BRIDGING THE SUSTAINABILITY GAP

AUTHOR

BETH VAN KOESVELD
Director

TRANSITIONING TO SUSTAINABILITY IS HARD, BUT BRANDS STAND TO BENEFIT FROM LONG-TERM GROWTH

SUMMARY

Every week T garage engages with brands and consumers about sustainability. It’s a topic laden with challenges, tensions and trade-offs.

But the transition to sustainability is essential – and progress promises rewards.

In this paper we highlight recent evidence and results from our Sustainability Study with a nationally representative group of Australians aged 18+ (n=612), address sustainability gaps in consumer behaviour, incentives for brands to press for progress, and ways forward.

LET’S FACE IT, TRANSITIONING TO SUSTAINABILITY IS HARD.

It’s hard for businesses – managing capex, costs of goods, manufacturing cycles, supply chains and sales volumes, margins & profit. There’s investor pressure to embed ESG into corporate strategy and manage sustainability whilst protecting long-term value. There’s increasing regulatory, compliance and reporting requirements – about packaging targets, greenwashing claims and global sustainability regulations among others. There’s the challenge of managing multiple ESG and brand purpose objectives, and communicating them to consumers in an attention-deficit attention economy.

It’s hard for consumers. Climate anxiety is increasing, and is particularly high among Australian young people by global standards. Our Sustainability Study found that two-thirds of Australians are concerned about the impact of climate change on their daily lives (68%), and concern increases for its impact on the lives of other Australians (71%), and again for the those around the world (74%).

Progress feels possible to consumers – the majority of Australians feel that they can personally make a difference to the environment through their choices and actions (73%). However in reality it’s not always easy to make sustainable consumer choices because they involve unwanted trade-offs: consumers are often burdened with paying more for sustainable options, or else expected to accept that sustainable options mean compromising on quality, effectiveness, attractiveness or appeal.

THE GAPS CAN SEEM WIDE

There are tensions and contradictions that can discourage brands from making the sustainable transition, and even suggest there is low consumer demand for sustainable products:

The ‘say-do’ gap: where consumers say they are willing to buy and pay extra for sustainable products but in reality do not. In our work across categories consumers are more likely to choose based on price or perceived value, brand, and quality (e.g. does it work well? Taste great? Is it better than competitor offers?), rather than the most sustainable option.

Sustainability brakes: our study highlights a range of barriers to sustainable purchases, chief among them are higher price points (57%), lack of trust in brand claims (35%), low availability of sustainable choices (35%), insufficient information (35%), conflicting information (30%) and products that are not entirely sustainable (30%).

Category challenges: our study found that consumers can find it particularly challenging to make sustainable choices in certain categories – including packaged foods (53%), travel e.g. airlines, hotels (43%), automotive (35%), household cleaning products (34%), tech & home electronics (33%), clothing and fashion (32%)

Low trust: Similarly, consumers had lower trust in companies’ sustainability messages and claims in certain categories – notably energy providers (39%), travel e.g. airlines, hotels (38%), clothing & fashion (36%), banking & financial services (34%).

GOOD NEWS: GROWTH GOES GREEN

Despite the gaps and challenges, a large-scale study of US consumer spend found that, at a macro level, consumers are shifting their spend towards products with ESG-related claims, and that such products averaged higher cumulative growth over 5 years compared to products that made no ESG claims. While there was variation across categories, brands and products, it showed that ESG products aren’t limited to niche audiences and increasingly attract the spend of mass consumers.   

RESPONDING TO CONSUMER DEMAND:
WHAT CAN BRANDS DO?

In our study we asked consumers to name the top actions they want brands across different categories to take to improve sustainability. The results were broadly consistent, average scores below:

1	Reduce excessive packaging (35%)
2	Go plastic-free (34%)
3	Use recycled materials (33%)
4	Use biodegradable materials (26%)
5	Reduce water use (23%)

In open commentary, consumers want greater transparency and demonstrable proof of brand actions to improve sustainability, and greater corporate responsibility for more sustainable practices and reduced environmental impact.

BRIDGING THE SUSTAINABILITY GAPS:

PRIORITIES FOR GROWTH

Drawing on our extensive work in this space, we see a number of opportunities for brands to progress and ultimately benefit from long-term growth: 

1.Lead the charge: Create sustainable alternatives to show corporate responsibility and stave off challengers

2.Patience reaps rewards: Invest in ESG-related products, packaging and practices to create long-term growth  

3.Sustain efforts: To build trust and bridge the trust gap will require long-term, consistent initiatives, quality information and messaging

4.Cost of business: Accept that sustainability isn’t something to charge more for, but will increasingly become a cost of doing business

5.No more trade-offs: Shift the onus off consumers and on to brands and produce sustainable, affordable, quality, effective and appealing products

6.Mind the attention gap: Information is key, but remember the attention-poor context

7.Make it easier: Bridge the ‘say-do’ gap – by making it easier and more attractive for consumers to make sustainable choices

8.Know your market: Understand what the consumer wants in your category. Test products, packaging, price points, messaging, positioning and make changes accordingly. Test assumptions and biases, and provide reassurances where needed e.g. on quality, effectiveness

“The greatest threat to our planet is the belief
that someone else will save it”
– Robert Swan