Preserve, Supply and Sustain

The sustainability paradox: Are shoppers the biggest hurdle to corporations going green? Behavioral nudges could help

PSS Feature 01

The sustainability paradox

Are shoppers the biggest hurdle to corporations going green? Behavioral nudges could help
Many consumers claim to care about the environment but research suggests they have other priorities when deciding what to buy. Understanding their psyche could provide the answer.

When Edwin Stafford’s daughter was four years old, he posed with her for a photograph next to a billboard being erected by Interstate 15, the section of the highway that runs north to south through Utah. It was an unusual choice of background for a family portrait, but the poster read “Wind Power Can Fund Schools,” and was the culmination of a project that Stafford had worked on that aimed to convince citizens and legislators to support renewable energy in the state.

The school support message was important because Utahns “couldn’t care less” about wind power, being happy with inexpensive coal-fired electricity, as Stafford, a marketing professor at Utah State University, wrote in an article about the project in a 2010 issue of the Stanford Social Innovation Review. As a result, Stafford and his colleagues at the Utah Wind Working Group had to find inventive ways to get their message across. The group had come up with other slogans, such as “Homegrown Alternative Energy,” but these only added to the perception that wind energy was experimental.

Instead, they thought about other ways to best appeal to their audience, a largely conservative population that held hard work and family in high esteem and concluded that a message focusing on opportunity would garner support. Wind farm developers would have to pay property tax on their projects, 75% of which would go toward local schools, and the resulting slogan helped to convince legislatures to vote in favor of renewable energy tax incentives.

“The message that got the state of Utah moving toward renewable energy when they started seeing that (marketing campaign was), hey, you know, I might not believe the green aspects of wind power, but boy, I sure do like the extra funding that it brings to my community,” Stafford told CNBC by phone.

The photograph of Stafford and his daughter on the highway was taken in 2004, but now, more than 15 years later, the message on that billboard is reflective of a technique that’s still relevant in convincing people to support green projects.

“There's all these polls and surveys where consumers say they want greener products, they want greener options. But what we find in the academic research is that very often consumers are driven by two key things. One is price and the other is convenience,” Stafford said. One academic study from 2011 suggested that while up to 70% of consumers claim in surveys that they want to purchase more environmentally-friendly products, only 1% to 5% actually do and this is because people have other priorities, such as concerns over healthcare, employment or looking after their families, Stafford suggested.

And, despite many businesses claiming shoppers want greener products, a 2019 study also highlighted the inconsistency in consumer behavior: 65% of people say they want to buy brands with a green focus, but only about 26% actually do, per a report in the Harvard Business Review.

“Consumers are also skeptical of green products’ quality, believing that they can’t make a difference, and they are generally unwilling to pay more for greener options,” he wrote in the journal Sustainability earlier this year.

Edwin Stafford with his daughter Victoria, who is also seen on the billboard behind them, part of a 2004 campaign promoting wind energy in Utah.
While up to 70% of consumers claim in surveys that they want to purchase more environmentally-friendly products, only 1% to 5% actually do.

The green paradox

This paradox is something large companies have been addressing. According to research by L’Oreal undertaken between June and August of this year, 80% of people said they are “sustainably minded” or “environmentally aware” but 74% said that if a product “worked really well” they would choose it over a greener version.

“Consumers care about issues of sustainability, but they also want to use products that deliver,” said L’Oreal’s U.K. and Ireland Managing Director Vismay Sharma in an email to CNBC. “How well a product works remains a huge motivation in a purchase choice … We have been working in this area and have ranges that address the need for sustainability while delivering the quality and results that consumers desire,” he said.

In September, the beauty company switched to 100% recycled plastic bottles for its Elvive haircare brand in the U.K. and has started an in-store makeup recycling program too. “Effecting long term consumer behavior change requires not just telling a consumer what to do but educating, encouraging, inspiring and enabling them to make that change,” Sharma added.

It’s a sentiment echoed by Marc Engel, chief supply chain officer at Unilever. When the firm launched dry shampoo, it was marketed as a green product that meant people could save water by taking shorter showers because they could wash their hair less frequently. But the message was a “complete failure” Engel told CNBC by phone. “(People felt) this is their gratifying moment of the day, and people will … decide how long I shower, thank you very much.” When dry shampoo was sold as a product that meant hair could stay fresher for longer, fitting in with consumers’ busy lives, it started to take off, Engel said. “There needs to be a reason (to buy) that is very often not sustainability alone. The reason to buy needs to be compelling,” he said.

Behaving in a greener way also needs to be something made easy for people, according to Karl-Hendrik Magnus, a partner in McKinsey's global sustainability practice. The fashion industry produced about 4% of global greenhouse gas emissions in 2018, per McKinsey's estimate, and giving people better access to secondhand goods would encourage them to buy, Magnus said.

“You have an extremely well-developed consumer experience on the linear market (for new clothes) when you go into a store on the high street or you order on your favorite marketplace and you have it delivered (the) next day … If you compare that to the circularity retail experiences, they’re still relatively cumbersome,” he told CNBC by phone.

