The latest Colmar Brunton 'Better Business Better Future' report suggests there is a growing demand from consumers for environmentally and socially conscious products. Photo / Getty Images
The latest Colmar Brunton 'Better Business Better Future' report suggests there is a growing demand from consumers for environmentally and socially conscious products. Photo / Getty Images
The dizzying choices we face whenever we stand in front of a supermarket shelf or a rack of clothing in a retail store represent an opportunity to do some good.
For there, perhaps down at the end of the row, is the Fairtrade section, or the organic section which, respectively, mean the grower in the developing world gets a decent deal for their produce, and the land on which the organic plant is grown is not doused in toxic pesticides.
Almost every conceivable product category and service now has a 'green' alternative.
We have the opportunity to bring change to the world, simply with the purchasing decisions we make, which products we consume and which brands we support.
Despite the echoes of the global financial crisis, we are still willing to pay a little more cash on the basis that we believe we're buying a product or service that has been ethically produced - environmentally, socially, or both - and which will encourage the continuation of that practice. In turn, savvy businesses realise this as an opportunity.
They are changing their business practises in order to make themselves visible as "ethical" companies, allowing them to tap into the rapidly growing market of conscious consumers. Here's the opportunity, for both consumers and businesses.
The publication last month of the annual Colmar Brunton report Better Business Better Future highlighted the unmistakable upward trend: people are caring more about the ramifications of their purchases.
The research company has been conducting the survey since 2009, when it noticed that a significant portion of consumers were saying they genuinely wanted to be able to make conscious, responsible purchases - but they simply did not feel able to.
"Issues of sustainability have always mattered a lot to people. Preserving our way of life, our environment and our economy for future generations is fundamentally something that everybody cares about, but it wasn't necessarily translating into behaviour," says Jacqueline Ireland, CEO of Colmar Brunton New Zealand, referring back to the 2009 findings.
She believes the reason was the significant price differential for eco products and services. "Consumers weren't prepared to pay a big premium. They'll pay a small premium."
Photo / Supplied
It's very difficult for consumers currently - based on the information they're given - to make an informed choice.
Now, however, the forces of supply and demand have changed the market. Producers and manufacturers are able to sell organic, Fairtrade and eco-friendly items and services at a more competitive price point. In turn, businesses stand to benefit from this booming market.
But the necessary communication links to allow major societal change are not quite there yet in the majority of cases, believes Ireland. There's too much conflicting information about ethical business to take in. Companies need to take action to make themselves publicly known as a positive contributor to society.
"Issues like obesity, poverty, inequality and pollution - this generation won't put up with them. They believe there's a better way, and they're prepared to do stuff to make that happen. It's a wake-up call for business, definitely," says Ireland.
"It's very difficult for consumers currently - based on the information they're given - to make an informed choice. When the market gets itself sorted and there's some kind of indicator for consumers about what product is really better than another for you, for the environment or for the economy, then that type of badging and signposting is going to have a really significant impact."
In the latest edition of the Better Business Better Future report, Colmar Brunton spoke to 1000 people, representing the national demographics of age, gender and region. The results suggest that people are becoming increasingly socially and environmentally conscious, with rises in almost every measurable.
It found 82 per cent of New Zealanders are concerned about the future, and whether New Zealand is doing enough to stay safe and healthy. 80 per cent agreed that previous generations haven't protected the planet, and believed the responsibility is on their generation to improve the situation. 78 per cent also think it's important for New Zealand to grow and market food that's organic and GE-free. Most importantly, 76 per cent of those surveyed had faith that what they do at a local and personal level - including what purchase decisions they make - can have an effect on future generations.
Ireland says these changes are partially due to the younger, aspiring generations coming on board as people with a disposable income - particularly the Millennials, also known as Generation Y.
"They are growing significantly in their awareness, concern and willingness to act in this space. That means that businesses are starting to take notice as well, because that young demographic is the one that almost all businesses are interested in. They are big consumers today and they are big future consumers as well."
Indeed, in Deloitte's Millennial Survey of January 2014, it found the majority of Millennials believed that businesses were having a positive impact on society through the creation of jobs and prosperity.
However, a large number also specifically wanted to see businesses doing more to address the challenges that society is facing, including the scarcity of natural resources, climate change and income inequality.
The Millennials surveyed also believed the success of a business is embodied not only in its financial performance, but also in its positive social and environmental contributions. This points to a ballooning consumer consciousness that businesses would do well to take heed of.
