Francis Hemingway

What Do Ethical Consumers Want?

Earth Day raised awareness about the state of our planet and what we can do to help it, making sustainability a priority for many people. The advertising and business press provided some insightful reports on people’s attitudes and behaviours toward being more sustainable.

Below is a collection of our favourite learnings, along with links to the actual reports.

1. Adoption of sustainable lifestyles is on the rise.

Deloitte’s sustainable lifestyle report shows that people are embracing sustainable behaviours in many aspects of their lives. While recycling and reducing food waste are the most popular behaviours, limiting single-use plastic, reducing the amount of new product purchases, and reducing meat and animal products are the fastest-growing habits. Deloitte also looked at what is important to people when buying brands and products.

They found that people consider the following sustainable and ethical values most important when choosing brands/products:

• Producing sustainable packaging and products
• Reducing waste in the manufacturing process
• Committing to ethical working practices
• Reducing carbon footprint
• Respect for human rights

Full report here

2. Sustainability-marketed products occupy 17% of the consumer-packaged goods market and are growing faster than non-sustainability marketed products.

NYU Stern’s Sustainable Market Share Index found that sustainability-marketed products grew 2.7x faster than products not marketed as sustainable. These products also command an average 28% price premium, which shows that many people are willing to pay more for a product that is kinder to the planet. Brands are reacting to this demand by producing more sustainable products; 1 in every 2 new products that were introduced to the CPG market in 2021 communicated a sustainable benefit.

Full report here

3. People want both sustainability and affordability.

We are in the midst of a cost-of-living crisis that is affecting everyone in different ways. You would be forgiven for thinking that people abandon sustainable living habits during challenging economic times, but Capgemini’s Today’s Consumer report shows that isn’t always the case. The study found that people are still very much committed to being more sustainable but are trying to balance that ambition with their financial reality. 54% of consumers value affordability over sustainability, meaning that 46% feel the opposite. Capgemini advised brands to lead with purpose to manage the growing tension between affordability and sustainability, recommending tactics such as value-led loyalty schemes and re-evaluating the price of sustainable products.

Full report here

4. Utilities, food and travel are the sectors where people are looking to be more sustainable with their spending.

PDI Technologies’ Business of Sustainability Index report outlined utilities, food and restaurants, fuel stations, and hotels as the top categories where people are most likely to make sustainable purchase choices. They also found that loyalty/rewards schemes would drive adoption of sustainable products.

Full report here

5. Consumers do not understand some of the newer sustainability terms and want brands to use clear language.

Economists, sustainability advocates and brands are increasingly using terms like “circular economy,” “regenerative agriculture,” and “carbon neutral” in sustainability communications. The National Retail Federation’s study shows that few people understand these terms; 11% are familiar with “circular economy,” 13% with “regenerative agriculture,” and 34% with “carbon neutral.” They encourage using more familiar and simple terms such as “recyclability,” which are understood by a significantly larger proportion of society.

Full report here

6. Certifications matter more than ever, and brands should use them.

BCorp, Fairtrade, Planet Mark, and other independent certifications act as kitemarks of sustainable and ethical practices. The Shelton Group’s research shows that these marks influence product purchase and build trust in brands, with 87% of people saying certifications are important when purchasing products. Such certifications can act as shortcuts for people to choose a brand and have confidence that it is ethical.  Brands that have such certifications should ensure these marks play a prominent role in their advertising and packaging.

Full report here

So said McKinsey when they released the learnings from a joint study undertaken with Nielsen IQ that examined the explosion of interest from consumers in environmentally and socially responsible brands and products.

McKinsey and NielsenIQ analysed 5 years of sales data covering 44,000 brands and identified 93 different ESG-related claims. The analysis revealed a clear link between ESG-related claims (e.g. animal welfare, environmental sustainability, organic-farming methods, planet-based, social responsibility and sustainable packaging) and consumer spending.

This news was music to our ears here at The GoodNet, and we’ve had a good look at the report.

Here are six things we learned..

1. Consumers are increasingly prioritizing sustainability: The report found that nearly 60% of consumers globally are willing to change their shopping habits to reduce their environmental impact. This means that companies who prioritise sustainable practices are likely to attract and retain more customers in the long run.

2. Consumers are willing to pay more for sustainable products: According to the report, around 45% of consumers are willing to pay more for eco-friendly products. This suggests that companies that invest in sustainable production methods and materials may be able to command a price premium for their products.

3. This applies to brands of all sizes. Smaller brands achieved disproportionate growth in 59% of categories, while larger brands did so in 50%. Established products making ESG-related claims outperformed established products without them in 68% of categories. Private-label products that made ESG-related claims seized more than their expected share of growth in 88% of categories, suggesting consumers may be eager to support affordable ESG-friendly products.

4. Less-common ESG-related claims are associated with higher growth rates than more common claims. This suggests brands can successfully use their sustainability initiatives and positioning as a means of differentiation. Products that highlighted the least common ESG-related features (such as “vegan”) grew 8.5% more than peers that didn’t make such claims.

5. Combining multiple ESG-related claims is associated with higher growth rates. Products with multiple types of claims grew twice as fast as those with only one. However, companies must back these claims with genuine actions that have a meaningful ESG impact to avoid greenwashing. The study suggests that a multiplicity of claims made by a product may correlate with authentic ESG-related behaviour on the part of the brand, and brands should reflect on their commitment to ESG practices holistically.

6. Sustainable practices can boost customer loyalty: Consumers are increasingly loyal to companies that prioritize sustainability. In fact, nearly 70% of consumers said they are more likely to recommend a brand if they believe it is making a positive impact on society and the environment.

Overall, the McKinsey report highlights the growing importance of sustainability for consumers and the potential benefits for companies that prioritise sustainable practices. By taking meaningful action on sustainability and effectively communicating their efforts (while complying with appropriate legislation such the ASA’s Green Claims Code), companies can differentiate themselves from competitors and build lasting customer loyalty.

Read the full report here.