Consumers and Climate Action

an inspiration. There were the zero waste folks, the vegans, the different shared economy business models, and the second hand options. Then were the things that I needed to do to upgrade my life, like how I heat and insulate my home and looking at my transportation choices. It was a long list, and in all honesty, it took me a year of incremental changes to evaluate all of these aspects and guess what, I am still not personally net zero,

not without carbon offsets. So where I landed at the end of this year of carbon dieting was that my actions were really a little bit less about the individual missions gains and more about the consumer markets signals I was sending to companies. It was about what I was and wasn't buying. My story is not unique, nor is it unique to people focused on climate. So today I speak with Hugh Bromley, who focuses on consumer trends for us at b an EF. He recently wrote a research

note titled Boycotts Bycotts, Lifestyle Choices and Discursive Acts. Today, we're going to talk about some of this framework and the examples of things that people are doing right now in regard to these categories. Hughes research really tends to focus on surveys and he'll talk of it today about what they might be telling us about what people are thinking and doing. As a reminder, b any F does not provide investment or strategy advice, and we've got a

full disclaimer at the end of the show. Also, if you get to the end of the show and you decide you want to read the research that he is referring to, it can be found at b NF go on the Bloomberg terminal on BNF dot com, or via our mobile app for our subscribers. And now let's speak with you. So Hugh, thanks for joining today. Let's start a little bit by explaining what it is that you focus on researching at b A d F. Because it's not our usual technology adoption and looking forward price curve

sort of situation. What is your primary area focus at the moment? I have had a little bit of unusual role at being as you say, where my primary focus is producing analysis on consumers. It's not marketing research or market research per se. I'm really thinking about consumers as a vector for transition and decompanization. So that's you know, how to choose to climate change and energy and transport technologies and how their behavior is affecting the pace of

change in the speed of decompanization. This is a topic that I'm keenly interested in, but I think you have a much bigger theme within this, which is how do all those little actions that are leading us closer but not personally actually there in many regards to that zero, How does that have a potentially larger impact on the political and corporate environment that we all exist in. So

let's start by asking what is a political consumer? Which is a deliberate term that you used throughout your research on this topic. Political consumer changes over time for each topics, and we think about climate change, it starts off with a pretty fringe group of society caring about a topic, right at the edge of the social radar climate change of different environmental issues. But over time those ideas become more mainstream around admissional reduction or around the emissions related

to big consumption, for example. And as they do, obviously the population involved, the populace that cares about this topic grows, enters what we call the lifestyle politics of that minority, and still it keeps growing and growing, and suddenly there's critical mass the political landscape that changes the commercial landscape as well, where companies see an opportunity and cater into this growing minority soon to be a majority by offering

new products and services and thinking about their own supply chains and how they need to evolve to not be called out within there. So you created a bit of a framework in which to think about what are the different things that political consumers actually can and are doing currently and where those might actually exist within the climate change space, because that is a specific lens you're looking at it. You talk a little bit about that framework

with us. Political consurism as a concept has existed for many decades now, and there's examples of political consumerism dating back to British settle in India and different trade disputes through the environmental movement of the nineteen fifties sixty seventies. The framework has been used for media finishes before, but really what we're done here in this piece of research is applied to climate change. The four ways that consumers can act in response to political matters are defined as

Boycott's pretty simple. You choose not to consume a product or a product group or a brand. They can be bi coots, let's be buy cots, and those by coots are a little bit different. Sometimes it involves ring fencing only buying products that are certified green power or certified be Corp, for example, or it could be more broader than that, by cots of solar storage or technologies of Tesla. Then you've got discursive actions. And this is really not so much about what you buy or you don't buy it,

but it's about how you communicate your consumption choices. It's about imposing those beliefs on others, generally by making fun of a corporation, a brand, or a politician and there in many cases greenwashing. And finally you've got lifestyle choices. This lifestyle choice is going to compass everything, but it's where you see cobalt to the population avoiding flying, avoiding needs, electrifying their homes, or you know, some cases, going off grid.