Some larger companies are now making it easy for people to shop for pre-owned items. In September, H&M-owned COS launched a resale site where people can buy and sell its clothes with COS taking 10% commission, while tech company Trove provides the platform behind Patagonia’s Worn Wear site and is set to work with Levi’s on a similar reselling initiative.

The language used around sustainability can also confuse people, according to Michael Stausholm, founder of Sprout World, a company that makes pencils containing seed capsules that germinate when planted into soil. “What does ‘green’ and responsible mean, and how do you as a consumer know that a product is responsibly made?” he told CNBC by email. As well as advocating that companies act in a responsible way, he is a fan of initiatives that help people be more environmentally-friendly, such as grocery stores that have removed “three for the price of two” offers.

People are now taking more of an interest in green issues, Stausholm added. “Sprout was founded in 2013 at a time when sustainability was something everyone was talking about, but few understood how to deal with, no matter if you were a corporation or a consumer. That has changed and is changing. The focus on climate change, responsible purchasing and sustainable production has never been bigger,” he said.

What does 'green' and responsible mean, and how do you as a consumer know that a product is responsibly made?”
Michael Stausholm, founder of Sprout World

Unconscious consumption

Businesses are also looking at ways to persuade employees to be greener. Daniel White is the CEO and founder of Signol, a company that uses a combination of technology and behavioral science to encourage staff to behave in a more environmentally-friendly way. White explains that the decisions people make — such as choosing one product over another — are largely made in our unconscious minds, the limbic system in the brain that responds to emotional stimuli.

So, to influence someone’s behavior when it comes to being greener, businesses need to understand what motivates people at a deeper level, White said.

“A lot of people care about the environment, but I think there are lots of psychological things going on that gives people reasons not to do something … You know, why should I get on a bike and cycle to work when all these other people don't? … Understanding what motivates people and going for that first (works best) and then (the) environmental outcomes can be a spillover effect,” White told CNBC by phone.

Signol was founded based on the principles of an academic study that saved Virgin Atlantic £3.3 million-worth of fuel in a trial that analyzed the behavior of 335 airline captains during 40,000 flights over eight months in 2014. Several elements make up fuel efficiency, some of which are affected by human behavior, including whether a pilot decides to switch off one or more engines while taxiing, and it was these human elements the study examined.

The pilots were put into one of three research groups (as well as a fourth, control group) and told their fuel use was being studied. The three groups were given assessments of their fuel use that were communicated via traditional mail, SMS messages and emails and they were carefully tailored to each person. One group was given specific fuel-efficiency objectives, and all of the groups made fuel savings.

One motivating factor is the Hawthorne effect, where people change what they do because they are aware of being studied. A combination of that effect and personalized feedback is what changed the pilots’ behavior, White said. As Virgin’s summary notes: “Notifying captains that fuel efficiency is being studied, as well as providing them with tailored information, targets and feedback, are highly cost-effective methods for changing behaviors and achieving fuel-, carbon-, and cost-savings.”

Signol incorporated the behavioral findings of the Virgin study into its software and is now working with the shipping industry using similar techniques. Fuel consumption can be reduced by operatives in several ways, such as by using on-shore electricity instead of the ship’s own diesel when sitting at a port, and a captain could be sent an SMS with details of their fuel performance while on board. The tone of these messages is important, White said. “We are looking for positive feedback. We’re not looking to tell people or wag our finger at them and say hey, you could be doing better … It’s very much about well done, keep it going.”

Context is important: in these types of workplace scenarios, comparing employees with each other isn’t all that motivating, White said. But when it comes to consumers, using social comparisons can be powerful, according to Stafford at Utah State University. This is evident in the language hotels use when asking people to reuse their towels, for example. Telling people that “almost 75% of guests” use their towels more than once via a card placed in their bathroom had a significantly greater effect than a message that simply encouraged them to “help save the environment,” per a 2008 study. And, with the rise of social media influencers, Stafford hopes that green behavior will become the norm. “As others make it … ‘normal,’ that this is expected behavior, that is going to promote people to become greener, and that is really the future,” he told CNBC.

And it’s marketers, rather than governments or environmental groups, who should be given the task of convincing consumers to be green. “They know their customers better than anyone else … they’re the ones who can design greener products that will appeal to their consumers,” Stafford stated. He’s hopeful that businesses will continue to apply behavioral techniques like those he used with that highway billboard more than a decade ago.

“My daughter … is now a senior in college, so I’ve been doing this for a long time … It’s really exciting to see ‘non-green’ consumers choose the green product and to understand why and taking those lessons, so that way we can apply them to other contexts and motivate other non-green consumers to nudge them in the green direction.”

We are looking for positive feedback. We’re not looking to tell people or wag our finger at them and say hey, you could be doing better… It’s very much about well done, keep it going.”
Daniel White, founder and CEO of Signol
Credits

Writer: Lucy Handley
Design: Bryn Bache
Editor: Matt Clinch
Images: Getty Images, Edwin Stafford and Betty Stafford