Organizations must walk the sustainability talk in 2023
14 Mar 2023
Despite standing on the precipice of a global financial crisis, consumers who can afford to pay more for sustainable and climate-friendly solutions are doing so, data indicates. The pandemic may be in the rearview mirror, but the coronavirus crisis boosted people’s drive to make better decisions for the planet’s health.
According to IBM Institute for Business Value (IBV) research published in April 2021, which surveyed over 14,000 adults from nine countries, 93% of respondents said COVID-19 had influenced their views on sustainability. Notably, IBV’s February 2022 survey results showed that 51% of respondents said environmental sustainability was more important to them than 12 months earlier.
This rising desire to combat global warming means that people are more willing to pay a premium for products branded as sustainable or socially responsible. IBV data from 2021 revealed that half of the consumers quizzed would spend more. But, tellingly, in 2022, some 49% – an average of 59% more – said they had matched deed with word and paid extra.
These findings echo what I see and hear from clients, consumers, and supply-chain industry experts. Indeed, at a CPG Supply Chain Connect conference in Berlin last November, a couple of statistics – taken from World Economic Forum data – highlighted a worrying gap between consumer expectations and how organizations must do much more to improve sustainability and transparency in all operations. While 66% of consumers are willing to pay more for sustainable brands, just eight supply chains accounted for 50% of all global carbon emissions in early 2021.
The message is clear: in 2023, organizations that fail to evolve and prioritize sustainability and the environment risk being snubbed by increasingly eco-conscious customers and top talent. So businesses must walk the talk, and it’s here that bold leadership has to be demonstrated.
Sustainability and profit
All of the clients I am working with have a sustainability agenda, which is commendable. But I challenge business leaders to go further than net-zero targets and box-ticking. Instead, they should view the need to improve sustainability as a unique opportunity to rethink everything and evolve operations. Adopting this mindset is a win-win.
A considered strategy and long-term roadmap to deliver sustainability will inform internal and external communications while offering a touchstone for critical decisions around operations. If done holistically, it will reduce costs while increasing efficiencies and consumer appeal, achieving sustainability and profit.
Organizations can improve sustainability in numerous ways, some more obvious and direct than others. For instance, by implementing remote-working policies, a company’s carbon footprint is reduced, and it’s also a cost-saving opportunity. It’s great to see some organizations have established new rules that mean workers have to use trains or other forms of public transport for journeys that will take less than six hours.
Pre-pandemic ways of working, especially around travel and commuting, look ancient in 2023, yet some companies are struggling to change and keep pace with workplace trends. Businesses should question what has to be done face-to-face. Or rather, ask what can’t be done virtually. Videoconferencing technology and tools are constantly improving; even supplier visits and audits can now be done remotely.
Of course, certain things, such as team building and brainstorming, are easier in person, but with departments ethically aligned and willing to revamp processes, great strides and savings are attainable on a sustainability journey.
Those that embed a culture of sustainability and support employees to be more eco-conscious – perhaps by installing more electric-car charge points or part-funding bicycle purchases – can prove their commitment from within and empower environmental champions.
Gen Z’s climate-positive purchasing decisions
As another example, being transparent about traceability and communicating the source of a product’s materials or ingredients, including packaging, will help businesses sharpen up supply-chain processes and also be more attractive to consumers.
Various studies show how Gen Z – the youngest generation in the workforce and a vital cohort to engage now for future success – is leading the way with climate-positive purchasing decisions. A report published earlier this year by the consultancy Oliver Wyman, which tracked 150,000 Gen Zers over two years, confirmed that this generation cares more about social and environmental issues than older groups.
Notably, the research found almost a third (31%) of Gen Z consumers reported they would buy more sustainable goods if they had more explicit product labels. Further, 29% would purchase sustainable goods with greater information on the product’s climate impact.
Both internally and externally, organizations must embrace sustainability and make it all-encompassing. Ultimately, business leaders bold enough to shine a light on operations, improve processes and communicate the progress of their sustainability journey will leap ahead of more sluggish and opaque rivals.