In 1987, the United Nations defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
According to a BCG Climate and Sustainability consumer survey (June 2022) conducted with about 21000 consumers globally across 8 countries, about 80% of all consumers are concerned about the environment. However, less than 60% take concrete action when it comes to their purchases and only about 5% are willing to pay a premium.
Compared to global consumers, the Indian consumer has a higher-than-average level of concern. However, they have a lower-than-average instance of concrete action when it comes to making sustainable purchases. Indian consumers are least likely to be willing to pay a premium for sustainable options (1% vs 5% globally).
Why is this so? There are several nuances to be considered.
First, sustainable behaviour comes naturally to Indian consumers. Using reusable items is an inherent part of the daily life of Indian consumers across categories. They use items that are both value for money as well as easily available and reusable. For example, cloth diapers which are washable and breathable are also much cheaper than disposable diapers. Distribution of disposable diapers is also relatively low – hence a category with higher prices and limited availability, loses out in the sustainability game.Second, Indian consumers prioritise what is good for themselves; if it also happens to be good for the planet, that’s a bonus. An offering that hits the sweet spot of ‘good for me’ and ‘good for the planet’ is likely to be accepted at a premium; whether it is sustainable can be secondary in such cases. For example, baby care and skin care categories are more amenable to consumers choosing sustainable options if there is tangible benefit to consumer health. But categories like fashion where consumers do not always see direct benefit can be lower on the sustainability maturity. Third, brands need to step up their game to justify value to consumers on why they should be willing to pay a premium for sustainability. Brands can do a better job in helping consumers see a more direct relationship between their contribution (i.e. the choice of sustainable & the premium they have paid) and the outcomes achieved towards the environment (e.g. 3x lower energy used in processing etc)
So, what does that mean for brands?
A Mintel Sustainability Barometer report (Apr 2022) found that the barrier to trusting companies can be overcome with consistent messaging to build brand credibility.
First, brands can communicate the key message that ‘it’s a double win when what is good for you is also good for the environment’ more clearly and establish a more tangible connection between their choices and the impact on the environment. Right now this is being done via the ingredient / contents list in most cases but can work better if it’s linked to metricised outcomes (e.g. carbon footprint impact, farmers benefited,..)
Second, brands can leverage or create communities of like-minded consumers who are evangelists of sustainability and are likely to engage with the brand. Some premium brands are already speaking the language of sustainability since the target audience is limited to the affluent consumer at this stage. In India, Nescafé talks about the sourcing story and backward integration to uplift farmers. Global beauty brands like The Body Shop have always talked about how their product value chains support their sustainability mission. Similarly, the Estee Lauder Group encourages consumers to bring back 6 empty product packs in exchange for 1 new product to promote recycling. These initiatives are targeting a small percentage of the population, but they are instrumental in starting a conversation around sustainability and its importance.
Net net, while sustainability is a niche play right now in India with limited target segments or categories with higher sustainability maturity, change in the regulations in the future can provide a big boost to the market anchored around sustainability. Only time will tell. But there is only upside for the brands to start early and work towards offering their consumers more sustainable solutions with clarity on the benefits for them and the environment. Brands that pivot to this need early on will surely sustain in the long term, pun intended!
Mani Singhal is Managing Director and Partner, BCG and Anulipi Ghosh is Consultant, BCG.
