HOW CONSUMER ENGAGEMENT CAN DRIVE CIRCULARITY

A Report by GlobeScan and GreenBiz We need to be working “ together to ensure that our lifestyles, our consumption and everything that is associated with becoming more circular is the result of the fact that each choice a consumer makes is a good choice. ” introduction

The shift to a more circular economy offers a compelling solution to the way the world currently conducts business. Circularity has the potential to change economic systems and help avoid devastating impacts to our climate and society.

The concepts that provide the foundation for circularity can be found throughout history, but post-World War II saw a radical shift by both consumers and industry to a hyper-linear economic model of take-make-waste. Factors such as environmental degradation, resource constraints and consumer sentiment are forcing a reassessment of this linear model and point to a path forward for circularity.

But circularity cannot happen in a vacuum. Migrating to a circular economy requires systemic change, not only to current business models, but also to consumption patterns. Much of the recent writing about circularity highlights the importance of a collective commitment and a need for greater collaboration by industry, government and non-governmental entities. Perhaps most critically, success will require consumers to play an important role in shifting the paradigm as they have the power to choose every time they make a purchase.

For this white paper, we engaged 20 experts from around the world to get their views on the pathway to a more circular economy. The thought leaders we spoke with were selected because of their expertise and contributions in the area.

These conversations build on GlobeScan’s latest global consumer research, entitled Healthy & Sustainable Living: A Global Consumer Insights Project. The

A Report by GlobeScan and GreenBiz 3 study involved 25,000 people across 25 countries and partners, including GlobeScan, IKEA, PepsiCo, Procter & Gamble, VF Corp., Visa, and WWF International, with the objective of helping companies and other influential actors better understand the barriers and enablers of living in a way that is good for people and the planet.

This report identifies barriers that may inhibit circularity from scaling and explores how to effectively engage consumers as a driver toward a more circular economy. Our intention is to help companies and other influential actors to work together to catalyze more sustainable consumption. We believe that circular business models have tremendous potential to do so.

barriers to consumer engagement

There are significant barriers to enticing consumers of consumers also point to a lack of support from to embrace the concepts associated with circularity. business and 27 percent admit to not knowing how to Some are economical and some are cultural. do it, again highlighting the need for more consumer The experts we interviewed recognize that the education around achieving a more sustainable most prominent among these barriers is a lack of lifestyle. knowledge of how to participate in a Our experts also notice that there are other barriers to circular economy. introducing the concepts associated with circularity, When consumers across the 25 countries surveyed in such as culturally embedded objections to reuse, GlobeScan’s 2019 Healthy & Sustainable Living project or substituting services for product ownership, were asked to indicate the most significant barriers although there are clear disparities across cultures, to improving their lifestyles to be healthier and more generations and social strata in terms of how sustainable, nearly half indicate that affordability (49 consumers value and perceive their quality of life percent) and lack of support from government (47 and the value of owning a product or using a service. percent) are two major obstacles. Thirty-one percent These cultural and generational differences can also

4 How Consumer Engagement Can Drive Circularity Barriers to Improving Lifestyle to Be More Healthy and Sustainable Average of 25 Countries, 2019

oo eenive o eno or ro overnen o eno or ro ine no re ow ie e wa ive now o eno or ro an ariie er eoe no oin i on r wa rea anor ear ao ee ie aion won ae an ierene oo eenive inonvenien o eno or ro overnen on ave ie o eno or ro ine a no erona onerne ao i no re ow ie e wa ive now Co eaeri noraion oivaion Conveniene o eno or ro an ariie er eoe no oin i on r wa rea anor ear ao ee ie be seen in GlobeScan’s research results, where around 22 percent of consumers agree that there aion won ae an ierene is a direct correlation between material possessions and happiness. inonvenien However, some cultures show a higher percentage than others. For example, the number of consumers on ave in ie non-OECD economies a no erona onerneree ao i (29 percent), Asia (28 percent) and Africa (27 percent) who agree that they need a lot of material possessions to be happy is higher than thatCo of consumerseaeri in North Americanoraion (13 percent),oivaion Latin Conveniene America (13 percent) and industrialized (OECD) markets (16 percent).

