Conscious consumerism is transforming industries

Tony Perrotta Tom Day

By Gavin Neilson, Jason Hill, Kim McCann, Steve Carden, Tony Perrotta, Tom Day

Conscious consumers are voting with their phones and wallets. Sustainably aware buyers aren’t just motivated by advertising, convenience and cost. Instead, they research the companies they buy from and support to understand their purpose, business processes, sustainability commitments and, more importantly, the impact their products or services have on the planet.

While this trend dates back to the 1970s, conscious consumerism has skyrocketed as awareness of environmental and social issues has grown. Some 80 per cent of people would personally do as much for the climate as they have for COVID-19 recovery efforts. And with consumers using digital tools such as search and social media to find, share and comment on products, brands can’t hide.

The past 18 months have solidified sustainability’s shift from ‘nice to have’ to an essential that consumers expect to see as standard. This is especially true for luxury products, which must be seen as sustainable to maintain their high-end appeal and justify higher price-points in today's market. But it's not just true for products – sustainability-led services such as mortgages, pensions funds and renewable energy are now expected.

Octopus Energy is a great example of a service provider leading sustainable efforts. The utility supplies 100 per cent green energy to customers while investing in renewable energy generation. They also offer a smart export tariff, which pays customers for surplus solar energy generated from at-home solar panels.

These activities and commitments show that companies from all industries can contribute to a greener world. Their success and growing adoption in the market speaks volumes about consumer shifts.

And generational attitudes are changing. For example, Gen Z, currently accounting for 40 per cent of buyers, will be the ultimate values-driven consumer. Some two-thirds are willing to spend up to 48 per cent more to buy from a purpose-led brand, as well as willing to make 20 per cent less to work for one. Meanwhile, employees of all ages and backgrounds are pushing their companies to speak out on social issues. Brands – are you listening?

When conscious consumers love brands, revenues flow. Despite the fact that sustainability-marketed products form 16.1 per cent of the consumer packaged goods (CPG) market, they delivered 54.7 per cent of the CPG market growth between 2015 and 2019. Conscious consumerism is where the market is headed. Environmental, social and governance (ESG) funds are receiving record inflows and are on track to reach $50 trillion by 2025, representing more than a third of total assets under management.

So, if selling to conscious consumers is the future, why isn’t everyone doing it? The truth is that it’s harder than it seems. Most sustainability strategies take significant new investment and years to deliver results.

Future-proof your business by designing products and services around conscious consumers

Despite the challenges, selling to conscious consumers is the future. Here’s a roadmap for capturing your share of the billions of dollars in conscious spending that are up for grabs in the global marketplace.

1. Lead with empathy

Brands are no longer just in the business of selling products or services. Now, they must also lead on environmental sustainability and social justice and communicate their commitment to driving change. Targets like 2030 and 2050 are too far out: Brands need to lead today. That’s why Patagonia, TOMS and REI have flourished - they are totally authentic and identified a problem before the market did. As a result, they have a strong sense of mission that resonates with consumers and provides a compelling narrative that builds trust.

Conducting customer research and journey mapping will help identify opportunities, understand what consumers care about, learn how users experience products and identify gaps in the market. For example, do consumers care about ESG investing, doing their part to reduce climate change, restoring nature, or combatting health or social inequality? Next you will need to decide how you will deliver eco-friendly goods and services, personalise them to consumers interests and communicate shared goals.

During the COVID-19 pandemic, we conducted a weekly qualitative and quantitative research initiative, Lockdown Unlocked, to understand how consumers’ attitudes and needs were changing across multiple verticals. These insights helped brands adapt during a time of momentous change.

2. Define your connection to purpose and value

It’s likely that your business and partners are facing significant challenges around sustainability right now. That could be raw materials shortages, water scarcity or rising costs, manufacturing processes that use toxic chemicals, disposable products that create excessive waste or near-term regulatory requirements or investors forcing faster action. These issues create challenges that need to be solved, as well as opening up opportunities to drive ROI. Whatever the issue, this is a great opportunity for partnering cross sectorally with innovators – even competitors – around the challenge of driving bigger and faster change that reduces risks and costs and creates value by addressing consumers’ needs and interests.

Connect with other firms that follow your purpose and define the value your contributions make to sustainability. In Innovation for Sustainability: Solving the Plastics and Packaging Challenge, we highlight how Mondelēz, Coca-Cola, and others are tackling the problem of plastics waste with new material technologies, such as plant-based plastics, aggressive recycling programmes and cross-sector partnerships.

3. Rethink sustainability

It can be difficult to consider how to embed sustainability into your existing business model and product portfolio. The easiest way to think about sustainability is by considering these key areas: carbon, water, products, packaging, waste and supply chain through the lens of social justice - the ‘S’ of the ESGs. Access to resources is not evenly distributed around the world, and those suffering the greatest impacts from climate change often are not the ones responsible for accelerating it. By focusing on these areas and understanding global, social challenges, you can explore commercial opportunities, regulatory and technical requirements, and how to drive change.

