Consumer attitudes and perceptions on sustainability

Consumer attitudes and perceptions on sustainability June 2010

Contents Summary Page 2 Part I: Methodology 4 Part II: Findings Consumer attitudes towards environmental and ethical topics 5 Environmental & ethical considerations in consumer buying behaviour 7 Consumer Perceptions of business attitudes to environmental responsibilities 11 Opportunities to influence consumers 14 Opportunities to increase consumer satisfaction 16 Part III: Conclusions and recommendations 19 Summary This paper deals with the impact of environmental and ethical considerations on consumer buying behaviour, and is based on the survey responses of 766 members of the Guardian News and Media consumer Brand Aid Panel. Respondents indicated strong concerns about environmental and ethical issues. Over 80% highlighted CO 2 emissions, pollution and over-use of resources as key concerns, and human rights was the strongest ethical concern. Over 80% indicated concerns over all of the elements in a typical consumer goods supply chain, with the strongest focus on packaging, waste disposal, and transportation. Consumers do think about the environmental and ethical aspects of their purchase, although the emphasis varies according to the type of purchase. Over 60% said they think about ethics when purchasing clothing, and over 80% think about the environment when purchasing groceries or transport. However, environmental sustainability is only one factor in the decision to buy, with price, quality and availability being more important; although 79% indicated that a company offering products and services with low environmental impacts would be more likely to win their loyalty. Two out of every three consumers consider ethical and environmental assurances to be important in developing loyalty. Unfortunately, there is a mismatch between what consumers expect businesses to do on sustainability and their perception of what is being done. Over 80% indicated that energy, manufacturing and transport sectors should place a high priority on environmental sustainability; but over 70% also think that energy, manufacturing and transport companies are not environmentally friendly and have little concern for the environment. Consumer attitudes and perceptions on sustainability 2

For companies to change perceptions, it is important to get third party endorsements and awards and positive media coverage. Corporate pledges to increase environmental activities are not valued unless they are in the form of public commitments to meet relevant targets. Companies can get their message across by making an effort to reduce packaging and provide more informative labelling: 70% of consumers are very likely or somewhat likely to be convinced by packaging or labelling that reflects a genuine concern for the environment. In addition, over 90% could not, or were not sure that they could, trust a company director to be honest in communicating their approach to climate change. Price promotions and free trials are the most valued incentives for consumer loyalty at all income levels, and matches the perception of it being expensive to buy green : over 80% of consumers feel that they pay more in being environmentally friendly and ethical, and over 90% tend to assume that the cheaper the product, the less environmentally friendly it is likely to be. Nearly one third of respondents feel that the single most frustrating aspect of trying to be more environmentally responsive is the lack of objective and trustworthy information to help them decide which products or services have less environmental impact. Over-packaging, cost, and lack of availability and choice were the next most common gripes. Customers want to be reassured that there are good reasons for green products to be more expensive and that they are not just contributing to inflated company profits. Companies need to pay attention to price, quality, and availability in addition to environmental sustainability. Focusing on one aspect at the expense of the others, even if that aspect is sustainability, is not a route to success, even with a consumer community that is very environmentally conscious. Consumer attitudes and perceptions on sustainability 3

Part I Methodology Methodology Guardian News and Media (GNM) has established a Brand Aid Panel of over 3,000 GNM consumers, people who use its print and online products. The panel is weighted by age, gender and frequency of Guardian, Observer and guardian.co.uk usage to match the known consumer profile. During early June 2010, the panel was sent a questionnaire to determine attitudes towards various environmental issues, buying behaviour, and influences. This paper reports the results from that survey. A total of 766 consumers responded to the questionnaire, fairly evenly split between male (54%) and female (46%). Respondents are representative of the total GNM panel. They tend to be well educated, mature, and relatively affluent: 86% have college or university degrees, 54% are aged between 35 and 54, and 62% have a gross household income of more than 40,000. Gross Household Income > 90.000 GBP 11% < 19,999 GBP 10% 70,000-89,999 GBP 13% 20,000-29,999 GBP 12% 50,000-69,999 GBP 22% 30,000-39,999 GBP 16% 40,000-49,999 GBP 16% 86% indicated that they were the person primarily responsible for the daily purchase of goods. Some differences emerged in responses from men and women, and from different age groups, but overall there were few substantial variations across the different demographic groups. In particular, neither income level nor primary responsibility for daily purchases seemed to affect responses. Those respondents who declared that they were very interested in outdoor life (203 of the sample) do tend to show more concern about environmental issues. Consumer attitudes and perceptions on sustainability 4

