The CEO Imperative: Make sustainability accessible to the consumer

The EY Future Consumer Index finds people want to make sustainable choices, if they can. Five strategies will help CEOs meet the demand.

From the earliest days of the pandemic, consumers around the world have said they plan to make more sustainable choices about how they spend their time and money once the crisis feels over. Global consumer sentiment on this point remains solid.

In fact, this could be the year in which the political, social, corporate and consumer agendas on a full range of sustainability issues – from climate change to poverty and social justice – come into alignment. The 26th UN Climate Change Conference of the Parties (COP26) is due this November and we know from our work with global corporations that sustainability is now a central boardroom concern.

The CEO Imperative Series addresses critical issues and actions to help CEOs reframe the future of their organizations. Here, we’ll outline consumers’ changing expectations of brands and the companies behind them with regards to sustainability, and how CEOs can address them.

Can you finally close the intention gap?

The latest edition of the EY Future Consumer Index suggests 43% of global consumers want to buy more from organizations that benefit society, even if their products or services cost more. And 64% are prepared to behave differently if it benefits society.

Consumers often say they will pay more for sustainable products and services, but then don’t support that intention with action. As the world slowly emerges from the pandemic, there are signs this gap will close. That would create a major growth opportunity for consumer-facing companies . But they need to transform now to seize it. In particular, they need to create products that reflect the nuanced concerns of target consumers, and they need to make sure the business operations behind the brand meets those expectations too.

How can CEOs respond? These five strategies will help your organization give consumers the sustainable products they increasingly want, at a price they are willing to pay, while meeting their evolving expectations about how companies should behave:

1. Embrace sustainability as a driver of value creation
2. Take a holistic perspective, but act on what matters to your business
3. Be authentic and be prepared to prove it
4. Drive positive impact across the value chain
5. Re-design your operating model for sustainable execution, then build it fast

Countries are at different stages of the journey out of the crisis and people around the world are still deeply worried about their futures. In these challenging times, it’s important to view the increased consumer interest in sustainability issues as a growth opportunity, not just another risk or cost.

That requires a detailed understanding of the way the experience of the pandemic is reshaping attitudes to sustainability. As the Index shows, what consumers value and which values they are prepared to actually pay for varies across countries, categories and segments. These differences are nuanced, complex, and often paradoxical.

• 84% say sustainability is important when making purchase decisions, but 47% say it costs too much to purchase sustainable products.
• 86% of consumers consider the amount of packaging when buying products, but 35% want more packaging to protect them from the risk of infection.
• 61% of consumers want more information to help make better sustainable choices, but only 20% check sustainability claims made on packaging or in advertising.

More consumers want to buy sustainably, but they need companies to make that possible for them. Most consumers can’t afford to pay more for sustainability; price remains their number one purchase criteria. And many of those consumers who are willing to make a more sustainable choice don’t have access to products that reflect their changing values. To succeed, CEOs need to make sustainability accessible to more consumers.

Who cares about sustainability, and what do they care about?

The EY Future Consumer Index has been tracking global sentiment for a year now. Over that time, more consumers have prioritized sustainability. But economic uncertainty is driving consumers to focus on affordability as well.

The segment we identify as “Planet first” accounts for 18% of consumers, but “Affordability first” forms the largest segment of consumers (31%). Some 27% of these cost-conscious consumers say sustainability is an important factor in their purchase decisions, but 73% say high prices deter them from buying sustainable products.

Giving people what they want in a way they can afford becomes more complex when you include variations in consumer priorities across countries and demographics. For example, ask French consumers to identify the top three challenges that fall within the definition of a “sustainability issue” and 44% highlight the need to combat climate change. That falls to 23% for US consumers and 16% for those in India.

This doesn’t mean consumers in the US and India are not interested in the climate crisis, it’s just that they see sustainability through a different lens. In India, for example, consumers are more likely to say the health and wellbeing of citizens is a sustainability issue than climate change.

When you move beyond definitions of sustainability and ask consumers what they are actually most concerned about, 56% in Japan and 53% in Germany highlight climate change. This falls to 38% in the US.

Local levels of concern diverge significantly from the global level in some regions. UK consumers are more likely than their global peers to worry about plastic waste (44% compared with 33% globally). And for those in China, air pollution is a standout concern (57% compared with 33% globally). These gaps are likely a reflection of the way the lived experience of the consumer differs around the world.

How does this influence spending?

When it comes to actually buying a product, food is the priority category where sustainably matters to the consumer. But clothing and personal care also rank highly.
At a regional level, consumers in India, China, Brazil and Indonesia are more likely than those in other markets to consider sustainability. The US overall lags the rest of the world across categories.

Who is willing to do something about sustainability?

Consumers have different views about what sustainability means and what issues they care about. These differences are reflected in what they are actually willing to do, pay for, or sacrifice in order to live and consume more sustainably.

In Brazil, 48% of consumers would be willing to pay more for sustainable goods and services. This falls to 24% in Australia and just 18% in the US. There are generational divides too. Globally, 35% of Gen Z consumers are willing to pay more compared with 28% of Boomers.

The difference between generational attitudes is also evident in what consumers are willing to do and what they will sacrifice to promote sustainability. Gen X and Boomers are much more likely than younger consumers to take simple steps, such as taking their own shopping bags to stores, reusing or recycling packaging, and conserving their energy use.

However, Gen Z and Millennials are much more likely to favor sustainable lifestyle choices, such as plant-based diets and use of public transport. And they are more likely to share information about products that are good for the planet with their friends and peers.

5. Re-design your operating model for sustainable execution, then build it fast

How are you creating the flexibility needed across all your operations to meet and shape evolving consumer expectations around sustainability? This isn’t just about reducing cost. For example, 27% of global consumers would pay more for products that ensure safe and inclusive labor conditions and fair employee pay.

All of these strategies are an opportunity to rethink how you create and measure both value and impact. Your operating model needs to efficiently support not one or a few business models, but a plurality of new strategies for staying relevant to the consumer. Tomorrow’s operating model should incorporate these five design elements:

1. Dynamic ecosystems that foster profitable agility
2. A listening organization built on data and analytics for real-time decision making
3. Talent flexibility that reimagines how people do their work
4. An innovation platform that fosters ideas that can scale
5. An enduring purpose that drives all decisions and activities