Faran Mahmood

Behavioural implications of policy instruments on triple bottom line business sustainability in an innovation-driven economy

This study aims to analyse how bounded rationality and bounded self-interest of producers and consumers can lead to various behavioural failures in achieving the overall sustainability goals. When a technological innovation is introduced, new policies are needed to address the issues such as health and safety, environmental impact, regulations, etc. as well as to remove barriers in the commercialisation and promotion of new public/private partnerships. In the absence of an effective policy, a new sustainable technology may meet a premature death due to lack of consumer acceptance; or may result in undesirable accompanying effects.

The Fast Moving Consumer Goods (FMCG) and retail industries are under immense pressure to become more sustainable; and according to a report (IME – Global Food, 2013) by the UK’s Institution of Mechanical Engineers, about 2 billion tonnes of the food produced worldwide is wasted. However, the recent initiative by many retail chains to use Radio Frequency Identification (RFID) based product tagging for the waste reduction in their supply-chains met a strong response from consumer forums. This work is built on the case study of Tesco PLC who attempted the RFID technology rollout; reflecting on how it failed in stakeholder engagement due to privacy, health and safety concerns; despite enormous benefits in terms of triple-bottom line business sustainability.

The work also explores how firms react emotionally to various government policies and how it affects the consumer behaviour patterns as well as the overall triple-bottom line business sustainability. By using various tools of behavioural economics, it is analysed that how consumers perceive the value of green products, when subsidised or taxed. The research findings are then translated into policy recommendations for government and legislators.