The Role of Consumerism in Shaping Economic Practices in Global Sustainability

Boxuan Xu

La Salle High School, Pasadena, United States

bartleyxubx@gmail.com

Abstract: The development of globalization has accelerated the pace of social life, but this lifestyle may promote the development of consumerism and challenge economic practices and sustainable development. This paper evaluates the impact of industry trends such as fast fashion and drop-shipping on the economic and environmental landscapes of developing countries and assess their influence on global sustainability, analyzes the impact of ESG metrics on promoting corporate profitability and social sustainability, and discusses how to implement ESG concepts in green production and green consumption, providing a possible solution to reduce the negative impact of consumerism on the environment and society.

Keywords:Consumerism;fast fashion; drop-shipping; ESG; sustainability.

1. Introduction

The urge to acquire more material possessions has surged, hence consumerism. According to Higgs, consumerism is linked to capitalism since consumers have an unquenchable thirst for more and more material things [1]. This concept received much attention in the US in the 1920s. Lage et al. suggest that consumerism has emerged as a daily part of life, which has been termed to enhance happiness among consumers as they meet their tastes and preferences, pleasure, and aesthetic reasons [2]. Panizzut et al. link mass production to consumerism, hence the exploitation of resources [3]. Its adverse outcomes are extreme temperatures, flooding, and pandemics. Human society is facing a fundamental paradox: on the one hand, consumerism, as the engine of economic growth, continues to promote global economic development and the improvement of living standards; On the other hand, the growing awareness of environmental protection is warning us that this model of development is overdrawing the vitality of the planet.

In the face of the conflict between consumerism and environmental awareness, we need to recognize that this is not an either/or choice, but a question of how to restructure the system. As economist Kate Raworth argues in “Donut Economics”, human development needs to find a balance between the ecological upper and lower social limits. This paper evaluates the impact of industry trends such as fast fashion and drop-shipping on the economic and environmental landscapes of developing countries and assess their influence on global sustainability. The contribution of ESG metrics is also a point of concern to illustrate how they can promote sustainability. This paper also discusses the impact of ESG metrics on promoting corporate profitability and social sustainability, providing a possible solution to reduce the negative impact of consumerism on the environment and society.

2. Impact of Industry Trends on the Economic and Environmental Landscapes of Developing Countries

Consumption trends in recent years, since the onset of COVID-19, have showcased increased demand for products that contribute to environmental destruction. Fast fashion and drop-shipping are leading drivers of lack of sustainability and increased consumerism.

2.1 Fast Fashion

The popularization of cheaper, trendy, and mass-produced clothing led to fast fashion’s emergence in the 1990s [4]. Increased market competition has seen many fashion companies engage in the mass production of fast fashion to attract more consumers. Leading fast fashion companies such as Zara, Shein, H&M, Forever 21, and Fashion Nova have adopted a production model focused on trendy and cheap clothing, which keeps consumers demanding more stylish clothes. Mass production hinders sustainability due to the exploitation of natural resources and the generation of greenhouse gases. Besides, they result in labor exploitation as their production is outsourced to developing countries. Developed countries such as the US and Germany are leading in the consumption of fast fashion, while China is a major producer of fast fashion with brands such as Shein [5].

The high fast fashion consumption in developed countries has contributed to another devastating scenario of second-hand clothes imported to developing countries.As shown in Figure 1, most second-hand clothing imports are made by developing countries. Wazir states that the US is the leading exporter of second-hand clothing to Africa and Asian countries. These exported second-hand clothing, which is majorly fast fashion, results in environmental degradation in developing countries, hence a decline in sustainability [6].

The production of these clothes also consumes significant resources, such as water, while generating massive heat. Fast fashion production contributes to vast amounts of waste disposed of by the environment at a higher rate. Since the production occurs in developing countries, environmental impact is also felt in these countries. The increased affordability of trendy fashion has fueled consumerism, which hinders environmental conservation and effective resource utilization [7].

Figure 1 Leading Second-Hand Cloth Importers

Data Source: US News & World Report

2.2 Drop-Shipping

Online-shopping also facilitates consumerism as it enhances efficiency in shopping and the delivery of products. Igini explores the environmental issues resulting from the emergence of drop-shipping, including increased carbon emissions due to increased delivery vehicles and over-packaging materials that end up in landfills. The increased convenience in online shopping and delivery has enhanced consumerism, resulting in mass production and affecting the environment. Free return policy for cheap products offered by e-commerce companies has been a major driver to increased consumerism [8].

Drop-shipping is a type of retail fulfillment that retailers don’t stock up. The drop-shipping model lets sellers list products on their website and fulfill orders directly through third-party suppliers, providing a low barrier to entry into the world of online retail. This model eliminates the need for warehousing and reduces upfront inventory costs, making it an attractive option for both new and existing businesses. However, as the direct selling industry has grown, so has its impact on the environment.