There can be a socialDiaree stigma associated with previously used products as well. Consumers across I Need a Lot of Material Possessions To Be Happy ree eier aree Average of 25 Countries, 2019 nor iaree

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A Report by GlobeScan and GreenBiz 5 People in the 25 countries surveyed remain hesitant to buy second-hand household items or clothing, with only 5 percent of consumers reporting that they buy such items all of the time. When we look at the age groups of consumers who buy second- hand items or clothing at least “most of the time,” Gen Z (25 percent) and Millennials (21 percent) on average are more likely to purchase used items than both Gen X (15 percent) and Baby Boomers (12 percent). While younger generations may be more willing to buy second-hand products, older generations may be happier with fewer material possessions but still be stigmatized by previously 6 ownedHow C goods.onsumer Engagement Can Drive Circularity I Buy Second-hand Household Items or Clothing “All of the time” and “Most of the time,” by Generation, USA vs Average of 25 Countries, 2019

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The results of the study about owning and reusing material goods confirm that the required change in societal mindsets (i.e., how society places value on living a quality of life and the ownership of goods) might be achievable if we target different consumer audiences with different messages aimed at educating and increasing the awareness around the economic, environmental, social and personal benefits of circularity.

o a a ie Coee consumers are willing to change

o Several of our experts confirm that consumers are starting to gravitate toward more sustainable

consumption patterns that, if properly supported by multiple stakeholders and infrastructure, may be able to help accelerate the circularity transition. When asked to express their attitudes toward the environment,oerae well-being and consumption, 54 percent of consumers on average across 25 countries recognize the importance of living a healthier and more sustainable lifestyle and see the topic as a “major” or “large” priority. However, only 6 percent of consumers confirm that they are completely living a healthy and sustainable lifestyle, signaling that their intentions to do so are not fully matched by their actions.

A Report by GlobeScan and GreenBiz 7 onr averae en iennia

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Extent of Living in a Way that is Good for You, Good for Other People, and Good for the Environment Average of 25 Countries, 2019

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When it comes to the environment, 64 percent While consumers say that they are on board of respondents show a strong willingness to with some of the basic concepts of circularity, a reduce their impact and 66 percent agree that significant number still engage in - in order to preserve the environment for future linked behaviors that damage the environment. A generations, we need to consume less. A majority majority across the 25 countries say that they use confirm that they would pay more for products their own shopping bag (62 percent), that they and services that work to improve society and repair broken household goods rather than replace the environment (51 percent) or are produced in them (59 percent) and that they recycle all or most a socially or environmentally responsible way (50 of the time (51 percent). Four in ten consumers percent). Also, nearly half affirm their support for also avoid single-use plastic and products with companies and brands that speak out on social extensive packaging all or most of the time (42 and environmental problems (49 percent) and percent). However, 26 percent of consumers say they encourage others to buy from these continue to buy water in single-use disposable companies (49 percent). containers and 24 percent prefer to buy cheaper

8 How Consumer Engagement Can Drive Circularity Attitudes toward the Environment/Well-being/Consumption Average of 25 Countries, 2019

I believe we need to consume less to preserve the environment for future generations I want to reduce the impact that I personally have on the environment and nature by a large amount I am willing to pay more for products or brands that work to improve society and the environment I am willing to pay more for products produced in a socially/environmentally responsible way I encourage others to buy from socially and environmentally responsible companies and/or brands I actively support companies/brands that speak out on social/environmental problems I try to purchase brands that are independently certi ed by a third party to be environmentally and/or socially friendly I feel guilty about my negative impact on the environment

Strongly Agree Somewhat Agree

products that do not last long, which underlines the challenges of changing consumer behavior that may be constrained by a lackAverage of infrastructure of 25 Countries (e.g., clean drinking water) and economic USA limitations, as well as cultural preferences and practices. Use own shopping bag Try to repair not replace

Try to repair not replace Recycle On the whole, however, these results suggest that a collective conscience is progressively Recycle Use own shopping bag developing wherein consumers are starting to rethink their consumption patterns and are ready Avoid single-use plastics Buy bottled water to support business models that actively support their changing needs. But they also show that Avoid packaging Buy second-hand more needs to be done to support consumers and reduce barriers to more circular behaviors. Buy bottled water Avoid packaging

BuyThis non-durable will require cheaper clearer products communication and consumer engagement in supportAvoid single-useof circularity. plastics

Buy second-hand Buy non-durable cheaper products Our experts confirm that circularity requires different communications for different actors operating at different levels (including businesses, government, customers and consumers), All of the time Most of the time and should focus on issues and solutions specific to them

For instance, when talking to businesses, the focus should be on business models and cost savings. When speaking within a business, the discussion may focus on issues such as design and end-of-use recovery. And for civil servants or public authorities, the issues relate to landfills, incineration and contaminated land and waters.

