Sustainable Consumers Shaping Industries

It has been a slow build up, but companies are now enlightened to consumer attitudes towards sustainability. More and more, consumers are becoming environmentally concerned; and because of this, companies are adapting their operations and turning to greener processes. Numerous studies have revealed the shifting preferences of the global consumers toward more sustainable organizations. The 2001 Journal of Consumer Marketing showed that consumers are willing to pay substantially more for a product that is proven green, compared to another of identical characteristics except the sustainability response. Likewise, the Stanford Social Innovation Review reports that consumers want to act green, but 61% expect businesses to spearhead these efforts. The 2007 National Technology Readiness Survey found that two thirds of respondents prefer to do business with companies which are deemed environmentally responsible.

Top companies have even made their own efforts to study green consumer as early as two decades ago. SC Johnson, a global manufacturer of household cleaning supplies and other consumer chemicals sold in over 110 countries, started The Environment: Public Attitudes and Individual Behavior in 1990. The study aimed to measure green attitudes and behavior of consumers and found that “twice as many Americans recycle (58% in 2011 say they do so on a regular basis), buy green products (29%), and commute in an environmentally friendly manner (18%)” compared to 1990. Through academic studies and corporate sponsored surveys, businesses are finding out that consumers are becoming more and more environment-conscious. For enterprises all over the world, the key is to be more sustainable.

Aspirationals

In a global consumer study by , it was confirmed that nearly 2.5 billion consumers worldwide now unite style, social status and sustainability values. According to the report, these consumers represent 36.4% of the global market and identify themselves as Aspirationals – “defined by their love of shopping (78%), desire for responsible consumption (92%) and their trust in brands to act in the best interest of society (58%)”. Raphael Bemporad, BBMG co-founder and chief strategy officer said: “Driven by young, optimistic consumers in emerging markets and amplified by technology and social media’s influence, Aspirationals represent a powerful shift in sustainable consumption from obligation to desire.”

In essence, aspirationals no longer see sustainability efforts as simply right, it is actually perceived to be “cool”. This provides an opportunity for organizations to take advantage of sustainable design and societal values to create positive impact. The survey reveals that 88% of aspirationals encourage others to buy from “socially and environmentally responsible companies”. 92% believe the need to consume less and preserve the environment for future generations; moreover, 91% of aspirationals are willing to pay more for products that are produced sustainably.

The Power of Consumers

Organizations and their leaderships are aware of the power of consumers to drive markets. The latest United Nations Global Compact-Accenture CEO Study on Sustainability notes that 64% of CEOs “see the consumer as a key stakeholder in their approach to sustainability”. This report indicates that consumers are pushing corporations to become sustainable enterprises, and it’s because of these sustainability-conscious consumers that organizations are forced to adapt. As corporations evolve to become sustainable businesses, they reap multiple benefits: sustainability primarily pushes businesses to become more efficient, thus reducing their operations’ environmental impact. As sustainable businesses save costs from efficient operations, they also have the opportunity to expand their profitability.  Aside from savings and profit, firms that promote sustainability also improve their reputation and may ultimately lead to greater consumer patronage. It is in this virtuous cycle that consumers can be considered as a key driver of sustainability among businesses.

Brand Loyalty and Sustainability

According to a survey by the Research Data + Insights, 86% of the respondents expect food and beverage companies to “actively help increase recycling of their packages”.  While consumers also rely on company and brand websites to check recyclability, a huge chunk (76%) of consumers depend on the product’s packaging to find out if it is recyclable. Today’s consumers rally behind sustainable practices so fervently, that 45% say that their loyalty to food and beverage companies can be swayed by its commitment to environmental causes. Carton Council of North America Vice President Jason Pelz says that brands should use this knowledge to their advantage. He advises companies to use recycling logos for their packages and use social media to promote their efforts.

