05 June 2020 Consultancy.uk
The overwhelming majority of global consumers are willing to pay more for sustainable packaging in order to decrease the impacts of plastic on the environment. However, passing the cost onto consumers as a flat-rate charge may disproportionately punish people in lower income brackets meaning companies need to be mindful of how much of a cost they pass on to their customers.
Land-origin plastic pollution has both severe economic and environmental impacts on the world, its people and businesses. Plastic pollution could be resulting in an estimated economic loss of $19 billion for 87 coastal countries, according to a recent Deloitte study, while the brutal toll plastics have on ocean ecosystems has been heavily documented – most famously by the BBC series Blue Planet II, which caused major public outcry at the time of its airing.
Now, new research by Trivium Packaging has found that public opinion has turned so far against plastic use that a majority of people would pay a premium to see their goods packaged in eco-friendly materials. Responses from more than 15,000 US, Europe and South America consumers saw nearly three-quarters, or 74% of the global survey – developed in partnership with Boston Consulting Group – state they would pay more for sustainable packaging.
The study surveyed participants for their preferences related to sustainable packaging along with their willingness to pay more for products with environmentally friendly packaging. Apparently, 65% of those polled said they associate plastic with ocean pollution, while 57% said they saw it as ‘harmful’ – 80% more than metal.
Firms willing to tap into this sentiment could see buoyed sales, even if their products are marginally more expensive. The report pointed to an NYU Stern School of Business survey which found that sustainability-marketed products now grow at 5.6x the rate of conventional products.
“This increased consumer awareness, driven by increased media coverage of the environmental impacts of pollution and large corporations transitioning away from plastics, whether it’s straws, grocery bags or plastic water bottles, truly underscores our findings,” said Michael Mapes, CEO, Trivium Packaging. “Consumers’ focus is on sustainable living now more than ever, and they’re willing to pay to protect the planet. This presents brands a real opportunity to impact purchasing decisions by offering environmentally friendly options for their consumers.”
However, it would be wrong to assume that simply leaving the market to decide on this will do the trick. The researchers also confirmed that how much more consumers were willing to pay correlated with their income level.
Only 9% said they would pay in excess of $2 extra for goods with sustainable packaging, while 27% said $0.50 was their upper limit – and with the average wage still languishing beneath salaries before the 2008 recession, it is easy to see where the limits of expecting consumers to ‘make informed choices’ for the good of the planet lies. The closer to the breadline someone resides, the less chance they have to indulge in ‘ethical’ spending – meaning non-sustainable goods will continue to be purchased regularly, especially as the global economy heads toward another major recession.