Euromonitor International’s global network of analysts has identified From Sustainability to Purpose as one of the six key Coronavirus (COVID 19) themes that are transforming consumer markets. From Sustainability to Purpose talks about the acceleration of the purpose-driven movement in response to COVID-19. Businesses are realising the importance of acting beyond their immediate self-interests, placing the creation of value for all stakeholders at the forefront of the corporate missions and agendas, aiming to be a force for good and capturing a part of that value as profit.
In 2020, during a number of digital events, Sustainability Insights Manager Maria Coronado Robles discussed global sustainability trends and the impact of the pandemic. Here are the responses to a sample of questions that were asked.
You mentioned that consumers are becoming more ethical. How are they learning about the ethics of the brands they want to support or boycott? And how are brands communicating sustainability?
As sustainability becomes a key priority for consumers, with over a quarter of them boycotting brands that do not align with their ethical values (Euromonitor Lifestyles Survey, 2020), communicating sustainability strategies is starting to play an increasingly important role in business success.
Looking at what influences consumer purchases, friends and/or family recommendations is the most influential factor, globally, (Euromonitor Lifestyles survey, 2020) and this influence is stronger in developing markets. Another important source of information is social media posts from people they know and trust, not only family and close friends but also online influencers and famous people. (Euromonitor Lifestyles survey, 2020).
With the acceleration of the digital transformation, we will see more online activism influencing consumer behaviors, especially in the younger generations. For example, in January 2021, the hair care brand Aveda named the supermodel and environmental activist Arizona Muse its global brand ambassador.
There is a huge opportunity for brands to use social platforms and influencers to help consumers get more accurate information and create online content related to sustainable lifestyles, like climate action, upcycling, reusing, repairing, etc.
Source: Euromonitor International Voice of the Industry Sustainability Survey, 2020
While corporate websites and social media remain the main communication channels for sustainability initiatives both internally and externally, a CEO’s voice on sustainability issues is increasingly resonating with stakeholders. COVID-19 has accelerated CEO activism, with 23% of surveyed companies, in June 2020, considering their CEO a sustainability activist who speaks out on issues related to social, political, and environmental causes (Euromonitor Voice of the Industry: Sustainability Survey, 2020).
When you talk about consumer’s environmental awareness, do you see more interest in climate change vs waste today?
When you ask consumers about their sustainability concerns, many of them (61%) are worried about climate change (Euromonitor Lifestyles survey, 2020), and this percentage is higher in developing markets like Asia or Latin America where they suffer the consequences of a warming planet more.
Media coverage about tsunamis of waste entering the ocean has increased concerns over plastic pollution, with only 5% of consumers considering plastic as sustainable, according to Euromonitor Lifestyles survey, 2020.
Despite the high eco-anxiety around climate change, actions like reducing energy consumption, carbon emissions or meat consumption are less popular amongst consumers, compared to individual initiatives to reduce waste. More consumers are willing to do something about their waste, with actions such as using less plastic, recycling, reducing food waste, or switching to sustainable packaging being the most popular among consumers, globally.
Source: Euromonitor International Lifestyles Survey, 2020
The higher willingness to take action on waste issues compared to climate change can be linked to different factors such as the previously mentioned press coverage of the issue in recent years. But also, action on waste is perceived as easier or more accessible (reduce, reuse, recycle for example) whereas issues around carbon emissions/energy consumption can require a greater level of engagement, infrastructure, and investment. Less polluting products and energy sources are not always in the hands of the consumer (sources of renewable energy/access to alternative modes of transport).
Nevertheless, we can’t forget that the two issues are not mutually exclusive. The circular economy aims to make more efficient and regenerative use of resources and that includes materials and energy, also tackling climate change.
You mentioned that fewer consumers in Europe are reducing their plastic waste compared to those in Asia and Latin America. Is this because European governments have already taken action to tackle environmental problems?
In general, Western markets are less worried about environmental problems compared to developing markets and this is valid for Europe and North America. Consumers in developing countries in Latin America and Asia are more socially and environmentally aware. They are suffering the consequences of climate change, severe weather events, pollution, poverty, and inequalities. There is more awareness in these markets and more willingness to act.
Besides consumer behaviour and attitudes, when we talk about plastic waste there are other factors to consider, such as available infrastructure, government action, NGO pressure and industry sustainability leadership.
Sustainability can be affordable. In Chile, Algramo found a packaging solution that is both sustainable and affordable. People with lower economic resources tend to buy products in smaller formats and end up paying more for the same amount of product (this is what Algramo calls the poverty tax). The company has fixed this problem with sustainable, reusable packaging that people use to buy the amount of product they need at bulk prices, reducing the cost per unit while also saving the cost associated with the single-use packaging.
By providing more sustainable solutions, what would be the most probable impact for companies? Can we expect share growth?
Today, there is an increasing risk of losing market share if a company or a brand is not considered sustainable. 73% of businesses currently invest in sustainability to improve their brand reputation (Euromonitor Voice of the Industry Sustainability Survey, 2020), and a fifth of consumers, buy from purpose-driven brands (Euromonitor Lifestyles survey, 2020).
Sustainability offers an opportunity to increase market share. 35% of companies see financial value in investing in sustainability (Euromonitor Voice of the Industry Sustainability survey, 2020). Unilever has demonstrated the business case for sustainability with its Sustainable Living Brands consistently outperforming the average growth rate of the rest of the portfolio since the metric was introduced in 2011.
Sustainability is also increasingly important to investors. In June 2020 around half of the businesses were communicating sustainability with their investors and 22% considered sustainability investments key to attract capital (Voice of the Industry Sustainability Survey, 2020).
Investments that consider environmental, social, and governance (ESG) criteria seem to be more resilient in times of crisis. During the first peak of the pandemic in 2020, sustainable funds outperformed their traditional counterparts, hitting a record high of USD1.1 trillion at the end of June 2020, according to the financial services firm Morningstar.
Investing in sustainability is key to anticipate and prepare for consumers’ progressively greener demands, upcoming legislation, increasing social scrutiny, and pressure from investors, while also essential to cut down future risks and in building both resilience and brand reputation.
To learn more about the topic of purpose and what it means for the shifting sustainability landscape. download our white papers: "Growth of Sustainability in Southeast Asia" and "Rethinking Sustainability: No Purpose, No Gain".