Retailers and consumer product manufacturers are having a hard time convincing shoppers to embrace sustainable alternatives when the products cost more or have an inferior look.
This is despite the fact that 78% of U.S. consumers believe a sustainable lifestyle is important to them, according to a study by McKinsey and Nielsen.
“Many CPG (consumer packaged goods) executives report that one challenge to their companies’ environmental, social, and governance (ESG) initiatives is the inability to generate sufficient consumer demand for these products,” the study said.
The challenge comes after companies, ranging from Nestle and Kimberly-Clark to Walmart, have invested billions of dollars in developing more sustainable supply chains that help produce more environment-friendly products.
“There is a gap between what people say they want and what they actually do at the purchasing point — this is a difficulty for us,” said Oriol Margo, EMEA sustainability transformation leader at Kimberly-Clark. “It feels like our consumers are asking for sustainability, but they are not looking to compromise on price or quality.”
For Kimberly-Klark, the maker of Kleenex tissues and Huggies diapers, developing a more sustainable business model has meant reducing Scope 1 and 2 greenhouse gas emissions by 42% and Scope 3 emissions by 10.8% by the end of 2022 compared to 2015. In addition, it is now sourcing 90% of tissue fibers from “environmentally preferred” sources. However, sometimes consumers find its products that are made using recycled fibers to be of inferior quality.
Another player facing similar challenges is Ahold Delhaize, which owns 19 retail companies, including Stop & Shop in the U.S. and Albert Heijn in the Netherlands.
According to CEO Frans Muller, retailers and consumer product companies will ultimately have to communicate better to their customers to avert the problem.
“A lot of consumers do not realize what the consequences might be,” Muller said. “We will go our own course as a company, but we have to communicate (with shoppers).”