Seventy five per cent of the global workforce will be made up of Millennials by the year 2025, according to the Future of Business Citizenship research report released by MSLGROUP in September 2014.
The Millennials are the primary consumer demographic of the future, and the following generations can be expected to be even more ethically and civically minded. "Nowadays, to be a great company, you need to be a good company," says Y for YOUTH co-founder Alex Greig.
"The new generation of Millennials is emerging with the predominant mindset that the main purpose of business is to improve our society rather than earn profits for the shareholders."
Y for YOUTH wants to encourage responsible business and informed consumers. In exchange for companies donating a percentage of their profits to youth charities, they are permitted to put the Y for YOUTH logo on their products.
The organisation hopes this will "become as ubiquitous as the Fairtrade symbol" and provided sustained funding for youth programmes. This would benefit businesses and consumers alike, as it would promote responsible, profitable practices while satisfying consumers' increasing demand for knowledge of the products they buy.
Ireland at Colmar Brunton says the digital age is adding a lot to this growing trend. "The internet is just making stuff so much more transparent. You want to be really, really careful about what you do and the legacy that you leave as a business, because consumers will find you out and they will punish you severely."
When Colmar Brunton asked people to name a sustainable brand or organisation, they found that two thirds of all surveyed couldn't name even a single business in that category. Consumers want to know of sustainable businesses - but they are confused due to information overload. Ireland believes this presents a huge opportunity for companies.
"Giving consumers those tools to make those choices really easy is important, because none of us have any time," says Ireland.
"Standing in front of the supermarket shelf, faced by all these products, I don't have time to think too much about which one is better for my kids or not, and to read the labels on the back and all that kind of stuff. Life is busy. I'm looking for really clear indicators that make it easy for me. I think there's still work to do in that space by brands and organisations."
Kate Billing is the co-founder of Conscious Capitalism, which is still in its early days in New Zealand, but part of a greater global movement in recognition of the changing times. She thinks people are definitely making a move toward more thoughtful, ethical consumption. Billing says people are increasingly using their purchasing decisions as a means of self-expression.
"They're more able to demonstrate their values and what matters to them by the choices of a product or service than necessarily they are by what choice of job they might have. It means something to every individual - having a sense of purpose, a sense of 'why am I here'. We see purpose as being more important."
However, Billing is concerned about businesses and organisations taking advantage of caring consumers in the wrong way.
Billing warns of the potential for companies to simply turn out marketing which gives the consumers an abstract sense of productive and ethical value, instead of actually shifting their business operations in a socially and environmentally responsible direction.
It's fundamental to the Conscious Capitalism movement that business has the power, opportunity and responsibility to change the world for the better.
If companies wish to remain viable heading into the future, they must make it abundantly clear to their customer base that their responsible talk is backed by responsible action - rather than just clever rhetoric.
"I think there is an inherent cynicism for people about how deep that stuff runs for an organisation," says Billing.
"Is it just some marketing budget being put into a community activity to make us look less bad? Or is it something that aligns to our purpose? It's fundamental to the Conscious Capitalism movement that business has the power, opportunity and responsibility to change the world for the better."
She argues that consumer power, particularly through the transparency of social media, must be acknowledged if businesses want to do well. Consumers need to be informed, so that they feel encouraged that they are able to use their powers for good.
"This is the way the world is going to be. We live in a complex and integrated system, and businesses are a key part of that, because all businesses are is collections of people, who come together to create something of value - and that something of value now isn't just profit."
Global information measurement company Nielsen recently reported back with the 2014 Consumers Who Care media database. It follows a survey into corporate social responsibility, and particularly companies' involvement with charities and worthy causes.
Associate director Yvette Basson emphasises the importance of responsible business, which was indicated in the results of the report.
"New Zealand is saying that they'll buy a product or service from a company that importantly shows a high level of environmental and social responsibility. It went from 44 per cent in 2010 to 55 per cent in 2013, which is a really big shift as far as what we see in terms of the attitudes of New Zealanders moving."
Basson says the rate at which this has happened indicates it's a very good idea for companies to support worthy social and environmental causes. She identifies the results of the study as suggesting people have felt the need to cut back on their personal spending following the global financial crisis.
On the flipside, however, it shows people are becoming especially keen for the brands they support to act on social responsibilities with some of the revenue they generate.