So let's stay fit a little bit on the discursive actions part, because I think that's one that might be very new to us conceptually, or at least you know what.

I'm not going to speak for other people. It's new to me conceptually, but it's something that actually, now that you bring it up, it is really obvious that it's we're surrounded by it because we live in this increasingly technology filled world where we spend an inordinate amount of times actually interacting on our phones and looking at different messaging, not just advertising, but like different people's agendas on whether it be Facebook, Twitter, Instagram, or a variety of other

much hipper apps that I'm sure people younger than we actually use. So what is an example of something that we might see that like a polluter parodying is one of the areas that you looked to our social media movements. Would something like a meat free Monday be considered a social media movement? I could say that a lot a lifestyle action in many cases where you're engaging a certain

population or community in changing their behavior. When we think about discursive actions, we're thinking more about a way of picking an antagonist and really reversing the script on them, and we see this all around. Actually there's been as much discursive actions, I think as there has been greenwashing

is you know, played climate discussions for years. But you know, an example would be if you walk around any of the cops cities and the most recently Glasgow billboards posted across the city, you know, really pulling out brands like NatWest, like Shell, like Standard, Jot and Jagua Landerer. So they're you know, what's perceived or conveyed to be their greenwashing, and they're a false script on the action they're taking

on climate change. There actually was a Twitter butt on International Women's Day when people activated the butt by tagging it to a Twitter feed where someone said Happy Women's Day. Their gender pay gap number was automatically inserted by the Twitter butt. That be considered a discursive action, yeah, I would think. So, you know, they're really innovative, they're engaging, they're normally comical. They're not going to appeal to everybody.

They are really just about getting a message out there to they already believers. Uh and potentially highlighting a problems outbuts so on discursive actions, they're almost always intended to send a signal to the company that they're specifically talking about. And yes, there is a public sentiment element to it where you're trying to rally others, but you're also sending a very deliberate message to either consumer or political group. Yeah,

I think that's right. So clearly the main audience here is the climate engaged and the company being targeted, and it's the pressure there c suite and executive to make it just the change the behavior. As you said before, they're monitoring their socials to see how much negative feedback

there is. If these you know, engaging billboards and tweets and marketing campaigns get picked up by mass menia and center and viewed by by thousands or hundreds of thousands of millions of people, then suddenly that's extremely powerful and potentially more powerful in their own brand in many cases their own marketing efforts, and there's the expectation that there will be a response. It's a distraction to their core business and the way of avoiding that is the change.

Now for a very short break, stay with us. One of the things that I read recently was about the tagging within social media. So let's say Instagram and negative Instagram post, and it was in the tens of thousands, not hundreds of thousands, where a negative reaction to something actually started to get a response from the marketing team essentially at that company, and then would escalate it upward.

So getting the eyes of a company on their consumers, which you know, the most important stakeholders in many respects, is actually something that happens more quickly than you might think because they're quite sensitive to what it is those consumers think about, particularly in the consumer discretionary space, how they're tied to that brand. But let's talk a second

actually about the boycotts and bycotts. So we're thinking boycotts are the things we don't buycots are the things we do buy, and what sort of market signals those may send. But how about lifestyle choices? How would you say lifestyle choices differ from these boycotts and bycotts. They generally bit more all encompassing. So it's not just about buying a

certified componutral products. It's about changing your loss job obviously, and being inconvenience in order to make your point at the slight shaming movements out of Northern Europe is a classy example here vegan and vegetarians and where it is tied to a driver are examples of lifestyle movements. As I mentioned earlier, you could trace this back to far more fringe groups, you know, living off grid or in

isolated communities, living an environmentally friendly lifestyle. So in this we have identified the different things that people are and can do within within this space in order to influence. But my question really is how do we measure it and what sorts of things do you look at to see whether or not these are significant things to be

watched by the political and corporate environment. I tend to measure things through survey, and surveys are fraud beasts in that you know what people say and what people do is not always the same thing. Certainly, there's an agel saying that the perception is reality. So really, as a forward indicator, perception of how people view companies of happy with your policies and politicians will shape their reality more so than data of what has happened in the past.