Part II Findings Consumer attitudes towards environmental and ethical topics Respondents were asked questions to establish the extent of their concern about environmental and ethical issues. Because the panel is drawn from readers of The Guardian, we would expect its members to have strong concerns over most environmental and ethical issues, and that was the case. Based on a 1 to 5 scale of concern, where 5 is very concerned and 1 is not at all concerned, the average scores on all environmental issues were well over 3.5. 5 How concerned are you with the following environmental sustainability issues? 4 3 4.13 3.92 4.29 4.16 3.96 3.91 4.16 2 1 0 Over 80% indicated strong concerns over CO 2 emissions, pollution and over-use of resources. Women indicated more concern than men over some of the issues, particularly landfill. 80% of women are very or somewhat concerned about landfill compared to 65% of men. Older respondents in the 55-79 age group expressed stronger concerns about CO 2 emissions, pollution, and over-use of resources compared with the sample as a whole. For example, 63% are very concerned about pollution compared with 48% of the total sample. As might be expected, those who are very interested in the outdoor life also expressed more concern about issues such as biodiversity, pollution, landfill and CO 2 emissions. For example, 52% of outdoor types are very concerned about CO 2 emissions compared with 39% of the total. Consumer attitudes and perceptions on sustainability 5

5 How concerned are you with the following ethical issues? 4 4.14 4.4 4.09 3 3.63 2 1 0 Labour rights Human rights Occupational health & safety Fair trade On ethical issues, human rights attracted the highest average score of 4.4. The lowest average score of 3.6 was for occupational health and safety, reflecting a higher percentage (28%) of consumers who have no opinion either way. This may have been because the issue is less well publicised in the media or that they have had limited experience of it themselves. It is interesting to note that consumers in the older age group (55-79) expressed more concern over occupational safety and health, with 36% being very concerned compared with 21% of the total sample. It is likely that they have had more exposure to safety issues in the workplace over their lifetime. Women are more concerned than men about fair trade issues: 49% of women are very concerned, compared with 27% of men, while 21% of men have no opinion on the issue. Older respondents are also more concerned about fair trade, with 51% of those in the 55-79 age group indicating that they are very concerned compared with 37% of the total sample. Respondents reinforced their commitment to environmental and ethical responsibility: over 80% indicated that all of the elements are of some environmental concern to them, especially packaging, waste disposal, and transportation. Over 50% indicated that packaging and waste disposal are very much a concern. This finding is not surprising, given that these issues are the most visible to consumers on a day-to-day basis. Those who are very interested in an outdoor life focused more on water use, the amount of CO 2, transportation and packaging as key concerns. For example, 70% of this group noted that they are very concerned about packaging and 57% are very concerned about the amount of CO 2 ; while only 44% of the total sample said they are very concerned. Consumer attitudes and perceptions on sustainability 6

Which elements in a typical consumer goods supply chain are of most environmental concern to you? Water use Amount of CO2 Waste disposal (end of life) Transportation Packaging Manufacturing processes Extraction of raw materials 0% 20% 40% 60% 80% 100% Very much a concern No opinion either way Not a concern at all Something of a concern Not that much of a concern Environmental and ethical considerations in consumer buying behaviour Given their high concern for environmental and ethical issues, it is not surprising that consumers think about the environmental and ethical impact of their purchases, although the focus varies with the type of purchase. It is notable that respondents with the highest household income levels (more than 90,000) are more likely than the sample as a whole to think about the environmental impact when buying groceries (91% vs. 81%) and utilities (75% vs. 64%), but these seem to be the only substantial variations linked to income. When buying clothing, more consumers consider the ethical than the environmental impact, and when purchasing transport or household appliances, consumers focus more on the environmental aspects. But these results tell us nothing about the effect of that consideration. 60% of consumers might consider the ethics of buying a cheap t-shirt, but that does not mean that all of them will instead choose one that costs twice as much but has fair trade assurances. Similarly, the fact that over 80% of consumers consider environmental aspects in their transport purchases does not translate into an 80% market share for electric cars. Consumer attitudes and perceptions on sustainability 7

