Sustainability isn't a consumer need - it's a fundamental business basic
As some countries around the world are slowly finding a way out of the Covid-19 crisis – although still very much a devastating event in many regions – we hear a sigh of relief from governments, businesses, and consumers. Finally, we can go back to doing things we used to love - going out with friends, shopping, travelling (well not yet but soon we hope) and making the economy tick. The notion that prevailed in the early days of the pandemic, that people will have changed forever and will now focus on living more “authentically”, is fading fast: crowds of shoppers overloaded with bags in city centres across the UK when stores reopened on April 12th was a sign that we may return to old patterns of consumption quicker than expected. Of course, this is good news from an economic standpoint: the economy needs to restart, and money needs to be spent… BUT, we believe aspects of this may be short-lived.
The pandemic has detracted from a much bigger and significantly more serious threat to our way of life. Climate change has not gone away... in fact it has accelerated during the last 12 months and the fact that it took a complete shutdown of the global economy to make a small, temporary dent in carbon emissions illustrates the extent of the challenge we collectively face. And yet, the permanent pursuit of short-term profit is still prevalent in the corporate world, as the demise of Emmanuel Faber at Danone shows. The time to act is now and businesses have a responsibility to change: for the health of the planet of course but, more pragmatically, for their own long-term survival.
Companies that understand that sustainability and social responsibility are not communication levers to hide spurious practices and bamboozle consumers but rather a fundamental way of operating are those that will succeed in the long term – sustainability needs its seat at board level, not in the marketing or innovation team! Undoubtedly, there is a tension between delivering short-term profit and investing for the long term and it will take courage and strong beliefs to change the equation and put Planet and People before Profit.
We have been lucky to work with several companies which have sustainability and social responsibility at their core, and which have been ready to take a leap of faith and invest for the long term – with them, we have explored what consumers expect, how ready they are to change and what it will take for that change to happen. The categories we have covered are varied: travel, food, drink, fashion, etc... and we hear the same thing over and over.
So, what have we heard?
Fundamentally, the tables have turned; consumers now have the power to force change and are beginning to use it. While they increasingly accept they will need to change the way they consume, they expect a concerted effort between themselves, institutions and businesses.
5 key themes are emerging:
Consumers do not have a need called “sustainability”: choosing a product that has been manufactured sustainably sits at a higher order of expectation than feeling refreshed, looking cool, sharing a good time with people, etc. Consumers do not have a need for sustainability, but sustainability is a fundamental consumer expectation.
Consumers are ready: over the last few years, concerns about the environment have grown and reached the masses – caring about the environment is not a hippy thing anymore. A recent multi-country project revealed that only a minority of consumers in Europe are true eco-rejectors, representing less than a fifth of the European population. Furthermore, the next generation of consumers (those turning 20 today) is the first to grow up observing the tangible everyday impact of climate change, creating a whole new set of expectations in relation to the companies they buy from. They might not yet be able to let their money do the talking, but they will.
Most consumers are confused... and cynical: a minority, the eco-actives (approximately 25% of the European population), is fully informed and adapts its behaviour accordingly: buying less, buying better and fact-checking claims (importantly, they have more money so punch above their weight in value). However, the majority knows it needs to act but does not know how, and constant ‘greenwashing’ is adding to their confusion (2 thirds of consumers say that companies exaggerate their green credentials and half think that sustainable claims are just a way to make consumers spend more). While this confusion might have led to resignation a few years back, it is now generating a loss of trust in established brands with consumers actively seeking alternatives and reassurance.
Consumers expect businesses (and institutions) to show leadership: it is not enough anymore for brands to offer a “sustainable” range and leave it to consumers to choose it (often at an unaffordable premium) or to simply tell them they should put their plastic bottles in recycling bins (like a recent campaign by a leading beverage company, deflecting responsibility onto the consumer rather than accepting any responsibility to offer alternatives). Consumers increasingly believe brands have a duty to adopt sustainable modes of production and to offer tangible solutions (more than 8 in 10 consumers in Europe say that companies must be environmentally friendly and that companies have a responsibility to take care of the planet and its people).
Consumers are ready to pay more: invariably, we have seen that consumers accept that more virtuous products come at a (small) additional cost and therefore they are ready to accept a (small) premium – most typically around 5 to 10% - as long as the claims are fact-checkable, and the products deliver against their fundamental needs.
So, what should businesses do?
Changing towards more sustainable practices is a leap of faith for many businesses because the returns might not be immediate. Putting profit behind planet and people is not yet part of the corporate way of thinking – it takes courage, vision and means bringing investors and stakeholders on the journey. Even if short-term returns are lacking, the key is to consider the cost of inaction: beyond a moral duty to change and adopt more sustainable approaches to doing business, if you do not act, others (maybe smaller, more nimble) brands will, relegating those who refuse to change to the status of dinosaurs, and consumers will eventually find and favour these alternatives.
Some key principles should underpin the journey towards sustainability:
Be honest and transparent: be clear and open about the journey you are on, where you are starting from and where you are heading. Consumers are wary of empty and vague promises and are ready to hear you are not perfect... but working to be. Claiming to be fully virtuous opens you to scrutiny on other areas you may fall short on.
Be consistent: being sustainable is not a one-off initiative – it should permeate the entire workings of your business. If inconsistencies are found out, it can undermine or even negate the investment you have made.
Be accountable: do not claim to be something you are not, and make sure all sustainable claims are clearly laid out, independently verifiable and measurable. The time for smoke and mirrors is over.
Be bold and ambitious: prioritise the core issues of your categories and size your efforts – talk about a timeframe consumers can relate to (i.e. next year rather than by 2030 or even better “we’re already there and we’re onto the next thing already”). Pre-empt rather than react when you’re found out.
Keep it real: offer real, tangible solutions that are anchored in what you do. Producing and working sustainably is not the same as being philanthropic: it needs to address the tension inherent to your products or services - for instance, for one of our transportation clients, switching to 100% renewable energy to power their vehicles is more meaningful than giving money to a charity regenerating eco-systems... it does not mean it should not support that charity, but that support is of a different nature.
Be wary of fads: many businesses claim to be carbon neutral (or even carbon negative), but the way in which carbon negativity is achieved is increasingly being questioned by the scientific community. They run the risk of coming under scrutiny which may, in the long run, erode trust in the business or brand.
The topic of sustainable development and protection of the environment is very close to our hearts at Insight Angels, both in terms of our personal lives and the work we do - helping our clients shift to a more sustainable way of operating is critical to us and we have recently been involved in fascinating projects around this topic in different industries. If you want to discover how ready your consumers are to adopt more sustainable practices, what worries them most, what changes they are already making in their daily lives, where they look for information, what brands they listen to, where your brand stands, etc. do get in touch.