We partner with brands to innovate business models, products and services at pace. We use agile eight- to twelve-week sprints combined with immersive ideation and gamification to spur innovation and break down barriers. The best ideas can then be captured for future exploration.

We spotted an opportunity to transform tea packaging to be more environmentally friendly. Most tea bags are 80 per cent paper, but 20 per cent plastic. Our team of creatives, consumer experts and materials scientists at our Global Innovation and Technology Centre created a proof of concept and working prototype in just three months that eliminated plastic and made the product compostable. We have also filed for two international patents. Yes, disruptive innovation can be this fast and efficient.

4. Develop a holistic strategy

Once you’ve broken down sustainability and made it tangible for your business, you can develop a strategy to address carbon, water, products, packaging, waste and your overall supply chain. You’ll want to consider interdependencies between issues and trade-offs between different choices. For example, it may make sense to focus on just one to two issues to start, but you’ll need to make sure new decisions don’t create negative consequences across other key areas.

This process may involve creating new business models, finding new value streams, or developing new partnerships across businesses and sectors. A great example is Dunnet Bay Distillers – they introduced refills and closed loop packaging for their most popular spirits to reduce packaging and carbon impact.

Among these key areas, water is typically the most neglected, yet it’s among the most central inputs to business and manufacturing processes, contributes to energy consumption, and is full of untapped commercial opportunity. Reducing water consumption doesn’t just safeguard a vital natural resource, it also improves community health, well-being and social equality.

5. Start small and scale fast

Large brands can often take months or years to analyse a problem and pilot a solution, by which time consumers may have already moved on. Accelerate innovation by adopting a start-up mentality and embracing agile methodologies. To pivot from pilot to launch successfully, use data and insights from your customers, embed technologies and science solutions, optimise manufacturing processes, embrace sustainability business models and drive change across your supply chain.

We helped Better All Around, a British consumer goods company design and launch an innovative kitchen towel, Ora, in just 12 months. The product rethinks paper towels by eliminating the cardboard inner tube, layering single round sheets in a stacking system and holding them in a waterproof container. The award-winning design reduces packaging by 20 per cent, saving on logistics and retail shelf space while reducing waste.

6. Create an experience around sustainability

Despite what consumers say, selling sustainability on its own merits can be difficult, because it requires making different decisions and changing behaviours. The solution is to create a new sustainable product that has enhanced features or a brand new experience, easing the path to adoption.

Individual tools for making sustainable choices are already thriving: Giki helps people live more sustainably and reduce their carbon footprint, you can rent almost anything from people in your local area via Fat Llama, while Too Good to Go app helps reduce food waste. However, at present, brands aren’t offering end-to-end experiences. For example, brands can develop platforms of green services or bundle goods across partners; offer financial tools to guide value-based decision making; provide calculators that enable consumers to assess their own environmental footprint; offer interactive dashboards to explore their products and processes; and so on.

Another option is to join or build platform businesses, which enables them to quickly adapt to customer-needs, scale fast with limited costs and gain value with each new participant. As an example, a financial services firm could offer lower-cost home loans for sustainable renovation projects, link to certified providers and create a community around reaching goals. Of course, these initiatives only make sense when they offer true value and a differentiated experience to consumers.

Conscious consumers are here for the long haul

Conscious consumerism isn’t a passing fad, it’s an important trend that will impact all consumer-facing brands in the years to come. These buyers want to support companies that share their values, focusing on people, planet and profit. They’ll want to know which raw materials you’re buying, how they’re sourced and used in production processes, what steps you’re taking to green your operations and who you work with.

The organisations that provide sustainable products and services with the same quality, price and convenience consumers have learned to expect will be the ones who win market share. It's not easy, but we’ve proven that it’s possible. Unilever is a perfect example as their share of revenue has grown tremendously from their Sustainable Living Brands. Conscious consumers care about long-term value and will reward you with long-term loyalty.

When you lead with empathy, align around a problem and use simple frameworks to drive sustainability strategies and innovation, you can tap new market needs, fuelling business growth. Conscious consumerism can also be a great prompt to become more agile and experiential. Most importantly, you are improving the state of the planet while building ongoing relationships with buyers that yield greater long-term revenues.

When it comes to selling to these buyers, green is truly gold.

About the authors

Gavin Neilson PA financial services expert
Jason Hill PA financial services expert
Kim McCann PA sustainable aviation expert
Steve Carden PA Transport Innovation lead
Tony Perrotta
Tony Perrotta PA sustainability and regenerative economy expert
Tom Day
Tom Day PA consumer, retail and digital expert

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