McKinsey & Company found that “products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claims” – a huge 40% difference!
However, Anish Melwani, LVMH’s North American CEO, stated that “the average customer doesn’t care terribly much about sustainability.”
This contrast illustrates the spectrum of consumer insights. It begs the question: are consumers’ sustainability attitudes actually all that important? Especially given the significant and persistent intention-action gap around product sustainability.
The short answer is: no. As Mr Melwani puts it, “sustainability is something we do […] because it is existential to our business, on top of being the right thing to do for society.” And LVMH isn’t alone as the majority of businesses have defined sustainability ambitions.
There are good reasons outside of consumer sentiment for making sustainability a priority for your brand. These are my top three:
1. Secure supply Our economies are built on extracting, processing, using and tossing earth’s natural resources faster than they can be replenished – it’s the essence of ‘unsustainable.’ As demand keeps growing, supply is starting to dwindle, and procurement becomes a challenge. There are more factors that cause profound issues in the global supply system: the ongoing war in Ukraine, the 2021 Suez canal blockage, trade restrictions such as those implemented by Brexit, floods, droughts, wildfires. If your brand’s supply chain runs like a well-oiled machine and wants to keep it that way, sustainability is the key.
2. Avoid penalties The EU’s carbon border adjustment mechanism applies a levy to highly carbon-intensive imports of goods such as fertilizer, steel and aluminum. Before long, those costs will apply to more commodities and get passed on to consumers – who won’t be keen to keep paying carbon premiums. It’s the first such mechanism, but others will follow and their scope will expand. If brands want to keep getting the best price, they need to start switching to alternative materials now.
3. Take control Companies innovate toward sustainable markets beyond their own business. There might be no better time for brands to have a go at steering the bandwagon rather than just jumping on it for consumers’ sake.
Fundamentally, sustainability also helps staying in business as the risks from our rampant exploitation of planet earth outpace the growth of the economy.
