Climate investment: getting the human element right
by CHARLOTTE VANGSGAARD, KATHERINE KAMEL & lARA cASCIOLA
It’s hard to overstate the threat climate change poses to human civilisation. There is a long way to go, but in recent years there has been increasing global focus on finding – and funding – solutions: public funding for climate-related research and development has increased dramatically since the Paris climate summit in 2015, and venture capital firms invested approximately $70 billion in clean-energy startups in 2021-2022.
Historically, the primary focus has been on creating solutions that will tackle the climate problem by shifting away from fossil fuels, removing emissions from the atmosphere, improving energy efficiency, making better use of recycled materials, and providing consumers with ‘greener’ choices, to name a few.
Existing and future solutions can only be useful, however, when and if people adopt them – and creating adoption requires a deep understanding of the what and why of human behaviour. Not taking human behaviour into account is not only inefficient – it is also costly.
Addressing the demand side of climate action – and encouraging behaviour change – requires addressing three key levels of behavioural resistance:
Finding common ground: overcoming active hostility and opposition through mutual understanding (e.g. towards clean energy projects)
Creating demand: encouraging the consumption of greener products and services (e.g. meat substitutes or clean energy)
Shifting mindsets and lifestyles: driving the pursuit of larger behavioural changes for the sake of climate benefit (e.g. opting for slow travel or flying less)
The social sciences, which take a systematic approach to understanding human behaviour, and are core to our approach at ReD, are best positioned to think about – and tackle – these barriers, and to achieve the full potential of current, as well as future, climate solutions.
1. Finding common ground
As the energy transition becomes an increasingly visible part of everyday life, pushback is increasing, with NIMBYism, protectionism, and other trends fueling this rise. Critical to negating this is more systematic stakeholder engagement: authentic engagement with diverse groups to understand their needs, values, and motivations, and finding the common ground necessary for building a path forward.
In some ways, public health interventions provide an analogy for exploring how to understand – and address – pushback towards infrastructure-scale climate action. The COVID-19 vaccination roll-out, for example, sparked much pushback from a diverse range of opposition groups.
For one major funder, the pandemic provided an opportunity to study how to build better connection and trust with vaccine-opposed groups. To explore this, the funder embarked on an investigation of the COVID-19 vaccination context in Kenya, Pakistan, and Nigeria. The ethnographic research uncovered key needs that were going unmet in current vaccination drives, such as the need to maintain legitimacy for health advisors, who felt undermined by vaccine campaigns who circumvented their authority. Bringing these groups ‘to the table’ to discuss better approaches provided a route towards getting them on board.
In this case, a focus on the contextual human drivers was critical for going beyond existing quantitative data on the situation. Social science provided not just tools for understanding, but also a theoretical and action-oriented body of knowledge to guide the development of a response. In an increasingly polarised world – where issues from public health to climate change are often co-opted by political interests – this type of deep explanatory power, and the ability to find shared goals amongst diverse interests, is increasingly important.
2. Creating demand
In many ways, making green choices has never been easier: there are more and more accessible products and services and increasingly better options. But only a few companies and categories have successfully encouraged uptake of green supply. Electric vehicles are one successful example of greener substitutes that have enjoyed increasing consumer demand: though electric vehicles only make up a small percentage of the global vehicle fleet at 3% today, this represents a significant increase from just 1% in 2020.
There are notable examples of the supply of green products and services outpacing demand. To take one, meat substitutes is a category that continues to struggle to gain sustained consumer uptake. After going public in 2019 and enjoying a surge in popularity in 2020, Beyond Meat has seen lower net sales and volume of meat substitutes sold in 2022 – it expects similar results this year.
Simply chalking this up to a lack of consumer demand misses fundamental human questions. A study published recently showed that over a five-year period, products making ESG-related claims averaged greater cumulative growth than products that did not. The behavioural resistance to green alternatives arises when value propositions miss the mark which in turn can lead consumers to lose faith in companies’ sustainability commitments.
Within the luxury space, brands are grappling with how to create demand for products that combine meaningful green promises with high desirability. The unique challenge of the luxury industry is in resolving the fundamental tension that consumers see as inherent between luxury and sustainability: where luxury celebrates excess and sustainability champions austerity; where luxury is elevated and sustainability is down-to-earth.
One luxury company decided to make big bets on sustainability to define the future of luxury, shifting away from disruptive practices across its supply chain. One of their initiatives has been to create a new, sustainable material to replace the use of natural leather in their products. The company learned that championing the material’s ‘green-ness’ alone would not be enough. To be a success, the consumer value proposition had to speak directly to the underlying tension of sustainable luxury, and make sustainability desirable – and luxurious – in its own right.
3. Shifting mindsets and lifestyles
Addressing the challenges climate change poses will require going beyond everyday consumer choices and encouraging people to adopt larger lifestyle shifts. These range from small new habits (e.g. using reusable grocery bags) to larger, more fundamental shifts (e.g. flying less).
The pharmaceutical industry has, understandably, placed a major focus on adherence as well as encouraging healthier lifestyles. When a large pharma player wanted to understand how best to encourage adherence for a new, pill-form drug, they carried out research with disease-sufferers to find a solution. What they found was that one way to drive meaningful behavioural change was to anchor taking medication in a daily habit – like brushing one’s teeth – as more effective than the instruction of ‘take medicine once a day’.
But how can we think about changing behaviours at the societal level? There are lessons to be learned from the success of the now infamous Got Milk? campaign. By the 1990s, milk had gone from being a beverage of choice and cornerstone of a healthy diet to an unappealing alternative to soft drinks. The Got Milk? campaign tapped into the emotional relationship people had with milk rather than a health-based, tactical one as previous campaigns had. It had a notable effect on consumer behaviour: after years of decline, milk sales increased from 740 million gallons in 1993 to 755 million in 1994.
When it comes to climate change, getting people to drink more diary is not the solution – quite the opposite, in fact. But it demonstrates how large-scale behavioural change can be accomplished when the underlying human questions are well-understood and subsequently inform big strategic decisions.
To understand and solve these three levels of behavioural resistance, seeking and finding answers to these human questions is essential. A deep understanding of the people and the unique social and cultural contexts involved has the potential to guide the processes needed to effectively implement, and even develop, the climate solutions of today and tomorrow.
REFERENCES
KPMG, Fintech and cleantech win as global venture capital investments become more focused, 2022
Bloomberg, Electric Vehicles Look Poised for Slower Sales Growth This Year, 2023
CNBC, Beyond Meat reports narrow-than-expected quarterly loss despite sinking sales, 2023
McKinsey, Consumers care about sustainability—and back it up with their wallets, 2023
Mental Floss, Udder Success: A Brief History of the 'Got Milk?' Campaign, 2018