Its hard to deny the environmental alarm bells going off on our planet. But many business owners are are unwilling to make business decisions based on environmental ideals. Somewhere along the way, the idea of social responsibility got mixed up with socialism, and as a result, many generations have held onto the idea that going green, means making less green. However, this old logic is shown to be fatally flawed in today's economy, especially when it comes to the new generation of consumers. And denying the new trend of conscious capitalism, could cost you.
The profits of sustainable minded businesses are undeniable. Companies like Patagonia, Chipotle and even mainstream companies like Walmart, are embracing sustainability as the best decision for their bottom line. Walmart, according to msn.com, is "the biggest seller of organic milk in the world and the biggest buyer of organic cotton globally."
In sector after sector, green businesses are outperforming their competition. According to a 2013 report called the "Big Green Opportunity," the first major report to look at the green economy from the perspective of small business owners, "Growth rates of “green” segments are outpacing conventional segments in every industry where we collected data." This report finds that from 2002-2011, the organic food segment grew 238% while the overall food market grew 33%. And from 2003-2011 the organic nonfood segment grew 400% while the equivalent overall non-food market grew 33%.
Despite this growing evidence, some small business owners still seemed trapped in that old way of thinking that assumes, cheaper is alway better, and that if they spend less, for example, on packaging, they will make more money. This follows another old assumption, that customers are unwilling to pay more for something like biodegradable packaging. However, new research on milennials is disproving this logic.
Despite the fact that millennials have come to age in the most financially strapped time in modern history, they are the more willing, than any generation of the past to pay more money for things that align with their values. A 2015 Nielsen online study, "Global Survey on Corporate Social Responsibility," found that almost 3 out of 4 respondents are willing to pay extra for sustainable offerings. Social media seems to play a major role in facilitating this generation of mindful consumers, providing accessibility to the story and social cause (or lack thereof) behind a product or company. Additional findings in this study include:
53% of people are willing to pay more for a product with environmentally friendly packaging
58% of people are willing to pay more if the product is from a company known for being environmentally friendly
43% of global consumers said they are willing to spend more for a product or service that supports a cause
66% of global respondents say they’re willing to pay more for products and services that come from companies that are committed to positive social and environmental impact (up from 55% in 2014, and 50% in 2013)
According to Forbes.com article, "Only Conscious Capitalists Will Survive", not only is conscious capitalism profitable, but there is a wealth of data that shows brands that are conscious capitalists succeed. John Mackey of Whole Foods, refers to conscious capitalism as "businesses that serve the interests of all major stakeholders—customers, employees, investors, communities, suppliers, and the environment."
Conscious Capitalism or Sustainable Shopping, call it what you will, consumers are becoming more eco-minded when it comes to where they shop, what they eat and what they buy. And this new wave of consumerism shows no signs of letting up. As of 2015, millennials now make up the largest share of the U.S. workforce, and they now have the power to shape consumer decisions and workplace practices. Companies need to take notice of what this generation values and adapt their strategies to attract new customers.
Conscious companies are those that look at a more complete picture of success, which includes employee satisfaction, social and environmental impact, contribution to the community, as well as bottom line revenue. According to Entrepreneurer.com, "Operating as a conscious company today is a meaningful tactic for revenue growth and customer retention and often the foundation of the next wave of innovation."
And sustainability, is not only a core value to millennials, they are very willing to take action over what matters to them. A recent study, conducted by Lightspeed, a globally integrated research organization, on behalf of Rubbermaid® Commercial Products (RCP). found that, over two-thirds of millennials are so committed to sustainability issues they would be willing to give up social media for a week if everyone at their company recycled. Additionally, nearly 1 in 10 millennials would quit their jobs if they found out their current employer was not sustainable.
What does all this mean for the average small business? It means that there is a cost to not being sustainable. Take for example, two food trucks, one offering great food in traditional styrofoam packaging vs. another truck offering equally good food and clearly communicating that their food is locally sourced and served in biodegradable to-go packaging. For millennials who expect transparency and value sustainability, the choice might come down to a value vote with their dollars.
Fortunately, for businesses willing to adapt, a sustainability reinvention is possible. But it requires a strong commitment from leadership. The good news is, sustainable strategies, like zero waste, are among the cheapest, easiest and most effective ways to make a positive environmental impact. Zero Waste is also one of the most visual ways to show customers that you are taking responsibility for your carbon footprint. But for savvy millennials, you can't just make claims, you must establish a reputation of environmental stewardship. This requires meaningful changes that are transparent, authentic and value driven. And in today's economy, a business's willingness and ability to embrace, adapt and move in a more sustainable direction, may just be the most important factor in their future profits.