% respondents 90 80 70 60 50 40 30 20 10 0 Do you think about the environmental and ethical impacts when making the following type of purchases? Groceries Clothing Consumer technology Financial services Yes I think about the environmental impact Yes I think about the ethical impact No I think about neither Transport Utilities Household appliances The reason is that environmental sustainability is only one factor in the decision to buy: price, quality and availability are more important. If electric cars are more expensive or less functional than their diesel or petrol powered equivalents, then the decision to buy is less clear cut. As the following chart shows, over twice as many consumers (68%) feel that quality is a very important factor in their purchases compared with environmental sustainability (33%). Nevertheless, over 80% of consumers do perceive environmental sustainability as an important, if not the only, factor in their purchase process. More women (42%) than men (24%) noted that environmental sustainability is very important in their decision. 45% of respondents in the 55-79 age group indicated that environmental sustainability is very important (compared to 33% for the sample as a whole). But more important to older consumers is the question of availability: 67% feel it is very important compared with 52% for the total. This is likely to reflect a propensity to shop at convenient local stores. Consumer attitudes and perceptions on sustainability 8

When buying products or services, how important are the following factors in your decision to buy? Quality Time pressure Brand loyalty Price Environmental Sustainability Availability 0% 20% 40% 60% 80% 100% Very important No opinion either way Not important at all Slightly important Not that important Most consumers said that companies that focus on reducing their environmental impact could be more likely to win their loyalty. When asked the specific question, 79% said yes, 15% were not sure and only 6% were negative. But loyalty does not automatically translate into purchase of products or services. As seen in the chart above, brand loyalty in itself is not the most important factor in decisions to buy. But increased loyalty does mean that consumers will be more likely to evaluate a company s product or service to determine if it meets the more important standards of quality, price and environmental sustainability. Would a company offering products and services with low environmental impact be more likely to win your loyalty? No 6% Not sure 15% Yes 79% Again, there are multiple factors in generating loyalty. Over 90% of consumers consider consistent product quality to be important, but over two-thirds also attach significance to environmental and ethical assurances. Consumer attitudes and perceptions on sustainability 9

90 Are the following factors important in developing your loyalty to a specific product or service? 80 70 60 % respondents 50 40 30 20 10 0 Price promotions Free trial products Joint offers with other environmental and ethical brands Frequent buyer points for donations to environmental causes Company commitment to donate percentage of profits to relevant causes Yes No Don't know Note that 80% of women and only 58% of men feel that ethical assurances are important. 76% of women and 58% of men feel that environmental assurances are important. Consumer attitudes and perceptions on sustainability 10

Consumer perceptions of business attitudes to environmental responsibility For two out of every three consumers environmental and ethical assurances are important in generating loyalty, so businesses have to understand expectations and perceptions. In the area of environmental sustainability, consumer expectations are high and current perceptions are low. % respondents 100 90 80 70 60 50 40 30 20 10 0 What level of priority do you think the following business sectors should put on environmental sustainability? Energy Manufacturing Transport Retail Health Technology Media Telecoms Financials High priority Low priority No opinion either way Not relevant to this industry Expectations for the energy, manufacturing, and transport sectors are very high, with over 80% of consumers indicating that these sectors should place a high priority on environmental sustainability. Expectations are lower for the financial, health, media and telecommunications industries, but nevertheless over 60% feel that environmental sustainability should have a high priority in these sectors. It is clear that business sectors are not living up to those expectations: the sectors with the highest expectations seem to be those that are perceived to have least concern for environmental issues. More than 70% think that energy, manufacturing, and transport sectors have little concern for the environment. No-one indicated that they thought manufacturing or transport are very environmentally friendly perhaps because the evidence of pollution or use of scarce resources is more visible? Consumer attitudes and perceptions on sustainability 11

