Are People Making Purchasing Decisions Based on Environmental & Social Factors?
You could say I am "all-in" on voting with my wallet to purchase from companies that support environmental sustainability and social equity.
A company's ethics and decisions around their responsibility and commitment to society influence all of my purchasing decisions: food & beverage, clothing, retirement accounts & other investments, vehicles, bank accounts, travel, and household goods... you name the category, and I'm going to look into a company's ethics before spending money with them.
Is my type of values-driven buying behavior rare or common? Significant or fringe? Should companies care or not?
A joint study from McKinsey and NielsenIQ reveals essential data that companies should pay attention to.
Here are my top 3 takeaways from their report:
Products making ESG-related claims (eco-friendly, environmentally sustainable, fair trade, woman/minority-owned, carbon neutral, etc.) averaged 28% cumulative growth over the past five-year period vs. 20% for products that made no such claims.
Brands of different sizes making ESG-related claims achieved differentiated growth. 88% of private labels, 53% of small brands, 50% of large brands, and 38% of medium brands had outsized growth for their ESG products.
Combining claims may prove more authenticity and believability. In nearly 80% of the product categories, the data showed a positive correlation between the growth rate and the number of distinct types of ESG-related claims a product made.
It turns out that there are A LOT of values-driven consumers like me! That will only increase as the buying power of Millennials and Gen Z continues to grow.
I will add one more critical point. These environmental & social claims for products must be authentic and have high integrity. Brands that make false claims will be discovered and punished by consumers in the age of transparency we enjoy today.
Do it right, and you'll reap the benefits of increased profits while you benefit people and the planet. Do it wrong, and you will lose your social license to operate your business.