- Evidence shows a rise of almost 40% in the global material footprint per capita since 2000.
- Unsustainable patterns of consumption and production are at the core of the triple planetary crises of climate change, biodiversity loss and pollution.
- The Artemis Positive Future fund supports companies trying to make a material positive impact on the world by investing in companies related to SDG12.
Sustainable consumption and production refer to the use of products and services to satisfy basic needs while trying to minimise the use of natural resources, toxic materials, waste and pollutants.
As one of the UN’s 17 Sustainable Development Goals (SDG), SDG12 is about promoting responsible practices to ensure sustainable consumption and production patterns.
“SDG12 is the only goal which directly targets businesses and the real economy, illustrated by the performance metric on a number of companies publishing sustainability reports,” says Oliver Carpenter, director of environmental risk analytics at the firm Risilience.
“The private sector too has a critical role in enabling a sustainable and nature-positive economy, and corporates have the agency to improve responsible production and incentivise consumer behavioural change.”
Integrating environmental sustainability with economic growth and welfare is therefore one of the most vital global challenges, and the UN is actively trying to tackle it.
What is responsible consumption and production and why should we care?
Generally, consumption and production patterns have significant environmental and social impacts. To render them sustainable means using all resources efficiently in order to put less pressure on the environment and our finite natural capital. Resource efficiency, consideration of the entire life cycle of economic activities and active engagement in multilateral environmental agreements are all vital elements of a successful transition.
“To ensure sustainable consumption and production practices necessarily entails respecting the biophysical boundaries of the planet and reducing current global consumption rates in order to fit with the biophysical capacity to produce ecosystem services and benefits,” the UN describes.
Content from our partners
“[SDG12] is also one of the few SDGs that targets the root causes of environmental impact, climate change and biodiversity loss,” Carpenter says. “That said, there are significant challenges to the success of SDG12. Consumer awareness and willingness to change behaviours are slow to evolve, and there are many barriers, [including] economic and cultural.”
Evidence shows a rise of almost 40% in the global material footprint per capita, which represents how much people consume in material goods, since 2000, as well as the domestic material consumption per capita, according to Trackinsight. This is why SDG12 was created, and it has 11 targets to reach by 2030:
- Implement the 10-year sustainable consumption and production framework.
- Sustainable management and use of natural resources.
- Halve global per capita food waste.
- Responsible management of chemicals and waste.
- Substantially reduce waste generation.
- Encourage companies to adopt sustainable practices and sustainability reporting.
- Promote sustainable public procurement practices.
- Promote a universal understanding of sustainable lifestyles.
- Support developing countries’ scientific and technological capacity for sustainable consumption and production.
- Develop and implement tools to monitor sustainable tourism.
- Remove market distortions that encourage wasteful consumption.
What happens if we continue to consume at the rate we do?
According to the UN, unsustainable patterns of consumption and production are at the core of the triple planetary crises of climate change, biodiversity loss and pollution. These factors not only threaten the achievement of all SDGs, but they also put at risk human well-being.
Some figures from the Sustainable Development Goals Report 2022 might be useful to understand the extent that irresponsible consumerism reaches:
- From 2000 to 2019, the total domestic material consumption rose by more than 65% globally, amounting to 95.1 billion metric tons in 2019.
- In 2020, an estimated 13.3% of the world’s food was lost after harvest and before it could reach retail markets.
- 17% of total food available to consumers, amounting to approximately 931 million metric tons, is wasted at household, food service and retail levels.
- Food that ends up in landfills generates between 8–10% of global greenhouse gas emissions.
Some estimates say that humanity has already used up a third of nature’s resources and, as things stand now, we need 1.75 planets to keep up with all the resources we are consuming. By 2030, two hypothetical planets will be needed.
Another big part is played by the fashion industry. Employing over 60 million people worldwide, garment production is one of the biggest manufacturing industries. Fast fashion in particular, alongside the waste of electronics, is responsible for 53.6 million metric tons of e-waste per year, as registered in 2019.
This mishandled consumption-disposal strategy will also result in a significant loss of valuable raw materials like platinum and cobalt, and an estimated 7% of the world’s gold is contained in e-waste. The improper disposal of these materials, in addition, is also behind the poisoning of soil and water, raising environmental risks.
On a more positive note, “many companies are promoting sustainable behaviours,” according to Carpenter. “In the fashion sector, for example, this might include making clothes robust to improve their longevity, changing product labels to incentivise cold washing, and offering repair or recycling services.”
Humanity’s demand and consumption today exceed what ecosystems can supply, sending the planet into an ecological overshoot. In 2022, Earth Overshoot Day happened on 28 July, meaning that humanity had already used more natural resources than the biosphere can generate on that date, rather than at the end of the year. In 1970, when it was first recorded, Earth Overshoot Day fell on 29 December.
How much investment goes into SDG12?
There are many routes for investors to tap SDG-related opportunities. Below are a handful of examples of exchange-traded funds (ETFs) investing in SDG12:
- BNP Paribas Easy ECPI Circular Economy Leaders UCITS ETF
- Direxion World Without Waste ETF
- Amplify Cleaner Living ETF
- HANetf Cleaner Living ESG-S UCITS ETF
The majority of these promote a circular economy model, a system of production and consumption that revolves around sharing, leasing, reusing, repairing, refurbishing and recycling, rather than the continuous creation of new things.
According to Trackinsight, a circular economy could potentially generate $4.5trn of additional economic output by 2030 and the International Labour Organisation also estimates an additional 18 million jobs could be created by then.
Other well-known companies, like Danone, have dedicated $220m to a fund focused on new packaging materials and models. It is part of a wider $2.2bn investment to cover issues regarding the overuse of materials, climate and agriculture, packaging and digitalisation.
What’s in it for investors to support SDG12?
Wastewater management, recycling mechanisms and sustainable packaging are all innovations that investors can fund in order to make the consumption and production processes more sustainable and, consequently, support SDG12.
In the supply chain sector, the most effective developments people should invest in revolve around packaging, recycling, reusing and sustainable sourcing of materials. For instance, sustainable packaging and paper producer Mondi is contributing to reducing the use of plastics in the industry. Paper production company Klabin reached some impressive goals in 2021, such as reusing 98.1% of its industrial waste.
In cases like these, impact investing is the only solution to keep the SD12 objectives alive. Investors should focus on entities that promote and bring forward SDG and ESG guidelines.
Impact investing can also be done by funds, rather than individual investors. An example is Artemis Positive Future, which supports companies that are trying to make a material positive impact on the world by investing, so far, 12.1% of its total funds in companies related to SDG12.
Overall, investors have many possibilities to choose from to tackle the consumption and production issues. Not only they could make reaching the 2030 goal easier, but they can also make a huge difference in the way the world consumes and produces goods.
[Read more: Stories on responsible consumption and production]
