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Your world Vs Your wallet – Will consumers pay to save the planet?

Nearly three-quarters (72%) of respondents said they’re currently buying more environmentally friendly products than they were five years ago

Greta Thunberg, the Power of ‘Social Influence,’ and Biblical Conflagrations. Drayton’s Nick Maughan analyses the relationship between climate change and retail pricing.

I don’t know if Greta Thunberg has a wallet. If she does, it’s almost certainly made of recycled wood. Or something equally virtuous. And I have little doubt that if asked to open it and pay any price to put an end to climate change the teenage Swedish activist would instantly do so. Whether you agree with her views or not, she comes across as utterly authentic.

As for the rest of us, however, historical consumer research shows that – despite the dramatic topicality of environmental concerns – we may be a little less enthusiastic.

A recent Accenture survey of 6,000 consumers in 11 countries across North America, Europe, and Asia found that: “More than half of consumers said they would pay more for sustainable products designed to be reused or recycled.” And that “Nearly three-quarters (72%) of respondents said they’re currently buying more environmentally friendly products than they were five years ago, and 81% said they expect to buy more over the next five years.”

On the face of it, good news for Greta then. But, as Fortune.com has pointed out, from a historical perspective: “In survey after survey consumers have said they're willing to pay more for sustainably-produced products, but when it comes to being sustainable, actions speak louder than words.”

The truth is most people’s earnings are finite and that means, like it or not, so, too, is the price premium they are prepared to pay to protect the planet.

Many analysts have put that at around 5%. A McKinsey & Company report I remember reading some time ago gave that exact figure and, very recently, Energy and Environment Leader, cites Toluna, a consumer intelligence provider, as finding that in a survey of 1,000 US consumers: “The importance and perception of sustainability among consumers is increasing. The research confirmed 37% of consumers are seeking out and willing to pay up to 5% more.”

Given the recent TV pictures of near-biblical conflagration in Australia, 5%, you might think, is not that high. Even more so when, as The Harvard Business Review points out, “A frustrating paradox remains at the heart of green business: Few consumers who report positive attitudes toward eco-friendly products and services follow through with their wallets. In one recent survey, 65% said they want to buy purpose-driven brands that advocate sustainability, yet only about 26% actually do so.”

Something the HBR labels the “Intention-action gap.”

So, no more than 5%, and often, not even that. I can already feel Greta’s “death stare,” the one she directed at President Trump at Davos, being turned in the general direction of the rest of her fellow global citizens. But there is hope.

Katherine White – a professor at the Dhillon Centre for Business Ethics at the University of British Columbia – tells the HBR that she has identified five actions for companies, and, presumably, governments to consider which may help fundamentally reduce that intention-action gap.

The key one seems to be the concept of “Social Influence.” Simply put – what our friends and family do we are more inclined to do too.

As the HBR says, “Telling online shoppers that other people were buying eco-friendly products led to a 65% increase in making at least one sustainable purchase.”

For most consumers then, if those around them can be persuaded to pay 10% more, they might be too. For me, Greta’s death stare has already done the trick.

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