The sustainability game How new rules are reshuffling consumer goods markets THE BIG Key consumer goods industries currently estimate the market to be worth around USD 14 trillion in retail sales globally – but to secure future growth, they must now put sustainability at the heart of their strategy. → P. 05 Our Consumer Pressure Index, based on analysis of 84 million conversations across 14 countries, shows that sustainability is not just a purchasing criterion for consumers – it's a hygiene factor. → P. 08 More and more countries around the globe are committing themselves to net zero and regulation is going to increase significantly. → P. 12 Contents The sustainability game | Think:Act 3 1 – PAGE 05 The rules of the game are changing. Sustainability is a matter of survival. 2 – PAGE 08 Consumer and regulatory pressure is growing. We provide transparency. 3 – PAGE 14 From food and beverages to luxury. Deep dives into key consumer goods industries and their sustainability efforts. 4 – PAGE 29 Solutions Cover illustration: Anton Hallmann / Sepia for consumer goods companies. Our recommendations. 4 Think:Act | The sustainability game Executive Summary ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE issues are front of mind for executives in all types of industries today, and the consumer goods industry is no exception. Pressure from consumers on the one side and regulators on the other is reshaping consumer goods markets and radically changing the rules of the game. Companies must act fast or risk seeing their revenues collapse – and potentially their very existence called into question. But with every risk comes opportunity. Research carried out for the purpose of this study, including an analysis of some 84 million posts on social media, e-commerce sites, forums and blogs across 14 countries, provides us with unique insights into what is driving the changes in the market and how companies can best "leverage" them. The data creates a picture of what the sustainable consumer of 2030 could look like – their lifestyle, their sense of responsibility, their values – and how pressure from regulators differs from country to country and industry to industry. These two factors are encapsulated in our Consumer Pressure Index (developed in cooperation with our partner Symanto) and our Regulatory Pressure Index. We also present a series of deep dives into the four key consumer goods industries: food and beverages (F&B), fashion, personal and home care, and luxury. We examine where current action on sustainability is taking place, the challenges for sustainability going forward, what the survey data tells us about each industry, and how things may change by the year 2030. To secure their future success, consumer goods companies must put sustainability right at the heart of their strategy. With this in mind, we present eight recommendations, some applicable to companies in specific industries and others across the entire sector. In particular, companies should remember that tackling the sustainability challenge is not something that can be put off. The time to act is now, when markets are being reshuffled, and not tomorrow, when they may find they have been dealt a losing hand. The sustainability game | Think:Act 5 1 – The rules of the game are changing. Sustainability is a matter of survival. TO MAINTAIN OUR STANDARD OF LIVING, we currently use the equivalent of 1.75 Earths in terms of resources and ecological services, according to "The World Counts". Ecosystems cannot keep up with our demands. As a result, between 100 and 300 million people are at increased risk of floods and hurricanes and many more are affected each year by extreme weather conditions. Sustainability has become more than just a buzzword – it is now a matter of survival. How are businesses reacting to the growing consumer and regulatory pressure to take action on ESG issues and reduce their environmental impact? And what effect will consumer concerns and tightening regulations have on the consumer goods industry? The pressure on companies to act represents a severe risk for business across all regions and industries. Players that fail to react will be punished by both consumers and institutions, and may even face a threat to their survival. Companies are grappling with the challenge of forecasting their CO2 emissions, so that they can then meet their targets. Failure to do so can be costly, as CO2 emissions have become a new worldwide curr