The CEO Imperative: Make sustainability accessible to the consumer

The EY Future Consumer Index finds people want to make sustainable choices, if they can. Five strategies will help CEOs meet the demand.

In brief

• There is no single “Sustainable Consumer”. Values and attitudes vary. The nuance is critical.
• Many people would be willing to pay more if your product reflected their specific agenda.
• Consumers will look beyond a brand to consider the sustainability of your full value chain.

From the earliest days of the pandemic, consumers around the world have said they plan to make more sustainable choices about how they spend their time and money once the crisis feels over. Global consumer sentiment on this point remains solid.

In fact, this could be the year in which the political, social, corporate and consumer agendas on a full range of sustainability issues – from climate change to poverty and social justice – come into alignment. The 26th UN Climate Change Conference of the Parties (COP26) is due this November and we know from our work with global corporations that sustainability is now a central boardroom concern.

The CEO Imperative Series addresses critical issues and actions to help CEOs reframe the future of their organizations. Here, we’ll outline consumers’ changing expectations of brands and the companies behind them with regards to sustainability, and how CEOs can address them.

Can you finally close the intention gap?

The latest edition of the EY Future Consumer Index suggests 43% of global consumers want to buy more from organizations that benefit society, even if their products or services cost more. And 64% are prepared to behave differently if it benefits society.

Consumers often say they will pay more for sustainable products and services, but then don’t support that intention with action. As the world slowly emerges from the pandemic, there are signs this gap will close. That would create a major growth opportunity for consumer-facing companies . But they need to transform now to seize it. In particular, they need to create products that reflect the nuanced concerns of target consumers, and they need to make sure the business operations behind the brand meets those expectations too.

How can CEOs respond? These five strategies will help your organization give consumers the sustainable products they increasingly want, at a price they are willing to pay, while meeting their evolving expectations about how companies should behave:

1. Embrace sustainability as a driver of value creation
2. Take a holistic perspective, but act on what matters to your business
3. Be authentic and be prepared to prove it
4. Drive positive impact across the value chain
5. Re-design your operating model for sustainable execution, then build it fast

Countries are at different stages of the journey out of the crisis and people around the world are still deeply worried about their futures. In these challenging times, it’s important to view the increased consumer interest in sustainability issues as a growth opportunity, not just another risk or cost.

That requires a detailed understanding of the way the experience of the pandemic is reshaping attitudes to sustainability. As the Index shows, what consumers value and which values they are prepared to actually pay for varies across countries, categories and segments. These differences are nuanced, complex, and often paradoxical.

• 84% say sustainability is important when making purchase decisions, but 47% say it costs too much to purchase sustainable products.
• 86% of consumers consider the amount of packaging when buying products, but 35% want more packaging to protect them from the risk of infection.
• 61% of consumers want more information to help make better sustainable choices, but only 20% check sustainability claims made on packaging or in advertising.

More consumers want to buy sustainably, but they need companies to make that possible for them. Most consumers can’t afford to pay more for sustainability; price remains their number one purchase criteria. And many of those consumers who are willing to make a more sustainable choice don’t have access to products that reflect their changing values. To succeed, CEOs need to make sustainability accessible to more consumers.
 

Who cares about sustainability, and what do they care about?

The EY Future Consumer Index has been tracking global sentiment for a year now. Over that time, more consumers have prioritized sustainability. But economic uncertainty is driving consumers to focus on affordability as well.

The segment we identify as “Planet first” accounts for 18% of consumers, but “Affordability first” forms the largest segment of consumers (31%). Some 27% of these cost-conscious consumers say sustainability is an important factor in their purchase decisions, but 73% say high prices deter them from buying sustainable products.

Giving people what they want in a way they can afford becomes more complex when you include variations in consumer priorities across countries and demographics. For example, ask French consumers to identify the top three challenges that fall within the definition of a “sustainability issue” and 44% highlight the need to combat climate change. That falls to 23% for US consumers and 16% for those in India.

This doesn’t mean consumers in the US and India are not interested in the climate crisis, it’s just that they see sustainability through a different lens. In India, for example, consumers are more likely to say the health and wellbeing of citizens is a sustainability issue than climate change.

What do consumers expect from you?

It’s not enough to understand the nuance of how consumers feel about sustainability and how that affects their buying preferences. Their growing sustainability expectations stretch beyond the brand to how your company as a whole behaves.

Globally, people are setting a high bar:

• 51% of consumers believe they are doing all they can to make purchase decisions that shape a more sustainable future, but 68% expect companies and organizations to take a lead.
• 55% of consumers believe they should drive companies and organizations to lead on better social and environment outcomes.
• 73% of global consumers believe brands have a responsibility to make a positive change in the world.
• 80% of global consumers believe brands must be transparent about their environmental impacts in the production of their goods and services.
• 38% of global consumers believe businesses should prioritize responsible production and consumption of goods and services.

Many consumers feel they have a role in helping to deliver a more sustainable future. While high prices deter 66% from buying sustainable products, 29% would pay more in taxes to combat climate change. This is a much higher proportion than the 12% who would be willing to pay higher taxes to combat the pandemic.