Why Viewing Sustainability Through a Consumer Lens May Help Boost the Bottom Line
For some companies, sustainability efforts may seem like a regulations-driven chore that only adds to the challenges and costs of doing business.
But for others, sustainability efforts are being redefined as a benefit for both the environment and the bottom line.
One reason for that?
The growing demand by consumers for brands that embrace sustainable practices.
As PowerFleet Chief Product Officer Elizabeth Elkins said in an interview for FreightWaves, “While governmental mandates continue to underpin initiatives, the movement toward sustainability has become top of mind for investors, customers and end consumers that benefit from the products that move across the supply chain.”
In the following, we’ll take a look at recent research that supports this trend, as well as one way you can help consumers gain confidence about your efforts: environmental disclosure, which CDP says is “now a business norm.”
Research: Many Consumers Prefer Sustainable Brands
Research indicating an increasing consumer preference for sustainable brands has been growing over the years—including that published recently by top research firms. The following provides a snapshot from several of these firms with key findings related to companies and corporations.
Shifting sands: Are consumers still embracing sustainability? This consumer survey conducted in March 2021 is a follow up to a similar survey conducted by Deloitte the year prior regarding “consumer attitudes to environmental and ethical sustainability.”
Findings revealed that:
“32% of consumers [are] highly engaged with adopting a more sustainable lifestyle”
“28% of consumers have stopped buying certain products due to ethical or environmental concerns”
Among members of Gen Z, “45% stopped purchasing certain brands because of ethical or sustainability concerns”
Many consumers “want brands to take the lead with 64% of consumers wanting brands to reduce packaging, 50% want information on how to recycle and 46% need clarity on sourcing of products”
As far as which sustainable practices consumers value most when it comes to brand efforts, “waste reduction, reducing carbon footprint, providing sustainable packaging, committing to ethical work practices, and respecting human rights,” topped the list.
When it comes to a willingness to pay more for products from brands with sustainable practices, “There is a 50/50 split between those willing to pay more or not for environmental and ethical brands.”
Economist Intelligence Unit (EIU)
An Eco-wakening: Measuring global awareness, engagement and action for nature is a May 2021 report published by the Economist Intelligence Unit (EIU) that was commissioned by the World Wide Fund for Nature (WWF®). According to a World Economic Forum (WEF) summary of the report:
“…support for sustainable business is growing in both developed and developing economies.”
“Many consumers believe brands bear as much responsibility for positive change as governments.”
“Momentum has been building for some time around brand purpose – a reason to exist beyond making money.”
The report “…shows a staggering 71% rise in online searches for sustainable goods globally over the past five years.”
Highlighted in the FreightWaves article mentioned previously, Forrester’s consumer analysis report published in January 2021 revealed that “empowered consumers” want to see transformation when it comes to sustainability.
According to a summary by Forrester Senior Analyst Anjali Lai, the report, Empowered Consumers Go Green: Empowerment Drives The Sustainability Transformation, revealed:
Increased awareness about the environment: “Our data reveals that a third of US online adults say they spend more time thinking about the climate than they did before the COVID-19 pandemic.”
Increased desire to take action: “In direct response to the events of 2020, 36% of US online adults are looking for ways to contribute to local communities, and 31% spend more time thinking about global challenges like poverty or hunger.”
“Highly-empowered” consumers want brands committed to sustainability: “68% of highly empowered consumers plan to step up their efforts to identify brands that reduce environmental impact, 61% seek out energy-efficient labels when making purchases, and 47% regularly buy organic products.”
The Role of Environmental Disclosure
Environmental disclosure plays an important role in letting consumers know about an organization’s sustainability efforts.
A central player in environmental disclosure is CDP, which describes itself as “a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Over the past 20 years we have created a system that has resulted in unparalleled engagement on environmental issues worldwide.”
On October 14th, CDP announced the release of its 2021 Disclosure numbers, which set record highs and included some findings specific to companies and corporations:
“Over 13,000 companies worth over 64% of global market capitalization, disclosed data through CDP on climate change, water security and deforestation in 2021, an increase of 37% since 2020”
“CDP reported increases in corporate disclosures across all three categories it currently covers: climate change, deforestation and water security.”
“The rise in corporate disclosures is a response to requests for information from 590 investors with over $110 trillion in assets, and over 200 major purchasing organizations with over $4 trillion in buying power…”
The following CDP video demonstrates the benefits of environmental disclosure and how it demonstrates a company’s commitment to sustainability.
In next week’s post, we’ll talk about what PwC refers to as the “ESG Revolution” and offer a few strategies from experts to help your company optimize sustainability efforts.