And through that lens we can be a number of people who are adopting different technologies for different reasons, for example, through survey or the number of people who have positive or negative opinions of a politician, of a policy, of a corporation, of a corporate action. And it all informs a view of can you consume a driver and how much activity and behavior might just be economic and rational, and how much might be taken to us into account some sort of other X factor or disengagement of the

political discourse. What are some of the more interesting surveys that you've looked at as a fleet? I highlight the surveys have flagged a couple of problems in the way we talk about climate change. Generally speaking, the surveys highlight that climate change in the environment are conflated and one of the same water pollution is treated the same as coal emissions, and therefore the symptoms, causes, and solutions climate change are really not abvious to people and their actions

they're spending. Their actions might be totally misdirected towards what they feel activities that will benefit the climate in some way. There's certainly willingness or increase willingness to pay for those products and solutions. But if you don't know where to spend the money or if you're misdone and a way to spend the money. We're obviously getting some poor outcomes. Let's talk a little bit about the political part of it. The term is political consumer and what we've talked about

thus far. You brought up politicians, but I'm really seeing this is much more sending signals to companies in particular again in the consumer and consumer discutionary space. How does this influence politicians and how closely are they watching boycotts, by cuts, lifestyle choices in terms of how they're not just formulating policy, which is really important, but also forming

their platform for election and re election. To talk about companies first and clearly, within political consumerism, the company can be the antagonists. It can be That's how I got on all Board that he has made a mockery of because of their green washing. They can also be the consumer.

And in the final stage of put consumerism, really, when you're going through those fringe groups society into a larger minority into the majority, the corporations ultimately change as well and pressure their supply chain, and they become the catalyst that change. They become the force here. I think political consurers is pretty apparent to me. Within my time of being effort I have recalcissant governments have followed me around.

I suppose you know. I started here in Australia shortly within a year or so, the Tony Abbott was elected Prime Minister and quickly tore up the carbon pricing regime that we had in place at the time. I moved to the US. Within a year, Donald Trump was elected to up a clean power plan and drew from the Paris Accord. With each of those advance the immediate local reaction was we're moving enormously backwards. There's three or four years of backwards stepping on climate change and climate policy

before there's any hope of change. And actually, what we saw in both cases, in Australia and in the US some of the most recalcistant administrations were seen in the Western world, is that some slack and not all, but some slack was taken up by consumers and corporations taking action, and cities and organizations and others as well. But they took up the slack as a message to those politicians that we still care. In Australia, you know, when their

carbon pricing raising was torn up. We had no carbon policy there for a while, we had front page news story saying that we had the highest power prices in the world. It was attributed by the politicians to carbon pricing, but really it's pretty obvious to everybody now that it was network spending and a very high exchange right, very strong dollar that was leading to those record of power prices.

But that didn't change the social impression that it was the climate policy and the action that was taken by many consumers to say, we're still going to invest in solar an investment solo, either because we don't like our power company for price gauging us or for not taking climate action, or we don't like this government again for not taking climate action. That wasn't everybody installed solar. It was around a fifth percent of customers installed as a

political message. Around four fifth was economics driven and they admitted. So it is a significant minority twenty of the population in the US. You have very similar stories when you have the kind of the we are still in it movement that was started up the Trump announced you would withdraw from the Paris Climate Agreement, and you've got city states, colleges, churches, everyone's saying we will commit to a pathway consistent with one and a half degree warning and take action toward it.

