“I think that once people understand the great risks that climate change poses, they will naturally want to choose products and services that cause little or no emissions of greenhouse gases, which means ‘low-carbon consumption’. This will apply across the board, including electricity, heating, transport and food.”
This was stated by Nicholas Stern, a British economist and environmentalist, in 2009. Today a number of global consumer companies such as Procter & Gamble and Unilever are reporting high growth around their sustainable products. Last year Unilever’s Sustainable Living brands grew 30% faster than the rest of its business.
Sustainable products refer to environmentally, socially and economically responsible goods and services that look to protect the public health and the environment throughout the product’s lifecycle – from manufacturing to final disposal.
At the recent 2016 Sustainable Brands conference held in Cape Town, a number of companies claimed they are seeing growing interest for their sustainable products among African consumers. Retailers such as Pick n Pay and Woolworths are looking to lower their carbon emissions and source products responsibly to win over consumer goodwill, while other companies are introducing products that will offer environmental and social benefits for their consumers. For example, Procter & Gamble has released a washing powder in Africa that requires less water for consumers washing clothes by hand.
A recent study by public opinion research consultancy Globescan suggests that consumers in African countries are more likely to be won over by companies solving problems within their communities than consumers in more developed markets – mainly due to the high level of challenges existing in African environments.
Sustainable businesses attracting private equity
Sustainable businesses are also increasingly attracting investments. Mike Davies of KudosAfrica noted that there is a growing interest for “sustainable investments” within private equity in Africa.
“Sustainable investing is really about integrating the environment, social and corporate governance factors into an investment decision,” explained Davies.
“It’s about taking a longer-term view, not just focusing on quarterly financial results, and ensuring that investors price in externalities – the negative costs of doing business. It is also about maximising the opportunities that sustainability will realise.”
He added recent surveys suggest a growing number of private equity investors believe sustainable investments will lead to “financial outperformance”.
Profit in sustainability
There are a number of African businesses that have been developed around sustainability. AgriProtein won the Innovation Prize for Africa in 2013 for its method of using waste and fly larvae to produce a natural, sustainable animal feed. It is a viable alternative to the feeds produced from fish products that deplete the ocean’s limited sea life.
And Hemporium – a Cape Town company that produces and sells a range of hemp clothing, accessories, cosmetics and other products – showcases the benefits of the environmentally-friendly hemp plant.
Its owner, Tony Budden, has built a viable business off merchandise produced from hemp and is continuously revealing new ways how the plant can add value. For example, he has built a surfboard from hemp that is more environmentally-friendly than fibreglass. He has also constructed South Africa’s first hemp house made from hempcrete, a healthier alternative to concrete.