Of course Zahid- I run an online fashion concept store that specialises in contemporary African design. We source through creative entrepreneurs in various African countries that like us, want to use fashion as a tool for sustainable trade in and with Africa, working with artisans to create jobs locally. We currently source from Kenya, Ethiopia, Tanzania, Ghana, Zimbabwe and South Africa. You can have a look at our products on www.shopsba.com and our blog www.styledbyafrica.com. Our ethos is to get people to buy less, but buy better when you do!
On the price-driven consumers: Sometimes, this is also strongly around perceptions and routines.
Fast food is often not cheap compared to cooked food. An inefficient fridge can be much more expensive over the years then a well-insulated one. Buying cheap, throwaway clothes can be more expensive then buying solid, classic items. There's an old (and often forgotten) German saying: "We're too poor to buy cheap things". Efficiency labels and "full price scenarios" over several years can probably have an impact here!
Beyond routines, there might also be credit limitations, especially around housing renovation... but also around access to clean energy in developing countries, of course.
I think this is a sector-specific question. In some sectors such as textile and apparel, there is no real finance gap. In others such as agriculture, tailored solutions especially for SME seem to be required. In this context, costs for rating credit worthiness appares to be one challenge impeding access to finance.
Also, improving social and environmental conditions will simply incur costs, at least in the short or medium term. It is important to illustrate this as an investment which pays out in the long-run both to consumers and producers alike.
Arindam, do you have experience how social and environmental messages reach your (final, end-) consumers? Is that a sales argument? Neutral? or rather a problematic issue?
Thanks Martin- appreciate you checking it out! We haven't yet had any requests from customers about certification- all of the designers we work with are small and certification is often expensive. That's why I guess trust is important within the supply chain- that we have the relationship with them to know they produce how they say they do, and our customers trust us. Developing a label system is something we've thought of though!
I think your brand is a brilliant example of "alignment", where social issues (giving African design visbility) are already enwoven in the basic idea of the brand. That obviously helps enormously to make the next step, and communicate on other social issues.
The question is, how far such an approach go for companies that are not "born" with a social twitch. Or how socially-born companies can protect this identity through the growth phase (think Body Shop).
Unfortunately, the idea of sustainable development and responsible business in the Kyrgyz Republic is not very popular. The consumption is mainly based on cost
I think it is really difficult to attract institutional sources of finance at a startup phase atleast in our part of the world. So the initial source has to be self or the promoting group, then private circle of supporters...friends, family, well wishers etc. At each stage you should be able to provide a little more evidence of the proof of concept and some success. Then only at a much advanced stage you can access institutional sources either for debt or equity.
Thanks Martin, defining "basic aspirations" in the Maslow context will take us to the year Maslow did his study - 70 years ago- and that's why I avoided using the term "basic" as there's a difference between needs and satisfiers as Max Neef points out.
As you pointed out, the consumption habits are satisfiers (or aspirations of) that shape the behaviors. Think about the rows of people queuing up with their families in a fast-food restaurant in an upscale mall in metro Manila… they do it because they can afford it and fulfil an aspiration itself.
What's cool about car sharing and public transport?
How to make these behaviors desirable?
Moreover, is there enough infrastructure to really show the personal, direct benefit you will get by doing what traditionally is what you're trying to escape of? Three hours in a traffic jam may make you think on the beauty of riding the metro… until you're stuck in the metro with other thousand people… so in general, the change will happen when there are messages reinforcing this behavior and making it more and more desirable (preferential lanes and parking spots for car poolers, 80% of your public transport ticket paid by the company…)
I guess for this its crucial to distangle "real financing" issues vs. "subsidies" around the risk-performance of new, sustainable ventures.
In cases where this is a "pure" financing issues, i.e. financing a profitable investment, I'd see the strongest role for the private sector (i.e. banking, microcredit or rural, non-banking finance institutions). In some cases, we might need public investments to make the financial system work better, e.g. in remote rural areas or for clients lacking formal registration. Clearning houses and credit bureaus are one example.
For subsidiy issues, we'll probably wait for the private sector in vain, and it would even be irresponsible to push banks. Still, development actors and foundations might sometimes give the critical "push" to new models, especially in the face of big uncertainty and risks in early phases.
Kiran - you raise an important point about certification costs. It's something I've heard before from small businesses and small-scale farmer associations. As you say trust is the critical ingredient in any labelling system. With social media, I guess you can generate the transparency needed to build that trust.
This is one of the questions that opens another question: how to make the financial sector more sustainable?
Trying to apply existing mechanisms to support innovative business models and new production processes is a bit of a contradiction as there are too many "old" practices that are against sustainable behavior itself.
New banking systems are needed to be able to cope with the increase of sustainable production practices. Rethinking the value of the money itself, crowdsourcing platforms are proving to be a very good example
Uluk, what are the 5 things (products) you think any Kyrgyz person can't really live without?
I'm asking because through this activity it is possible to analyze which products have the greatest potential to be turned into sustainable ones and really get a habit started and push a demand for sustainable products.
I think Kiran's and Martin's discussion raises a good question: When is it worth it to go for certification or labelling. If you have close relationships within your supply chain, a high level of trust and transparency and if your brand already communicates social and environmental responsibility in a credible way, there is no need to go for certification (which is costly).
However, Martin, you touched on the question of larger brands (or brands which want to scale their businesses). If you suddenly have to source from multiple additional suppliers and you want to maintain quality AND sustainability, certification might be very well an (economically) viable option.
Really interesting discussion! Let's move on to the third question:
Q3: Money or market data, rules or roads: which policy options do governments and donors have to promote sustainable production and consumption?
The thing is that consumers should be aware of their own power and act accordingly. Consumers decide whether to purchase the product/service of the companies… think on the case of toilet paper in Sweden, in the 80s the housewives demanded non-bleached toilet paper and didn't buy any. What happened? well, producers had to remove bleached toilet paper from the Swedish market.
Consumer cohesion is also important and in a way that is also part of the challenge in places where individuals are driven by the desire of distinguish themselves from the rest of the group. This distinction normally happens by consuming different goods.
How to empower consumers?
you probably know the saying around "family, friends and fools" that finance young businesses, and it's not only valid the developing world. Still, it makes sense, as founder personality is super-important in early starting phase, more important than market characteristics, also as founders can change their business model and thus target market quite rapidly.
There's some really interesting work from the Entrepreneurial Finance Lab at Harvard (http://www.eflglobal.com/), mainly across africa, to assess credit scores through interviews (rather then credit history). maybe you should invite them over for a meeting with banks in your country.
- One aspect mentioned already is improving consumer information on SCP. Awareness campaigns, setting environmental and social standards and recognition systems for credible standards systems and label, etc.
- Another highly important role for governments is creating incentive mechanisms to support SCP, e.g. by integrating sustainability criteria in public procurement.
- Finally, governments should provide capacity development to producers on sustainable production methods, exspecially in developing and emerging economies, so that social and environmental standards do not become barriers to trade.
No we have not tried it. We went exactly the way I mentioned above and now we are in the process of raising equity investments and speaking to various investors. We won a few competitions like Artha Venture Challenge, SEED Low Carbon Awards and Finalists for Changing Markets Award. These are helping us in attracting the investors.