A new report from Bain & Company suggests that consumers would be willing to pay a premium for sustainable products – 12% on average – but most agree that eco-friendly products are priced too high.
Bain’s report, The Visionary CEO’s Guide to Sustainability, suggests that consumers are ‘running into barriers’ when seeking out sustainable products, most notably on price.
For example, in the US, consumers would be willing to pay an average premium of 11% for products with a low environmental impact – however the average premium on said products is 28%.
Elsewhere, in markets with a high level of environmental concern among consumers, such as India, Indonesia, Brazil, and China, consumers would be willing to pay an even higher premium, of between 15% and 20%, for products with a minimised environmental impact.
Consumers in the UK, Italy, Germany, and France, on the other hand, would be willing to pay between 8% and 10% extra.
Changing behaviour
The study also suggests that consumer behaviour when it comes to environmental matters can change more quickly than many companies anticipate, particularly if government intervention is involved.
China, for example, introduced financial incentives for electric vehicles in 2009. Currently, 19% of Chinese consumers report driving an electric car, a significantly higher figure compared to the global average of 8%. Other countries have seen a marked decline in the use of disposable plastic bags once a charge has been introduced on said items.
Consumers also struggle to identify sustainable products, Bain found, and ‘don’t trust’ corporations to develop them properly.
According to Bain, half (50%) of consumers identified sustainability as one of their top four key purchase criteria. However, when asked to discern which of two given products had higher carbon emissions, consumers were either mistaken or uninformed about 75% of the time.
This suggests that despite the emphasis on sustainability, there may be misconceptions influencing consumer decisions.
Corporate sustainability
At corporate level, the study found that more than 60% of businesses are currently ‘off track’ to meet their current sustainability targets – achieving this will require a combination of technology, policy, and behavioural change, it added.
“We have spoken to thousands of executives about their sustainability ambitions and the associated trade-offs,” said François Faelli, partner and head of the global Sustainability practice at Bain & Company.
“They know they have a key role to play in the energy and resources transition. Many view this as their legacy, but they are worried about the growing gap between their progress and public commitments. While it will not be easy, there are three levers CEOs must prioritise: policy, technology, and behaviour.”
