5 minute read 7 Oct. 2021
The Intention Gap

Greater Expectations: Why consumers won’t stand for corporate greenwashing

Authors
Gerri Ward

EY NZ Climate Change and Sustainability Services Director

Passionate about authentic leadership. Here to make a difference. Aspiration to be a positive maverick. Motivated by bringing out the best in our people, and getting what matters done.

Meg Fricke

EY Australia Climate Change and Sustainability Services Partner

Environmental scientist and economist passionate about transforming and integrating sustainability into business strategy, building robust and transparent disclosures and making the world work better.

5 minute read 7 Oct. 2021

Australians and New Zealanders are prepared to walk away if ‘their’ brands don’t do what they say they’re going to do on sustainability.

In brief
  • Consumers are considering sustainability more broadly and more critically.
  • Brands responding with genuine efforts will be favourably regarded while ‘green-washing’ could have a lasting negative impact.
  • Consumers want brands to take a leadership position on sustainability.

Over the years, sustainable products have moved from specialist ‘alternative’ stores to niche brands peeping from the upper shelves at the supermarket. Now sustainability is something we simply expect from ‘our’ brands. And it’s not only an expectation that those brands act as sustainably as they say they do, but also that they’ll make the right decisions for us, and make living a sustainable lifestyle as easy as buying from our trusted brands.

“At the same time that consumers are wanting brands to do more on sustainability, they are entrusting brands with a real responsibility to help solve big global issues and take a leadership position,” says Meg Fricke, Partner, Climate Change and Sustainability Services, EY Australia.

If brands are talking the talk, the seventh global EY Future Consumer Index (‘the Index’) shows that they had better also be walking the walk. And the expectations of information-rich and savvy consumers go beyond direct concerns over what is being purchased, for example with materials used in a product or the recyclability of any packaging.

Companies are now increasingly being judged on broader questions around sustainability that can include treatment of employees, company diversity and human rights in supply chains. It’s something that consumer brands especially need to start taking seriously.
Meg Fricke, Partner, Climate Change and Sustainability Services, EY Australia

Sustainability demand creates sustainability demands

The latest Index took a close look at the way consumer behaviour is reflected in purchasing decisions. As the smart brands well know, demand for ‘green’, or sustainable products is growing - fast. The Index found that nine in ten Australians and New Zealanders care about sustainability when buying goods and services. Over the past year, 25% of consumers interviewed had increased their purchasing of sustainable products; while about 64% of people’s sustainable purchases had remained about the same – and in the coming year, 33% of interviewees said they expect to buy more sustainable products.

On the flip side, consumers are proving increasingly intolerant when it comes to green-washing. More than two in five (41%) of Australian and New Zealand consumers said they would stop buying – permanently – from a business they believed had done something that wasn’t socially or environmentally appropriate, and 31% would go so far as to tell their friends and family never to use the brand.

There’s something uniquely unforgiving about being seen to lack integrity when it comes to promises made about sustainability. Get it wrong, and many of your most loyal customers will leave, and never come back.
Gerri Ward, Director, Climate Change and Sustainability Services, EY New Zealand.

Complicating the picture for businesses is the fact that ‘sustainability’ can mean different things to different people. Depending on a person’s perspective, the term could mean social sustainability (for example, a fair-trade supply chain), environmental sustainability (as in cutting back packaging and carbon emissions) or both. When asked to nominate their top three issues, the Index found that the issues [Australian and New Zealand] consumers are personally concerned about are: climate change (44%), plastic waste (32%), water pollution (30%), human rights (29%), wildlife conservation (24%) and wealth inequality (23%). As EY Oceania has noted on the changing nature of sustainability, while this can be an intimidating ‘to-do’ list for businesses to take on, it shows how aware consumers are (and will continue to be) when they are weighing up a conscious purchasing decision.

Turning concern into action

While price may be the biggest barrier to some consumers buying sustainable products, others are happy to dip further into their pockets to help protect the planet. The most prominent sustainability-related features that people were most willing to pay extra for were:

  • Packaging made from recycled materials (34%) 
  • Looking after animal welfare (31%)
  • Using renewable sources of energy (30%)
  • Reducing water and soil pollution (30%)

Almost six in ten (59%) would pay more for at least one of these four features.

