With consumers being led more by their conscience, a growing number of companies understand the value of sustainability and having clear environmental values.
In April 2022, global retail giants Kohl’s and Walmart received civil penalties of $2.5m and $3m respectively for misleading customers over the labeling of some of their textile products. Advertised by the two retailers as ‘bamboo’, the items were in fact made of rayon, which violated both the US Federal Trade Commission Act and the Textile Act.
From an environmental standpoint, the problem also came from the companies use of terms such as “sustainable”, “highly renewable”, and “environmentally friendly”. While bamboo is a natural product, the manufacture of rayon involves the use of toxic chemicals such as sodium hydroxide and emission of pollutants such as carbon disulfide, carbonyl sulfide, and ethylene oxide that are hazardous to the environment.
The issuing of multi-million-dollar penalties to Kohl’s and Walmart is the latest example of companies falling foul of rules governing the use of misleading environmental claims in their ads. The consequences for greenwashing are clear: break the rules and you could be fined millions, creating unwanted attention and potentially losing billions in future revenue.
Investment not a cost
Of course, being found guilty of greenwashing doesn’t do much for the public perception of a brand – something that can make a dent in sales. And when that perception is built upon the environmental values of the company, that dent can get significantly bigger.
Whatever sector they are in, companies should understand that sustainability is an important factor in business success – an investment rather than a cost. A study by Smurfit Kappa found that 82% of executives treat sustainability as a long-term investment, with 72% of businesses seeing sustainability as a lasting trend, and 83% describing sustainability as an opportunity to be exploited1.
Consumers will now also gravitate towards brands with clear environmental values, preferring to spend their money with companies that take a positive stance on sustainability. The latest NielsenIQ Sustainability Report shows that 42% of respondents consider the sustainability or environmentally friendly claims of a product to be “much more important” than two years ago, with a further 27% seeing them as “a little more important”.
The growing importance of sustainability in the purchase decision is largely due to consumers being a lot more informed about the environment and how their choices can affect a brand’s performance. However, many companies are still missing out on the business potential of strong environmental values and action.
“Consumers want help to live and consume sustainably,” said Nicole Corbett, Vice President of Thought Leadership at NielsenIQ. “However, not all corporations have sustainable practices. Over the past decade, consumers have been calling for a green revolution that has not materialized, and greenwashing and inaction from brands and retailers has left consumers with varying levels of trust in these parties to deliver.”
The young lead the way
It’s perhaps no surprise to discover that young people show more concern for the climate and sustainability than other age groups. In a survey by market research company Savanta, climate change ranked as a top three concern among 18-24 year olds, behind cost-of-living and mental health. Younger consumers are also the most likely (22%) to have participated in a boycott of a brand or product because of sustainability issues.
“What we’ve seen in the last couple of years is a lot less brand loyalty, particularly among the younger generation,” said Nikki Lavoie, EVP of Global Experience Strategy at Savanta. “Let’s see what Generation Alpha does when they’ve got their spending power. If you are not playing the sustainability game, pretty soon you’re not even going to be in the running.”
Future-proof your business
It’s clear that while inflation, energy and other costs are the current areas of concern for companies and brands, in the long term, sustainability must become a key pillar of their core business strategies. Many economists refer to sustainable products as luxury goods – for example, electric vehicles – but setting in place strong eco-friendly practices and halting any greenwashing will go a long way to future-proofing your company.
“The changing climate of sustainability has reached a critical moment, and the next five years will bring dramatic change as companies transform to meet new demands, guidelines, and realities of doing business,” states the NielsenIQ Sustainability Report. “Authentic action from proactive and genuine companies will have a strategic advantage as industries scramble to meet requirements and mandate sustainable efforts.”
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1Balancing Sustainability and Profitability survey, 2020
2NielsenIQ Sustainability report, 2023
3Savanta Eco Segmentation report, 2023