Alzbeta Klein, International Finance Corporation: 'When it comes to climate business, consumers can lead the way'
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AUTHOR: Alzbeta Klein
As part of our blog series for World Consumer Rights Day, we asked thought leaders across the world to provide insight into the campaign theme 'The Sustainable Consumer'.
Alzbeta Klein, Director and Global Head, Climate Business, International Finance Corporation (IFC), explains why consumer demand for sustainable products and services is shaping the future of the industry's approach to the climate crisis.
In 2017, encouraged by rapidly falling prices for solar energy, C. L. Gupta Exports, a supplier to fashion giant H&M based in the Indian state of Uttar Pradesh, invested in a rooftop solar project, helping to reduce the company’s carbon footprint.
The solar installation is expected to save the company about $100,000 a year in energy costs and to avoid annual emissions of 2,500 tons of carbon dioxide – the equivalent of taking 500 vehicles off the road. The company switched to solar in response to a H&M corporate sustainability target to source 100 percent of the electricity it uses worldwide from renewable energy resources.
With climate awareness on the rise, conscientious consumers around the world are rethinking what they buy and how. At the International Finance Corporation (IFC), we are proud to partner both with H&M and C.L Gupta Exports in helping companies and their supply chains in emerging markets adopt sustainable practices and reduce their carbon footprint.
IFC works with the private sector in developing countries to create markets that open up opportunities for all. Our estimates show that global markets for climate-smart businesses and technologies have grown to $1 trillion annually, while 21 emerging market economies alone hold $23 trillion in climate-smart investment opportunities through 2030.
In order to make a difference for the climate, investors and businesses must lead the way, but consumers play a critical role too. We cannot help our clients grow their green businesses unless we see growing consumer demand across the global supply chain.
That’s why our partnerships with companies large and small make such a difference. When IFC partnered with H&M, we also helped develop a roadmap for the company’s other 1,300 strategic suppliers in Bangladesh, China, and India to increase their renewable energy use. These suppliers too will ultimately benefit from improved profitability that follows reduced energy costs, the achievement of corporate sustainability targets, and a more reliable power supply.
So too will the consumer who wants to set themselves apart from a $2.5 trillion fashion industry responsible for around 10 percent of global greenhouse gas (GHG) emissions. H&M is just one of 43 global fashion brands who have signed onto the Fashion Industry Charter for Climate Action and who have agreed to reduce their aggregate greenhouse emissions by 30 percent by 2030.
Last year, IFC signed a $2.3 million cooperation agreement with Levi Strauss & Co to help 42 suppliers and mills across ten emerging economies reduce their GHG emissions to meet the company’s science-based target commitments.
Across other global sectors, we are seeing consumer demand drive more and more climate business. Take green buildings, for example, which represents one of the biggest investment opportunities of the next decade—$24.7 trillion across emerging market cities by 2030.
Investors, owners, and tenants are beginning to push sustainability into the mainstream when it comes to buildings. They recognise the clear business case in green buildings and are demanding homes and offices that can meet tenants’ needs, maximize returns, and minimize their environmental impact. This is especially the case for cities in emerging markets that are expanding at a fast pace to keep up with high population growth and rapid urbanization.
In the global food sector, consumers are issuing a call-to-action for more sustainable farming. That’s good news for IFC colleagues who are helping existing and potential agribusiness clients acquire and leverage new agricultural technologies – or Ag-Tech – for both large scale and smallholder farms. Our “climate-smart” approach has yielded $1.3 billion in investments to reduce food losses and to make crops more productive and resilient.
The clients that we work with recognise the market potential that sustainability brings. It helps them reach their long-term business goals, improve relations with stakeholders and local communities, and boost their consumer brand value and recognition.
Smart consumers understand that the future of business depends on tackling climate change and investing in new technologies and business models to deal with its impacts. They see the opportunity of buying low-carbon products and services and avoiding those that stick to the business-as-usual high carbon path.
It’s a choice that’s not only positive for the environment but, as in the case of emerging markets, good for people and profitability too.