One of the most important findings in the research is that consumers who care about sustainability want those who create and regulate the products that they’re buying to take action on their behalf. People don’t want to have to research the sustainability of all the different items on their shopping list and more than half of our respondents (56%) said they need more information to help them make sustainable choices when they shop. “We’re seeing brands and retailers have greater success when consumers not only trust that they’ve taken authentic, responsible action,” says Ward, “but then they’ve made it easy for consumers to use their purchasing power to do the right thing.”

A lack of clear, simple information is a key hurdle for consumers. While 79% say sustainability is at least somewhat important when making a purchasing decision, only two in five are prepared to figure out a product’s environmental impact for themselves.

Rather than being influenced by the opinions of family or friends, our Index found that a sustainability score on the label was the most likely factor to tip a purchasing decision. While some appliances have power or water usage star-ratings to indicate comparative performance, “the absence of easy-to-understand overall sustainability markers or labels makes it difficult for consumers to make an informed choice and for companies to make trusted claims,” says Fricke. “Transparent and robust scoring for sustainability is a clear gap in the market but it’s a hugely complex task and the challenges can’t be understated. Nevertheless, there are demands coming from consumers and companies need to find a solution to meet that demand.”

The Index showed that more than two in three consumers said companies must act as leaders in driving positive social and environmental outcomes, including ensuring all their suppliers meet high standards in social and environmental practices. Asked to choose the top three issues that brands should prioritise from the 17 UN Sustainable Development Goals (a set of global social and environmental issues that include ending poverty and combatting climate change), the clear frontrunner was the responsible production and consumption of goods and services, followed by decent work and economic growth, investment in industry, innovation and infrastructure, and combatting climate change.

The majority of respondents (68%) said that it should be up to business to act as leaders in driving positive social and environmental outcomes, help ensure that all their suppliers meet high standards in social and environmental practices, and provide sustainable choices in the products and services. And half (50%) believe it’s also the government’s responsibly to make sure people act as sustainably as possible.

What can companies do now?

More and more, consumers are expanding what sustainability means, both to them and to how they parse a brand’s desirability. As expectations go beyond simple notions of ‘green-ness’ into supply chain issues, human rights and governance, boards and executive teams need to be cognisant of all the decisions they make about a product because soon all these issues will determine how sophisticated consumers engage with brands.

As brands work to deliver sustainable choices that the majority of Australians and New Zealanders are looking for, the Index suggests that companies need to keep three principles front of mind as they work through their process:

  1. Understand your impact – Before companies can begin to make and provide sustainable options to their customers, they need to look across their value chain and understand the biggest impacts their products and services have on the environment and society.
  2. Commit – Once companies understand what their baselines are, they need to materially integrate sustainability into their product life cycles, and develop clear, measurable commitments to improve.
  3. Make it easy – Companies need to not only be transparent about their sustainability choices within their organisations, but they need clear labels that make it easy and relevant for the consumer to confidently exercise their choices.

Consumers are turning to the brands they trust to help them do the right thing and simplify the process of making good, sustainable purchasing decisions. “Our research shows that this is a trend that isn’t going anywhere but up,” says Ward. “It’s now up to our brands to truly integrate authentic social and environmental outcomes into the products and services they’re selling – and to make it easy to live a more sustainable life.”

Summary

Companies need to genuinely and comprehensively tackle sustainability across their products and services, making it easy for consumers at the same time.

About this article

Authors
Gerri Ward

EY NZ Climate Change and Sustainability Services Director

Passionate about authentic leadership. Here to make a difference. Aspiration to be a positive maverick. Motivated by bringing out the best in our people, and getting what matters done.

Meg Fricke

EY Australia Climate Change and Sustainability Services Partner

Environmental scientist and economist passionate about transforming and integrating sustainability into business strategy, building robust and transparent disclosures and making the world work better.