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The EY Future Consumer Index uncovers US consumer sentiment on ESG and sustainability, and their expectations of retailers and CPG brands.
In brief
- Consumers are taking more actions to live and buy sustainably.
- A majority of consumers believe a company’s behavior is as important as what it sells.
- A consumer-centric ESG strategy is the key to sustainability realized.
Companies are facing increasing pressure from all sides to become sustainable, but especially from the consumer. This edition of the US Future Consumer Index dives into consumer perceptions and expectations around sustainability and how retailers and brands must respond.
Of the five future consumer segments, 17% of US consumers identify as Planet First and another 17% identify as Society First, pointing to the importance of sustainability and ESG as a strategic imperative for companies to meet consumer demands.
Sustainability is now a matter of purchase, trust and loyalty. Retailers and brands must consider its role in every part of the business — from sourcing and packaging to operations, footprint and investments to win the consumer and drive long-term value.
The sustainability issues at hand
Consumers desire to live and buy sustainably
Consumers are increasingly taking actions in their everyday lives to be more sustainable. Their personal efforts to live sustainably all or some of the time include:
And these actions are coming across in the ways that they shop and buy.
Sustainable preferences drive purchase decisions:
Consumer expectations of companies
It’s clear that consumers are eager to do their part, but they also expect companies to operate sustainably – improving their social impact and lessening their environmental one.
US consumers say the top three company priorities should be:
Responsible production and consumption of goods and services: 33%
Decent work and economic growth: 30%
Investment in industry, innovation and infrastructure: 25%
And there’s a consequence for the companies that don’t. If an organization does something socially or environmentally inappropiate:
31% of consumers will not purchase their products again
31% will purchase fewer of their products/services
24% will tell family and friends not to use the organization
On top of that, regulation will only intensify, ESG factors are shaping how investors allocate capital, industry groups are putting pressure on solving key sustainability issues.
Sustainability at a cost
On top of that, regulation will only intensify, ESG factors are shaping how investors allocate capital, industry groups are putting pressure on solving key sustainability issues.
Many consumers feel priced-out when it comes to purchasing sustainable products, and as such, revert back to more price-friendly, non-sustainable items. It’s true that there’s a premium on sustainable alternatives to mainstream products, however retailers and brands must do their part to communicate sustainable value – like the long-term savings of re-usable and higher quality products on top of the environmental and societal benefits. This will allow retailers and brands to make it easier and more cost-efficient for consumer to live a more sustainable life in the long-term.
Sustainability Realized
The value proposition for sustainability continues to rise as consumers, regulators and investors drive significant growth opportunities.
The opportunity is there. Implementing sustainable practices could drive top and bottom-line growth.
How can retailers and brands realize this sustainability imperative?
55% of the total CPG market growth from 2015 to 2019 came from sustainable brands, though they make up only 16% of its products.
Sustainable products command a 39% price premium compared with conventional products.
Here are the key strategies and core questions to consider:
- Build a consumer-centric sustainability
- Transition sustainability out of a siloed, segmented approach to an integrated strategy focused on long-term value creation aligned with purpose.
- With the massive shift to e-commerce, optimize digital platforms to support consumers’ environmental and societal priorities
- Bring your consumer along on your sustainability journey
Download the full brief
Summary
Consumers are eager to live more sustainable lives and they are taking actions to do so. But their expectations of companies are as high as their expectations of themselves to do good for the environment and for society. Retailers and CPG brands must rethink ESG and sustainability as a strategic driver of long-term value.