On Wednesday, we led our regular office hours with students from the Polsky Center for Entrepreneurship and Innovation of Chicago Booth. While advising the CPG and B2C entrepreneurs, the theme of Conscious Consumerism and its impact on modern companies kept coming up. With the topic being more important than ever, we created a quick run-through of the term and the key factors that should influence your business decisions:
What is conscious consumerism?
Conscious consumerism has occurred when consumers’ commitment to positive social, economic, and environmental impact drives their purchases.
The term was first coined in the 1970s by two professors at The University of Texas in Austin. However, the first signs of the movement were identified in the 1950s by economist, James Buchanan who called individual participation in the economy a “form of pure democracy” (or “dollar voting”).
Present-day and beyond
Consumer interest in sustainability has been growing for years. According to insights company Nielsen, by 2021, we expect sustainably-focused consumers in the U.S. to spend $150 billion on sustainable products. Governance and Accountability Institute reported that before 2013, only 20% of S&P 500 companies chose to disclose their environmental, social, and governance (ESG) information. However, following conscious consumer trends, in 2019, 90% of S&P 500 companies published sustainability/responsibility reports. According to Research World’s study, one in five consumers have ‘buycotted‘ a brand because it was not sustainable at least once (27% of Gen Z).
According to InSite Consulting, Trust will be one of the main KPIs in the new sustainable era, with only 41% of consumers trusting brands that make sustainability claims, and 7 out of 10 asking for more transparent and reliable information. Half of the consumers in IC’s research believe that sustainable brands are more up-to-date, and 41% think they offer better quality.
Impact on business
According to Unilever, their purpose-led brands grew 69% faster than the rest of the company. In a global study led by InSites Consulting that occurred before COVID-19, 8 out of 10 consumers found sustainability “important” to “very important.”
“The key issues that companies and brands should address are recycling, reducing packaging (especially single-use plastic), reducing CO2 emissions, preserving and restoring biospheres, and abstaining from using artificial and chemical ingredients in production. The youngest segment of the sample – Generation Z – places more emphasis on fair wages, gender, and race equality, and LGBT+ rights. Sustainability as we knew it before COVID-19 – maximizing profits while doing less harm to the planet and people – will have to be replaced by “climate-plus” or “net-positive” thinking.”
Given the past decade’s consumer trends catalyzed by this year’s events, responding to conscious consumer behaviors and incorporating them into a business strategy is no longer a nice-to-have option but a vital play to consider if businesses value longevity.
To round things off, here’s a brilliant infographic by good must grow of their conscious consumer index, factoring in the covid-19 pandemic: