Closing the Loop – between the perception and practice of sustainability

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Consumers are no longer choosing where to shop based on price, product quality and brand recognition alone but instead, are making conscious choices based on a brand’s commitment to sustainability.

Part 1

What started out as a trend around taking more responsibility in individual consumption patterns, has now firmly become mainstream, with almost 80% of consumers actively changing their preferences based on perceived sustainability. Within one year we’ve seen a societal shift where walking around with a disposable coffee cup or wearing a brand known for unfair labour policies is considered almost unacceptable. Covid-19 has further brought attention to the vulnerabilities and interdependencies within our societies around economic inclusion, social responsibility and environmental friendliness. As a result, this shift towards more sustainable consumption will only gain momentum.

Defining sustainability in the consumer products and retail value chain

Sustainability is about harmonising economic growth, social inclusion and environmental protection, to meet the needs of the present without compromising the ability of future generations to meet their needs. Meeting these interconnected goals requires consideration of the entire value chain, from product design, sourcing, manufacturing and distribution through to store operations, labour policies, technology and beyond.

A disconnect between perception and practice of sustainability

Despite good consumer intentions there remains a gap between perception and actual sustainability. Whilst consumers seek to make better decisions and actively change their day-to-day behaviours, the reality is that they often unknowingly fail to do so. This can be for several reasons, but three primary ones are worth exploring further:

  1. A lack of transparent information

Although consumers think they practice sustainability, they may not grasp the entire reality of a product’s negative impact. This comes down to lack of clear and easy to access information about a product or service. For example, 72% of consumers in the UK are not aware that nearly one-third of solid waste in the US comes from e-commerce packaging, driven by online delivery orders. However, when made aware of this, nearly 61% of consumers in the UK were willing to purchase a less packaging-intensive option. For organisations, providing this level of information can become a real differentiator. We are already seeing the likes of DHL prompting customers to opt for reused packaging when placing new orders and Amazon crediting customers for choosing no-rush deliveries. These efforts are creating signals of intent, bringing consumers closer to these organisations based on shared values.

Moreover, although the consumers of today are time constrained, they are willing to actively inform themselves about the sustainability of products and services they consume. The issue lies not only in the lack of readily available, but also contradictory and sometimes incorrect information, making it difficult to fully understand what the most sustainable options to them are. As consumers make the conscious switch to more organic and plant-based products, they are often left confused with changing, inconsistent information on the level of impact oat or almond milk, for example, has on the environment during its production (like water usage). To counter this, Unilever is planning on putting carbon footprint labels on all its products, with the aim to communicate transparently and holistically, and play its part in reducing emissions by working closely with suppliers to standardise data management.

  1. Low consumer trust on sustainability efforts

Whilst most consumers agree that their retailers have stopped using single-use plastics, introduced in-store recycling of clothes and taken visible efforts towards energy conservation, consumer trust on these initiatives remains comparatively low, at 48%. This comes as no surprise given that still only around 36% of organisations believe consumers are truly willing to shift their purchasing preferences. As a result, their efforts to implement sustainability-driven initiatives have been largely fragmented and poorly embedded across the organisation’s value chain. Moreover, the consumer’s inability to verify product data and an organisation’s true position on sustainability issues, such as fair treatment of labour, has often made them question the authenticity of such efforts.

As a result, we are seeing a large percentage (~53%) of consumers switching to lesser-known brands which may not only work more sustainably, but provide greater visibility into what that means in practice from day-to-day operations to the ecosystem of suppliers and partners. As consumers were previously often unaware, loyalty will be placed on organisations that help bring awareness and improve choices towards sustainability. Walmart is using technologies such as blockchain to trace the path of products from raw materials to store shelves and assure consumers of responsible sourcing. Others have made bold commitments towards the circular economy, communicating this in everything they do and offering new services around it. In its mission to end plastic waste, Adidas has invested heavily in creating 100% recyclable shoes, aimed at having them returned by consumers and remade into new products. Nike’s focus on harnessing sport as a unifying force in the community and strong position around social inclusion and equality – exemplified by a $40m commitment to supporting the U.S. Black community – has seen them gain loyalty. These organisations are demonstrating the positive impact strategic investments in sustainability are having on consumer trust, revenue and profitability (60-80% increase).

  1. Ease of converting good intentions into practice

Although 64% of consumers report feeling happy and sharing an emotional connection when buying sustainable products, converting these intentions into practice is hard to do.  Consumers need organisations to encourage them by making green choices more accessible at the point of decision be it on price, convenience or visibility. We know consumers today are more inclined to purchase seasonal and locally-made products, products nearing their shelf-life as well as those with minimal-to-no packaging. However, the likelihood of doing so is highly increased when those items are clearly sign-posted and accessible. Wasteless helps grocery stores reduce their waste of perishable goods by using AI powered dynamic pricing to incentivise consumers into choosing reduced-price products nearing the end of shelf-life.

Understanding consumer behaviour at the point of decision will be key in ensuring initiatives, such as M&S’ refillable containers and plastic-free produce become first-choice for many, by making them stand out and easy to grab a hold of. The success of sustainability initiatives is determined by how effortless they are to adopt and although the decision lies with the consumer, responsibility remains with organisations. Although 42% of consumers say they ensure product packaging is recycled post purchase, people are often unaware of the nuances in the reality of recycling, such as ensuring items are clean or separating combined packaging like plastic and paper. As a result, what initially seems like sustainable disposal, may not in fact be once items arrive at recycling centres, where they may be disregarded or requiring greater effort to separate materials. To make it easier for consumers to effectively recycle products, Yeo Valley eliminated 109 tonnes of packaging in over a year by redesigning its packaging to reduce the amount of plastic used, remove avoidable cardboard sleeves and sign-post how to best dispose of and recycle post-use.

Organisations should continue to take the sustainability agenda beyond the product. To support and win consumers, they need to ensure sustainability becomes a strategic priority across the organisation’s value chain. This means increasing awareness by providing greater transparency on the sustainability of a product or service throughout its lifecycle and making it a part of the organisation’s purpose. Moreover, measuring initiatives in a test and learn manner to scale successful ones quickly and begin to embed sustainability as a key performance indicator opening opportunities for innovation and new business models to emerge should become a priority.

The second part of this blog will address how organisations can accelerate and achieve sustainability at scale.

 

Author


Natalia Skaloud

Natalia joined Capgemini in January 2017 from a luxury lifestyle PR start-up. As part of the Customer Strategy & Performance team within Customer Engagement, she has a passion for strategy design and using innovative digital technologies to help her clients adopt a customer-centric approach to their services and operations.

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