Financials Telecoms Technology Health Retail Transport Manufacturing How concerned with environmental issues do you think the following business sectors are? Media Energy 0% 20% 40% 60% 80% 100% Very environmentally friendly No opinion either way Not at all environmentally friendly Somewhat environmentally friendly Not that environmentally friendly In addition, there is a lack of trust in corporate leaders about their commitments and activities. Over 90% could not, or were not sure that they could, trust a company director to be accurate in communicating their approach to climate change. Would you trust a company director to be accurate about their approach to climate change through blogs, forums, webcasts, live Q&As etc? Yes 4% Not sure 32% No 64% This finding reflects some of the concerns expressed in Section 6 about industry s inability to distinguish marketing hype from reality. Consumer attitudes and perceptions on sustainability 12

Even companies that are perceived to be socially responsible are not necessarily seen to be environmentally responsible. Only 16% of survey respondents linked the two aspects, although 50% were not sure. Would being aware of a company as a responsible corporate citizen, involved in social and community work, convince you that the company was also environmentally responsible? Yes 16% Not sure 49% No 35% Directors of corporate social responsibility should take note of these findings. Revelations about the lack of consistency between corporate actions and corporate communications are very damaging to consumer perceptions, and there is a reason that the term greenwash is gaining ground. Consumer attitudes and perceptions on sustainability 13

Opportunities to influence consumers Third party endorsements, awards and positive media coverage have a greater impact than a company s communications or advertising on whether consumers are convinced of its sense of environmental and ethical responsibility. Corporate pledges to increase environmental activities are not valued unless they are in the form of public commitments to meet relevant targets. What factors would help to convince you that a company was treating environmental and ethical issues as a high priority? Corporate pledges to increase environmental activities Consumer champions Company communications Environmental awards Scientific endorsement Public commitments to relevant targets Positive media coverage Packaging Labelling Advertising 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very likely to convince Not that likely to convince Somewhat likely to convince No opinion either way Not at all likely to convince Nevertheless, companies can get their messages across through attention to packaging and more informative labelling: 70% of consumers are very likely or somewhat likely to be convinced by packaging and labelling that reflects a genuine concern for the environment. A focus on reducing packaging and using recyclable packaging materials is critical. Men are perhaps more sceptical than women: 19% of women would be very likely to be convinced by labelling but only 7% of men. Over 80% of women would be very or somewhat likely to be convinced by packaging compared with 62% of men. These results are consistent with the responses to a more general question on the strongest influencers in understanding environmental sustainability. Over 80% of consumers indicated that news media and documentaries are very or somewhat influential, followed closely by environmental organisations. Peer groups, family and government are the next strongest influencers, with over 50% noting that they are very or somewhat influential. Not surprisingly, more consumers (43%) with a strong interest in outdoor life indicated that environmental organisations are very influential than the sample as a whole (29%). Consumer attitudes and perceptions on sustainability 14

How influential are the following in your understanding of environmental sustainability? Corporate communications Family Blogs & other web-based communications Environmental organisations Social networking sites News media Documentaries Celebrities Advertisements Government Employer Peer groups and friends 0% 20% 40% 60% 80% 100% Very influential Somewhat influential No opinion either way Not that influential Not influential at all For increasing market share of established environmental brands, price promotions and free trials are the most valued incentives. This finding is consistent across all income levels and fits with concerns expressed in Section 6 about the high price of buying green. 90 Are the following factors important in developing your loyalty to a specific product or service? 80 70 60 % respondents 50 40 30 20 10 Yes No Don't know 0 Price promotions Free trial products Joint offers with other environmental and ethical brands Frequent buyer points for donations to environmental causes Company commitment to donate percentage of profits to relevant causes Consumer attitudes and perceptions on sustainability 15

Opportunities to increase consumer satisfaction In the March survey, we noted that 81% of consumers felt that they needed to make sacrifices to be green. In this survey we asked about the extent of the sacrifices in specific areas. Over 80% said they sacrificed price competitiveness when buying products that are environmentally friendly and ethical. Consumers perceive that environmentally responsible products are likely to be sold at higher prices, and over 90% tend to assume that the cheaper the product, the less environmentally friendly it is likely to be. Do you tend to assume that the cheaper items in a product range are likely to be less environmentally friendly? No 9% Yes 43% Yes, but only sometimes 48% Analysis of responses to an open ended question, on the single most frustrating aspect of trying to be more environmentally responsive when purchasing, revealed that nearly one third believe there was a severe lack of objective and trustworthy information to help them make decisions. In particular, they do no trust companies to be objective in describing their offerings, and are frustrated in their attempts Consumer attitudes and perceptions on sustainability 16

