Are customers willing to pay more for sustainable products?

Shan Vahora
September 5, 2022
5 min read

New data from CHOICE shows that customers are increasingly aware of companies' carbon actions and many are factoring this information into their purchasing decisions.

CHOICE conducted a nationally representative survey of more than 1000 people between March and April 2022, to gauge their awareness and look at spending patterns when it comes to the environment and sustainability.

About a third of people (34%) say they're more likely or very likely to buy from a business that claims to be carbon neutral.

But the trust issue is still at play, with people almost evenly split between those who'd probably ignore the sustainability information because it's not from a reliable source (27%), those who'd probably take the information on board (28%), and slightly more people being undecided (33%).

There's also a contingent of people (almost 3 in 10, or 27%) who don't find the businesses' carbon claims important and would likely ignore them when making a purchase. Another 28% are undecided about whether they'd ignore the claims.

Another survey from L.E.K. Consulting among 3,000 consumers around the world suggests that Australian consumers are increasingly demanding more from companies, with consumers now turning their back on unsustainable business practices, in ever larger numbers.

On average, more than 50% of consumers in the US, UK and Australia are willing to commit to ‘high-effort’ sustainability activities. 60% of consumers say they seek to avoid specific materials, and pledge to reduce their intake of meat and dairy products.

In particular, LEK’s survey found that Australian customers are most keen to spend more on sustainable beauty and pet products. In these segments, more than one-third of respondents suggest they would spend a premium – while home goods and furnishings follows closely behind.

Unsurprisingly L.E.K. Consulting found that the willingness to pay the price of sustainability was highest amongst higher-income households. While this presents opportunities for brands willing to target this group of customers with their premium propositions, this smaller portion of the economy limits how far-reaching sustainability drives will be, if they expect customers to pay for them.

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