2012 will be the milestone year that the US economy demonstrates sustained economic growth through adoption of 21st century’s sustainable solutions. Earth 2017‘s economic model estimates that sustainable product solutions have now achieved the breakthrough trillion dollars per year in global annual revenues level and is on the path toward achieving $10 trillion of annual global revenues by 2017.
Here are the five megatrend drivers behind 2012’s sustainable economic growth:
1. Energy efficiency is #1 in ROI. The Return On Investment (ROI) on US 10 year bonds is 2 percent and the 2011 Standard and Poor 500 stock index closed the year with zero appreciation. Energy efficiency investments now offer 10-50 percent ROIs making them the superior investment available today in the United States.
Two fuel price trends are driving these superior returns for energy efficiency investments. The first is that 2011 marked the first time in US history that the average price of gasoline did not fall below $3 per gallon and diesel prices did not fall below $4 per gallon.
The second major fuel trend is the continuing rise in electricity prices. Electricity rates continue their long-term upward path driven by higher coal prices and the increased cost of pollution controls on coal fired power plants. In addition, the aging of the electrical grid and pressure to adopt smart technologies mean utilities are cash strapped and must request for higher rates to fund investments.
In response to electricity price inflation 52 percent of US companies report targeting a 25 percent reduction of their electricity consumption by 2014. The pain at the pump is now energizing the US automobile industry to act with new new models like the Chevrolet Cruze, Hyundai Elantra and Ford Focus. These vehicles with MPG over 35 mpg are succeeding in the market with sales up over 40 percent. The most telling trend-indicator of all maybe the successful IPO of Zipcar, a car sharing program.
2. Green supply chain is driving global economic growth. Corporations, not governments, are now driving the push toward sustainability as they harvest increasingly significant profit growth through design and process innovations that cut production, delivery, packaging and disposal costs while also reducing a company’s/product’s environmental footprint. This is a global trend led by international companies like Walmart, GE and Coca Cola. Its commercial impact is now evident in the increasing scale of Request For Proposal bid questions on sustainability metrics and performance results documentation. This global mega-trend is creating new revenue growth opportunities for smaller businesses that can offer price competitive lower environmental footprint products and solutions. It is also decentralizing decision-making as large corporations gain success using Green Teams to find and implement ideas that reduce costs and a company’s environmental footprint. Where CFOs once questioned the ROI of producing a corporate CSR report, the importance of these documents is now clear. CSR reports have an increasingly important role as a source document used by third parties that communicate to consumers and equity investors on the sustainability of a company and its products, which has an implicit impact on the bottom line. The combined impacts of the greening of the supply chain have now made this process the economic engine of the global sustainable economy.
3. Local farm to fork. Boomers are still the dominant economic force in America, accounting for 52 percent of the approximately $700 billion spent on groceries. Boomers are increasingly shifting their food procurement toward healthier choices in their lifelong quest for an “endless summer.” While still heavily influenced by price, convenience and mass marketing, the Boomer Generation is increasingly buying at farmers markets and adopting food gardening. Their mega buying power will accelerate the re-engineering of agriculture away from chemicals. It is also promoting Buy Local. Aligned with the Millennial Generation’s focus upon a healthy lifestyle these two mega-consumers will make 2012 a milestone year for moving the American food supply closer to a Local Farm To Fork supply chain.
4. “Smart” consumers bypassing the greenwashing explosion. 2012 will see a further explosion in greenwashing as 20th century unsustainable products attempt to align with the marketing power of smart, healthy and green labels. The boomerang of this increased greenwashing will be the acceleration in the consumer’s shift to their social networks for answers they view as authentic and transparent. 84 percent of moms now rely upon Facebook and 64 percent rely upon reading blogs to make their purchase decisions. The QR code accessed by a smart phone that links to third party assessments and analysis is emerging as the consumer’s information portal in evaluating price competitiveness, product claims and product safety. 2012 will see further acceleration of the “smart” consumer overpowering traditional brand marketing greenwashing.
5. Hispanic green leadership. The Hispanic community’s 50 million citizens now represent over 16 percent of the US population. Hispanic consumers have over $1 trillion of annual buying power. The US Hispanic community’s buying power is comparable in size to the GDP of South Korea, two-thirds the size of India and over twice the size of Turkey. The Hispanic community leads America in the new business start-ups and in new business start-ups by women.
Emerging market research now points to the Hispanic community also leading America in the green revolution. Led by their US Hispanic Chamber of Commerce the Hispanic business community is increasingly going green to lower costs, align with their Hispanic customers and win business with non-Hispanic businesses. The 2012 election year will see the Hispanic community gain increased influence at the ballot box and at the cash register as they align their vote and wallets with their strong sense of going green in behalf of their families and out of respect for their family values.
Bill Roth is the founder of Earth 2017. His book, The Secret Green Sauce, profiles case studies of business best practices that make money and a difference. During 2011 Roth coached hundreds of businesses on green business best practices through the Green Builds Business program created by the U.S. Hispanic Chamber of Commerce funded by Walmart.