Many businesses are attempting to operate more sustainably. Driven in part by national and international legislation, NGOs and the visible effects of environmental pollution, sustainability initiatives are becoming more widespread.
More Companies Begin to Explore Sustainable Initiatives
Although becoming a truly sustainable company is not easy, the progress and effort made so far is significant as companies explore adding more sustainable products to their portfolio. According to the Dutch bank ING around 10,000 companies in 161 countries have already signed up to the United Nations Global Compact to align strategies and operations with universal principles on human rights, labour, environment, and shift from traditional business models to more sustainable ones.
Driven by Consumer Demand?
In survey after survey consumers have stated they are willing to pay a premium for sustainably produced products.
A new study carried out by IBM in collaboration with the National Retail Federation in 2020, reveals that at a global scale nearly eight in 10 consumers surveyed say they value sustainability and that seven in 10 would pay, on average, 35% more for eco-friendly brands. Similarly, a research conducted by CGS in 2019, states that more than two-thirds of Americans say that consider sustainability when making a purchase and are willing to pay more for sustainable products.
Actions Speak Louder Than Words
Whatever their intention, consumers’ purchasing decisions tell a different story. A survey recently conducted by GlobalData in England, indicates that British consumers are showing a preference for the least sustainable brands, which in some cases have seen sales grow far beyond their more sustainable rivals.
The United States is also seeing a similar trend. According to a study carried out by CivicScience in 2019, the percentage of Americans who care about a company’s stance on social issues and overall kindness is trending down. The study shows that the number of respondents between 18-54 years old – when asked if they care deeply about a company’s social behaviour – went from more likely to say “very important” to more likely to say “somewhat important” over the last two years.
Today’s consumers often choose to buy more for less, disregarding the negative social and environmental impacts that this causes. For example, the fast-fashion industry – which continued to grow in 2019 – has been heavily criticized for its poor working conditions and environmental impact, especially in developing countries.
Is Sustainability out of Reach for Ordinary Consumers?
Consumers report a desire to buy sustainable products, but their purchasing decisions do not always reflect that desire. In a survey carried out by Harvard Business Review in 2019, 65% said they want to buy purpose-driven brands that advocate for sustainability, yet only about 26% actually do so. The common excuse for such a behaviour is that sustainable products are too expensive.
From Niche to Mainstream
However, this seems to be changing recently, as brands are introducing more sustainable products into the market, which should result in a decrease in price of these products.
For instance, in 2016 Adidas launched 50 pairs of shoes that were made of recycled plastic from the ocean. Due to the limited number of pairs being available, consumers had the option to bid for the shoes, driving the price up and making them unaffordable for the average consumer. However, three years later the brand re-launched 11 million pairs of environmentally friendly shoes that were affordable and made available to the general public.
According to Trend Watching, as eco-alternatives become more widespread and affordable, there will be no real reason for consumers not to choose them.
What Companies Can Do to Encourage Sustainability
While companies are implementing sustainability initiatives into their business strategy, for some consumers groups there are cost-barriers to choosing sustainable products. There is a clear need for companies to find ways to make sustainable products available at a variety of price points.
According to a survey carried out by the Conference Board in collaboration with Nielsen in 2020, companies who wish to simultaneously become sustainability leaders and encourage consumers to fully embrace sustainably produced products will have to:
- Innovate around sustainability in order to introduce new additional benefits that consumers value
- Consider various cost-efficient strategies and collaborate with the industry’s most important pioneering sustainable brands to decrease price
- Effectively communicate the benefits of choosing sustainably produced goods by providing concrete examples to consumers