We are in the midst of a new ‘era of sustainability’ in which sustainably-based values, attitudes and preferences are driving lifestyle choices and buying decisions. Customers globally are ‘voting with their wallets.’
According to Principles for Responsible Management Education (PRME), which has established a Working Group on Sustainability Mindset representing 128 universities in 46 countries, the Sustainability Mindset is a way of thinking and being that results from a broad understanding of the ecosystem’s manifestations, and an introspective focus on the personal values and the higher self. The mindset finds its expression in actions for the greater good of the whole. The Sustainability Mindset is ultimately a lens through which we analyze and interpret information, and make decisions.
A recent Nielsen study reported that 81% of global respondents feel strongly that companies should help improve the environment. This passion for corporate responsibility is shared across gender lines and generations. Millennials, Gen Z and Gen X are the most supportive, but their older counterparts are not far behind. Half of global respondents (49%) say they are inclined to pay higher-than-average prices for products with high-quality/safety standards, which consumers often associate with strong sustainability practices. Just behind safety and function, consumers are willing to open their wallets for products that are organic (41%), made with sustainable materials (38%) or deliver on socially responsible claims (30%). Almost half (46%) say they would be willing to forgo a brand name in order to buy environmentally friendly products.
An IBM and National Retail Federation study found that nearly 70% of consumers in the U.S. and Canada think it is important that a brand is sustainable or eco-friendly. More than two-thirds (69%) of environmentally-conscious buyers willingly pay a premium for recycled products, and more than half of these buyers are ready to change their shopping habits to reduce negative impact on the environment. Almost 80% of buyers want to know the origin of the products they buy, and 69% of these consumers would pay a premium for brands that provide this information.
A McKinsey study on sustainability in fashion conducted among European consumers in April 2020 found that the pandemic heightened sustainability awareness and concerns – 67% consider the use of sustainable materials to be an important purchasing factor, and 63% consider a brand’s promotion of sustainability in the same way.
Importantly, these sustainably-minded values and attitudes are translating to meaningful actions. According to the U.S. Chamber of Commerce, shoppers in the U.S. alone will spend up to $150 billion on sustainable products by the end of 2021, or 25 percent of all goods sold. And, Nielsen calculated a near-50% jump in sustainable product sales in 2020 compared to 2014.
The Chamber adds, “Across industries.. sustainability is no longer a siloed conversation as sustainably-minded consumers grow their voice and demonstrate their purchasing power. Gone are the days when sustainability was a passing trend or relevant for only a certain customer profile. Today, the sustainable consumer isn’t one type of person, but a collection of people from all walks of life interested in – and actively committed to – a wide range of social and environmental issues.”
Similarly, the Center for Sustainable Business (CSB) at NYU reports that sustainable purchasing is increasing significantly. Partnering with IRI, a leading research firm, the CSB analyzed data from across 36 product categories, representing approximately 40% of total CPG sales, excluding tobacco and alcohol. Findings include:
- Sustainability-marketed products delivered 54.7% of CPG market growth (2015-2019) despite representing only 16.1% share of the category($) in 2019, up more than 2.4% vs. 2015.
- Sustainability-marketed products continue to grow despite the COVID-19 pandemic.
- Sustainability-marketed branded products enjoy a significant price premium of 39.5% vs. their conventionally-marketed branded counterparts.