You can also call us on +44 (0)20 7170 7000, or select 'Live Chat' to chat with one of our advisors

Greener consumers - sustainability’s final frontier?

Posted by Aleyn Smith-Gillespie | 12 November 2014 | Viewpoint
barcode

Encouraging customers to make sustainable choices is proving to be one of the most difficult environmental challenges for businesses in the twenty-first century. Companies are still well off-track when it comes to targets for convincing customers to change their habits or buy ‘green’ products. Nevertheless, powerful approaches using design, behavioural psychology, and technology can help bridge the gap.

 

A growing number of companies have demonstrated significant energy and resource efficiency gains within their own operations, where they have direct control. These have been achieved through systematic assessment of opportunities, setting targets and implementing technology, process and behavioural changes to achieve them.

Many are now eyeing the next prize, looking outside their own organisational boundaries at where the majority of their environmental impact occurs. Companies such as GSK and Ikea have led the way, with targets for their whole value chains and initiatives to engage and support suppliers.

But while there has been some traction in upstream supply chains, where companies are finding efficiency gains and increasing resilience, the dynamics for looking downstream and engaging customers poses very different challenges. This is particularly the case for consumer-facing companies such as FMCG manufacturers and retailers, as they have to go beyond business cases and contend with more raw psychology and behaviour change.

Behaviour is generally instinctive and emotional, hard-wired to take the path of least resistance.  This needs to be the touchstone for assessing whether a consumer or market-focused sustainability initiative will work or not.

The customer proposition has to therefore be sustainable by design, more compelling than alternatives on the shelf, and deliver what’s promised. Anything less will relegate ‘green products’ to niche markets and be a missed opportunity.

Make it right

A good place to start is making all core products more sustainable through designing sustainability into everything a company does – from product to business model. For example, PUMA has been pioneering the use of more sustainable materials within its products, as well as taking an Environmental Profit and Loss (EP&L) approach to managing its business and supply chain. This means that everything a consumer buys will be a more environmentally-friendly choice.

Disruptive business models are also emerging, which provide better customer propositions that happen to be inherently more sustainable and resource-efficient. Companies such as Uber and Zipcar provide better, cheaper, more convenient urban mobility for many of their customers.

Sell it like you mean it

Companies need to use the full marketing and advertising arsenal at their disposal to encourage consumer uptake of sustainable products. Branding, packaging, promotion, and placement all have to be effectively deployed. These are well-proven techniques that are known to work.

The brand promise needs be authentic, blending sustainability into benefits which consumers can relate to, such as saving money or improving health. An example would be the positioning of  compressed deodorants as being just as effective but at more convenient size (backed up by a money back guarantee).

Feed the inner geek

While most of us are on autopilot when buying things, at times we want to look behind the curtain and read the fine print. Mobile technology is making it increasingly easy to access product data, reviews, and present information in intuitive formats (which is both a reputational risk and opportunity).

Information on product sustainability is therefore still important in guiding consumer choices, particularly when it can be interpreted and disseminated in simply ways through trusted channels, such as third party reviews and endorsements.

But in most cases sustainability information is stuck in a time warp, mainly found in large downloadable reports or labyrinthine websites. However some companies are looking at ways of making information more relevant to consumers. Coca-Cola, for instance, has looked into better contextualising personal impacts so that individuals understand which actions matter most in reducing carbon emissions. Nike has developed an app that intuitively communicates the impact of materials it uses.

Collaboration is key

Behaviour is not easy to change. It is at its most effective when messages are coming from multiple trusted sources. Furthermore, internal collaboration between company functions; as well as external collaboration between suppliers and retailers is needed to pilot and scale up sustainable products. Companies also need to seek sustainability-enhancing innovations from outside sources.  This is why things work best when businesses, NGOs and governments work together to drive things forward, as they have done with major issues such as food waste.

With an exploding global middle class, finding ways to create greener consumers will be a fundamental part of addressing the escalating environmental and resource challenges we are facing. It is going to be a tough nut to crack, but the problem has been recognised and action is being taken. If industries and society work together there is every reason to be positive that the challenges can be overcome.

 

This article was first published on The Economist Insights.

Read more about business model innovation

Back to top