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The last quarter of the calendar year is dominated by a large number of shopping events, mostly taking place online. Black Friday, Cyber Monday and Singles Day, a traditional Chinese holiday that’s now an online shopping bonanza, have always been well-received by retailers.
Now, there’s a new show in town. A movement – that manifests as more mindful, sustainable, and planet-friendly shopping events – is attracting a growing group of consumers with money in their pockets and the environment on their minds.
A new breed of conscious consumers
Customers, especially millennials and Gen Z, have high expectations about how brands promote their values and what commitments they make to sustainability. These concerns around sustainability are not only limited to materials and packaging but can also extend to everything from who they partner with to the conditions of the employees working for those brands.
Ethical consumerism is gaining traction, and despite the more traditional shopping frenzies, there continues to be an emphasis on sustainability. The focus on mindful shopping is gaining traction, placing the spotlight on ethical brands and smaller retailers.
This movement embodies the rise and the retail power of a new breed of conscious consumer who believes over-consumption is not good for our planet. It also highlights a growing consumer preference to support local and sustainable brands.
How retailers can adapt to ethical consumerism
The rise in ethical consumerism and the ‘circular economy’ (a way of producing and consuming that involves sharing, leasing, reusing, repairing, and recycling products) has given some retailers cause for concern. However, as with any change in consumer trends, there are always opportunities to be found. It doesn’t mean consumers will stop buying altogether, just that they might buy differently.
Despite inflation, consumers are willing to pay a premium for their purchases. It’s about the ‘buying well and buying once’ philosophy which emphasises quality and sustainability over quantity.
Adjusting to the ethical consumerism trend can also have several benefits for brands. Companies that prioritise sustainability stand to benefit further as sustainability initiatives compel them to identify efficiencies in their operations, maximise their supply chains and minimise waste.
There are several ways retailers can harness ethical consumerism:
- Integrate sustainability goals into your core business strategy – Sustainability goals require organisations to reconsider operations in their entirety, from sourcing to inventory management and packaging. Integrating sustainability into the strategic heart of an organisation is a long-term endeavour — it needs to be carefully and tactically planned
- Facilitate transparency to your customers – With an overwhelming number of brands available online and offline, transparency in sourcing, packaging and products plays a key role in empowering customers to make informed choices in split seconds
- Embrace the power of social voice – Consumers want to be affiliated with brands that share their values and are unafraid to use their social justice voice. These consumers are often compelled to share those values with their peers on Instagram or Facebook. This is part of the reason why a brand like Who Gives A Crap, a recycled toilet paper brand that uses 50% of its profits to fund sanitation projects in the developing world, is experiencing huge growth.
Customer loyalty is at the top of any company’s wish list. Now that the words, campaigns, and actions of brands and retailers have become inseparable from the customer experience, brands that put their company values front and centre are poised to form deeper, more empathetic connections with their shoppers, which can develop into stronger loyalty.
The clampdown on greenwashing
For retailers with an ethos of sustainability at their core, it is a great time to bring this to the fore. Brands must however, be careful in their communication as the Australian regulators are weighing in on ‘greenwashing’ — that is, the practice of portraying a company or product as being more environmentally and socially friendly than it is. Corporate greenwashing misleads consumers into false ethical consumption, and in recent years there have been several high-profile cases of greenwashing causing reputational damage for companies.
Recent investigations into greenwashing demonstrate that greenwashing practices are on the rise and vigilance is required. The Australian Competition & Consumer Commission (ACCC) has recently stepped up its vigilance on greenwashing by conducting ‘internet sweeps’ of company websites, as well as posts by third-party review platforms including social media posts. Other regulators, including the Australian Securities & Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA), have also had a strong focus on their bids to stamp out greenwashing in recent times.
The risk to a business of overclaiming its environmental credentials is not only regulatory but reputational, and several major fashion brands have experienced negative publicity for greenwashing.
It’s not only clothing retailers that have fallen foul of the regulators or risked their reputation with their customers.
Determining the difference between a company greenwashing and a company acting sustainably can seem like a grey area: the difference is in the detail. It is vital to be able to substantiate any sustainability statements made. This is where the environmental, social and governance (ESG) data becomes important, as well as having detailed plans to reach any future commitments. By measuring impacts and reporting using quantitative data, brands can prove to consumers that their words match their actions.
With sustainability reporting requirements ramping up around the world, and Australia expected to follow suit, now might be the time for brands to proactively consider sustainability reporting.
More green funding available
Over the past few years there has been a significant increase in green funding. In broad terms, this is finance available to companies to be used specifically for environmental initiatives to create better environmental outcomes. It can either be used to invest in new environmental projects or to minimise the impact to the earth of current projects.
Australia’s big four banks, and many of the country’s finance companies, have earmarked funds for green lending. This shift in demand is also seen from investors, with Investor Mandates regarding green funding opening more doors for smaller, environmentally conscious, investment-seeking companies.
Beyond this, a company’s broader sustainability measures are now often scrutinised when looking to access capital from traditional financiers and investors alike. The importance of measured and reportable sustainability metrics once again shows its significance throughout the supply chain.
How BDO can help
If you need help navigating this or establishing your sustainability strategy or ESG report, reach out to one of BDO’s sustainability experts today to assist you with:
- Sustainability strategy and consulting
- ESG reporting, assurance, education and training
- Roadmap assessment
- Gap analysis
- Benchmarking analysis
- ESG implementation, monitoring and improvement.
Visit www.bdo.com.au for information and professional advice.
Article source can be found here.