In survey after survey consumers have said they’re willing to pay more for sustainably-produced products, but when it comes to being sustainable, actions speak louder than words.
Luckily for the planet, research from the New York University Center for Sustainable Business (CSB) shows shoppers aren’t all talk but are actually following through with buying more sustainable goods.
“Across virtually every category of consumer packaged goods (CPG), sustainability is where the growth is, which I think tells you something about where consumers are,” CSB Director Tensie Whelan tells Fortune. While there might still be a gap between intentions and actual purchasing, Whelan says, “the bottom line is if you look at our data there is a massive shift in the last five years.”
CSB analyzed purchasing data on the sales of over 71,000 products in 36 different categories of consumer package goods. Items were considered sustainably-marketed if they were advertised with certain criteria, like being non-GMO, plant-based, or certified by a third party like the Rainforest Alliance or Fair Trade.
After combing through the data, CSB found 50% of sales growth among consumer packaged goods (CPG) between 2013 and 2018 came from these sustainability-marketed products, despite the fact such goods account for just under 17% of the market.
“The area of consumer packaged goods—food, personal care products—is an area where there’s been significant growth in demand for sustainability-marketed products,” Whelan says.
The growth of the sustainable marketplace isn’t an entirely new phenomena. According to market research firm Nielsen, just 22% of the world’s consumers were willing to pay more for an eco-friendly product in 2011, despite the fact 83% thought it was important for companies to have environmental programs.
In 2015, according to Nielsen, the number of willing consumers crossed the 50% threshold and dollar-sales of sustainability-committed brands grew four times more than those that didn’t advertise as sustainable. However, the data isn’t conclusive: research released by professional services firm Accenture last June found consumers still consider quality and price above environmental impact when making a purchase.
In its analysis of U.S. sales, CSB found a slightly higher growth rate in sales of sustainable products across its five years of study than Nielsen did. According to CSB’s data, reported earlier this year, sales of sustainability-marketed products grew 5.6 times faster than conventionally-marketed products, when measured by gross merchandise value. In over 90% of the individual product categories, the sustainability-marketed products outperformed their conventional counterparts.
However, there’s still room for even more sales growth in sustainable categories, particularly among consumer products valued for their efficacy—such as laundry detergent. Consumers may be hesitant to trust the effectiveness of a sustainable version right now, creating lower sustainability purchasing, said Whelan, but growth is spiking as more effective options enter the marketplace.
Indeed, environmental risk management firm CDP found six out of the seven of the largest publicly listed household consumer goods companies are actively innovating to replace petrochemicals in their products with natural, biodegradable ingredients.
Most major consumer good companies, however, are putting off such development by acquiring smaller, more environmentally conscious brands, CDP reported in February. This allows the major corporations to remain competitive without changing their core brands.
“Marketing firms and brand managers operate using an outmoded paradigm,” said Whelan. “Sustainability is the new disrupter from an environmental and social perspective.”
“Business leaders need to understand that consumer tastes are indeed changing,” Whelan continued, “and that if they don’t begin to change to address that shift, their company will lose market share.”
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