And some of those actions work economic anyway, but many works, many were two or three years ahead of the economics really making sense on such a pledge, and yet they made that decision anyway, and that maintained the political pressure such that not all was lost. Now for a very short break, stay with us. One of the things I think that we see very clearly in our analysis across the varied deems that we have at being the efforts that there is no one single thing that is the

most important thing. There is this kind of concept that generally you have this archway and each stone is interdependent on each other to hold each other up. And I know that this is definitely one of those the political consumer space as it interrelates then with politics and with companies, but specifically as we head now into what is a progressed, high inflation environment, and some of these technologies, as you're pointing out, technologies are actually products that are considered to

be greener, cleaner. Adoption may slow down as people have less discretionary income to spend on these things or spare income to spend on kind of things that are more expensive. How important is the political consumer space in driving change because you referenced that at some point it picked up the lap when you know the politics backed away from

looking at this in certain geographies. Will we be able to have the same progress on reaching certain climate goals if this ends up becoming a decrease in element of I guess the change nexus that we're looking at inflation is a good place to start. Actually, it was obviously contemporary topics, and I think it will drive change. When people drive past and see fuel prices they haven't seen ever, or haven't seen in at least ten years, they're going

to make decisions. Very few, I would argue, we're going to do the calculation of workout whether an e V makes sense of its day. But enough will be outraged at the fact that politicians are still levying fuel exercises on them whilst petrol prices are so high, or outraged that fuel companies are a price gouging them, you know, oblivious to the greater macro picture, and they'll make a

decision to purchase electric vehicle regardless. Now that might not be driven by climate, maybe it will be a factor. I'm sure there is political consumerism going on right now around inflation and particularly energy inflation with climate benefit. That's a really good point because I'm thinking about the high gas prices at the moment, and then this whole discussion around heat pumps and how difficult in some geographies they

can be to install. And actually I know a few people who are essentially pushing extra hard through that paper were given the current economic and political crimeate around what is you know, fraught pipelines of natural gas from eastern to to western Europe. I was thinking about it as people probably would spend less on greener things. But you raise a really good point. A may spur additional action in other areas. They need to be able to afford it,

so certainly, so that's that point is not lost. But given the capability to afford to make that decision, and we're talking about you know, fringe to to to larger minorities of the population here, action will not always be driven by economics. That we've driven by a political statement or a statement to corporations that the status quo isn't working and change needs to happen. So you've got a couple of case studies in here that I think are worth highlighting. So maybe we could go into those in

some detail. But let's talk about California households and the bi cuts of pv SO photovoltaic home solar and backup batteries and some regards which I know have become useful as a alternative of two backup generators. There have been some power outages that have continued over the last few years in California, specifically due to things like buyers and winds. What has happened in California that that's a sophisticated by cut market, is it not? I think it is. I

think it is of multiple technologies. But you know, the conflation of different events around, you know, around the period was really interesting California because clearly you had solar already economic, and for most consumers you had storages really being pushed and new intenses in place, so economic drivers improving. But

beyond that, the political landscape had just changed. Trump is in his second year in office and in becoming he's announced he's going to withdraw from the Paris Climate Agreement, and meanwhile California face its most destructive wildfire season ever forty seven lives or lost. Ten thousand buildings or more were destroyed, and there was a bit of a movement there. You know, there was a strong uptake in all the

storage to go after those fires. Plus some other liabilities incurred by the local power company, Pacific Gas and Electric, ultimately led to their bankruptcy. So suddenly you have these two antagonists. You're PG and E, and you had a federal government who was moving backward on climate change, and meanwhile you're facing what you see as the most destructive

and cataclysmic climate events in history. It was only a year later there were more wildfires and more damage than the political response was to the Trump criticized the California authorities for not breaking the forest. So when there's that sort of political discourse, there is going to be a consumer action. It helped that the economics were great, of

course it did, but you saw these other nudges. And in consumer behavioral science we always talk about nudges, and the political nudge here was actually to do nothing or to pretend it wasn't a problem. And that was enough of a nudge for the engage and the educator to