A Report by GlobeScan and GreenBiz 9 I believe we need to consume less to preserve the environment for future generations I want to reduce the impact that I personally have on the environment and nature by a large amount I am willing to pay more for products or brands that work to improve society and the environment I am willing to pay more for products produced in a socially/environmentally responsible way I encourage others to buy from socially and environmentally responsible companies and/or brands I actively support companies/brands that speak out on social/environmental problems I try to purchase brands that are independently certi ed by a third party to be environmentally and/or socially friendly I feel guilty about my negative impact on the environment Frequency of Actions Associated with Circularity Strongly Agree Somewhat Agree USA vs Average of 25 Countries, 2019

Average of 25 Countries USA

Use own shopping bag Try to repair not replace

Try to repair not replace Recycle

Recycle Use own shopping bag

Avoid single-use plastics Buy bottled water

Avoid packaging Buy second-hand

Buy bottled water Avoid packaging

Buy non-durable cheaper products Avoid single-use plastics

Buy second-hand Buy non-durable cheaper products

All of the time Most of the time

The media attention on plastic “waste in our oceans has led consumers to start questioning their packaging and to become more aware that there is no ‘away’ when throwing things away. ” 10 How Consumer Engagement Can Drive Circularity having the talk: meeting consumers where they are

For consumers, circularity is about prolonging the durability is highlighted as being particularly helpful. useful life of products, minimizing waste and being Consumers recognize the importance of buying able to repair, reuse and recycle to minimize the products that last a long time (44 percent) and are environmental impact of consumption. affordable (41 percent). Consumers also confirm that business plays an important role through The durability aspect of circularity is highly valued corporate efforts to eliminate environmentally by consumers, as confirmed by GlobeScan’s harmful ingredients (45 percent), reduce negative research. When consumers across 25 countries environmental impacts of its products (42 percent), are asked to rate the helpfulness of various actions offer products and services that reduce the impact that companies in different sectors can take to on the climate (42 percent), be transparent on the help people live healthy and sustainable lives, environmental effects of products (41 percent) and

A Report by GlobeScan and GreenBiz 11 Helpfulness of Actions to Enable Healthy and Sustainable Living Average of 25 Countries, 2019

Eliminating harmful ingredients Eliminating harmful ingredientsProducts/services that last a long time Products/services that last a long timeReducing impacts on climate change Eliminating harmful ingredients Protecting privacy of personal data Reducing impacts on climate change Products/services that last a long time Reducing negative environmental impacts Eliminating harmful ingredients Protecting privacy of personal data Reducing impacts on climate change Affordable products/services Products/services that last a longReducing time negative environmental impacts Protecting privacy of personal data Investing in science/R&D Reducing impacts on climate change Affordable products/services Same price for socially/environmentally friendly products Reducing negative environmental impacts Protecting privacy of personal data Investing in science/R&D Open about impacts of products/services Affordable products/services Reducing negative environmentalSame price for impacts socially/environmentally friendly productsNo energy/materials wasted in operations Investing in science/R&D Affordable products/servicesOpen about impacts of products/services Treating employees fairly Same price for socially/environmentally friendly products Investing in science/R&DNo energy/materials wasted in operationsAdvocating for better policies/behaviors Products/services Open about impacts of products/services Same price for socially/environmentally friendly products Treating employeesInforming fairly on living in environmentally friendly way Operations No energy/materials wasted in operations Informing on how to live healthier Open about impacts of products/servicesAdvocating for better policies/behaviors Products/services Treating employees fairly Third-party certi cation Communications/advocacy No energy/materials wastedInforming in operations on living in environmentally friendly way Advocating for better policies/behaviors Products/services Operations Treating employees fairly Informing on how to live healthier Informing on living in environmentally friendly way Advocating for better policies/behaviors Third-party certi cation Products/services Operations Communications/advocacy Informing on how to live healthier Informing on living in environmentally friendly way Third-party certi cation Operations Communications/advocacy Informing on how to live healthier

