EcoTextileNews Cover Story-November 2008 issue
by Coral Rose
As a result of the U.S. credit
crunch and slowing economy, we are now seeing consumers including, ethical
consumers become more economically
conscious. What remains to be seen is how, if and when this might affect
the solid upward trend of organic and sustainable fibers and products.
The Lenzing Group recently released results for
the first half of 2008. With noted strong sales increases of 17.4%, they
may be the first to acknowledge a shift in the market; “First signs of a
weakening global fiber market were perceptible already from the beginning of
the second quarter.” And “The
unfavorable economic development that started in the USA clouds expectations
for the global economy. The weak dollar and turbulent raw material and energy
markets will add further pressure”
In a
global economy, U.S. issues are global issues. There are now concerns
that the U.S. credit crisis is spreading to Europe and quickly becoming a
global economic hurtle.
“In the short run, I hear people saying that
we won’t have the resources to address sustainability now that we’re spending a
trillion rescuing the financial system. That seems backwards. We
need to address climate change and resource shortages even more aggressively.
It’s about risk management. The leaner we are, the less stuff we
use to make every product and service, the better prepared we are for whatever
comes our way.” Andrew Winston, Founder of Eco-Strategies,
and Co-Author Green to Gold.
We have witnessed decades of widespread global economic
growth, in which we have seen the standard of living for millions of people,
around the world rise to unprecedented levels.
As China and India enter the age of consumerism, global economic
development is linked not only to the core practices of business, but that of
environmental and social issues as well.
Our planet now supports 6.5 billion people. We are adding
to that, about 70 million people each year. Some might assert that the current
global economic business model cannot support or sustain economic progress for
the projected 8 billion people who will live on this planet by 2050.
“In many ways, the credit crunch is
the epitome of non-sustainability. Observing this crisis, you can study the
consequences of non-sustainable (economic) actions that - in the end -
will affect people, in other words the social/societal dimension of
sustainability. For us this development strengthens the conviction that
sustainable management is the only way of succeeding in the long run and we
will continue to focus on sustainability in all respects." Friedrich Weninger, Vice-President,
Lenzing AG.
In the coming months, we will invariably
see organizations implementing mid-course short term adjustments to their long
term strategies. Some consider this the opportunity of the 21st
Century; to bring fresh ideas, knowledge, collaborative resources and
innovation together in ways that link sustainability, with opportunities for
sustainable economic growth.
David Basson, President
of Greensource Organic Company, views sustainability as “the competitive
advantage to the slowing economy.” “Sustainability is front and center on consumer’s minds right now,
with high energy costs being a primary focus of
the current Presidential elections.”
“We are seeing a tighter economy;
consumers are looking for value and shopping
at stores that they had not previously frequented.” He noted
a recent trip where he observed many high - end cars in a Walmart parking
lot, he sees this as an enormous opportunity for Mass Market retailers.
While the current
economic slowdown is not affecting Greensource fiber strategies, David Basson
noted that pricing is still a large factor. As a vertical supplier he stressed
the importance of long term relationships in his supply chain, as being “key to
being able to service his customers through any economic challenges that may
occur.”
Patagonia is a brand that has successfully
created long term brand value and stakeholder loyalty by considering the
environmental and social impacts of their supply chain and products. Levi
Straus & Co. recently reported that the current economic slowdown “is not
hindering any product initiatives or other work LS&CO is doing in this
(sustainability) area.”
"Marc Gunther, Senior Writer Fortune Magazine, who writes about the impact of business on society, with a focus on environmental issues, says “that this turmoil in the capital markets can't be good for the sustainability movement.” however, “if nothing else the economic slowdown is a huge distraction. But this will pass, eventually, and then there is no way that companies, and consumers, are going to be able to ignore sustainability"
"Walmart remains committed to
Sustainability," according to Walmart spokeswoman Shannon Frederick; “At
Walmart, we believe that being environmentally friendly and running a good
business go hand in hand during times of economic prosperity as well as during
tough economic times like our customers are currently experiencing. We remain
committed to our sustainability-focused goals to be supplied 100% by renewable
energy, to create zero waste, and to sell products that sustain our resources
and the environment. All along we have said that we believe families should
have access to affordable environmentally-friendly products. And we're
committed to making sure our customers don't have to choose between a more
sustainable product and one they can afford.”
How might the economic slowdown
affect consumer purchasing behavior? Natural Marketing Institute recently reported that consumers state higher purchases
of “Natural” versus “Organic” foods
and beverages. “This is driven by a wide range of factors; levels of
understanding, availability, price, and perceived benefits.” Will
we see this trend from organic to ‘natural’ (sustainable) in the fiber market?
As the impacts of a slowing
economy are felt, companies that can adapt quickly to the
troubled economy and become focused on the cost savings of sustainable business
practices may be the ones to deliver a return on investment in tough times. Cost
savings derived from increased energy efficiency of the supply chain, could lead
us to a more localized and regionalized supply chain versus one that is globalized.
Economically tough times of the past
yield us some insight to forthcoming possible actions; Retailers may sharpen
margins and work towards leaner inventories; this will trickle down the supply
chain. Brands and retailers may be less willing to make long term commitments
at least for the short term until the rising economic tide has passed. Consumers
will invariably spend less money while at the same time looking for products
with added brand value, and consumers will shift to purchasing practical-no
frills basics, this includes upcoming holiday gift purchases.
It is clear that companies who can strategize to thrive during this time, will no doubt be well situated for long term sustainable economic development and growth.
Copyright(C) 2008 Mowbry Communications Limited
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