Are Sustainability and ESG concepts that are being foisted on corporate management by a vocal minority, or do consumers genuinely care about these issues?
In an era where environmental concerns and ethical considerations are gaining momentum, the corporate landscape is witnessing a paradigm shift towards sustainability and ESG (environmental, social and governance) practices. Companies are increasingly recognising the importance of aligning their operations with values that go beyond mere profit-making. But the critical question remains: Do consumers truly care about sustainability and ESG, or are these merely corporate buzzwords that companies feel forced to adopt out of fear of a vocal minority?
Many Consumers Are Sceptical About Corporate Claims
While most companies at least pay lip service to sustainable and socially responsible business practices, the realities are often somewhat nuanced as sourcing more eco-friendly and ethical alternatives often comes with a cost.
Products that are supposed to be better for the environment have other drawbacks. Take for example plant-based meat substitutes; while they are supposed to have half the environmental impact of genuine meat, they are some of the most highly processed foods on the planet, with long-term implications for human health.
Electric vehicles also claim to be better for the environment, yet the environmental and social costs of mining and processing the raw materials required for their production are staggering.
Buying Behaviour Doesn’t Always Reflect Consumers’ Claims
Individuals may express concern for the environment and ethical business conduct, but critics argue that their buying habits don’t always reflect their claimed values. Studies of consumer trends indicate that the relationship between consumers and sustainable/ethical purchases is more nuanced.
Patagonia and TOMS have successfully resonated with these values, demonstrating transparency and commitment to environmental and social causes.
Except for the relative minority that is wholeheartedly committed to only buying sustainably and ethically, most consumers are guided by a wide assortment of factors. These include the cost of living and spending power, product choices and availability, convenience and personal taste.
But Younger Consumers Are More Discerning
On the other hand, younger generations are becoming more discerning in their buying choices, seeking out products that align with their values. One of the most significant data points uncovered in a recent report is the fact that 66% of consumers say they will pay more for sustainable products. Whilst 50% of consumers said sustainability is one of their top key purchase criteria when shopping. Source
They are also becoming more demanding of brands, expecting full transparency and disclosure around issues such as environmental protection, social justice and ethical business practices.
One contributing factor towards this conscious consumerism is the growing influence of social media, where information is more accessible and individuals can easily apply combined pressure on companies to be accountable for their actions. No business today can expect to last if it ignores this factor, as negative publicity spreads fast on social media and can quickly have a significant impact on a brand’s reputation, profitability and even survivability.
As a result, businesses are now forced to proactively adopt sustainable and ethical practices and communicate these effectively to consumers.
The Benefits Of Embracing Sustainability and ESG
While adopting environmental and socially responsible policies carries a significant financial cost, it also has its benefits. As the average age of consumers falls, brands will be increasingly addressing a more discerning customer base that has come to expect this level of commitment.
Early adopters of sustainability and ESG are therefore more likely to widen their appeal and generate brand loyalty. This begs a further question: how can companies reduce the financial burden of adopting these changes?
Reducing The Cost Of Sustainability And ESG
While sourcing viable product alternatives that meet the environmental and ethical expectations of consumers is key to sustainability and ESG success, there are other ways in which this investment can be mitigated. Here are a few examples:
Efficiency Improvements
Unless procedures are constantly monitored and improved, business efficiency can fall over time as processes cope less effectively with a changing business environment. In fact, adopting new systems can bring both financial and environmental benefits.
One example of this is a UK healthcare trust that had a contract with a secure document destruction company. This company would visit the trust’s premises each week to remove documents from all of the trust’s secure disposal bins, even though many of these bins would be only partly full.
SECURALL from Avena Group provided a more cost-effective solution, using smart technology to notify Avena when individual bins needed to be emptied, reducing both the trust’s operating costs and the carbon footprint of wasted regular weekly collections.
Investment In Renewable Energy And Resources
Solar panels, wind turbines and other green energy systems can not only reduce a company’s environmental impact but in many cases, reduce operational costs by selling surplus energy back to the grid.
Businesses can also reduce water consumption and costs by installing rainwater harvesting systems. While this water isn’t of sufficient quality to be drinkable, it can be used to flush toilets and provide a water supply for some industrial processes.
If government grants are available to cover or help towards the cost of installing these systems, these will also mitigate the cost of sustainability.
Development Of A Circular Economy
A circular economy minimises waste and maximises the lifespan of products. Creating product exchange incentives for consumers to return used items in part exchange for new purchases encourages customer loyalty and can create resources that can be reused, recycled or refurbished.
One example of this is SECUREBRAND textile destruction and recycling from Avena Group. Used, redundant and surplus textiles and garments – either from the fashion industry or corporate workwear and uniforms – are shredded into separate fibres. The best quality fibres to emerge from this process are re-spun into new yarns and made into new fabrics, while most of the inferior fibres are converted into padding for upholstery, acoustic panels and vehicle interiors.
This process not only protects the fashion or corporate brand against the unauthorised resale of fashion clothing or misuse of branded workwear but also ensures these waste products don’t go to waste and landfill. As seen through the link below
Supply Chain And Strategic Partnerships
Closer collaboration with supply chain partners can often result in cost-saving efficiencies through improved management of resources while ensuring all participants in the supply chain align with your ESG goals.
Creating strategic partnerships with organisations that share your ESG goals can result in shared resources and knowledge, and potentially reduce costs. Don’t be afraid to reach out to organisations that you might regard as competitors – a strategic partnership that brings benefits for all parties has no losers.
Like to know more?
For more information on how Avena can support you in your path towards adopting sustainability and ESG policies, register your interest or speak to an expert.