Third-party certi cation Communications/advocacySpain not chargeMexico more for sustainable products (41 percent).Italy These results highlight the importance Brazil Turkey of the product design element in enabling consumers to advance circularity. Mexico Argentina Brazil Philippines Mexico Italy Spain Brazil In addition Turkeyto durability, consumers globally are very concerned about the issue of single- Italy South Africa Spain Argentina Turkeyuse plastic waste in the environment, suggestingSouth Korea that plastic waste offers an entry point to Italy Philippines Argentinacircularity that is likely to continue to resonate. Although consumers in the Turkey France Sweden Philippines Argentina expressSouth somewhat Africa lower levels of concern aboutIndia the issue compared to those in most other France Philippines South Korea Indonesia South Africacountries, four in ten Americans say that the single-use plastic waste issue is very serious. In France Germany United Kingdom South Korea South Africa the Latin SwedenAmerican and Southern European countries surveyed, as well as in Turkey, roughly Germany Kenya South Korea Swedenthree-fourths of respondents say that it isSaudi a very Arabia serious issue. Germany Indonesia India Hong Kong Sweden United Kingdom Indonesia India Several ofCanada our experts suggest that to effectively engage with consumers, circularity must United Kingdom Indonesia Kenya United States Canadabe communicated in a way that is positive and inspiring. Communications should emphasize United Kingdom Saudi Arabia Kenyathat circularity offers a vision of an economic system that is beneficial and adds value rather Canada Hong Kong Nigeria Saudi Arabia Kenya than oneAustralia that is disruptive. To achieve this, the Japanmessage should be simple and easy to Hong Kong Saudi Arabia Russia Australiaunderstand. The narrative should focus on consumer engagement and standard procedures Hong Kong United States Russia Australia China United States Russia Nigeria China United States Nigeria China How Consumer Engagement Can Drive Circularity 12 Japan Nigeria Japan (how to read labels, for example), and it needs to explain how consumers can contribute through their behavior (daily actions, patterns, etc.).

When communicating to consumers, the message should be tangible and supported by real examples and inspiring initiatives. In Japan, McDonald’s Happy Meal toys are returned to the restaurants to become trays. This helps consumers to close the loop in their minds: they get something to take home at the restaurants and it goes back to the restaurant to become part of another product. This helps consumers relate to the concept through an experience.

Kei Lap Li (Philippe), business development manager of HK Recycles, illustrates how a lack of infrastructure can make it harder for consumers to engage in circular behavior: “60 percent of Hong Kong’s municipal solid waste is from the households, domestic waste. However, most of the newly constructed buildings are small and it is hard for property managers to have the right bins. If each floor does not have the space and cannot accommodate the bins, forcing people to go somewhere else to recycle, this has an effect on a person’s willingness to recycle.”

The lack of knowledge of practical actions to take is also confirmed in GlobeScan’s research. Twenty-seven percent of consumers across 25 countries say that they do not know how to live in a way that is good for themselves, other people and the environment when asked to indicate the barriers to improving their lifestyles in order to be healthier and more sustainable.

A Report by GreenBiz and GlobeScan 13 Eliminating harmful ingredients Products/services that last a long time Reducing impacts on climate change Protecting privacy of personal data Reducing negative environmental impacts Affordable products/services Investing in science/R&D Same price for socially/environmentally friendly products Open about impacts of products/services No energy/materials wasted in operations Treating employees fairly Advocating for better policies/behaviors Products/services Informing on living in environmentally friendly way Operations InformingSeriousness on how to live ofhealthier Single-use Plastic Waste Third-party certi cation “Very Serious,” by Country, 2019 Communications/advocacy

Mexico Brazil Spain Italy Turkey Argentina Philippines France South Africa South Korea Germany Sweden India Indonesia United Kingdom Canada Kenya Saudi Arabia Hong Kong Australia Russia United States China Nigeria Japan

Educating consumers on what circularity is (e.g., with positive and targeted messages), increasing their awareness through examples (e.g., showing them what they can do to make it happen) and encouraging their interest around entry concepts (e.g., plastic, waste) are all important steps to increase consumer engagement, according to the experts we interviewed. Although some of them emphasize that we are in a phase where the language around circularity is still developing, they also recognize that consumers are increasingly showing an interest in issues such as waste because it is a problem that is receiving increased attention across several media channels.

