Given that sustainability issues vary by category, we also assessed whether a claim concerned a material environmental or social issue for that category. Committing to sustainability might just pay off for consumer brands, according to the latest Nielsen Global Corporate Sustainability Report. But the results should be interpreted cautiously. An online survey of more than 1,000 consumers took place in July and found 68% of respondents said they were willing to pay more for sustainable products. I don't dream of a world with 99 cent hamburgers available at any roadside fast food place. Consumers are willing to pay more for greener products and want producers to provide better climate-related on-label packaging. Simon-Kucher & Partners is regarded as the worlds leading pricing advisor and thought leader. Are consumers really willing to pay more for sustainable products? Wed suggest they follow the data. That across the board, consumers are willing to pay extra for one thing: sustainability. Brands that establish a reputation for social responsibility and environmental stewardship among todays youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending Millennials of tomorrow, too, says Farraj. michele@greenprintcorp.com This sum will continue to grow exponentially as more Millennials reach peak buying power. A majority (55%) of consumers are willing to spend extra money in order to purchase environmentally friendly products, though at differing amounts. Companies that are able to navigate the business of sustainability will be best positioned for future success.. Queensland University of Technology apporte un financement en tant que membre adhrent de TheConversation AU. While the survey respondents were answering questions . One overwhelming conclusion of the report? Why cities should be fully recognized stakeholders within the UN system, This Architect Says Sustainable Timber Could Be The Future Of Our Cities, 3 solutions helping net-zero aviation take off, is affecting economies, industries and global issues, with our crowdsourced digital platform to deliver impact at scale. Nature is worth $44 trillion to the global economy, according to a recent World Economic Forum estimate. While attitudes vary across generations, countries, and industries, 85% of consumers have become greener in their purchasing in recent years. Consumersparticularly Millennialsincreasingly say they want brands that embrace purpose and sustainability. While 66 percent of global consumers are willing to pay more for sustainable goods, a full 73 percent of Millennials are (Nielsen defines Millennials as those born from 1977 to 1995). Commercial research says 46% of consumers are more inclined to buy a product if it is eco-friendly. From there, it becomes more specific and fragmented. This statistic displays the share of consumers willing to pay extra for sustainable products in the Netherlands from 2014 to 2020. About a 3 minute read. To ensure the most secure and best overall experience on our website, we recommend the latest versions of. Companies have used this conventional wisdom as justification for not making their products more sustainable. In 2015, brands who showed a commitment to sustainability saw sales grow more than 4% globally. Access to this and all other statistics on 80,000 topics from, Show sources information Concerned about allegations of greenwashing claiming a product is green when its not many brands are turning to organisations such as Climate Neutral, Foundation Myclimate and members of the Global Ecolabelling Network to legitimise their claims. Social responsibility is a critical part of proactive reputation management. In burgeoning sustainability markets, however, natural and organic are paving the way for more detailed and specific claims. Products that had a sustainability claim on-pack accounted for 16.6% of the market in 2018, up from 14.3% in 2013, and delivered nearly $114 billion in sales, up 29% from 2013. Sustainability sentiment is particularly consistent across income levels. For years, brand managers have groused that while consumers say they intend to buy sustainable products, in store they dont actually purchase them. Millennials represent the consumer market of the future, and it behooves corporations to read the tea leaves. CSR can build brand loyalty, raise awareness, and strengthen reputations, or it can have the opposite effect. And according to Nielsen, I'm not alone in that. Again, younger generations lead the way as higher shares of Generation Z (39 percent) and Millennials (42 percent) are willing to pay for sustainability compared to Gen. X (31 percent) and Baby Boomers (26 percent). Our analysis did not include the term natural (which is ubiquitous but means nothing) or marketing claims related to social causes or charities. They wanted to know more about what influences how people feel about brands, and how those feelings impact buying behavior. I dream of a world in which all factory farms are destroyed. According to the report, sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally in the past year, while those without grew less. And as social media channels continue to burgeon, the voice of younger generations will only increase the demand for sustainability. On Earth Day 2020, the organisation Climate Neutral an independent non-profit organisation working to decrease global carbon emissions confirmed 103 brands had completed its certification process in 2020 and 50 other brands were still in the process. The legacy companies that will thrive are those that accept this shift and are willing to pivot, such as PepsiCo and Unilever. ", Deloitte, Share of consumers who were willing to pay more for sustainable goods in China as of November 2022, by category Statista, https://www.statista.com/statistics/1367681/china-consumers-willingness-to-pay-more-for-sustainable-goods/ (last visited March 02, 2023), Share of consumers who were willing to pay more for sustainable goods in China as of November 2022, by category [Graph], Deloitte, January 18, 2023. "Consumers are really seeking to purchase products that help them stay true to their values and what they consider matters most to them," said Parker. Companies that dont have sustainability as part of their core value proposition need to act now to protect against future reputational impacts and loss of market share, said Shikha Jain, author of the study and Partner at Simon-Kucher & Partners. When expanded it provides a list of search options that will switch the search inputs to match the current selection. Nudge theory is used to understand how people think, make decisions and behave. This is especially true for Millennials. More than half of Europeans (51%) said they are willing to pay more for climate friendly food. 2015 Nielsen Global Corporate Sustainability Report, 2015 Cone Communications Millennial CSR Study. The Consumer Sustainability Survey (2019) found that 72% of consumers buy more environmentally-friendly products than five years ago. According to a June 2014 Nielsen study , 55% of global online consumers "are willing to pay more for products and services from companies that are committed to positive social and environmental impact." In fact, as early as 1992, the European Commission established the EU Ecolabel , a Europe-wide voluntary environmental labeling scheme that . In fact, the majority (73%) of global consumers say they would definitely or probably change their consumption behavior to reduce their impact on the environment. A balanced approach is key for brand communicators, with the emphasis on demonstrating good deeds versus self-serving promotion.. For example, one study found Spanish consumers were willing to pay 2237% more for green products, but Japanese consumers were only willing to pay 822% more for green products. Commitment to the environment has the power to sway product purchase for 45% of consumers surveyed. : (617) 231-4551 Some brands are even moving beyond simply eco-friendly and now seek to claim their products are climate-neutral. Consumers are trying to be responsible citizens of the world, and they expect the same from corporations. CPGs that are not making the pivot will lose Kraft Heinz, whose investors have encouraged a cost-cutting approach that is backfiring, is a case in point. Inherently skeptical, Millennials will punish companies on social media not deemed to be fully transparent as well as those that pay lip service to CSR and causes important to them. Deloitte. The Nielsen Global Survey of Corporate Social Responsibility and Sustainability was conducted between Feb. 23-March 13, 2015, and polled more than 30,000 consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa, and North America. "Share of consumers who were willing to pay more for sustainable goods in China as of November 2022, by category." To trust a company statement, 45% of Americans say they need a third-party validating source. The Global Sustainability Study 2021*, conducted by global strategy and pricing consultancy Simon-Kucher & Partners, reveals significant global paradigm shifts in how consumers view sustainability and the associated generational differences in willingness to pay for sustainable products and services. This is the result of a representative survey that we commissioned from INNOFACT. I recently spent $38 on a t-shirt from abrand I would trust with my life: Janne Robinson. From procuring raw materials to shipping the final product, almost all steps of the manufacturing and production process of eco-friendly products cost more than traditional products. As a result, many consumers have adopted more sustainable behaviors. Across industries, willingness to pay for sustainability is highest in Consumer goods (38 percent), and lowest for Energy/utilities (31 percent). Millennials and Gen Z are becoming a force to be reckoned with as they continue to represent a larger share of the consumer demographic. To ensure the most secure and best overall experience on our website, we recommend the latest versions of. This behaviour isn't just limited to the wealthy in big economies. Already in 2015, a Nielsen report found that 73 percent of the Millennial generation was willing to pay more for sustainable goods. Nielsen combines sustainability into free-from, clean, simple, sustainable and . Says Gstalder: While marketing good deeds is encouraged and expected by consumers, authenticity and credibility are essential. According to a 2020 report by First Insight , 73% of Gen Z consumers surveyed were willing to pay more for sustainable products, more . In 2018, that number had risen to about 85% . Seventh Generation, Sundial Brands, and Pukka Herbs. Overall, consumers identified . Are you interested in testing our business solutions? The firm has over 1,400 employees in 41 offices worldwide. For example, one study found Spanish consumers were willing to pay 22-37 per cent more for green products, but Japanese consumers were only willing to pay 8 per cent to 22 per cent more for . Professor of Marketing and Consumer Behaviour, Queensland University of Technology. e-mail: rachel.pope@simon-kucher.com . A majority of people have doubts when companies say they are environmentally friendly, with 53% of Americans never or only sometimes believing such claims. it is biodegradable (65%) or made from recycled packaging (60%), when it comes to making a purchase, consumers value durability . Products must meet similar standards (ISO 14020 and ISO 14024). Nielsen's 2015 Global Corporate Sustainability Report has revealed that brands showing a commitment to sustainable practices are receiving support from consumers, who are willing to pay more for . Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. In more than 90% of the CPG categories, sustainability-marketed products grew faster than their conventional counterparts. Rudominers lifelong passion is using communication to foster social change. While this statistic is telling on its own, what's more telling is that 81% of those interviewed said that they planned to buy more sustainable products over the next five years.. And environmental consciousness isn't a new trend among consumers. So when it comes to purchasing, they are doing their homework. For the US, 22 percent of consumers indicate major changes to the behavior, but that number jumps to 55 percent when including those who say theyve at least made some modest changes. Businesses are in a bind. Profit from the additional features of your individual account. The shift in consumer buying, where more consumers are willing to pay more for environmentally conscious products, underscores the need for manufacturing companies to enhance their commitment to responsible business practices using technologies that support more sustainable product design and development. 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