Taking care of the planet, buying food at your local corner shop... Supporting social and environmental causes currently of most concern has found a powerful ally in the conscious economy. Here’s an explanation of the meaning of this term, which is becoming more and more popular.

The conscious economy is a concept that is gaining ground in the lives of a growing number of consumers. More than a rigid way of earning money and managing our finances, it refers to the relationship we have with our money and with the people with whom we interact in money transactions. To understand this definition, let’s see an example.

Julio is an experienced telecommunications professional who, for his holiday, decided to travel to northern Europe and visit one of the sights he most wanted to see: the Arctic glaciers. The experience made an impression on him, as he was able to see the devastating effects of climate change on the planet and to become aware of the urgent need for all of us to respond to it. He also had the chance to check out and enjoy the small local stores that bring life to the villages he visited.

All of this made him aware of the “conscious economy” and taught him to change small aspects of his routine so that it was more in tune with his philosophy of life and values. Now he shops more at a small market a couple of blocks from his home as he has discovered that by not shopping in bulk, fewer things he buys pass their sell-by date. And more importantly, he’s got to know Guillermo, a fishmonger who, since he opened his store more than two decades ago, works with a big smile on his face every day and teaches his daughter María all the secrets of the trade.

As a result, Julio bears in mind that, while money is a part of work, there are other fundamental aspects, such as well-being, trust and respect that are just as important as the wage paid by a company. Therefore, he has changed the way in which he manages his team, by aiming for wider participation and a sense of belonging.

Another aspect that he has changed since his trip to northern Europe is how much he spends on particular dates in the year such as Black Friday. Before, when he was driven by a present bias and the appeal of bargain sale prices, he would buy products that he had not planned to purchase (and then would not use), such as items of clothing or gadgets. Instead, he now prefers to avoid unnecessary purchases and to choose products and services whose processes and values mirror his own: carbon footprint reduction, recycling, etc. 

What trends are involved in the conscious economy?

Although, as explained above, the concept of the conscious economy has a very wide meaning, it involves a set of trends that are generating major changes in the consumption model for many people. Let’s have a look at the most significant ones:

  • Collaborative economy: this is an exchange model that encourages the reuse of products, e.g. through second-hand platforms, and service sharing, such as transport for making a particular journey. One of its benefits is to reduce purchasing costs.
    If you want to learn more about the collaborative economy, you can read this article (in Spanish) in Tu Futuro Próximo, Santander Consumer Spain’s blog.
  • Circular economy: this is a form of production and consumption whereby people share, repair, recycle and upcycle products, to extend their useful life. The main benefits include reducing the exploitation of raw materials and scarce resources such as water – according to the United Nations, 2.2 billion people lack access to safely managed drinking water services.
  • Responsible consumption: this involves people’s commitment to use goods and services in such a way that they cover their needs while respecting society and the surrounding environment.
  • Bioeconomy: this is a term that emerged to describe the way in which biological resources and knowledge about them are managed to develop goods and services in various sectors. Biomass is central to this. It refers to all organic matter, such as wood, used to obtain renewable energy. The goal of this responsible vision, as in the other cases, is to contribute to a sustainable economy.

What do we mean by “sustainable”?

There are two types of sustainability in our day-to-day lives. Sustainable procedures cover the social and economic needs (both present and future) of the population. This involves society, the environment and the economy.

Then, sustainable development focuses on preserving natural resources with the aim of caring for the environment so that it may be enjoyed by current and future generations. It therefore centres on prioritising environmental awareness and concern over other cultural and social criteria.

Would you like some tips on how to be a smart consumer? You can find them in this article (in Spanish) in Finanzas para Mortales (Finance for Mortals). 

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