14 How Consumer Engagement Can Drive Circularity what next?

To reach consumers we should speak their language and focus on concepts that bring them value and that they understand, such as the need to reduce single-use plastic waste to save the oceans. We also need to overcome significant barriers to enable consumers to participate in a circular economy, making sure the design and infrastructure is in place, and challenging social and cultural norms.

Communication should generally be positive and inspiring, using concrete examples of circularity that show the value it can bring to consumers and other stakeholders, rather than presenting an abstract concept.

And finally, we should avoid making the same mistake we did with communicating the idea of sustainability, with overcomplicated definitions and metrics, and using it as a catch-all term in the context of an overly broad scope. Circularity has the natural potential to offer a broader appeal because it has a more motivating message attached to it.

A Report by GlobeScan and GreenBiz 15 As Marian Chertow (Yale University) explains, “Circular economy as a concept is appealing to people by coming across positively. People get tired of being told all the terrible things they are going to have as a result of climate change, like hurricanes, tornadoes, flooding and droughts. Showing people that they can make a difference through leveraging circular behaviors, business models and collaborations to drive change is a much more positive message.”

Consumers increasingly “want to know not just where their products are coming from in terms of sourcing and impact on the planet, but also where the products are going at the end of their useful life. ”

16 How Consumer Engagement Can Drive Circularity appendix: the collective wisodom of thought leaders

GlobeScan 2019 Healthy & Sustainable Living: A Global Consumer Insights Project is a study drawing from comparative and representative online surveys of 25,000 people across 25 countries to explore current understanding, concerns, expectations and opportunities to support healthier and more sustainable lifestyles.

The Healthy & Sustainable Living study was designed and launched with a range of partners, including GlobeScan, IKEA, Procter & Gamble, PepsiCo, VF Corp., Visa and WWF International, to help companies better understand the barriers and enablers of living in a way that is good for people and the planet.

In addition to the research, this report is based on in-depth interviews with 20 global experts on circularity, selected because of their expertise and influential contributions in the area. Interviewees are based in North and South America, Asia-Pacific, Europe and Africa.

A Report by GlobeScan and GreenBiz 17 First Name Last Name Position Company/Organization egion

VP, Facilities & EHS and CSO Christina Amorim Life Sciences Solutions Group Thermo sher Scienti c North America

Guilherme Brammer CEO Boomera South America

Yale School of Forestry and Associate Professor, Industrial Marian Chertow Environmental Studies and North America Environmental Management Yale School of Management

Executive Director, Center for Closed Loop Partners North America Kate Daly the Circular Economy

Reader in Sustainability, Dr. Paul Dewick Technology and Innovation MMU Europe Management at MMU

Sr. Director of Open Innovation Danone North America Merijn Dols and Circular Economy for Food

Lorraine Francourt Director, Circular Economy Dow Europe

Jeff Hogue Chief Sustainability Of cer C&A Global Europe

Cliona Howie del Río Head of Circular Economy Climate-KIC Europe

Sally-Anne Kasner Director Circular-Vision South Africa

Business Development Philippe Li HK Recycles Asia Manager

President and Chief Marketing Simon Lowden Of cer — Global Snacks and PepsiCo North America Global Insights

Angela Nahikian Director, Global Sustainability Steelcase North America

Wayne Ng Group Auditor & ESG Cochlear Limited Asia

Luisa Santiago Latin America Lead Ellen MacArthur Foundation South America

Vice President, Corporate Yalmaz Siddiqui Sustainability MGM Resorts International North America

Mathy Stanislaus Circular Economy Fellow World Resource Institute North America

Director, Elaine Strunk Global Sustainability McDonald's North America

Lauren Yarmuth Director of Circular Economy IDEO North America

Adrienna Zsakay Executive Director Circular Economy Asia Asia

18 How Consumer Engagement Can Drive Circularity