Nearly nine in 10 British consumers have become greener in their purchasing over the last five years, according to new research shared with City A.M. today.
Moreover, a third of UK consumers are prepared to pay more for sustainable products and services.
Those UK consumers were willing to pay on average 25 per cent more for greener alternatives, according to strategy and pricing consultancy Simon-Kucher & Partners.
“The fact a third of consumers are willing to pay a premium for sustainable products is a ‘green’ ray of light for UK companies,” stressed Rosalind Hunter, partner at Simon-Kucher & Partners.
She said regulatory pressure will only increase on companies to shift towards more sustainable products and services.
“These findings show the clear commercial opportunity from investing in sustainability as well. In fact, companies must invest, innovate and transform their business models now. Increasing consumer awareness will only further drive the expectation for affordable sustainable alternatives,” Hunter continued.
The survey found significant generational differences in attitudes towards sustainability within the UK.
Only 30 per cent of UK Baby Boomers were prepared to pay extra for more sustainable options, compared to 40 per cent of Millennials and 35 per cent of Gen Z.
In terms of how much they were willing to pay, Millennials (38 per cent premium) led the way, being prepared to pay more than twice as much as Baby Boomers (15 per cent premium on average) and a third more relative to Gen. Z (23 per cent premium on average).
Over the last five years generational differences have also emerged around how people are changing their behaviour to be more sustainable.
17 per cent of Baby Boomers have significantly changed their behaviour towards being more sustainable in the last five years. This figure climbs to 23 per cent for Millennials.
Additionally, when it comes to current behaviour, 32 per cent of Millennials will choose a sustainable alternative when available, whereas older generations are far less likely to actively choose sustainable alternatives (19 per cent).
“Millennials and Gen Z are becoming a force to be reckoned with as they grow to represent a larger share of the consumer demographic,” said Shikha Jain, author of the study and partner at Simon-Kucher & Partners.
“Companies that don’t have sustainability as part of their core value proposition need to act now to protect against future reputational impacts and loss of market share,” Jain added.
Outside the UK
US consumers were willing to pay the most at 37 per cent more, and Italian and Swiss the least, with a price premium of 16 per cent for greener goods. The US also led the way on the proportion of the population prepared to pay more, with 42 per cent.
Interestingly, of the people that are willing to pay a sustainability premium, the premium amount is lowest for consumer goods (22 per cent premium on average), while it is highest for financial services (28 per cent premium on average).