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Sustainability Megatrends: Shaping the Future 

The landscape of sustainability is evolving rapidly, driven by a confluence of consumer behaviour, regulatory mandates, and technological advancements. 

What has become clear is that the sustainability preference is not a passing trend but a deep-seated shift in consumer behaviour that is reshaping the marketplace and, pushing companies to innovate and align their offerings with these values​.

Consumers prioritise sustainability

Consumers are voicing their demands loud and clear, with Capterra research indicating that over 80% prefer to purchase from brands with strong sustainability credentials, even in the face of economic challenges like inflation. Striking 87% of consumers believe businesses must integrate sustainability practices into their operations.

Only 4% of consumers report not looking for sustainability information, compared to 25% not checking for it in 2021!1

The newer generations are prioritising sustainable products even more, with 90% of Gen Z consumers buying sustainable products, vs 85% Millennials, though, Gen X and Baby Boomers are not far behind: 

Source: Capterra, “Consumer Expectations for Sustainability Are Accelerating Despite Inflation.”

The demand for transparency is equally strong, with 73% of consumers willing to pay a premium for brands that offer complete transparency in their sustainability efforts. And percentage of consumers who justify higher costs of sustainable products has doubled in 2022, compared to 2021!

Gen Z is more tolerant of increased prices, with only 3% reporting they disagree that the price of sustainable goods is reasonable (compared to 7% of Millennials, 12% of Gen X, and 9% of Baby Boomers).

These trends show that sustainable product production will become even more important in future, and brands need to focus on sustainability if they wish to follow (or dictate) the trends to the future highest purchasing group.

What part of a product are consumers wanting to be sustainable?

Nearly three out of four consumers (71%) are checking that a product’s materials are sustainable before making the purchase. Materials can include wood, metals, and glass (think non-edible parts) that are ethically sourced, renewable, and/or recycled.

68% of consumers also want the product’s packaging to be sustainable, which we’re seeing as a move away from plastics and toward recyclable packaging materials such as plants.

Sustainability and Business: opportunity for growth & revenue?

A striking 92% of companies now view sustainable procurement as essential to their operations, marking a significant uptick in corporate responsibility and ethical practices. This trend reflects a broader acknowledgement within the business community of sustainability as a critical factor in long-term resilience and brand integrity.2

More executives now see sustainability as a growth opportunity. Over 63% of executives say that the business case FOR sustainability is clear, a number that has tripled from 2022.3

Capgemini’s research shows that environmental sustainability is financially viable.

Revenue per employee metric shows a performance growth from 6% to 12% in the companies applying sustainability practices and demonstrates that sustainability doesn’t put the company at a financial disadvantage, but rather the opposite.

Source: Capgemini Research Institute, “A World in Balance 2023: Heightened sustainability awareness yet lagging actions.”

Regulations and corporate reporting

Regulatory frameworks have also been intensifying, with a notable rise in policies focused on responsible investment and corporate sustainability reporting

The number of sustainability-related regulations has grown by 15% in the last year alone, compelling businesses to increase transparency and adopt more sustainable practices proactively​ (PRI)​.4

As responsible investment policy initiatives grow in number worldwide, we would expect to see the proportion of voluntary policies also increase, as they are often seen as a stepping stone towards hard law. Indeed, this has certainly been the case since the start of the century, but, in recent years, the proportion of voluntary policies plateaued to around one-third of all regulations, while mandatory regulations continue to grow.

Source: PRI, “Regulation Database Update: The Unstoppable Rise of RI Policy,” 2023.

The European Union is at the forefront of these regulatory efforts with initiatives like the EU Green Deal and the Corporate Sustainability Reporting Directive (CSRD).

The EU Green Deal aims to make Europe the first climate-neutral continent by 2050, encompassing policies that drive investments in green technologies, sustainable solutions, and new businesses.5

The CSRD, which expands the scope and requirements of the previous Non-Financial Reporting Directive (NFRD), mandates comprehensive sustainability reporting. From 2024, it will affect a broader range of companies, requiring detailed disclosures on environmental, social, and governance (ESG) impacts. This shift aims to enhance corporate accountability and transparency, aligning business strategies with broader EU sustainability goals.

Moreover, the integration of Industry 4.0 technologies is revolutionising sustainability in manufacturing. These innovations are crucial for optimising resource use and minimising waste, ultimately contributing to a reduction in the environmental footprint of industrial activities​​.6

However, organizations still face challenges in reporting on sustainability, with 48% of executives relying on third-party assistance to disclose their environmental impact (Capgemini).

Understanding the full spectrum of emissions is crucial in this context, as businesses strive to meet both regulatory requirements and consumer expectations. Our previous article on Understanding Scope 1, 2, and 3 Emissions: Insights and Data provides insights into where companies can improve and align more closely with the sustainability values that consumers and regulations demand. By bridging the gap between perception and practice, businesses can not only enhance their brand integrity but also contribute significantly to global sustainability efforts.

Embracing Sustainability for Future Success

As the importance of sustainability continues to grow, businesses must keep pace with evolving consumer preferences and regulatory demands. By adopting sustainable practices, companies not only ensure compliance but also seize opportunities for growth and increased revenue. The shift towards sustainability is not just beneficial for the environment but is also a strategic business move that aligns with the values of modern consumers and regulatory frameworks.

Sources:

  1. Capterra: Consumer Expectations for Sustainability Are Accelerating Despite Inflation ↩︎
  2. EcoVadis: Now is the Time for Sustainable Procurement ↩︎
  3. Capgemini Research Institute, “A World in Balance 2023: Heightened sustainability awareness yet lagging actions ↩︎
  4. Principles for Responsible Investment (PRI), “Sustainability Reporting and Disclosure,” 2023. ↩︎
  5. European Commission, “A European Green Deal,” 2023. ↩︎
  6. Technavio, “Industry 4.0 Market by Application, End-user, and Geography – Forecast and Analysis 2023-2027. ↩︎