In that instance, people are not directly supporting the cause themselves, because they can't afford it - "but they're happy to make a purchase in the supermarket or add a dollar at the clothing store where it's not going to have a big impact on their personal situation, but there's a real feel-good factor - 'I am doing something and I'm making a difference'." says Basson.
Lifestyles of Health and Sustainability (LOHAS) refers to a multi-billion dollar market of consumers who are interested in focusing on the wellbeing of themselves, the environment and other people. They seek that positivity as a flow-on effect of their responsible purchasing decisions of eco and socially-friendly products.
Businesses who visibly and practically identify themselves and their products with this behaviour can expect an eager LOHAS customer base waiting for them. Surveys of the adult population in the United States have suggested 13 to 19 per cent of them fit into this demographic.
However, New Zealand's situation is much different, thanks to our drive to experience the outdoors, to connect with and appreciate our environment, and to take responsibility for social issues. A survey by Moxie Design Group suggested almost a third of New Zealanders align with LOHAS values, representing a huge market for ethical business to work with.
Element readers realise they change the world by supporting good companies:
The company that chooses to support social change is then able to build up valuable positive associations, which render them a more viable business going forward. There are numerous examples both locally and globally of consumer behaviour making a significant difference to business activities in this way - proving that citizens' influence on the market is becoming more pronounced.
After confectionery giant Cadbury New Zealand revealed in 2009 that it had changed the ingredients of its ubiquitous dairy milk chocolate, people from a variety of backgrounds were outraged. Cadbury had substituted cocoa butter with vegetable fats, including palm oil - which is blamed for the formation of huge palm plantations which contribute to global warming and destroy natural habitats occupied by endangered orang-utans in Indonesia and Malaysia.
Auckland Zoo pulled Cadbury's products from its on-site retailers, and Green Party MP Sue Kedgley called for a wider boycott on the products which contained palm oil. Many consumers acknowledged the message, even going as far as forming a Facebook group which attracted 3500 members. The voices of consumers were the defining factor that caused Cadbury to revert to its previous recipe.
Cadbury New Zealand managing director Matthew Oldham said the decision was a direct response to consumers, and expressed hope that New Zealanders would forgive the company.
Cadbury admitted it would take years, rather than months, to regain consumer trust following the widespread criticism it had received. "Trust is key and it always has been," says Ireland from Colmar Brunton. "It's hard won, and easily lost. Losing trust takes years to rebuild from a consumer perception base. Trust comes from behaving in a responsible, caring, ethical way. People talk about organisations and brands that they admire and respect, and that they trust."
New Zealand petrol retailer Z Energy is another large company that is recognising it is not only responsible for generating a profit for its stakeholders, but also making a constructive contribution to society, too. Z Energy focuses on sustainability, in keeping with the values on which it was founded when Infratil and the Guardians of New Zealand Superannuation bought the local retail assets of global oil giant Shell back in 2011. You could be forgiven for thinking a petrol retailer combined with the mention of sustainability raises an oxymoron. However, Z Energy recognises specifically that if the company sells more of their product, that will ultimately be bad for society.
Instead of oil, Z is prioritising intelligent action to help make the world a better place. Chief executive Mike Bennetts announced in early 2014 that the company was developing New Zealand's largest biofuel plant. He acknowledged global warming as "real," and that it is humanity's responsibility to offset our contribution to it. Z Energy wants to eventually become the country's largest biofuel provider, setting us up for a more prosperous, clean and healthy future.
The company understands New Zealanders are constantly becoming more informed. Consumers will notice particularly if organisations in the energy industry don't take a long, hard look at the road ahead of us, and how we will traverse it. Z is doing that, and in return it has earned solid public trust, support and custom.
Chocolate maker Whittakers has been making another kind of social contribution to appeal to consumers in a different way. In 2012, they took on an idea proposed by a group of students in Wellington that they include raspberry white chocolate in their product line, and then donate a portion of the profit generated by each bar to the Breast Cancer Foundation. Consumers have taken to this, recognising Whittaker's as a company who cares.
These are all solid examples of how when a business does something morally and ethically right, and subsequently receives support from consumers, the business can feel compelled to follow more of the same approaches. That will then allow the company to generate increased custom, enable the consumers to feel confident and empowered about the ethical background of the product they are purchasing, and in the end render the social and environmental background of the item to be more positive.
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