In consumer surveys, respondents often support the good and oppose the bad. But is the "green paradox", meaning the green bias in consumer behaviour, true today? Can sustainable products make a better profit margin? In her blog series, Infine founder Tiina Saukko explains the angles as well as the stumbling blocks of corporate sustainability.
This time, I'll explore the Harvard Business Review's consumer behaviour research from 2019 and flesh it out with IBM's consumer research from this year.
Why it pays off to brand sustainable products as sustainable
Products that are branded as sustainable win in the market. Already in 2019, a study published in the Harvard Business Review found that 90% of the sustainability-marketed Consumer Packaged Goods (CPGs) surveyed grew faster than their competitors.
This study was conducted by tracking sustainability-branded products from 2013 to 2018. In five years, the share of the total market accounted for by sustainability-marketed products rose by 16%. As sustainability has become more and more topical in recent years and the climate debate has heated up with the IPCC reports, for example, I believe the pace of development will only accelerate. Moreover, this study was carried out in the United States, which is a leader in sustainability issues in Europe.
The study was based on IRI data, i.e. cash data. The study covered 36 categories and 71 000 SKUs, representing 40% of the consumer packaged goods (CPG) market. Interestingly, the products with the largest gains in terms of sustainability were laundry detergents, fabric care products and tissue paper - where the increase in responsible products was 150%. The researchers concluded that kategoriat, joissa ei ole aikaisemmin markkinoitu vastuullisuudella, nousevat kaikkein nopeimmin.
Because consumers voted with their wallets, the winners were PepsiCo and Unilever, which had invested in sustainability. Kraft Heinz, for example, competed on price and lost out. So the "old traditional recipes" no longer work - profitable renewal is now moving in the direction of sustainability.
This is further confirmed by the fact that in IBM's extensive consumer survey, almost half (49%) of respondents said they would pay an average 59% sustainability premium for products branded as responsible.Based on the survey, the difference with "not responsibly branded" is around 50% at the margin level. So the result is from this year and certainly contains some green bias - but if half of this is true, the trajectory should be clear on the consumer product side.
Tiina Saukko
The author is the founder and CEO of Infine and has worked for over 20 years in the fields of product responsibility, responsibility marketing and corporate responsibility.
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