Climate Ambitions are Large, but Consumer Willingness Remains Small

Only 11 percent of consumers said they would be most willing to pay a premium on daily eco-friendly purchases.

September 18, 2020

Solving climate change requires a multi-faceted approach – every business, nation, and individual needs to play their part in driving change. Consumers, however, are often overlooked in the impact they can have on reducing global emissions.

The Carbon-CAP project estimates that consumers who make eco-friendly choices can drop the European Union’s carbon footprint by 25 percent. One large consumer packaged goods firm estimates that almost 70 percent of its greenhouse gas footprint depends on which products customers choose and how they dispose of them.

But are consumers willing to change their consumption behaviors to drive positive environmental impacts?

Many research studies show that consumers would change their consumption habits to reduce their environmental impact. However, a recent study conducted by Lippincott, an Oliver Wyman company, shows that when consumers are faced with a trade-off in their buying decisions, their willingness to spend more to buy environmentally sustainable products is less pronounced. 

It could be that retail customers have become so accustomed to buying environmentally sustainable products at market prices, that their willingness to pay a premium has disappeared. Some climate-friendly technologies, like solar power, have become drastically more affordable over the last two decades. In some instances, wind power is now the lowest cost power supply available. Against this backdrop, it might well be the case that consumers demand sustainability be integrated into their products at no additional cost.

However, there are some exceptions. In many markets, we’ve witnessed strong growth in organically grown food over the last decades and the growth in electric vehicle sales as a proportion of new car sales. We must better understand and learn from these experiences.

There are various avenues that can be taken to improve the uptake of environmentally sustainable consumption decisions by consumers. Incremental changes such as providing consumers with superior data and information on their consumption decisions or making the sustainable options the “easy” option, like removing plastic bags, can all have large impacts towards reaching our climate goals. There is also the opportunity for transformational change, whereas companies can fundamentally alter business models and offerings make sustainable choices the norm. Both avenues can reap significant environmental and economic rewards in a low-carbon economy. Time will tell on how we get there.