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The world is in a “permacrisis” and 2022 has been an unprecedented year of instability and inflation. So it is valid to ask the question, if and to what extent sustainability is (still) important.
Consumers’ answer is “yes, it is highly important”. They are concerned about environmental pollution, climate change, and expect more responsibility. In addition to the product range and the classic needs that a product or brand fulfills, more consumers consider the values, a brand represents and how a brand behaves, as relevant.
According to GfK's Consumer Life Global report 202273% of global consumers think it is important that companies take environmentally responsible actions, and
36% of global consumers will select one brand over another specifically because it supports a cause they believe in.
This represents two billion consumers worldwide, who are more quality than price-oriented: ‘eco-actives’ are a valuable target group. Hence, sustainability also has a major impact on the economic success of companies. GfK estimates that by 2030, eco-actives around the globe will spend more than 1,000 billion US dollars on FMCG and over 700 billion USD on technical consumer goods.
Inflation rockets to the #1 societal concern
Over the past years and accelerated by the COVID-19 pandemic, environmental awareness has developed into a personal core value of consumers. In our ‘Consumer Life Study’, we are observing a value shift beyond the self towards the planet. From 2016 to 2022, in almost all 28 countries surveyed, the importance of preserving the environment has increased – with China being the only exception. 52% of consumers stated that sustainability became more important to them due to the COVID-19 crisis, resulting in a closer connection with nature.
It is no surprise, however, that this year, inflation rocketed to the No. 1 societal concern in twelve of the 22 markets in the Green Gauge study, mostly driven by consumers in North America and Western Europe.
Nevertheless, attitudes and behaviors towards the environment prove to be resilient. In 2020, climate change was the top concern, pushed down by the pandemic, but it remains stable in third place. 72% of consumers identify climate change as an extremely or very serious issue, with environmental pollution also constantly in the global top 5 since 2018 – five years of persistent concern for the environment.
With more floods, droughts and forest fires than before, climate change is affecting everyone, resulting in a change of attitude. Whereas climate and nature used to be topics for young and middle-aged people, now 73% of people over the age of 60 identify climate change as a serious issue (+10 points since 2012), adding to the tremendous momentum behind sustainability.
While only half of consumers think that they personally can make a difference for the environment, 80% expect companies to pay attention to the environment – and more companies accept this responsibility. However, 6 out of 10 consumers are skeptical and believe that companies are only interested in their profits, suspecting greenwashing.
One brand that has managed to build a very high level of trust in terms of sustainability through consistent action over the years is Patagonia. Recently, Patagonia made headlines with the decision to give the company to a charitable trust to fight climate change, thus safeguarding the company's mission for future generations.
In addition to consumers, government institutions are increasing their pressure on companies to act more sustainably. In a display of progressive local politics, the Dutch city of Haarlem, for example, has banned public advertising for meat products.
The increased cost of living is now resulting in a conflict between sustainability and inflation. With their personal economic security at stake, consumers are changing their attitude toward sustainable products: four out of ten are finding it more difficult to act sustainably because of the pressing economic situation. While price (at least in perception) has always been the top barrier for shoppers to refrain from buying sustainable products, now 60% of consumers state that environmentally friendly alternatives are too expensive.Even before inflation, consumers were most likely to do the things for the environment that also helped them
with their household budget: 90% would save energy and 80% would save water. Now, the rising energy costs are turning into a major concern, especially for people on low incomes, and in countries such as in the UK and the Netherlands. In addition, consumers that worry about the economy, will try to reduce their energy and water consumption even further. And in some countries, the general public is called upon to save energy: a current campaign in Germany is focusing on social responsibility and calling on people to work together to reduce consumption and push renewable energy sources. Similarly, German companies are requested to cut their energy consumption, especially gas, by 20% and explore alternatives.
The pressure to save energy and water provides a window of opportunity for durables, a market, where the choice of eco-friendly products is still extremely low1. For example, currently, only 1.6 out of 10 washing machine brands are considered to be eco-friendly. The fact, that has already hit the durables sector: in the first half of 2022, total sales value declined by -5.5% compared to the same period in 2021. Nonetheless, the market still offers pockets of potential value growth in areas where stretched consumers are willing to make purchases, for example to counterbalance financial pressures. This includes the replacement of dated “energy guzzlers” as well as, e. g. energy-efficient thermostats.
At this years’ international trade show for durables and consumer technology – IFA in Berlin –, for example, sustainability was the most important topic, from domestic energy and water saving appliances to smart thermostats and solar gadgets2.
1 - GfK Blog, June 2022: Champion sustainability and grab first mover advantage in technology and durables2 - Merkur München, Sep 1, 2022: Technik-Messe gibt sich grün: IFA setzt auf Energiesparen; Handelsblatt, Sep 1, 2022: Nach dem Corona-Boom: Die Elektronikbranche setzt auf Sparsamkeit
While only half of consumers think that they personally can make a difference for the environment, inflationary pressures are now pushing them to shift from buying to saving, thus supporting the environment indirectly.
Inflationary pressures shift focus from buying to saving
Conservation and minimizing consumption are important strategies for those worrying about a budget squeeze. Concerned consumers state that they will recycle more, and reduce their energy and water consumption. Especially in Western Europe, reducing food waste is a declared strategy to cope with inflation. But with budgets declining, households will also lower their environmental considerations related to new purchases and make fewer financial contributions to environmental NGOs.
Across Europe the economic uncertainty and inflationary pressures are hurting the consumer climate. Consumers are extremely hesitant to make major purchases. However, they are still – at least in high GDP countries like Germany – willing to buy sustainably, reflected in a fairly stable GfK Sustainability Index. Also, two thirds of consumers are willing to pay a higher price – an opportunity for companies even in times of crisis.
Even more so, for companies in FMCG, where 27% of consumers want to make major purchases sustainably in the future and 64% of consumers plan to buy products for daily use sustainably in the future.
GfK Consumer Climate Germany August 2022
GfK sustainability index Germany 2022
