Pester Power

So. I’m in the middle of my first ever TYPHOON. How much fun is THIS?

I went downstairs yesterday morning on my way to work and there was this big sign in the lobby of the hotel warning guests that we were currently experiencing a Category One Typhoon. Excellent.

I was really looking forward to going out and seeing what a “Category One” looked like. I was expecting howling winds, driving rain, people getting blown over on the street, and if I was REALLY lucky, maybe I would even see a cow fly by like in that movie with Helen Hunt: Twister.

No such luck. Apparently a Category One Typhoon is the equivalent of “occasional showers”in Melbourne. Ripped off.

The typhoon did bring some other (apparent) advantages though. The rain continues to wash all of the pollution out of the sky, which makes it a bit easier to breathe – but this only deposits it on the streets and buildings where it eventually makes its way into the sewer system and straight out into the Hong Kong Harbour. There is no treatment of the groundwater, so it just washes straight into the sea. I am learning that it is not by coincidence that Hong Kong roughly translates to “Fragrant Harbour”.

I’ve been reading the local papers and keeping abreast of what is going on locally, but even though there is a fair amount of pressure on the Chinese Government to reduce pollution in the lead up to the Beijing Olympics, very little seems to be getting done to increase environmental awareness.

When I talk to my students in class about the need to be environmentally aware, I constantly get the reply that their companies are meeting the needs of their international partners (their customers). When really pushed though, they admit that they wouldn’t bother with environmental issues if their customers didn’t care about it. Too expensive.

When I talk to them about whether they think environmental protection (or harm minimisation) might be able to lead to competitive advantage, they all shake their heads and say no. The only thing that their customers care about is price.

I have had the same discussion with many of my classes here in Hong Kong. Most of my students are mature age – they have to be at least 26 to enrol in our course – and quite often I will have senior managers, managing directors and the like in the class. The answers are still the same. Price matters; the environment doesn’t.

Now, I’m the first to admit that I can do more for the environment. At home we do our bit, but there is more that can be done. I’ve often thought that I am too small to make a difference – but I have come to realise that it is with me that change needs to begin; that I am somewhat responsible for the terrible pollution in a country on the other side of the world.

You see, the real reason that the manufacturers don’t care enough about the environment is because their customers don’t care enough about the environment. I am not the immediate customer of these manufacturers – the wholesalers and retailers of the goods that I buy are. The retailers don’t really care that much, because in their thinking it is not their problem – they are not making all the pollution, the manufacturers are.

Economists (wielders of the Dark Arts!) like to use the concept of incentives to describe “agent behaviour”. Often the presence of an incentive can lead to different behaviour. So, I need to offer an incentive to the retailers to get them to change their behaviour. Hopefully, this will flow back up the chain to the wholesalers and eventually to the manufacturers.

Incentives can come in many forms. I could offer a price differential (I could pay more for environmentally sound products) but how can I truly know that the product I am buying is environmentally sound?

The economists would say that it is perfectly rational behaviour for a supplier (retailer) to promote goods that have minimal environmental benefits as being ‘good for the environment’ and then charging a price premium for them. The difference would be that I am paying higher prices for not much extra ‘benefit’. The difference to the retailer would be more profit for not much extra work. The retailer benefits, I suffer, and not much happens to stop pollution.

Another incentive that I could offer as a consumer is that I could choose not to buy from retailers who don’t stock environmentally sound goods and services. The problem with that is relatively speaking I don’t have much purchasing power, and your average retailer wouldn’t care if I didn’t shop there anyway. In fact, they probably wouldn’t notice at all.

“What if we all didn’t shop there?” I hear you ask.

Well, a couple of things might occur:

1. The retailer, noticing that his custom has dropped off, might offer price discounts on the goods and services. The idea of this is that when he drops the price, then more people will buy from him. You and I would be effectively replaced as consumers by people who don’t mind buying unfriendly products because the price is cheap. In fact, buy dropping the price the retailer might in fact get MORE customers – translating into a demand for more unfriendly products and inadvertently, we have made the problem worse, not better.

2. Assuming that the retailer DID get the message and switch to environmentally friendly goods and services, there is no guarantee that they would tell their suppliers WHY they switched. In order to protect business relationships that might be able to be rekindled in the future, there is no real incentive to explain to the supplier the truth behind the move. Chances are, the retailer will use some other non-offending excuse in order not to damage the relationship. Kind of like when you hear people break up and they say things like “It’s not you, it’s me” or some other form of bullshit. This is particularly a problem here in China and other Asian states where (business) relationships are everything.

So, what to do?

Well, there is another incentive that we can offer as consumers and potential consumers of goods and services. Pester power.

Email, write, call, fax, blog, and even sms the people who are in the chain between manufacturing and retailing of your favourite product or service. Ask them directly are your goods and services environmentally friendly? Can you prove it? What are you going to do about it in order to ensure that you continually improve on your record not just settle for the minimum requirements? Continue to pester. Don’t give up. Tell them that you are telling all your friends not to buy that particular good or service. Tell them that you are spreading the word that as a company they are neglecting their duty to the planet. Tell them whatever you have to in order to get a response.

The important bit is to do it all along the chain. Each part needs to be informed of the movement against them; each part needs to know that they have responsibilities. Each part needs to know that they are being watched and ultimately judged. You can’t rely on one link of the chain to pass on the message to the next.

The beauty of pester power is that it is virtually free. Also, it is targeted. Finally, it is easily repeated again, again and again.

It’s hard to think that we can make a difference as an individual. But, as individuals, we have considerable power if we just use it in the best manner. Leverage is our friend. Understanding how business operates and what their incentives are likely to be, also helps.

In Melbourne, we are lucky. The environment looks pretty clean. The skies are relatively free of pollution, our air is breathable and our waterways reasonably clear. It’s easy to forget that we are actually part of a much wider problem.

Lets do what we can.