While drop-shipping offers a variety of benefits, it also comes with environmental concerns and is mainly reflected in the following aspects. One is the increase in the carbon footprint of commodities. Drop-shipping typically involves multiple shipments from different suppliers to the end consumer. Due to multiple shipping stages and a lack of consolidated shipping, this can lead to higher carbon emissions, increasing the overall carbon footprint of each product sold. Secondly, the increase in packaging waste brings environmental pressure. Many drop-shipping suppliers use too much packaging to ensure that items arrive in perfect condition. This may leads to landfill problems and environmental degradation. Thirdly, the problem of product returns magnifies the harm to the environment. The convenience of online shopping can lead to higher return rates. Returned products often need to be repackaged and re-shipped, with additional shipping and packaging waste further amplifying the environmental impact. Fourth, suppliers may produce too many goods to meet demand. If the item is unsellable, too much inventory can lead to waste, which can lead to environmental issues associated with unsold items.

2.3 Unsustainable Damage to the Environment and Developing Countries

Rapid industrialization, driven by fast fashion and direct selling, could be a double-edged sword for developing countries. In 2022, Vietnam’s textile and garment industry achieved an export turnover of US$44 billion and is further driving the country’s economic growth by attracting foreign direct investment. However, it is estimated that Vietnam’s textile industry generates 15 million kilograms of waste every year. In addition, Vietnam’s greenhouse gas emissions have been increasing rapidly. In 2024, the country’s coal imports surged by 31% to a record 44 million tonnes of coal, mainly to power its manufacturing sector. In addition, the textile industry alone generates around 2.5 billion cubic meters of wastewater every year, most of which is discharged into rivers without proper treatment. The development of global consumerism offers opportunities for economic development in developing countries, but the cost of such opportunities may be environmental damage and the weakening of sustainable development.

3. Influence of ESG Practices on Corporate Profitability and Sustainability Practices

3.1 Introduction to the Concept of ESG

The concept of ESG can be traced back to the second half of the 20th century, and it is generally believed to have originated from ethical investing, that is, refusing to invest in industries that are contrary to doctrinal beliefs due to religious beliefs and other reasons. The term ESG was first coined in the investment field, dating back to 2004 when the United Nations Global Compat and financial institutions jointly released a report, calling on financial institutions to consider ESG-related factors in their investment decisions, which also inspired corporate ESG governance practices. ESG governance emphasizes the company’s environmental protection, social responsibility, and internal and external governance, reflecting the company’s non-financial risks and values, that is, on the basis of traditional corporate governance, more emphasis is placed on the comprehensive consideration of environmental, social and governance, as well as interaction and responsibility with stakeholders, so as to promote the sustainable development of the company.

In terms of theoretical basis, ESG research mainly focuses on sustainable development theory and stakeholder theory. The theory of sustainable development emphasizes the coordinated development of economy, environment and society, and advocates that enterprises should assume the responsibility of environmental protection and social welfare, while the stakeholder theory believes that the operation of enterprises should not only focus on the interests of shareholders, but also widely consider the needs and expectations of other stakeholders. These two theories provide a solid theoretical support for the study of ESG, and guide scholars to explore the relationship between ESG performance and corporate performance and financing activities. Although numerous studies have shown that there is a certain positive correlation between good ESG performance and corporate performance, it is believed that high levels of ESG practices can improve a company’s social reputation and financial performance.

3.2 The Influence of ESG Practices

Increased expectations by consumers, policymakers and other stakeholders for corporates to engage in sustainable practices and report investment in ESG can counter unsustainable practices. Companies involved in production activities that destroy the environment have benefitted from engaging in and reporting their ESG metrics [9]. ESG initiatives enhance corporate image, hence attracting more consumers. A study also finds a positive relationship between ESG and corporate profitability [10]. As corporates with unsustainable operations invest in ESG initiatives in pursuit of profitability, they contribute to sustainability practices. Most academic studies have shown that ESG has a long-term positive impact on corporate value, and the implementation of ESG management system can more effectively strengthen the sustainable business goals and stakeholder needs of enterprises, and enhance the intrinsic value of enterprises. At the same time, good ESG governance can also improve the ability of enterprises to resist risks and promote the reduction of corporate financing costs.

Consumerism is driving economic progress, but it is deepening environmental and social inequalities. ESG metrics provide an ethical headline that urges companies to reconcile profits with ethical accountability. By prioritizing sustainability and ethical practices, companies can promote sustainable growth, mitigate environmental damage, and promote social equity. This shift is critical to building a sustainable global economy, ensuring that economic development does not come at the expense of workers’ rights or environmental health. Initiatives such as environmental, social and governance metrics are beginning to influence corporate sustainability practices. Consumers and investors are increasingly demanding greater accountability, with 76% of consumers preferring companies that are committed to ESG principles. ESG practices can also reduce operational costs. ESG metrics are proving to be a determinant of success, and companies must align with sustainability principles to maintain profitability and sustainable development.