make a decision to adopt technology. Then let's talk also about another case study that you referenced a little earlier regarding in the Nordics flake shaming, and some airlines have seen it as a threat, other airlines have actually taken it head on. So KLM lunch this Fly Responsibly campaign that actually addresses and embraces a little bit this flight

shaming mentality that's going on at the moment. What sort of changes have the surveys that you looked at, how people responded to this, and is this pressure or potentially virtue signaling, is it working and is it changing people's patterns. Flight shaming or at least flight avoidance is larger than people expect. And the flight shaping movement was a very Northern European movement at first, a little bit elitist. It was a bunch of local celebrities talking about their boycott

of plane and travel because of emissions. It's spread across Western Europe. But really we're seeing science that all around the world now. For example, in the UK, the majority of Britons now say they have already or likely to avoid traveling by plane on holidays. You see even similar numbers in China, smaller numbers in Japan, but an awareness that's short distance flying short distaviation its emissions and can

be avoided. Follows through is more difficult to measure, especially during the last two or three years when the wiped out, So it's a bit too early to know, but this was very much on the forefront of airlines minds and dialogues going in COVID. You mentioned KOM that fly responsibily campaign is particularly interesting because they're basically asking travelers to consider not flying at all, are using something else. Most other airlines really just present your carbon offset options or

you know, flying carbon neutral options. They're not trying to turn away your business. Across Europe we see a under of organizations banning short distance flights to their employees. Lots of universities, the BBC Greater London Authority all banned employees

from traveling. We see Deloitte, for example, making a major investment in light Year, likely as a company out of the Netherlands that makes solar powered cars, which will be one of the first customers of to move their employees across continental Europe seeking out alternatives because again, you know, corporations are kind the final movie here. They think about their supply chain, they think about where criticism is going to come from in the future, and they're taking action.

He referenced Curbon offsets and then said, you know, playing Curbon neutral on that. But we have a whole another episode with Kyle Harrison about the offset space and how incredibly fraught the additionality of those offsets can be. But I don't want to digress too much there. Let's go into one final example while we're on the show today about resilian products and how that may have an impact

on the Amazon rainforest. And you know what people are actually doing and how they're tying specific products to that geographic space and that ecosystem. This is a really fascinating example. And as a current example, right before I mentioned Australia, I mentioned the US and California. With that political dynamics passed in many cases, in most cases in Brazil is

still very much happening. And you've got a President Bosonara there who has been skeptical and critical of climate action since his in operation, and you know, not a lot of pressure, not a lot of accountability from the Brazilian people. One because it's very difficult to take action against what is really in many cases illegal operations clearing the Amazon add Secondly, because you know protests is fraught with danger essentially, so what instead you see is that the supplier channel.

Did you see corporations taking action for their customers and their constituents on the opposite side of the world. An example here would be a group of supermarkets around the world.

It included you know, Audi and Astor and test Go and woar Wars from Australia pressuring their concern to the Brazilian government around a proposal that they say would lead to further deforestation, and they basically threatened to stop buying all products that were tied to the Brazilian agricultural supply chains, enormous impacts further upstream obviously if they were to do so, they're advocating basically on their behalf customers in Europe and

Australia and elsewhere, to say, our consumers won't stand for this, even if your consumers in Brazil havevent or can't take action. We've seen it from European banks decided to divest from meat producers or tied deforestation in Brazil and really distributed action on the other side of the world forcing some level of change in Brazil. So here This brings me to a point regarding who and specifically where are these

political consumers really prevalent. And this is going to vary geography to geography, probably for a variety of reasons, including culture and discretionary income. But where are we seeing high percentages of individuals within some of these surveys that you looked at that are willing and interested in engaging in being a political consumer. So one thing I've looked at here is to compare the willingness of people to pay

more for products that are good for environment. Again, they can plate environment and climate and their intention to actually buy more sustainable products, and what we see is a bit of a mismatched there so many countries, many affluent countries Germany, US, UK, Australia, consumers say they are willing to pay more for products they can afford it. They're willing to pay more for products that they see good for the environment. But it's much more vary when it

