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Affordable Sustainability: Embracing Sustainable Living on a Budget

7/21/2023
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The affordable sustainability dilemma has been present for years, yet in 2023, it has gained relevance as the cost-of-living crisis has limited sustainability adoption. Consumers are highly concerned about climate change and are willing to protect the planet. They want to embrace sustainable lifestyles, yet premium prices are still limiting wider adoption, according to Euromonitor International’s Voice of the Consumer: Sustainability Survey, fielded January to February 2023​.

41% of global consumers surveyed mentioned higher prices as the top barrier to purchasing products with sustainable features

Source: Euromonitor International Voice of the Consumer: Sustainability Survey

The recent surge in inflation has pushed players in some countries to increase prices at considerably higher rates than disposable income have expanded. Under such economic pressure, consumers have been mainly driven by price when buying. However, they have also been forced to reduce costs whenever possible, which has raised sustainable behaviours by default, such as reducing energy and water usage, and limiting food waste. They have also started to see the economic value in extending product life through repair services, while saving through second-hand shopping.Affordable Sustainability chart1.svg

Affordable sustainability initiatives amid economic challenges can unleash market performance

It is important that players keep their sustainable initiatives alive during tough times, as consumers still want to play their role in easing the pressure on the environment, while stricter regulations on businesses are expected to expand globally. As scientists continue to remind us, the costs of inaction outweigh the costs of acting now. Hence, players need to take a proactive approach, through collaboration and partnerships, to boost the transitions towards circular business models that will unlock cost-reduction solutions, and therefore allow them to provide sustainable features at reasonable prices.

As consumers are increasingly aware of their impact on the environment, and, according to Euromonitor International’s Voice of the Industry: Sustainability, fielded January 2023, 71% of global players face at least some pressure for climate action from consumers, this is expected to continue growing, so the time for players to act is now. 

71% of global companies face at least some pressure for climate action from consumers

Source: Euromonitor International Voice of the Industry: Sustainability

Along with improving brand reputation and enhancing resilience, businesses should also consider sustainability´s capacity to unlock market potential. In all industries tracked in the Sustainability Product Claims Tracker, products with sustainability claims outperformed products without them in retail sales growth in 2022, demonstrating there are clear business cases for sustainability investment.Affordable Sustainability chart2.svg

Players should nurture sustainable living on a budget to support frugal consumer behaviour 

The persistence of consumers’ frugal behaviour has created a need for players to empathise with them and offer guidance on adopting sustainable lifestyles. Businesses must communicate the economic and sustainability benefits of their products to foster brand loyalty and reputation among concerned consumers. Those taking steps to address the challenges are poised to leave a lasting impression. Being considered a source of support during tough times, they are likely to enjoy a favourable position in the minds of consumers when they regain their purchasing power. 

In fact, the below data show that nearly half of global consumers believe their actions contribute to the exacerbation of climate change, a sentiment that becomes even more pronounced in developing regions, needing players’ support to reduce their sustainability gap.Affordable Sustainability chart3.svgCollaborative efforts between the private and public sectors are crucial to accelerate the transition towards unilinear models and to scale up sustainability offers to help make sustainability affordable. 

Many consumers are willing to pay more for sustainability attributes, yet 42% of industry experts consider willingness to pay extra as the primary challenge in implementing sustainability initiatives, according to Euromonitor International’s Voice of the Industry: Sustainability, fielded January 2023.

​In actuality, organisations must begin by looking inward and developing a comprehensive sustainability strategy that is deeply ingrained in their core business and vertically implemented. Increasing internal awareness and transversal alignment in key departments, such as procurement and production, is key to unleashing a player´s capacity to reduce costs and cover affordable sustainability needs. ​

Leverage the right claims for effective and transparent sustainability communication

Consumers and regulators keep pressing players to be accountable and transparent about their sustainability initiatives. Yet, most businesses are struggling to do so, according to Euromonitor International’s Voice of the Industry: Sustainability, fielded January 2023.

Only 10% of global companies believe their sustainability communication to general consumers is extremely effective in 2023

Source: Euromonitor International Voice of the Industry: Sustainability

Education campaigns along with compelling messages are needed to support their pledges and commitments, as, despite consumers being aware of climate change and willingness to act, their understanding and trust of sustainable labels need to be enhanced. Along with price sensitivity, at least two out of 10 global consumers are discouraged from shopping sustainably due to unclear labelling, sustainability features’ unfamiliarity, low assortment or lack of trust in claims.Affordable Sustainability chart4.svg                                                                                                          

By embracing circularity, businesses should strive to minimise and reuse as many raw materials as possible, resulting in lower costs, reduced emissions and reasonable prices. In the long term, the cost of production will decrease and facilitate affordable sustainability democratisation as players continue to invest in circular models, infrastructure, supply chain, technology and renewable energy.

 

Learn more about Sustainability in our report, Affordable Sustainability and visit our Sustainability page for further insights on where to play and how to win with sustainable claims.

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