- Both corporations and consumers need to consider the impact of consumption practices on social welfare and the environment.
- A “double helix structure” between corporations and consumers creates a positive feedback loop to embed the DNA of responsibility in the consumption ecosystem.
- The “GIFT” framework can guide corporations as they collaborate to drive more responsible consumption.
Consumption is related to every part of the industrial value chain, from circulation, to manufacturing, all the way to procurement and product design. Consumption plays an important role in driving economic prosperity, but should not stop at driving economic growth.
Going forward, consumption should exercise greater responsibility when it comes to the impact on social welfare and environmental sustainability.
“Responsible consumption” is about not only satisfying the basic needs of consumers, but also managing the impact and external cost to society and the environment.
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As China is experiencing the macro trend of “consumption upgrade”, responsible consumption has become critical.
On JD.com, we have noticed that Chinese consumers – regardless of age, region or education level – have been increasingly favoring “green” or “responsible” products, such as energy-saving home appliances, smart water-saving toilets, stationery made of recycled materials, organic food and more.
Moreover, the recent macro events of COVID-19 and occurrences of extreme weather across the globe have further increased public interest in consuming more responsibly.
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The rise in consumers’ awareness is a positive driver, but to fully realize responsible consumption, joint efforts are also required from the supply side, with brands/manufacturers, distributors, retailers, tech providers, industry associations and more joining forces, as described by the UN’s Sustainable Development Goal 12 (SDG12), “Responsible Consumption and Production.” On the consumer side, responsible consumption is both right and a duty for consumers to exercise, while on the corporation side, it is a key building block of CSR and a critical source of competitiveness in the long term.
To better understand the evolution and practices of SDG12 in China, we conducted in-depth research on both the consumer side and corporation side. The major findings can be summarized by two concepts: a “double helix” structure for “responsible DNA in consumption,” and a “GIFT” framework to measure corporations’ responsible consumption initiatives. These concepts can provide clear yet simple frameworks for the industry to further drive responsible consumption forward in China.
The 'double helix' between corporations and consumers
The key driver of responsible consumption in China is bilateral promotion from both consumers and corporations through the “double helix structure”. This means responsible consumption will be mutually propelled and helically deepened by both the consumer and the corporation, thus embedding the DNA of responsibility in China’s consumption ecosystem.
Here’s how it works. As awareness grows among consumers, corporations will increasingly realize that, beyond catering to consumers’ needs, they should also pay attention to consumers’ expectations and proactively drive the collective effort from the corporation side.
Consequently, active initiatives from the corporation side will provide more sustainable products and services, broaden and deepen awareness among consumers and inspire more consumers to practice responsible consumption in their everyday lives.
This “double helix” creates a positive feedback loop between the corporation side and consumer side.
On the corporation side, consumption initiatives are expanding beyond the leading corporations that have been early pioneers, though wider collaboration is needed.
Key motivations for corporations are diverse yet concrete, including sustainability procurement requirements along the value chain, brand image enhancement, consumers’ preference for sustainable products and compliance with government policies.
The 'GIFT' framework measures responsible consumption initiatives
Corporations’ responsible consumption practices can be captured by what we call a “GIFT” framework:
- Generosity (contributing to social welfare)
- Industry collaboration (collaborating for responsibility along the value chain)
- environmentally Friendly (caring for nature)
- Technology (leveraging technological innovation for responsibility)
Different sectors have their own strengths across the four categories:
- Household Appliances/3C: As a sector with significant energy consumption and emissions across production, usage and recycling, there has been extensive exploration in technologies as well as innovative business models to drive “environmental friendliness” across the entire product lifecycle. While initiatives have transformed corporations’ operations, leaders in this sector have also actively guided and shaped consumers’ behavior, e.g., to save energy and water and pay more attention to recycling.
- Food & Nutraceutical: As a sector closely related to consumers' daily life and wellbeing, corporations in this sector are particularly active in promoting healthy lifestyle, healthy product innovation and eco-friendly innovations like reduced packaging and degradable packaging.
- Cosmetics & Personal Care: As a sector that is among the closest to younger generations, corporations in this sector cater to consumers' emerging demand for nature and sustainability, such as launching sustainable or responsible product lines, investing in eco-friendly packaging, conserving energy and reducing emissions. In addition, leaders in the personal care sector are actively collaborating with brands and retailers from other sectors to promote reusable packaging.
How the 'GIFT' framework can guide corporate action
As a long-time practitioner of responsible consumption in China, JD.com has both the consumer side and the corporation side in its ecosystem. To expand the double helix, every consumer and every enterprise should have the ownership to drive the DNA of responsibility in the consumption ecosystem.
Corporations across sectors should join forces around four key initiatives:
1. Form a responsible consumption roundtable, led by leaders in different sectors to facilitate collaboration and share best practices across enterprises, along the value chain and across sectors.
2. Promote standards with credibility around responsible consumption. Establish and refine the “responsible” or “sustainable” product standard system for each sector to enhance credibility among consumers so as to guide more consumers to make responsible choices.
3. Build the circular system. Under the framework formed by the roundtable, build the circular system across the entire lifecycle of products across sectors.
4. Influence via communications. Corporations should not only transform their products and operations, but also influence the general public by embracing new communication channels and formats to proactively educate the public and drive awareness and adoption among consumers.
What is the World Economic Forum doing about the circular economy?
The World Economic Forum has created a series of initiatives to promote circularity.
1. Scale360° Playbook was designed to build lasting ecosystems for the circular economy and help solutions scale.
Its unique hub-based approach - launched this September - is designed to prioritize circular innovation while fostering communities that allow innovators from around the world to share ideas and solutions. Emerging innovators from around the world can connect and work together ideas and solutions through the UpLink, the Forum's open innovation platform.
Discover how the Scale360° Playbook can drive circular innovation in your community.
2. A new Circular Cars Initiative (CCI) embodies an ambition for a more circular automotive industry. It represents a coalition of more than 60 automakers, suppliers, research institutions, NGOs and international organizations committed to realizing this near-term ambition.
CCI has recently released a new series of circularity “roadmaps”, developed in collaboration with the World Economic Forum, the World Business Council for Sustainable Development (WBCSD), McKinsey & Co. and Accenture Strategy. These reports explain the specifics of this new circular transition.
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3. The World Economic Forum’s Accelerating Digital Traceability for Sustainable Production initiative brings together manufacturers, suppliers, consumers and regulators to jointly establish solutions and provide a supporting ecosystem to increase supply chain visibility and accelerate sustainability and circularity across manufacturing and production sectors.
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