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How can your business connect with sustainability-focused customers?

If you go up to a stranger exiting a supermarket, their hands laden with reusable bags full of weekly groceries, and ask them if they spend their money on sustainable brands, you’ll most likely receive a resounding yes.

That’s how prevalent sustainable purchasing is in our society these days. From the way companies source raw materials to their manufacturing practices and product packaging, consumers are increasingly scouring the market for brands that have a high sense of corporate social responsibility. But does a person’s retail shopping choices reflect in their purchasing decisions elsewhere—like insurance, superannuation, and banking?

Yes, it does.

When it comes to financial services, a growing share of consumers want brands to be sustainable. Environmental, social, and corporate governance (ESG) issues have emerged as a vital part of any business’ operation. Several studies have confirmed that many customers and investors do indeed seek out companies that have proven and reliable ESG policies.

This is why multinational corporations now have “environmental impact” as a mandatory feature of every product release; the audience demands it. Even in the finance sector, many companies have started promoting their social and green credentials to gain customers’ favour. According to EY’s Sustainability Finance Index, in 2021, 57% of insurance companies, 44% asset and wealth managers, and 42% of banks across the world offered “green products or solutions.”

Although, inevitably, this has given rise to greenwashing—over-representing environmental credentials—it has created demand for reliable sustainable investment products and information among investors.

Across the world, companies with a high sustainability rating regularly outperform their competition. It’s not surprising; consumers will buy from and into companies that do good and share their personal beliefs—that’s human nature. In fact, a global survey found that consumers are at least four times more likely to buy from and endorse companies that share their purpose and values.

The sheer force behind this demand, of course, is the portion of the population that has the most money to spend on essential and non-essential goods and services: millennials and Generation Z. About 40% of this group, according to global strategy consulting company, Simon Kucher, are willing to pay a premium for sustainable brands and products. They’re also willing to pay an extra 30% of the price of products and brands that aren’t as sustainable. When it comes to purchasing financial services, sustainability is a key consideration for 44% of consumers.

Heeding this demand is crucial for financial services providers; after all, this is the audience that’s defining the future of economic activity. Although the boomers and Generation X still hold the most purchasing power in today’s economy, it’s the older millennials who spend the most in education, healthcare, housing, insurance, and superannuation. They’re the most engaged in investment and wealth-generation opportunities. If that audience is filtering their options based on which brands have the cleanest supply chains and lowest emissions, then financial services providers who are able to meet that demand will be in a position to capture that extra market share.

Sustainability is a common denominator in household financial decisions

The growing role of women as wage earners and decision makers is likely to reinforce the trend toward sustainable shopping and investing behaviours. A 2016 study found that nearly 70% of Australian couples now make household financial decisions together. This means they’re constantly finding the middle ground in their priorities, including investing in sustainable business practices.

Parting thoughts

Consumers and investors represent the tech-savvy, internet-first generations. They have more access to high-quality information about global economic and environmental challenges—and they have ability to direct their purchases and investments toward companies based on ESG criteria and relevant personal values. They will go the extra mile to find brands that share their vision.

Source: Zoho

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