SKU’d Thoughts 44: How have consumers impacted corporate sustainability?

Back in 2008, Walmart launched a Packaging Scorecard, a software tool that grades packages on their environmental friendliness. The scorecard, which was part of Walmart’s company-wide sustainability initiative, aimed to reduce packaging in the retailer’s supply chain by 5% by 2013. I was working at Kraft Foods (now Mondelez) at the time and I recall an internal scramble to ensure packages for SKUs stocked at Walmart were up to snuff since the buyers from the world’s largest retailer were using the scorecard to help make purchasing decisions.

Nowadays, sustainability is not just a mandate that companies with purchasing power force onto their suppliers. It has now become a marketable differentiator that impacts consumer purchasing decisions. This shift towards values-driven consumerism is evident by the increasing number of Certified B Corporation companies; over 3,500 companies globally across 150 industries. These companies which include Danone, Patagonia, and Gap-owned Athleta are balancing purpose and profit by considering the impact of their business decisions on environmental and social issues.

One of those B corporations is Allbirds. The shoe company launched in 2016 with what they’ve called “the world’s most comfortable shoe” and sustainability embedded in their entire value chain. The upstart shoemaker’s environmentally-friendly practices includes using sugarcane for the soles instead of plastic, which is made from fossil fuels. Understanding that sustainability is a collective effort, Allbirds has open-sourced sugarcane to sole technology for other companies to take advantage of. Four years later, the shoemaker is labeling all shoes with a per-unit carbon footprint. A complicated number to derive because you have to factor in both direct and indirect processes of shoemaking but Allbirds hopes to establish an industry standard.

The rise in conscious corporate dealings is directly correlated to what consumers are buying into. Consumers have traditionally made purchasing decisions based on price, convenience, and quality, and now environmental impact aka sustainability can be added to that list as a key factor to the buying decision matrix. According to a 2019 Accenture survey, 50% of respondents “are willing to pay more for a product that was designed to be reused or recycled” and 36% of that same group “are willing to pay more for a product that was made from recycled materials.” The increasing environmental consciousness of consumers has kept the pressure on companies to continually drive up sustainability standards.

Pre-pandemic, it was estimated that consumers would spend up to $150 billion on sustainable products by 2021, and sustainability programs and commitments were becoming the norm in the retail and consumer products sectors. The pandemic hasn’t slowed down the retail sector’s commitment to sustainability. Many apparel and accessory retailers are fighting to stay in business by leveraging sustainable initiatives such as partnering up with resale platforms like ThredUp to sell pre-owned items. Walmart, Target, and CVS started The Beyond the Bag Initiative to “reinvent the single-use plastic retail bag, with the goal of identifying, testing, and implementing viable design solutions and models that more sustainably serve the purpose of the current retail bag. On the consumer packaged goods front, sector giants like Unilever, Procter & Gamble, Clorox, Mars, Coca-Cola, and PepsiCo have committed to TerraCycle’s Loop initiative. TerraCycle, through its mission “to eliminate the idea of waste”, introduced a new way for consumers to shop for all their favorite products, by utilizing reusable packaging. Even with the capital expenditure required for reusable packaging, the number of brands committing to the TerraCycle’s Loop program continues to grow.

While the growth in conscious consumerism and the continued efforts by companies to become more sustainable does just boil down to profit, it is imperative for the survival of future generations. Both sides, consumers and companies, have to continue to yield more in order to make a material impact. It will be interesting to see what gives as e-Commerce is projected to continue increasing as a share of all retail. This increase in e-Commerce comes with more packaging waste and fuel emission of delivery vehicles. If sustainability is really the goal, consumers and companies will have to decide on the importance of e-Commerce conveniences like one or two-day delivery.