The rise of ESG concepts has brought new development opportunities to enterprises. On the one hand, practicing ESG concepts can help companies enhance their brand image and attract more investors and consumers. On the other hand, ESG practices can promote the transformation and upgrading of enterprises, improve the efficiency of resource utilization, reduce operational risks, and achieve sustainable development. However, ESG practices also face a number of challenges. For example, ESG information disclosure standards are not uniform, making it difficult for companies to accurately measure and disclose ESG performance. The concept of ESG investment has not yet been popularized, and investors' awareness and acceptance of ESG products need to be improved. There is a shortage of ESG professionals, and companies lack relevant experience and capabilities.

4. How to Implement ESG Concepts in Production and Consumption

4.1 Application of ESG in Green Production

4.1.1 Environment (E)

Enterprises need to increase R&D investment in green technologies such as clean energy, energy-saving technologies, and pollution control technologies, replacing traditional fossil energy with renewable energy such as solar and wind energy, and using technologies such as big data and the Internet of Things to optimize production processes and achieve precise emission reduction; Establish a circular economy model, recycle and reuse waste in the production process, and promote the efficient use of resources; Strengthen supply chain management, conduct ESG audits of suppliers, select suppliers with good environmental performance, and promote suppliers to adopt environmentally friendly materials and production processes; Establish a green supply chain, and work with suppliers to carry out activities such as energy conservation, emission reduction, and resource recycling.

4.1.2 Society(S)

Firstly, enterprises need to strengthen the care for employees, pay attention to the health, safety and welfare of employees, and provide a good working environment, reasonable remuneration and career development opportunities. Carry out staff training and skill improvement activities to improve the overall quality and work ability of employees. Secondly, actively participates in community building and public welfare activities, and supports community education, medical care, culture and other undertakings. Thirdly, attach importance to the protection of consumer rights and interests. Ensure product quality and safety, provide accurate product information and after-sales service, and pay attention to the health and safety of consumers.

4.1.3 Governance (G)

Firstly, establish an ESG governance system, such as establishing an ESG committee or a sustainable development committee to be responsible for formulating ESG strategies, goals and policies, and supervising and guiding the implementation of ESG work. Improve the corporate governance structure and improve the scientific and transparent decision-making. Secondly, strengthen information disclosure, prepare and publish annual ESG reports in accordance with internationally accepted ESG reporting standards to comprehensively and systematically disclose the company’s environmental, social and governance practices, performance and goals. Thirdly, identify and assess the environmental, social and governance risks faced by enterprises, formulate corresponding risk response strategies to reduce the probability and impact of risks.

4.2 Application of ESG in Green Consumption

4.2.1 Environment (E)

Firstly, cultivate consumers’ awareness of green consumption. Through publicity and education, public welfare activities and other means, improve consumers’ awareness of environmental protection and green consumption, and guide consumers to choose environmentally friendly, energy-saving, low-carbon products and services. Secondly, actively promote green products and services. Enterprises should actively develop and promote green products and services, such as new energy vehicles, energy-saving home appliances, environmentally friendly building materials, etc. Provide convenient conditions for green consumption, such as setting up green product counters, providing preferential policies for green consumption, etc. Thirdly, encourage and guide green consumption behaviors. Encourage consumers to reduce waste and conserve resources and participate in environmental protection activities.

4.2.2 Society(S)

Firstly, encourage consumers to pay attention to the performance of corporate social responsibility and choose the products and services of enterprises that actively fulfill their social responsibilities and contribute to society and the environment. Support public welfare undertakings, such as purchasing products with a public welfare nature, or participating in public welfare activities of enterprises. Secondly, consumers should enhance their awareness of self-protection and understand their consumer rights and interests, such as product quality, after-sales service, personal information protection, etc. Thirdly, advocate a healthy, civilized and rational consumer culture, and oppose excessive consumption, comparative consumption and other bad consumption behaviors. Encourage consumers to establish correct consumption values, pay attention to the quality and use value of products, rather than blindly pursuing brands and prices.

4.2.3 Governance (G)

Consumers can participate in the governance of the enterprise, supervise the business behavior of the enterprise, and put forward reasonable suggestions and opinions through the status of shareholders, consumer associations, etc. Pay attention to the ESG performance of enterprises, and criticize and supervise companies that perform poorly. Consumers can also join forces to push the industry to develop stricter ESG standards and norms to promote the sustainable development of the industry. Consumers should also actively participate in consumer monitoring and evaluate and give feedback on the ESG performance of enterprises. Through social media, consumer evaluation platforms and other channels, share their own consumption experience and views on the company, and influence other consumers’ purchase decisions.

5. Summary 

In recent years, with the growing consumerism, the contradiction between overconsumption and environmental protection has become increasingly acute. This paper evaluates the impact of consumerism on sustainability and industry trends such as fast fashion and drop-shipping to assess their influence on sustainability, discusses the impact of ESG metrics on promoting corporate profitability and social sustainability, providing a possible solution to reduce the negative impact of consumerism on the environment and society. Investing in ESG projects is a recommended strategy that can help promote sustainability and mitigate the negative environmental and social impacts of consumerism. All stakeholders should actively participate in green production and consumption, and actively promote global sustainable development.

References

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