Creating a competitive advantage through sustainability
COVID-19 may have pushed the topic of sustainability off the top of the news agenda recently, but its importance in terms of the global population only continues to grow.
Creating a competitve
advantage through sustainability
While COVID-19 has been dominating conversations, heatwaves, floods, and hurricanes globally have meant that the challenge of living more sustainably remains as critical as ever.
Recently, the IPCC’s 2021 Climate Report hit the headlines with some very stark findings. It directly links human activity with the warming atmosphere, oceans and land, and projects vast increases in extreme weather events around the globe. Unsurprisingly, the urgent need for action outlined by the report grabbed the attention of politicians around the world.
Consumers also understand how critical this topic has become. The number of households that are the most environmentally conscious (which we call ‘Eco Actives’) rose for the second year in a row. Globally, this group now represents 22% of consumers. They are worth $446 billion to the Fast-Moving Consumer Goods (FMCG) industry, increasing by $70 billion last year.
Now in its third edition, Who Cares, Who Does? is our annual global study to understand the attitudes and actions of consumers towards the environment – and how this impacts their decisions at the point of sale.
This year’s report provides updated insights on sustainability, as manufacturers and retailers look for ways to meet their ‘green’ commitments, which have been louder and more visible than ever.
Over the following pages, we will cover:
1. What issues people are concerned about, how these change across the world and what environmentally positive actions people intend to do more often.
2. Which brands are currently resonating with consumers as being more environmentally positive than the competition, and how this impacts performance.
3. We talk to industry experts, including Bill Marshall, Global Director, Futures and Sustainability at Unilever, and Chris Sellers, CEO at Water Unite.
Who Cares, Who Does? is a joint initiative between Kantar, Europanel and GfK. Thanks to this partnership, we have interviewed over 88,000 people across 26 countries.
This study is unique, as we can cross-reference our questionnaire with actual behavioural data: both shopping and usage. In doing so, we can directly link people’s sustainability attitudes to the brands and categories they purchase, and the retailers they shop in.
We can also help you create a competitive advantage through sustainability and play your part in shaping the future of our planet.
Who Cares, Who Does is a globally harmonized survey across 26 markets on our household purchase and usage panels.
Countries: Belgium, Brazil, Chinese Mainland, Colombia, Costa Rica, Chile, Czech Republic, Ecuador, France, Germany, Great Britain, Hungary, India, Ireland, Italy, Mexico, Netherlands, Peru, Poland, Portugal, Russia, Saudi Arabia, Slovakia, Spain, Thailand, USA.
Sample >88,000 respondents
Fieldwork took place between
June - July 2021
How the global population has shifted
At the centre of the
Who Cares, Who Does? study is our
Eco-Segmentation, where we have
divided the global population into
three unique consumer groups.
Let’s see how the groups have
changed over the last three years.
How the global population has shifted
Our Eco-Segmentation is created based on how often people do everyday actions to help reduce plastic waste. Activities include everyday changes, like consumers taking reusable bags when grocery shopping, using refillable water bottles and bringing reusable cups for hot drinks. These also include the larger, potentially more ‘inconvenient’ (and less widely done) actions, such as avoiding buying drinks in plastic bottles or products packaged in plastic.
We have three groups in this segmentation: Eco Actives, Eco Considerers and Eco Dismissers.
Shoppers who are highly concerned about the environment and are making the most of actions to reduce their waste. They feel an intrinsic responsibility to be more sustainable, follow the topic more actively, and are more aware of their potential impact on the planet.
They are worried about the environment and plastic waste, at similar levels to Eco Actives. But they are closer to Eco Dismissers in how they act, not taking many actions to reduce their waste. Their most significant barriers are convenience and price.
Shoppers who have little or no interest in the environment and take no steps to reduce waste. The topic rarely features amongst friends and family, and they lack awareness of environmental concerns. They do not think they make a difference.
The most sustainable shoppers, Eco Actives, account for 22% of the global population in 2021. They grew for the second consecutive year, up six percentage points when compared against 2019.
The $446 billion
opportunity in FMCG
Eco Actives account for 22% of households, worth $446 billion to the industry – an increase of $70 billion since last year.
Clearly this is a growing market to capitalise on.
However, the Eco Active growth rate is not consistent everywhere. Between 2019 and 2020, Eco Actives grew in the majority of markets, with only Denmark and Chile seeing a loss. However, this year, we see a much more mixed picture, with half of the markets witnessing a fall in Eco Actives.
Generally, the more affluent countries are seeing more substantial growth (averaging at an increase in 5.5 percentage points), whereas the less affluent markets see a decline averaging at a loss of 1.2 percentage points.
The more developed or more affluent countries have a higher percentage of Eco Actives. The opposite is true in countries with low GDP per capita, with most Latin American countries and China having a relatively low share. Exceptions include Hungary and Chile, which significantly over-index on Eco Actives, with 37% and 35%, respectively.
