Conscious consumers are taking over
There is a shift underway that will see conscious consumers dominate the market. Once a fringe segment, sustainability-conscious consumers are set to become the majority within five years, which raises questions for the pricing of ‘sustainable’ products.
“You cannot continue to extract a ‘niche’ premium from a group of consumers that are no longer niche,” says Jason Cate, sustainability transformation practice lead at research firm Kantar New Zealand.
Cate was speaking at a Director Lens on Consumer Sustainability Insights webinar, hosted by the IoD’s Chapter Zero NZ. He said the cost of living crisis was impacting Kiwi consumers’ ability to purchase sustainably produced products, and the lesson for sellers to find ways to deliver their products at a good price.
“We know that the key levers to start closing that gap are to, firstly, improve the cost benefit ratio of what we are offering. I stress here that that's not just about pricing. It is as much to do with what I get for what I pay, as much as purely what I pay” Cate says.
A second consideration is for companies to provide enough information about a product for consumers to trust that it really is produced sustainably.
“It's showing consumers that their actions will make a difference.”
Speaking at the same event, Sustainable Business Council Communications Manager Rebecca Lowe highlighted trends in sustainability, starting with ensuring your company's environmental and social claims support an overall sustainability strategy.
“This means working with your executive teams to explore how to integrate sustainability across all aspects of your company from procurement to product design, to asset management, as well as communications and marketing,” Lowe says.
Her second trend was investing in environmental, social and governance goals through your existing brands, as well as through new products.
“This means exploring how environmentally and socially responsible products can account for a significant share of your company's innovation pipeline,” she says.
Products aligned with this trend include Silver Fern Farms’ net carbon zero beef products, Zespri embarking on a zero carbon sun gold kiwifruit trial, and New Zealand Post developing carbon-neutral postal services, Lowe says.
“The final trend I wanted to mention today is embracing the holistic, interconnected nature of ESG by creating products and services addressing multiple concerns. Climate change is closely connected to all other sustainability issues such as climate resilience, adaptation, waste, equality, and of course adjust transition. Directors need to be asking how can their businesses design products against a suite of environmental and social outcomes?”
The final speaker was director Sarah Ottrey CFInstD, chair elect of Christchurch Airport. She described some of the initiatives that led it to be first airport in the world to get a level four carbon accreditation from Airports Council International.
The Airport has reduced its Scope one emissions by 85% and other initiatives including transitioning to an all-electric vehicle fleet including an electric fire engine due to arrive in two years, and undertaking zero-emissions test flights with electric planes, Ottrey says.
A big part of that reduction was an unusual use of subterranean water for heating.
“We pull that up out of the ground, circulate it through our buildings and then put it back into the ground. We only need to heat the building a little bit – we don't have to go from zero to 16 degrees, we can go from 12 to 16. And that has been a substantial contributor.”
The airport’s reputation has paid off not just with consumers but also with staff. Ottrey says people choose to work there because of its sustainability credentials.
“I was sitting through a final interview with the general manager position and in asking that individual why they were choosing to be a candidate in this process, they said their key reason was the purpose of the airport and its sustainability achievements.”
