More than 50 years ago, the United States took a big step to formally acknowledge the environmentalism movement when more than a million people took part in the inaugural celebration of Earth Day. Environmentalism was perceived for a time as a somewhat radical lifestyle for the eccentric, the domain of hippies and the counter-culture scene. But the sustainability movement is now hitting the mainstream, and it’s dragging the market along with it (at times kicking and screaming) as companies both big and small begin to embrace greener practices as a matter of good business.
Shareholders of the oil giant ExxonMobil recently elected three new board candidates who promised to pilot the corporation toward cleaner energy solutions. Additionally, Ford Motor Company revealed an electric version of its best-selling pickup truck, the F-150. Dubbed the F-150 Lightning, the electric vehicle (EV) boasts a standard travel range of 230 miles per full battery charge, outpacing one of the biggest quality-of-life drawbacks that have held EVs back from mass adoption. The vehicles also shipped with an innovative (and, perhaps, soberingly prophetic) new feature: it can be used as a backup power source to power a home for up to three days in the event of an emergency. As climate change makes extreme weather events perceivably more violent and frequent year-over-year, we may even see the vehicle-as-backup-generator become a standard feature in new cars.
As more consumer demand and global legislation push for greener practices, we are watching a fringe movement become more mainstream within a single generation. The question remains, how do you capture the energy and enthusiasm of consumers who are currently willing to sacrifice a little convenience and higher cost for greener options, but who are still held back by limited market options and confused by green marketing gimmicks?
The Mainstreaming of Sustainability at a Macro Level
As evidenced by Exxon and Ford’s recent announcements, big businesses worldwide are making strides to become more sustainable.
In early June, Nasdaq unveiled a green equity label program in the Nordics. The first of its kind, the innovative program will set a minimum standard for what companies can sell as “green.” The voluntary platform will grant corporations a green label if they generate over 50% of their sales from climate-friendly activities and if more than 50% of their investment budgets support greener initiatives. Moreover, sales from fossil fuels cannot exceed 5%.
IKEA, the global home-décor conglomerate, is striving to become a greener corporation that uses regenerative resources and clean energy. The company’s goal is to end its dependency on virgin fossil fuels and materials by 2030, making sustainable market options more affordable and accessible to more buyers. Even vending machines are going green. The Coca-Cola Company started cutting back on its usage of hydrofluorocarbon (HFC) in refrigerants in the early 2010s and is widely using naturally produced, greener alternatives instead.
While these sustainability initiatives can help pave the way for greener corporate practices, they can also be used as market differentiators. Millennials and Gen-Z are more eco-conscious on a wider scale than previous generations, likely influenced by extensive environmental public awareness campaigns in the early 90s that were heavily targeted to children. As these generations came of age, they also had access to a boom of sustainably-focused products and services that emphasized personal choice and consumer responsibility. With the current heightened interest in sustainable services, programs, and investments that improve the environment, companies looking to tap into these markets can enjoy the increased profits without the pollution that was so commonly considered necessary for economic development.
How Mainstream Sustainability Can Benefit the Bottom Line
In a 2019 study, nine out of 10 business leaders acknowledged that customers would hold them accountable for their corporation’s environmental impact, an even larger ratio than was reported by employees, shareholders, or government regulators.
Over the last several years, a handful of large brands have announced their environmental goals and climate pledges with the hopes of attracting consumers. Amazon announced a $2 billion Climate Pledge Fund focused on investing in businesses that “decarbonized” the earth. Tech-giant Apple promised to be 100% carbon neutral companywide by 2030. Other commitments include creating a recycle robot named Dave to better dismantle used Apple products to recoup rare earth minerals that can be reused in new devices. Apple was already a brand that enjoyed a strongly loyal customer base with young and affluent consumers, who themselves are more likely to factor sustainability into their purchasing decisions. These sustainability efforts are likely to position Apple even more favorably with that demographic.
Today’s consumers are more inclined to buy from eco-conscious companies, especially as online retail makes it easy to avoid companies that don’t align with their values. A 2019 survey by Hotwire discovered that 47% of Internet users had dumped a product and service in favor of a competitor for breaching their personal values.
Mainstream Sustainability Is Here to Stay
Across industries, sustainability has become the primary focus of many major businesses in order to boost brand loyalty and their bottom line. While the companies most likely to lose money short-term in a carbon-restrained world will continue to resist sustainability, many other businesses are realizing the long-term trajectory of this movement toward greener corporate practices.
As consumer choice continues to move in favor of sustainability, more big-name brands will begin innovating and pivoting to meet the demand. Environmental concern is no longer a latent interest but rather a top-of-mind factor when making purchasing decisions, right next to prestige, convenience, and cost. Driven by saliency, the public is vocal and visible about saving the earth. Corporate leaders are taking notice. Anticipating a market shift, major market leaders are turning their focus away from delivering ever-cheaper and more convenient market offerings. Instead, they’re thinking about how to deliver on the promise of a healthier, happier planet as customers begin to demand accountability across the board.