On the other hand, we would expect a higher proportion of Eco Actives in the US (18%) and Netherlands (21%), given their high GDP per capita.
Half the population will be Eco Active before 2030
Whilst Eco Actives may be the minority now, we predict that they will almost double in size in the next six years and account for over half the global population by 2029.
Using the three years of data we have collected, we can predict how much bigger the Eco Active population will become over the next 10 years.
Eco Actives will grow quicker in high GDP markets, reaching 50% in the next four years. We do not expect Eco Actives to arrive at 50% in low GDP per capita markets until 2035.
Our confidence in this shift is down to the current size of Eco Considerers (40% of global households) who are trying to be more sustainable but can’t yet achieve it. With the help of manufacturers, retailers, and government organisations producing more sustainable alternatives, members of this group will soon find it easier to become Eco Actives.
This growth is good news for companies that have pledged to reform their packaging and restrict their carbon footprint: it means a target audience will be waiting for them. Manufacturers and retailers need to act now and ensure their sustainable message is heard, so they can build a competitive advantage from this population shift.
However, many brands that shoppers recognise as doing a good job for the environment have always been doing so, those which are 'born- sustainable'. For those brands that don't fit this description, please note that short-term 'green' pledges do not sway consumers; they are merely hygiene factors. Brands that want to gain a competitive advantage need to take the lead on an issue.
The risk of missing
out on Eco Actives
Whilst the growth of Eco Actives is undoubtedly good news for the planet; many brands will need to evaluate the impact this population shift will have on their bottom line. The increase of Eco Actives will come at the expense of Eco Dismissers, and brands that rely on this group will see their shares fall against other brands that can attract sustainable shoppers.
Eco Actives favour categories related to scratch cooking, natural products and artisan categories like fresh olives. They reject heavily processed items, canned and frozen foods, and heavily packaged categories like moist wipes, liquid soap, and packaged fruit and vegetables.
Using data from Belgium, Germany, Great Britain and Spain, we have identified five categories at-risk that currently under-index with Eco Actives. Many of these categories do not have a range of brands offering sustainable options. We can plot the current index against the growth rate of Eco Actives and quantify the financial risk of inactivity. For example, we project that Carbonated Soft Drinks will decline by a combined €700m by 2031 across these markets.
Impact of COVID-19
on sustainability views
This year we also asked consumers whether due to the coronavirus pandemic, had sustainability become more or less important to them.
Almost half (49%) said it is now more important, while only 7% said less.
This trend is consistent across the different segments, with 38% of Eco Dismissers, 51% of Eco Considerers, and 61% of Eco Actives rating sustainability as more important than previously.
We also examined whether sustainability was more likely to be important for those respondents in better financial situations. We found that there was little impact of people's financial position on their levels of concern. If anything, those struggling to make ends meet are more likely to think sustainability more important than those in more comfortable situations.
The opportunity across Eco Considerers and Dismissers
Behind the Eco Actives, a large share of the population is trying to be more sustainable but cannot achieve it regularly. We call this the Value-Action gap, a concept also known as the say-do gap. It is the difference between peoples’ desire to be sustainable and their ability to achieve it.
There are many ways to assess the size of this gap. In Who Cares, Who Does? we have chosen to use two statements related to how people shop. ‘Value’ is assessed as those that ‘try to purchase environmentally friendly packaging’ and ‘Action’ as those that ‘regularly avoid plastic packaging’.
So, why is this important?
The gap accounts for 36% of the population globally and is worth $806 billion to the FMCG industry. This gap shows a substantial unmet demand which is an excellent opportunity for companies to help shoppers close. If shoppers have more options to purchase sustainably, they will. Therefore the responsibility – and the opportunity – lies with companies to provide more environmentally friendly options at affordable prices.
Eco Actives can generally fulfil their desire to be more environmentally friendly when shopping, with a Value-Action gap of just 12%. Eco Considerers have the biggest Value-Action gap at 43%, with 70% of shoppers wanting to purchase sustainably but only 27% regularly doing so.
The Eco Considerer challenge is situational. They tell us purchasing environmentally friendly options is more expensive or less convenient. What does motivate them, though, is the feeling that they can make a difference and the chance to show off to friends and family. Considerers are the low-hanging fruit opportunity: those that need a little help to become an Eco Active.
Eco Actives are a group that can be thought of as unreachable, particularly for manufacturers who produce mainstream brands. It's believed that this group is too ‘ethically minded’, but it's worth remembering that they are not activists, despite their name. Whilst we see that they are more likely to purchase vegan products and avoid red meat, preferring niche and more locally produced brands, they are certainly not unreachable for organisations of any size.
And if half of the population will be Eco Actives by 2030, the opportunity speaks for itself.
Eco Considerers have the biggest Value-Action gap at 43%, with 70% of shoppers wanting to purchase sustainably but only 27% regularly doing so.