comes to intention, it's universally lower. Fewer people will intend to buy more sustainable products than are willing to say to pay more for them. In some cases that stuck. So in Australia, for example, half the population says they're willing to pay more, but only about a third intends to buy more. So they were the wealthy countries you're

talking about, But that's not always the class. Clearly, there's plenty of countries where consumers just don't have the income, the ability and the financial stability to make these to make altruistic choices whatsoever. And in others it really comes down to the ability to be an activist. And for example in India, which you could well be paid to the prior of the last cop given they aid the

discussions go on for the last two days. Climate activism is really not part of the social discourse, so potentially not even out of the political thinking and priorities and in addressing climate change. So if you there are certain supply chains and certain parts of the supply chain which are invariably going to be more responsive to in consumers like people like you and I than others. In what areas is the consumer voice a really important and critical

part of moving towards a decarbonized future? And what areas where really is going to come down to politics and the companies themselves looking at things differently, In consumers maybe don't have as much of an influence, and I think it is a second question into that personally, where should I spend my time? It's an awesome question. I'll like to think that consumers can do three things. They cannoither

buy something, change the product produces lower emissions. They can change their behavior and not necessarily need to buy anything. Or they can stop consuming and that will almost certainly lower emissions in a great way, and not the other two options. Failing that, you need the supply Chaine decarbonize that supplies consumers. And remember you know you could tie back two thirds or three quarters of emissions can be

tied back to household consumption. At the end of the day, we are generally producing something for someone who needs to produce something for household. So when you think about the sectors that are really reliant on consumer action, road transport or passenger transport is extremely reliant on consumer action. We are then he consumers to biolect vehicles and replace their I C s or to forego driving, or to move from vehicles into public transit, microbit mobility and pedestrian alternatives.

Without that, without consumers changing behavior or products, there will be no decobanization in road transport riding off bio fuels and other options that the supply chain could do. But when you think about something like aviation, consumers have no alternative. They can stop flying potentially if it's a shortcoll flight and there's alternatives available, but that's going to be a

fairly minority of people. Look in dense markets like where you're sitting in London, it's going to be nobody where I'm sitting in Australia. And so really that we're totally reliant on the airline supply chain, the aviation supply chain to build lighter aircra after, create lower emission, lower fuel consumption planes and invest in alternatives, invest in hydrogen or electric or whatever the alternatives might be. Because consumers won't

have that don't have that ability. And then you know, when across the power sector kind of you need both. Consumers need to be buying the electric appliances such that the decarbonized electricity system can provide them with clean power. If you don't get both of those things, you still have emissions stemming from heat from cooking, from from other oil gas and solid fuel us. So consumers are a

massive vector of change. They're needed. Really, the question here is around how do they engage with politicians, how to politicians engage with them support that transition. When you look at the emissions in your home, that the bulk are coming from, heat aviation is a big factor as well. So you need to decide whether there is a product substitution that will allow you to go about your lifestyle or whether you're willing to be inconvenienced or abstained from consumption.

And at the moment that comes down to an economic versus a lifestyle decision, but in the future doesn't necessarily have to be because gosh, I think all roads lead to heat in so many respects, both in the residential

and in the industry heat space. So hopefully my friend who is looking at that heat pump will help bring prices down in increased skilled labor to actually look at heat pumps to build a potentially more sustainable home environment for all of us in the future, uh and bring those costs down of that technology in the meantime, Thank you Hugh for keeping an eye on different consumer behaviors. We look forward to speaking with you again sometime soon

regarding what the surveys are telling us around consumer adoption. Thanks, I appreciate it. Today's episode of Switched On was edited by Rex Warner of gray Stoke Media and produced by Ava Marina Gonzalez Isla at b F. Bloomberg an A is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed, as investment advice, investment recommendations, or recommendation as to an

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