A Greener World

A more environment-conscious consumer base will ultimately lead to leaner industries where outdated practices are left for more innovative ways. Questioning what goes into the products and what happens during production will not only lead to healthier and more informed consumers, but a cleaner, greener world as well. 

For example, Starbucks seeks to reduce operating costs and increase shareholder value through energy and water efficiency. The coffee giant also plans to source 100% certified sustainable palm oil in an attempt to reduce greenhouse gas (GHG) emissions. To take care of its human resources and stakeholders, its stores are aiding the education, employment, health, housing and safety of the communities in their vicinities. Even the construction and contents of these stores promote sustainability. Its stores are being built to be Leadership in Energy and Environmental Design (LEED) Certified. In addition, the company uses recycled coffee grounds in table tops, low emitting adhesives, paints, sealants, coatings and flooring, and saves 45% of power on lighting through LED installations. By 2015, Starbucks plans to exclusively use recyclable or reusable cups in an effort to reduce the waste it produces.  The enterprise relies on renewable energy for half of its power needs, with its sights set on total reliance on renewable energy by 2015. By then, it aims to reduce water consumption by 25%; as of 2012 it has decreased water use by 17.7% since 2008. This has been achieved by employing a new water filtration system which saves 50% more water compared to the older system. The global coffee enterprise has reduced its environmental impact by avoiding the emission of more than 50,000 tons of carbon through reforestation and restoration efforts. 

Retail giant, Walmart, has taken on a project to track the sustainability of every product that the company sells through a sustainability index. This has the potential to give every customer an in-depth knowledge on a product’s sustainability information in the next 12 months with the possibility of changing consumer behavior. Rosalind Brewer, CEO of Sam’s Club – a chain of membership-only retail warehouse clubs owned and operated by Walmart, said that Sam’s Club customers are willing to pay extra on premium items such as Greek yogurt, grass-fed beef and organic milk consistently. This clearly illustrates how consumers are more attracted towards products that were manufactured with sustainability in mind. Another sustainability effort of the company is to decrease energy inefficiency to save $1 billion in costs by 2020. The company’s goal is to let these savings trickle down to the consumers.

The Future of Sustainable Business

Aside from the traditional consumer goods, web sites have now become some of the most prevalent and in-demand consumer products. Google has forwarded initiatives to minimize its environmental impact. The web leader relies on renewable energy for 34% of its power as it buys its electricity from wind farms near its data centers. According to its report, its carbon footprint is “beyond zero”. This was possible because its efficiency efforts, utilization of clean energy and buying of carbon credits, a tradable certificate allowing a firm to emit a ton of CO2 into the atmosphere, brings its carbon footprint to zero. Additionally, it has committed over $1 billion to renewable energy projects such as wind and solar energy ventures which has a total capacity of 2 giga watts – enough to power 500,000 homes and more than what it uses. This is part of the company’s core value and belief that investing in renewable energy sources is good for the environment and good for the business.

As consumers become more and more environmentally conscious, producers of consumer goods have to adapt to keep patrons loyal. Not only has this become a branding strategy, sustainable practices in an organization’s operations have become a must. This is not only good for the environment; this is actually good business practice, as companies who can reduce their consumption and emissions reduce costs as well. Lower costs mean more savings and an improved bottom line. This shows that sustainable operations not only safeguard income and business continuity – they even satisfy the most scrutinizing consumers.

Companies can leverage on sustainable practices to have cost-effective operations, improve brand reputation and secure customer loyalty in a market driven by environment-conscious consumers. FirstCarbon Solutions (FCS) has the tools and expertise to help firms achieve all these. As CDP's’s exclusive scoring partner for its Supply Chain Program, as well as a Gold Consultancy Partner and Silver Software Partner, FCS can help you be leaner and more sustainable throughout your entire operation. FCS’ CSR Reporting can make all of your sustainability efforts more transparent and accessible, keeping stakeholders informed. With FCS, businesses can be more sustainable, improve customer satisfaction and bottom lines.