricing strategy for these companies would not only be based on demand for green products, but also on ensuring continued demand and profitability for their brown products.

In fact, a high green premium could be a strategic decision to maximize profits by exploiting green-consumers’ willingness to pay rather than the result of increased production costs.

Beyond individual purchase power

Certainly, consumers, especially in developed counties, have a crucial role to play in transitioning towards a more sustainable economy. However, I wonder if our individual purchase power can enable us to go through this transition quickly enough.

When asked about the drivers for spending on product sustainability, companies ranked pressures from retailers as the most significant external driver — much higher than consumer demand, industry initiatives or even regulations. Of course, the larger the buyer, the stronger their negotiating power. Creating a mass market for sustainability requires engaging with the suppliers — a high value but very demanding task. Walmart’s sustainability initiatives or Unilever’s sustainably sourced tea are relevant examples that illustrate this.

How does all this translate to sustainability in buildings?

Although I had proposed to move away from my research topic in this blog post, I couldn’t help concluding with a note on buildings.

Green buildings come with a premium. Tenants do have an important role to play for advancing sustainability in buildings. But just like other products, other actors can be influential in accelerating the transition to green construction and a more sustainable future.

A recent book chapter presents a case of Housing Nova Scotia‘s (HNS) pilot project. HNS aimed at providing high performance affordable housing for low- to modest-income individuals. By using Passive House standard (which can provide more than 60 per cent energy savings when compared to typical new construction), they reported the average construction cost increase over code-built houses was only 11 per cent with a return on investment in as low as four years.

Through this project, the NHS was able to provide high-performance affordable housing to tenants who could hardly afford rents in ‘brown’ properties. Additionally, HNS’s adoption of green building practices was a key driver in accelerating the adoption of these green technologies in mainstream developments.

A recent paper published in Research Policy proposed to add process intermediary in the categories of transition intermediaries. The authors include architects, sustainability consultants and managers who hold influence on the transition processes. Additionally, the authors identify some of the more comprehensive building certification programs — such as the living community challenge — within the niche intermediary type. This highlights the role building design professionals and their practices play as intermediary agents.

To move forward, it is the institutional intermediaries that might hold the key to accelerating the transition to a more sustainable economy.

So, while there are many competing views and opposing arguments on who should lead the transition, what is certain in a future of global warming is that no one is a winner.

About the author