How much consideration do you give to a brand’s ethics before you make a purchasing decision? Many consumers today are more likely to purchase from ethical brands, with ethics playing a bigger part in decision-making than they did a decade ago—or even a few years ago.
The change is most notable among the Millennial generation. For example, overall, 66 percent of consumers are willing to pay more money for a product if it came from a sustainable brand. Among Millennials, that percentage jumps to 73 percent.
Already, companies are starting to transform in reaction to this change. Take a look at some of the top 10 brands in any industry, and you’ll see a collection of high-profile leaders trying to improve or showcase their ethical superiority. In fact, 85 percent of companies in the S&P 500 now publish sustainability reports at least annually.
So what’s driving this preference?
Why the Change?
There are a handful of motivating factors working in concert to make ethics more visible and demanded in modern society:
- Climate change is becoming more evident. Part of the transition is due to the mounting evidence for man-made climate change. Climate scientists have been expressing concerns for decades, but only in the past 20 years or so has it been getting more press attention. The Paris Agreement of 2015 motivated the vast majority of developed nations to vow to take action to mitigate the effects of global warming, and thanks to more news coverage and better information in circulation, the general public is growing increasingly aware of and concerned about the environment. This is driving environmentally conscious consumers to buy from companies they know are making an effort to combat climate change.
- Public distrust. We can also look at the growing levels of public distrust in corporations as a sign of where we’ve come as a society. We’re living in an era with record-level trust declines across the board; Americans are distrustful of corporations, the government, and even the media. This has several independent root causes of its own. For example, the overabundance of persuasive advertising has led many consumers to be skeptical of the corporations churning them out. The economic crash of 2008, driven largely by unethical banking practices, has led consumers to demand more from their financial institutions.
- Millennials spend more frugally. Another root cause could be Millennials’ lower level of materialism. The average Gen Xer or Baby Boomer spends about $32,000 annually on discretionary items, while the average Millennial spends only about $26,000. When a group of people has less money to spend, they tend to be pickier about where they spend it. For example, if you can afford to eat at restaurants only once in a while, you’ll want to choose the ones you feel are doing the best job overall.
- Competitive pressure. There’s also a growing feedback loop in place. As more consumers begin to demand ethical practices from the businesses they buy from, more companies begin to change their approaches, publishing sustainability reports and publicizing their efforts. Average consumers see messages from competing brands, and can’t help but acknowledge which brand is doing better things for the world at large. To prevent themselves from losing business this way, companies overdue for an ethical overhaul are more willing to adopt sustainable practices. This, in turn, exposes more consumers to the importance of ethical practices, and the cycle continues.
Planning for the Near Future
Will this trend continue, with greater and greater pressure on modern brands to conduct ethical practices? Or is this a short-term boost of consumers caring about the environment and ethical internal operations?
It’s hard to say for sure, but it seems unlikely that the trend would reverse itself. Sustainability is the “right” choice, and increasingly, it’s becoming the cheaper one. The more companies and consumers collectively pressure each other to engage in more ethical business practices, the harder it will be to ever deviate from those new norms.