Consumers embracing sustainability in living and spending habits

16 August 2022 3 min. read

Australian consumers are increasingly willing to adapt their habits to fit a sustainability agenda, meaning companies need to adapt their offerings to avoid losing business. According to a new survey by L.E.K. Consulting, almost half of consumers would pay more for ethical and environmentally friendly goods.

As climate change continues to accelerate, citizens around the world are calling on governments and businesses to step up their efforts when addressing sustainability.

A new 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 half of consumers are willing to engage in higher-effort sustainable activities, while lower-effort activities garner even higher participation

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.

Meanwhile, ‘low-effort’ activities enjoy even higher participation. Some 85% of respondents are committed recyclers, while a similar number are looking to reduce their home energy use.

Furthermore, while it’s one thing to support an issue, willingness to pay is the deciding factor. L.E.K. Consulting’s study found that more than half of consumers are now willing to pay extra to avoid products which have a negative environmental impact – and Australia’s cohort was no different.

The price premium that consumers are willing to pay for a sustainable version, compared to the price of a regular product with no sustainability features - US, UK and Australia

As consumers across the range of household incomes start to consider and engage with the sustainability agenda, other opportunities will arise for brands willing to reposition to take advantage of this shift.

Of all consumers, people in the US are most willing to pay extra for sustainability, at more than half. The United Kingdom follows, splitting consumers straight down the middle, while Australian consumers are just shy of the 50% mark. While that still means a majority would not pay over the odds for the sake of the environment, this does represent a major shift in sentiment that “retailers cannot afford to ignore”.

In particular, 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.

There may be limitations to expecting consumers to pick up the tab when it comes to saving the planet, however. With many economies now in the grips of a cost-of-living crisis, the idea of households paying more for food, with its price already inflating faster than their wages, it is unclear how these consumers can be expected to pressure food producers to be more sustainable.

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.