Sustainable moves businesses can make to win customers, IBM

With half of consumers saying environmental sustainability is more important today than a year ago, businesses should up their eco action, says IBM report

In the race to reduce emissions, consumption, and waste, companies across all industries are transforming their business models to forge a sustainable future. Supply chains are being recalibrated. Source materials are evolving. Travel requests are carefully scrutinised.

But companies can’t do it alone. Consumers also play an important part. And what they’re willing to do defines, in part, how far businesses can go. And while consumers have said they want companies to be stewards for change, and that they’re willing to commit significant personal resources to protect the planet, there has historically been a disconnect between their aspirations and their actions.

However, the pandemic may have turned the tide. Last year, the IBM Institute for Business Value (IBV) found that 93% of global respondents said COVID-19 had influenced their views on sustainability. And over the past year, this trend has intensified.

IBV’s February 2022 survey of 16,000 global consumers in 10 major economies found that more than half (51%) of respondents say environmental sustainability is more important to them today than it was 12 months ago.

For business executives, the issue is equally important, with 4 in 10 (39%) executives saying that environmental sustainability is a top priority for them today, according to recent IBV research, and more than half (53%) saying it will be a top priority in three years.

That said, while 86% of organisations have a sustainability strategy in place, just over 1 in 3 (35%) have acted on that strategy.

So, how can businesses take further action? By understanding what consumers want, organisations can ensure they position themselves as the consumer choice of the future, as a recent report, Balancing Sustainability and Profitability, from IBM Institute for Business Value reveals.

Help consumers make more sustainable choices at home

What consumers want Three-quarters (77%) of consumers say they want to do more to support sustainability at home, including reducing water and energy consumption, recycling electronics and appliances, buying recycle products, composting food waste, generating renewable energy at home, and storing energy at home. Perceived difficulty in making such more environmentally responsible decisions at home is proving an obstacle, however.

Consumers say there are several actions that businesses, perhaps in partnership with government could take to help them make more sustainable choices at home, including offering greater personal incentives to make change, such as rebates or discounts (43%), creating different, more accessible ways to participate (41%), offering less expensive options (40%) and ensuring greater awareness of available choices (39%).

How businesses can take action To help consumers make smarter, more sustainable changes at home, IBM recommends the following:

1.    Increase transparency and communications Increasing transparency and communication will be critical to helping individuals take more effective and informed actions, and influence others. For example, providing detailed information about sourcing, manufacturing, materials development, and transportation can help them advocate for environmentally responsible companies in conversations with family and friends. Social media videos, on-pack callouts, and QR codes can supplement traditional reporting to help consumers understand how your company is protecting the environment and enabling responsible consumption.

2.    Embrace the circular economy Design and engineer a sustainable end-of-life for your products, but also help give them new life by educating consumers on how products and packaging can be reused, reclaimed, or recycled.

3.    Educate, inform, and influence Help consumers share their experiences and success stories with others in their networks. Videos, social media posts, savings calculators, and online articles are all great vehicles to help consumers amplify the conversation and promote your brand.

 

Win over purpose-driven consumers with quality and value

What consumers want In 2022, purpose-driven consumers, who choose products and brands based on how well they align to their values, became the largest segment (44%) of consumers across all product categories, according to Ibid research. And their impact appears to be growing.

IBM’s study found that, on average, three in five consumers (64%) say products branded environmentally sustainable or socially responsible made up at least half of their last purchase. What’s more, roughly half (49%) of consumers globally say they paid an average premium of 59% for products branded as sustainable or socially responsible, signalling consumers are willing to support sustainability with their wallets. And it’s not just the wealthy willing to spend more, 43% of those in the lower income bracket said they too paid a premium for such products.

How businesses can take action Forward-looking brands are competing to win over purpose-driven consumers. Take mega-retailer Target which recently announced plans for its first net-zero store in California. So, what action should businesses take to win purpose-driven consumers?

1.    Improve product quality Accelerate product design and development innovations using renewable energy, recycled materials, re-engineered packaging, and other sustainable options. Leverage intelligent automation to ensure quality and compliance through different phases of the manufacturing process.

2.    Increase value for money Offer incentives for consumers to reduce their carbon footprints, such as discounts for customers who consolidate shipments from multiple orders. Leverage intelligent workflows and advanced analytics to improve efficiency while reducing carbon emissions and waste – then pass the savings along to end consumers.

3.    Invest in education Define clear metrics to measure progress and share outcomes with consumers. Increase transparency around product sourcing and ingredients. Highlight different ways consumers can participate in the circular economy and reduce waste with the products you offer, such as paying a deposit for reusable containers they can return or refill.

Make it easy for consumers to travel sustainably 

What consumers want IBV research found that when it comes to travel, low-carbon transportation options are gaining ground with consumers, with more than 1 in 3 (35%) saying they have either stopped using personal cars that run on gasoline or use them less due to environmental sustainability concerns. Also, around 1 in 3 consumers say environmental impact factors are now more important to them than convenience, cost, and comfort when purchasing travel; and 4 in 10 of those who care deeply about the environment say their concerns compelled them to reduce or eliminate travel by traditionally powered private cars and airplanes in the last year. And almost half of all travellers increased their use of EVs in the last year for the same reason.

Despite such intent, gas, diesel, and hybrid-powered private vehicles are still the most common travel modes across countries, meaning businesses need to help consumers make that transition.

How businesses can take action Net-zero travel is certainly on the horizon and travel and transportation companies are investing in low-carbon technologies that promise to revolutionise the sector. Take United Airlines, which recently announced plans to offer flights on a new fleet of zero-emission electric planes in the US in 2026. What can businesses do?

1.    Measure environmental impacts Educate consumers on how travel decisions impact the environment. Encourage the use of online calculators to estimate how travel decisions affect personal carbon footprints. Ensure that the carbon impacts of various travel options are clear to travellers during the shopping and booking process.

2.    Enable sustainable travel Enable the shift to more environmentally friendly travel modes when possible. Continue to invest in lower carbon travel alternatives, including sustainable fuels, fleet electrification, and energy-efficient buildings and power systems. Actively market sustainable alternatives as they continue to emerge and mature.

3.    Encourage efficiency encourage customers to travel more efficiently and help them prioritise sustainable travel. Show travellers where they can bundle trips and find ways to share travel modes when appropriate Incentivise travellers to choose your brand by publicising your sustainability credentials and promoting loyalty program tie-ins.

IBM Institute sustainability report

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