“Future-oriented Sustainability x Business Perspectives" Global Trends You Need to Know to Balance Sustainability and Profitability

At the internal seminar of Scope Co., Ltd., our COO, Katsutoshi Yamada, delivered a seminar, which we will summarize in this digest. The lecture was planned to be divided into two parts, and this time we will cover the first part, which is the basics.

Current situation: Japan is the world's second-largest plastic waste producer

Japan has a high consumption of plastic products, and when comparing the per capita disposal of plastic containers and packaging waste by country, Japan is second only to the United States. When plastic waste is not properly disposed of and flows into the ocean, it not only affects the marine ecosystem but also causes pollution in coastal and marine environments. There is data that suggests it takes 400 years for a PET bottle to decompose in the ocean, and if the amount of ocean plastic waste continues to increase, it is said that by 2050, there will be more marine debris than fish. In Japan, disposable plastic containers and packaging materials provided in supermarkets and restaurants are considered a major cause of plastic waste. Efforts are needed to reduce these plastic wastes.

To solve these plastic waste problems, Japan has implemented initiatives such as charging for plastic bags and promoting the use of reusable plastic containers. However, in order to further enhance environmental protection and sustainability, more and more companies around the world are working on this issue, while still maintaining it as a business.

World business examples that combine sustainability and profitability

First of all, the footwear and apparel brand Allbirds, founded in the United States in 2016, uses environmentally friendly materials as much as possible to produce its products. It has already gone public and is valued at over 180 billion yen, and is a typical example of building a revenue pillar while considering environmental impact. There are also fashion brands such as Ecoalf, which originated in Spain, and KAPOK KNOT, a Japanese apparel brand that uses materials derived from nuts, and more and more companies and brands are focusing on sustainability.

Recently, there has been a growing interest in the technique called upcycling, which involves reusing useless byproducts and waste to upgrade them into more valuable new materials or products. There are specific measures such as upcycling beer lees into granola.

"Ethical Spirits" is a Japanese startup that uses upcycling to manufacture spirits from sake lees, for example. It has been talked about as the world's first recycling distillery that specializes in ethical production and consumption, and its packaging is also distributed as a gift because of its high design quality. In addition, the use of vegan leather products is increasing worldwide, in addition to apple and pineapple leather, cactus leather sneakers have also become popular.

Furthermore, there are more and more companies with technology based on scientific discoveries obtained through research in specific natural science fields, which is called "deeptech". This concept, which is prevalent in Europe, is attracting attention in Japan as well. Hello Tomorrow, which has a global network of deeptech companies, entrepreneurs, researchers, and others, is promoting deeptech with companies and entrepreneurs around the world.

World consumer trends

In Europe, more than 80% of people are aware of environmental and social negative impact products, and they do not buy them. Beef is particularly recognized as a food that emits a large amount of greenhouse gases and some universities in Europe are not serving beef as a result. Worldwide, there is a growing awareness of avoiding products from companies that harm the environment, and more than 80% of people tend not to choose such products. In particular, there is an increasing interest in sustainable products and services.

ESG (Environmental, Social, and Governance) investment is becoming more prevalent in universities and companies. The amount of investment in ESG is increasing every year and is expected to increase further by 2025. To catch up with the trend in Europe, companies in Japan need to focus on ESG. Although it is currently difficult to manage a business based solely on ESG, it is necessary to respond to it because there is also a possibility that money will no longer be collected without ESG.

Government trends in Japan and the world

The Japanese government has announced a policy to achieve carbon neutrality by 2050. Countries and regions aiming for carbon neutrality by 2050 are increasing worldwide, with the UK and the EU setting different numbers at the midpoint. It seems that the world is moving towards sustainability, and companies and consulting firms are moving in unison based on the government's announcement. There are many acquisitions related to sustainability, and major companies are increasingly creating sustainability departments, with more Chief Sustainability Officers being appointed. Experts in these fields are being recognized due to the high demand for sustainability, and companies are aware that it is important to communicate information about sustainability.

The beginning of ESG management

Since around 2020, there has been a surge in ESG (Environmental, Social, and Governance) investment. 30 leading asset management companies jointly established the Net Zero Asset Manager Initiative in December 2020, and in 2021, assets equivalent to 87 trillion dollars have joined the initiative, increasing the amount of assets under management. BlackRock, a leading institutional investor, announced a series of action plans in January 2020 to enable its clients to invest sustainably in the future. ESG investment as a whole has grown at an astonishing rate worldwide, with ESG investment increasing by 15.1% from 2018 to 2020, reaching 35 trillion dollars. It is expected to reach 53 trillion dollars, or about one-third of total assets under management by 2025.

The movement in the advertising industry is further igniting this trend. CO2 measurement and reduction are now being demanded in the production and deployment of advertising. The organization Ad Net Zero has been established to lead the advertising industry towards net-zero, and companies such as Assembly have announced plans to launch tools to audit the CO2 emissions of the advertising industry. The Cannes Lions International Festival of Creativity has changed submission requirements this year and recommends that applicants submit information about CO2 emissions and sustainability impacts associated with their works.

Although this is the first attempt, it is not included in the judging criteria, but it is important to understand these trends and develop business strategies that incorporate sustainability in the advertising industry.

Voices of seminar participants

We also received the following comments after the seminar. ”I felt the difference in the way of thinking and approach between Japan and the rest of the world. I was surprised to see how much of a business opportunity sustainability is.” ”I was surprised at how many business opportunities there are in sustainability. I was surprised at how many business opportunities sustainability offers. I learned a lot by switching my awareness from global environmental issues to a business mindset.” ”I was not clear on how sustainability activities are connected to business before the lecture, but now I understand better where the money comes from and how it becomes business.”

Recursive will continue to promote the compatibility of sustainability and business in society.