The wider cost of consumerism

How consumer demand is leading traditional brands to consider their environmental impact and shift their practices.

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By Adriano Marchese

The price of the gift-giving, feast-eating holiday season is usually measured in credit card debt. According to a report by accounting firm PwC, Canadians are anticipated to spend an average of $1,563 on buying presents, stocking stuffers and lavish meals. But another cost is the size of the carbon footstep of these festive indulgences – the ecological effect of producing, transporting and even enjoying the things loved most during the holidays. Tally the carbon-price of the holidays and you’ll find that it is when North Americans produce 5.5% of their yearly carbon footprint. Any way you look at it, Christmas isn’t cheap.

The realization among North American consumers that the impact of the holidays extends beyond the bank account is becoming more prevalent. As a result, more people across the generational divides are changing their consumption habits to reflect an awareness of the environmental impact of not just what they buy, but how they buy, says Johanna Faigelman, co-founder and CEO of Human Branding Inc, a market research and consultancy firm.

“From a cultural perspective, there’s a desire to resist the ‘use it and lose it’ consumption,” she says. “Marketers and advertisers have always relied upon the notion that consumers want to buy and accumulate more. But there’s been an absolute backlash against that in recent years.” Instead, the trend is moving towards buying less, and focusing on buying quality products from companies that share consumers’ values, she adds.

A Nielsen report released in November found that more than 80% of global respondents believe that companies should be greater stewards of the environment, and in the U.S., half would change their spending habits with the planet in mind. Not surprisingly, the report showed a greater enthusiasm on the part of millennials, with three-quarters of the cohort saying they would change their purchasing habits to reflect their greener inclinations.

The effects are clear: before 2013, only 20% of S&P 500 companies disclosed their “Environmental, Social & Governance” information, according to Nielsen. Today that number has risen to 85%.

ikealamp2IKEA is a company that understands these trends, and has for many years. “They’re going after the millennial market,” says Jennifer Gunn, president of Scout Environmental, a company that supports businesses transition to greener operations and helps them market their products and services to bigger audiences. “Millennials may not have the money yet to buy incredibly expensive furniture but [IKEA] knows that these kinds of values are important to them.”

This year, the company rolled out a Canada-wide pilot program to buy back ‘gently used’ IKEA furniture. Much of their products, if not sold on the secondary market, would otherwise be destined for the landfill. It’s part of a larger green endeavour to reduce the retailer’s carbon footprint, which also includes eliminating single use plastic – think wrappers, styrofoam fillers – by 2020.

Going green also serves the bottom line. Companies that are making efforts to curtail their impact on the environment see the value directly in cost-savings, or indirectly through association with a cause that resonates with its consumer base. “It’s not just for environmental goodwill,” says Faigelman. “There’s an element of that, but there’s certainly a negative backlash against companies that don’t make any inclination.”

There is ample evidence that going green is good for business. In 2017, Unilever released a report estimating that an opportunity of €966 billion (CAD$1.47 trillion) exists for brands that emphasize and display their sustainability initiatives. The report surveyed 20,000 adults from five countries about their shopping habits and found that a third of consumers actively chose to “buy from brands that they perceived as doing social or environmental good.”

lovebeautyplanetThat same year, the Anglo-Dutch consumer goods giant launched its personal care and hygiene brand, Love Beauty and Planet, to go after what it sees as a critical segment of the market: those seeking natural and environmentally friendly products. It boasts ingredients that are ethically sourced, bottles that are 100% recyclable and products (like shampoo) that use less water to rinse out. Of the brands under the Unilever umbrella, the company reported that those with clearly marked sustainability credentials have outpaced those that do not – the latter showing 30% more growth.

According to Faigelman, traditional brands also face the added existential challenge of competing against newer companies that were established with sustainability and environmental responsibility as their central modus operandi. “The whole notion of cottage industry, a local, artisanal push in food, in beverage, in clothing, in furniture making – that’s all about rejecting big brands, and creating a version of a brand that’s more in line with changing consumer values.”

Ford Motor Company – one of the bigger contributors to greenhouse gas emissions – has leaped head-first into environmentally friendly initiatives with climate commitments. “They’re not Tesla,” remarks Faigelman. “But they’re certainly trying because they’re [seen as] one of the worst polluters.” In past years, the company has introduced electric vehicles to its line-up; began using recycled material for more parts; and renovated their plants to be more efficient. Their efforts have earned them the Energy Star Award for their eco-friendly innovations. For legacy companies like Ford, the challenge then is threefold: to shed its old image as major polluter, redefine itself as an environmentally friendly brand while competing with brands that already have these principles imprinted into their DNA.

“When it comes to social and environmental initiatives, [change is] really slow moving,” admits Gunn. The value of a positive public perception has both immediate and long-term effects on a company’s finances, but the greatest value of considering the environment will be the effects – or perhaps, the lack of effects – on the health of the earth and its inhabitants. Planet aside, businesses and their marketing teams know the boon of going green. “You have to start today, if you want to be in the race even ten years from now.”