A global survey by management and consulting firm Bain & Company revealed that there are high levels of concern among consumers when it comes to sustainability.
Finance leaders must take note of this as this can dictate how operations and business will go in the near future, considering that there is now a growing urgency of sustainability topics amid global environmental concerns.
The study, which surveyed 23,000 consumers, found that 64% of people reported high levels of concern about sustainability. Most said their worries have intensified over the past two years and that their concern was first prompted by extreme weather.
Among the key findings of the Bain research include:
- Baby boomers are often just as concerned as Gen Z. Many companies have long viewed younger consumers as more focused on sustainability than their older counterparts, but the reality is not as clear-cut. For example, 72% of Gen Z consumers and 68% of boomers globally are very or extremely concerned about the environment, but in countries as diverse as India, France, and Japan, boomers are more concerned.
- Consumers are willing to pay a premium for sustainable products, 12% on average, but they are still priced too high. As concerns grow, consumers are looking to make environmentally sound choices and are willing to pay more for sustainable products. Yet, they often run into barriers. Consumers in fast growing markets, where Bain found environmental concerns to be highest—such as India, Indonesia, Brazil, and China—are willing to pay an even greater premium, between 15 and 20%.
- Consumer behavior can change more quickly than many companies anticipate, with external factors such as government regulation heavily influencing the market. China began offering financial incentives on electric vehicles in 2009; now 19% of Chinese consumers report driving an electric car, compared with 8% of consumers globally.
- There is a disconnect between what consumers want and what most companies sell. Worldwide, 48% of consumers consider how products are used when thinking about sustainability. These consumers are more concerned about how a product can be reused, its durability, and how it will minimise waste. In contrast, most companies sell sustainable goods based on factors such as how they are made, their natural ingredients, and the farming practices deployed. These factors cause many consumers to conflate “sustainable” with “premium.” One result of this disconnect: Nearly half of all developed-market consumers believe that living sustainably is too expensive. By comparison, roughly 35% of consumers in fast-growing markets believe this.
- Consumers struggle to identify sustainable products and don’t trust corporations to make them. In Bain’s survey, 50% of consumers said sustainability is one of their top four key purchase criteria when shopping. Yet they may be making decisions based on misconceptions. When asked to determine which of two given products generated higher carbon emissions, consumers were wrong or didn’t know about 75% of the time.
Consumers say they rely most on labels and certifications to identify sustainable products, yet most were unable to accurately describe the meaning behind common sustainability logos, such as organic production or Fairtrade. A lack of trust in corporations compounds the issue.
Bain found that only 28% of consumers trust large corporations to create genuinely sustainable products, compared to 45% who trust small, independent businesses.
