Young consumers and a sustainable future
Credit Suisse Group AG
Today, the Credit Suisse Research Institute (CSRI) released a thorough study that examines the significance of sustainability for young consumers, their propensity to direct their consumer spending toward environmentally friendly goods and services, and the spending categories that are most likely to be affected.
The report looks at responses of 10,000 people across ten countries aged between 16 and 40 years. It examines the need to address climate change from the ultimate driver of all emissions: the consumer, assessing how environmentally aware young consumers are, and if they are willing to lead a more sustainable lifestyle as a result. Based on estimates, this group makes up 48% of global consumer expenditure today, which could reach 69% by 2040.
Eugène Klerk, Head of Global ESG & Thematic Research at Credit Suisse, commented:
“It has long been known that the younger generation has taken climate considerations far more seriously than generations before, understanding and championing the path forward for change. With this survey, we were able to delve into the different facets of sustainability that particularly interest young consumers and retrieve valuable insights from 10 key markets. Interestingly, we find that Millennials lead their Gen Z cohorts in terms of allegiance to the sustainable agenda and somewhat surprisingly, we find emerging consumers appear to me more environmentally engaged overall than those in more developed markets. Considering these young people will soon become the highest spending consumers over the coming decades, it is important we understand their values and consumption preferences.”
Emerging Consumers lead on sustainability- One of the key conclusions from the analysis is that engagement around the topic of sustainability is markedly higher for Generation Z and Millennial consumers in emerging economies than for those living in developed countries. The share of consumers that is environmentally conscious, accepts that tighter regulation might be needed, is willing to pay more for sustainable products and that is willing to switch consumption to more sustainable products is highest in Mexico, India and China. The opposite appears true for those living in France, Germany and the US.
Environmental concern is high- The survey readings point to a high level of anxiety among younger consumers in relation to sustainability: 65%–90% of consumers in all ten countries are concerned or very concerned about the environment. However, conviction in a more sustainable future appears low as less than 30% believe that long-term climate change targets are likely to be met. Nevertheless, around 75% of younger consumers with environmental concerns aim to live sustainably going forward, while 25% will try to convince family and friends to do the same.
Education is key in order to achieve a sustainable society- The survey strongly supports the argument that creating a more sustainable world requires greater focus on educating consumers on the environmental intensity of consumer products and services. The results show a consistent positive correlation between a consumer’s engagement with sustainability and the level of education achieved. Some 60% of surveyed consumers highlight that more focus on sustainability in education is needed in order to increase sustainability.
Young consumers show a strong willingness to increase spending on sustainable products such as solar power, home insulation and electric vehicles. In addition to personal responsibility, young consumers feel a need for banning and taxation of unsustainable products, as well as greater education and stricter governance and reporting requirements for corporates. Skepticism on corporate disclosures and how they report on sustainability remains high.
Central role for food consumption and production- Young consumers show a strong desire to switch to a more sustainable diet, particularly focused on cutting consumption of fast food and meat. The growth outlook for alternative food looks solid, with 66% of consumers surveyed intending to increase the purchase of plant-based meat and dairy products. In addition, almost 40% of respondents with concerns about the environment already want to try cultivated meat.
Decline of “fast fashion”- The past decade has seen the rise of “fast fashion,” where clothes are cheaper and disposed of faster, with serious repercussions for the environment and climate. The findings show that over 40% of the consumers believe the fashion industry is unsustainable with, on a net basis, a greater number of respondents who expect to decrease their consumption of fast fashion and luxury brands.
The survey results suggest a rapid shift in consumer preference in travel and transport choices in the coming years. It found 63% of all respondents expect to own electric/hybrid vehicles, more than three times the 19% who currently own electric/hybrid vehicles. This preference is even greater among respondents from emerging countries, consumers with a level of education of bachelor degree or above, and consumers in the 25–30 age group. In contrast, consumer preference with regards to flying may be slower to change.
Investment in energy-saving technologies hampered by lack of education- Similar to trends in other sectors, young consumers in emerging countries are more likely than those in developed countries to invest in energy-saving technologies for the household. Lack of education is one of the key barriers to adopting energy-saving technologies, particularly heat pumps. In addition, respondents said they were more likely to make such investments if they can reduce monthly energy bills or better understand the benefit to the environment.
Source: Credit Suisse