Less Than 7% of Consumers Pay More for Sustainable Products and Services, But 40% Could be Convinced to Make Sustainable Choices, Says Report

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by KnowESG
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Corporate climate and sustainability commitments are increasing in number and scope, but increased consumer action is required to achieve collective sustainability goals.

According to a new report published by Boston Consulting Group (BCG), consumers care about climate and sustainability and want to help, yet only 20% believe they can make a difference. 

More importantly, 70% said they were sceptical of company sustainability promises and commitments. The report, titled Consumers Are the Key to Taking Green Mainstream, examines how to increase consumer adoption of sustainable products, services, and behaviours.

According to the report, which is based on a survey of 19,000 customers from the United States, Japan, Germany, France, Italy, China, India, and Brazil, while up to 80% of consumers are concerned about sustainability, just 1% to 7% have paid a premium for sustainable products. However, concentrating solely on these two extremes—consumers who pay a premium for sustainable products and services and those who express concern about sustainability—provides an inadequate picture of actual consumer behaviour.

Aparna Bharadwaj, a BCG managing director and partner and global head of BCG’s Center for Customer Insight, who co-authored the report, said: 

"It’s easy to interpret these signals as a lack of consumer readiness, but companies will never maximise the potential of sustainable products and services if they focus only on consumers who are willing to pay a premium. 

"There’s a significant number of ‘in-between’ consumers who are just on the threshold of embracing sustainable products and services. The key question is, ‘How do we encourage these consumers to act?’”

Some of the 14 product and service categories covered in the report are more advanced in terms of consumer sustainability, providing a considerable possibility for companies to move up.

For example, over 60% of consumers indicated they already practise sustainable behaviours in home care products, such as recycling products, bottles, and packaging (36%), using reusable cleaning cloths (35%), and purchasing refillable cleaning and home care products (29%). In the car, 39% of consumers reported adopting sustainable practices, such as avoiding driving or driving only when required (38%), or carpooling (14%).

Adoption of sustainable behaviour varies by market as well. Consumers in China (93%) are most concerned about sustainability in categories such as home care, vehicles, grocery retail, clothes, and skin care products, while consumers in Brazil (89%) are most concerned in areas such as home care, cars, and PCs and tablets. 

Italy has the highest level of concern among developed markets (87%), particularly in electricity suppliers, home care, luxury, and PCs and tablets.

BCG’s report identifies three imperatives for expanding the uptake of sustainable lifestyles:

Make claims locally relevant. Companies should speak the language of consumers rather than the language of their internal business teams, regulators, or investors. For example, packaging is an issue of particular concern for Japanese and American consumers, so they are more likely to favour products that are recyclable, reusable, or compostable.

Broaden the dialogue. Only 7% to 16% of consumers cited sustainability as one of their top three reasons to purchase. However, 20% to 43% could be persuaded to make sustainable choices if the products or services deliver on other related needs. Communicating a broader set of benefits for sustainable products, such as health or quality, could double or quadruple the number of consumers who purchase them.

Break the tradeoffs. Companies must understand why consumers hesitate to adopt sustainable products and services and then either innovate to remove real barriers or use communication to address perceived barriers. Price, for example, can be a real tradeoff for consumers. However, BCG’s research shows that consumers who do not buy sustainable products perceive a higher “green premium” than the actual premium that exists. Consumers who are on the fence about making sustainable purchases for cost reasons need to see clearer price communication to combat this misperception.

Lauren Taylor, a BCG managing director and partner and global leader of the firm’s customer-centric sustainability topic, who co-authored the report, said: 

"By understanding consumers’ core needs, and by removing real or perceived barriers through innovation and communication, companies can significantly increase sustainable outcomes. Making the attribute of sustainability an ‘and,’ not an ‘or,’ will be a win-win for everyone.”

Source: BCG

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