European CEOs: Changing consumer behaviours is the next sustainability frontier
The chief executive officers of some of Europe's largest corporates have concurred that although consumer awareness of sustainability issues is rising rapidly, the responsibility for changing behaviours ultimately lies with big businesses.
In a bid to find out which sustainability “jobs” European businesses must do to help unlock a “new model” of growth which does not harm the environment or create social issues, consultancy Xynteo spoke with the leaders of 27 of the continent’s largest firms and a further 105 corporate representatives. This cohort of people collectively represented companies with a combined market capacity of more than $2trn.
The most commonly cited “job to be done” was moving business purpose beyond simply delivering returns for shareholders, to a model in which boards, teams and investors are engaging with a broader model, encompassing benefits to people and the planet. This finding was perhaps to be expected, given the Business Roundtable’s recent redefinition of “the purpose of the corporation”, which placed less of a focus on profits and more on CSR.
More surprisingly, the representatives surveyed concluded that the second most important sustainability task for business will be “leading consumers”.
While acknowledging that growing public awareness of issues such as climate change, plastics pollution and modern slavery in supply chains has made consumers an “influential” group in changing business practices, survey respondents ultimately concluded that consumers can be “irrational” – and swayed by misinformation or a lack of information about the broader impacts of certain changes.
On the plastics piece, for example, the survey report notes that businesses may have used the “war on plastics” movement to encourage the public to consume more overall. People unaware of how plastics extend the shelf life of certain food, for example, may buy and waste more food while thinking they’ve minimised their climate impact.
“While robust responses to existing and nascent consumer preferences are vital, reactive approaches can mean either focusing on the wrong part of the problem or tinkering at the edges of a fundamentally flawed model,” the report states.
The report additionally explains that while most (90%) of European shoppers are willing to change behaviours in the name of sustainability, they can only choose from what is offered by companies. Moreover, given that habit guides 45% of all buying decisions, consumers will likely need companies to use behaviour change psychology to drive a shift in consumption – even if they consider themselves “green” or “conscious”.
“What would our customers expect us to do if they knew what we know?” Dave Lewis, who recently stepped down as Tesco’s chief executive officer, told Xynteo. “We can’t just rely on customers to ask us for healthier, sustainable alternatives.”
“Nearly 90% of people are willing to change their behaviour to fight climate change, but only 3% of them know how – so there’s a gap there that we can fill,” Ingka Group’s chief executive Jesper Brodin added.
Circular economy nudges
Elaborating on which consumer behaviours they believe are most important to change, the CEOs concluded that the primary focus should be to help the public consume fewer resources.
They noted that, if the entirety of humanity adopted the average consumption habits of European residents, we would be using planetary resources three times as fast as nature could replenish them – proving the need for a circular economy shift.
In order to drive this shift, the chief executives surveyed said companies should explore business models which change linear models of consumption, such as refill, reuse, resale and service-based models such as rental and repair. They agreed that this change must be “system-wide” and not confined to any one corporate, in order to forge the new cultural norms necessary to meet global climate targets.
One of the most firmly founded was for corporates to begin this process, the report notes, is by using “nudge” techniques to alter choices. For example, supermarkets could display products housed in recycled packaging at eye-level or offer packaging-free options at a lower price than those housed in plastics.
But the representatives surveyed also agreed that most consumer-facing businesses have historically used “nudge” techniques to encourage overconsumption and that this approach will now need to be changed.
Businesses demonstrating this new kind of nudge include Ikea, which, through its Live Lagom campaign, encourages shoppers to buy no more and no less than they need, and to repurpose its products once they are no longer fit for their original use. Similarly, Patagonia has run a number of campaigns telling the public not to buy its products if they don’t need them.