to determine how to trade-off various factors such as miles travelled, ethical trade practices, packaging, and organic and responsible farming practices to make them comfortable with their purchases. What's the single most frustrating aspect of trying to be more environmentally responsible when purchasing products or services? 250 Number of mentions 200 150 100 50 0 Lack of trusted & Too much packaging Cost Choice and/or objective information on environmental impact availability Lower quality/effectiveness Other Over-packaging (particularly linked to recycling issues), cost (linked to potentially lower quality) and lack of availability and choice were the next most common gripes. There was some indication of concern that paying more an environmentally friendly product or service does not necessarily mean it is high quality, and that it could be less effective than a product that does not claim to be green. Some of the comments revealed the extent of consumer concerns about the difficulty of trying to be environmentally responsible and manage the trade-offs. Consumers vented their frustration on corporate and product marketing: Some products and services are more environmentally responsible, others just have a 'greenwash' of PR and marketing to make them appear responsible... it's very difficult to tell the difference Really knowing what the impact of a product is - the company wants to sell its credentials so is selective about focusing on the positives. Other consumers appear to have a genuine understanding of the complexity of the situation and are seeking help: The complexity and apparent conflict. For example, we're told to buy locally produced food - but this isn't always the most environmental approach. Weighing up the relative importance of different aspects. eg organic milk in a carton versus non-organic milk in a reusable bottle. Which is better? Many such dilemmas every day! Lack of a single unifying measure of environmental impact. Something can be low carbon but high water use. How do you weigh up the balance? Consumer attitudes and perceptions on sustainability 17

Not understanding the trade-offs; e.g. food miles vs. sustainability vs. ethics and fair trade. I don't want to decide arbitrarily on a single issue and buy on that basis Availability of INDEPENDENT UNBIASED information On pricing, some consumers expressed concern about limited budgets; others were more concerned that they get value for their money. That you invariably have to pay a higher price for green, eco-friendly brands. Makes the whole thing just seem like another angle to rip off the consumer with. Feeling that you are paying a premium for environmentally responsible goods. They appear to be marketed and priced toward the upper end of the market. One consumer succeeded in summing up his frustration and the findings around buying behaviour very succinctly: The apparent belief amongst the providers of said goods and services that a green or ethical label can act as a substitute for quality and price. It can't. Price and quality always, always, always come top. Green / ethics are a tie breaker. Increasing customer satisfaction means paying attention to price, quality and availability in addition to environmental sustainability. Focusing on one aspect at the expense of the others, even if that aspect is sustainability, is not a route to success, even with a very environmentally conscious consumer community. Consumer attitudes and perceptions on sustainability 18

Part III: Conclusions and recommendations Conclusions and recommendations Corporate environmental and ethical credentials are important factors in determining loyalty and the decision to purchase, but they are not the only ones; quality and price are more important. It is a combination of factors that converts consideration and loyalty into an actual decision to purchase. Communications around corporate environmental and ethical responsibility are significantly more effective if driven through or endorsed by third parties. This puts the onus on a company to ensure that its commitments stand up to scrutiny and that its actions support its assertions. Companies need to build consumer trust in their ability to follow respond effectively to environmental or ethical concerns. Window dressing can ultimately be damaging to the reputation of a company. The price of being green is a concern, but the underlying message is that consumers are looking for value for their money. They want to be assured that there are good reasons for environmentally responsible products to be more expensive and that they are not just contributing to inflated company profits. There are opportunities to increase customer satisfaction through more open communication and ensuring that the combination of price, quality, availability and environmental sustainability provides appropriate value. The lack of universal guidance and benchmarks for comparing the environmental impact of products and services is the most frustrating aspect for consumers who are trying to be environmentally responsible in their purchases. Perhaps there is an opportunity for the new government to provide some leadership in this area? If you require further information, please contact: Philippe Martin Tel: +44 (0)20 3353 2445 Email: Philippe.martin@guardian.co.uk Consumer attitudes and perceptions on sustainability 19