Companies will have to get creative to advance sustainability amid crisis
strategy+business|Autumn 2020
Companies will have to get creative to advance sustainability amid crisis
As COVID-19 plunges the world into recession, consumers will be more sensitive to price.
Denise Dahlhoff

Before COVID-19, people all over the world had been more focused than ever before on the issue of sustainability. Coordinated climate strikes, beginning in the spring of 2019 and continuing through the end of that year, conveyed the growing environmental concerns of global citizens. Employees and customers had increasingly expressed an interest in businesses taking action on sustainability. And consumer data showed rising sales of products with sustainability features.

Fast-forward to today: The pandemic has exposed the fragility of the world and heightened people’s appreciation of sustainability. How many of us have appreciated cleaner air and paid more attention to labor conditions, given essential workers’ greater virus exposure? Consumer insights reflect this sensitivity. More than half of respondents to a recent survey conducted by management consulting firm Kearney said that as a result of their COVID-19 experience, they are more likely to buy environmentally friendly products. And unpublished PwC research shows that 75 percent of U.S. consumers surveyed believe companies should maintain changes they’ve made due to COVID-19 that have a positive environmental impact.

At the same time, though, the deep economic crisis the virus has caused is making shoppers more price-sensitive and forcing many companies to do whatever it takes to simply stay afloat. Companies, even those with sustainability in their DNA, might put some or all environmental, social, and governance (ESG) initiatives on hold to stem revenue losses. However, early data suggests that prioritizing sustainability could boost financial performance. As of early April, big ESG-focused funds were outperforming the S&P 500 for the year. This could reflect investors’ long-term view. Recent research by the Conference Board also highlights how a commitment to sustainability can help companies weather crises and recover faster. Companies will need to be creative and more focused than ever, though, to make their sustainability strategies financially viable, considering reduced corporate income and consumers’ renewed frugality.

Long before the pandemic, Unilever’s chief research and development officer, Richard Slater, highlighted companies’ lead role in mainstreaming sustainability when he said in an interview on National Public Radio, “The onus is on us as consumer companies to innovate and come up with solutions that are great for people [and] convenient at the right price.”

Evidence that consumers care

A growing number of consumers — along with employees and investors — want to associate with brands whose values they identify with. According to a global consumer survey by the Conference Board, about two-thirds of respondents have bought brands because of their environmental practices, more than half have dropped brands because they don’t provide fair labor conditions, and a significant share have at some point either switched brands or moved away from brands because of the social causes the brands support.

articleRead

You can read up to 3 premium stories before you subscribe to Magzter GOLD

Log in, if you are already a subscriber

GoldLogo

Get unlimited access to thousands of curated premium stories, newspapers and 5,000+ magazines

READ THE ENTIRE ISSUE

Autumn 2020