Committing to sustainability might just pay off for consumer brands, according to the 2015 Nielsen Global Corporate Sustainability Report [1]. Sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%.
According to Nielsen, 66% of global consumers say they’re willing to pay more for sustainable brands, up 55% from 2014. Furthermore, 73% of global millennials are willing to pay extra for sustainable offerings-up From 50% in 2014.
“Sustainability is a worldwide concern that continues to gain momentum,” says Grace Farraj, senior vice president, Public Development & Sustainability, Nielsen. “An increasing number of consumers in developed regions consider sustainability actions more of an imperative than a value-add.”
Willingness to pay a premium
Consumers across regions, income levels, and categories are willing to pay more, if doing so ensures they remain loyal to their values. It’s no longer just wealthy suburbanites in major markets. Sixty-six per cent of global respondents say they are willing to pay more for sustainable goods, up from 55% in 2014 (and 50% in 2013). Those earning $20,000 or less are actually 5% more willing than those with incomes greater than $50,000 to pay more for products and services that come from companies who are committed to positive social and environmental impact (68% vs. 63%).
"Consumer brands that haven’t embraced sustainability are at risk on many fronts,” highlights Carol Gstalder, senior vice president, Reputation & Public Relations Solutions, Nielsen.
When it comes to sales intent, commitment to the environment has the power to sway product purchase for 45% of consumers surveyed. Commitment to either social value or the consumer’s community are also important (each influencing 43% and 41% of respondents, respectively).
Age matters
Despite the fact that Millennials are coming of age in one of the most difficult economic climates in the past 100 years, they continue to be most willing to pay extra for sustainable offerings—almost three-out-of-four respondents (73%) in the latest findings, up from approximately half in 2014. The rise in the percentage of respondents under 20, also known as Generation Z, who are willing to pay more was equally strong- from 55% of total respondents in 2014 to 72% in 2015.
“The hierarchy among drivers of consumer loyalty and brand performance is changing,” says Farraj. “Commitment to social and environmental responsibility is surpassing some of the more traditional influences for many consumers. Consumer-goods’ brands that fail to take this into account will likely fall behind.”
Developed vs. developing markets
While the relative importance of sustainable factors that influence the path to purchase is consistent across regions, the overall rates were lower in North America and Europe than in the Middle East, Africa, Asia, and Latin America. Consumers in developing markets are often closer to and more aware of the needs in their surrounding communities as they are reminded daily of the challenges around them, which leads to a desire to give back and help others. This suggests a greater likelihood to seek out and pay more for sustainable products.
When it comes to sustainability, the findings show it is generally harder to influence consumers in developed markets to pay more. Consumers in Latin America, Asia, Middle East, and Africa are 23%-29% more willing to pay a premium for sustainable offerings.
