Environmentally friendly: Does doing good come at a high cost?
Disposable, single use coffee cups are the symbol of the UK’s coffee addiction. But these cups are also totems for wasteful, single use plastic products. And one business has had enough.
The stats are horrific. According to the Environmental Audit Committee: the UK throws away 2.5bn disposable coffee cups annually, less than one percent of coffee cups are recycled and half a million cups are littered every day.
It’s why Boston Tea Party (BTP), a small chain of coffee houses headquartered in Bristol, have banned single use cups. Since the start of June, takeaway customers have to bring their own cup, or ‘borrow’ a cup (i.e. pay a deposit, like the beer cups at a festival).
The risks are certainly there, admits BTP’s finance director Shelley Wadey. It could lead to a decrease in demand. If consumers don’t want to bring their own cups, there’s sure to be a competitor that’ll gladly offer them the convenience of a disposable cup.
“Modelling the risk is incredibly hard,” said Wadey. “We don’t know how many customers are going to along with us. But we’re hoping to create a movement with this.
“We hope that this is the way forward but it’s a leap of faith. I don’t have the stats to say how many more customers might patronise us because of the stand we’ve taken. So it’s pretty much impossible to accurately model.”
Worst case scenario, according to Wadey, is a 5% dip in revenue. That’s around a million pounds. “We’ve put our neck on the line,” Wadey said. “Customers want to do the right thing - but they’re constantly issued with a choice. And they choose single use plastic because it’s easy for them. But once the choice is taken away, it’s easier to make a good decision.”
It’s an attitude strikingly reminiscent of Richard Thaler’s nudge theory. Thaler’s Nobel prize winning work argues for better ‘choice architecture’ when it comes to public policy. Small changes or ‘nudges’ can help people make healthier choices.
If Wadey’s hunch is correct, and BTP’s nudge works, she expects minimal effect on the bottom line. Another consideration is how the environmental stand opens up new opportunities.
Wadey points to one of Boston Tea Party’s own suppliers, Frank Water, as an example. Frank used to supply its water in plastic and glass bottles before halting its use of plastic. Overnight, it lost 35% of it’s business.
But, interestingly, that loss has evened in the year since the decision. A spokesperson for Frank Water told AccountingWEB the company had experienced a 10% decline in sales. It’s a loss, but far less devastating than it could have been.
The loss was softened by the new business Frank picked up as a result of its choice. After Boston Tea Party’s founder heard about Frank Water’s decision, for instance, the company gave the water supplier its business.
Wadey is hopeful that BTP will experience a similar halo effect. “Our brand benefits from these choices. More people have heard of BTP than before our decision. People are now aware of our ethics. And those benefits are hard to measure.” The intimidating part is the upfront costs.
“Often, not always, it’s slightly more expensive,” said Wadey. “We could make more profits - but we have families and we want futures for our families. The risks are great but there’s no other choice we could make.”
It can be onerous and cost pressure will increase. But environmental policy can actually create savings when belt tightening is needed. As Michael Wilks, the finance manager at a startup called Winnow Solutions, explained to AccountingWEB, “There are a number of ways to cut costs ethically.
“Just looking around my desk I can see that most of our furniture is second-hand and reconditioned – cheap and ethical while being exactly as good as something expensive and unethical. Energy efficiency is another example – our Plumen bulbs give the same effect as incandescent bulbs but with a fraction of the electricity usage.”
A heroic stand like Boston Tea Party’s isn’t necessarily required, Wadey agrees. “Often there’s a win-win: you can do a good thing and get a cost saving,” she said. But this time, the financial benefit isn’t clear and “sometimes you have take it on the chin”.
“With this decision, we felt we have to do this. We can’t carry on giving these single use items into the environment anymore.”