CHAPTER 1: INTRODUCTION
1.1 R ESEARCH M OTIVATION
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Chapter 1: Introduction
Research Motivation and Purpose
1.1 Research Motivation
Global warming has become clearly the greatest threat that humans are faced with. Numerous mechanisms have attempted to alleviate the worsening situation, including the development of trade mechanism, system and operation improvement and other new green solutions. The efforts mostly come from governments and businesses; however, the greatest driver of economy is the consumers.
How do consumers play their roles in a world of changing climate and economy? As major constituents of the society, consumers' voice is what manoeuvres businesses. Through what kind of mechanism can the society engage consumers with the entire value chain and contribute to sustainable development? Businesses interact with consumers through selling their products and it is through this interaction, businesses hear consumers. Therefore, the kind of products businesses offer and the kind of image that businesses project is key determinants to a business's success.
With the elevating awareness of climate change, consumers are taking more considerations into their purchase decision. Other than price and quality, the new factor influencing consumers' choice is green-ness. Therefore, in addition to the pursuit of high quality and low cost, the new goal for businesses is to achieve the former two goals sustainably. Both quality and cost can be reflected by the product's physical features, such as competitive price, delicate packaging, advanced specifications, however, there is barely any way to reflect a business's performance in green-ness.
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Hence, a communication tool must be developed in order to let businesses show their commitment in sustainable development. Carbon footprint label is the tool that consumers can see and evaluate when making purchase decisions and is what company uses to demonstrate its green-ness. Carbon footprint labelling is the practice of putting emission related information onto products' label, informing consumers of the total amount of carbon dioxide that will be emitted at the end of the entire life cycle of the product. Product life cycle is the new concept moving beyond emission associated with production, but further includes emission associated with material acquisition, post-production and post-consumption.
Material acquisition stage includes the process and resources needed to produce the raw material, for example, electricity and fertilizer. Fertilizer is a CO2 intensive input and so is electricity. Post-production emission happens during consumption, and disposal. Disposal emission occurs when product gets thrown away, and needs to be processed either into the recycling stream or the elimination stage through incineration which further produces more CO2. Product life cycle concept takes into account of all the emission throughout the product's entire value chain to look at carbon emission and sustainability from a holistic point of view. By looking at carbon emission from this perspective, businesses can get new inspirations on how to improve product design and move towards sustainability.
Therefore, carbon footprint label is the communication tool allowing businesses to demonstrate its competitive edge, consumers to make wiser choices and businesses to continue to improve on their products and services to better meet the demands of their consumers. As businesses begin to implement carbon footprint label onto their products, others who have not started the practice will lose out the battle eventually. This thesis hopes to serve as a reference for businesses wanting to initiate
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the carbon footprint labelling practice as this global trend becomes a standard. This paper differs from environmental related researches in the way that this paper looks at carbon footprint labelling from a strategic approach rather than a technical approach.
The technical approach examines the measurement of carbon emission at different stages of the product's life cycle. This paper does not discuss how to measure carbon emission but discusses the considerations that businesses take at different stage of the implementing process from a strategic perspective and how carbon footprint labelling is done world-wide. Starting from the initial driving force of the carbon foot printing project, this paper investigates the various factors motivating companies to implement the practice, then the project design, execution steps, complementary marketing strategy development, performance evaluation and reinvention and improvement of products.
Two companies of different industry are investigated to provide insight and comparison of the considerations and steps taken during the implementation of carbon footprint labelling scheme. Acer and Taisun have been selected as the subjects.
These two companies differ in industry and business model, products vary in complexity, value chain varies in composition, companies play different roles and as a result different approach and considerations. Acer, the world's number one supplier of PC, has a value chain mostly composed of suppliers attributed to its OEM business model. The manufacturing and resourcing areas of Acer are outsourced to different suppliers and partners. As a result, Acer plays a consultative and mentoring role in the carbon footprint assessment process. Furthermore, because of the complexity of the products, the carbon footprint assessment will be more complex than that of a bottle of water, as in the case of Taisun. Another difference comes from the high-tech nature of electronic goods where rapid technology advancement affects product
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performance and consumer preference to a high extent; therefore, product life time is shorter than other consumer goods. Tai sun, a major player in the food and drinks industry, has recently released a series of environmental friendly products, most acknowledged is the popular Twist water. As a maker of food and drinks itself, Taisun is directly involved in the carbon footprint assessment and labelling process.
Because of the simplicity of the product, the product life time will be longer than that of electronic goods. These product and business model difference results in different approach to implement carbon footprint labelling scheme.