Climate change and consumers: hot air or real deal?

At present, when what Australians say they will do to help the environment is laid side-by-side with what they actually do, there is definitely a gap.

However, if you’re developing or marketing goods and services with a green hue, the gap looks to close over time and there may be more customers who are willing to pay for improved environmental results.

Survey Says

Researchers have long pointed to a steady simmer in Australians’ concerns about the environment. Their recent work confirms what the newspaper headlines would have us believe: there’s been a rapid boilover and an overwhelming majority of Australians are now concerned about climate change.

A soon-to-released survey by a leading Australian market research and advertising group finds that 84% of Australians think climate change is “true and real”. Given the recent PR blitz, that’s not too surprising.

More interestingly, 91% say they’re willing to change their lifestyles to prevent climate change. The report’s authors call this an “incredible openness to change” and “a great emotional energy that is waiting to be channelled.”

And, Australians have strong views about the ‘climate consciousness’ of companies they interact with. The survey finds 81% believe companies need to take climate change and the environment into account to have a competitive advantage. Of shareholders surveyed, 89% say all companies should have a climate change policy – regardless of their business area.

Reality Cheque

But are Australians voting with their feet – or more accurately with their credit cards? Are their hip pockets connected to their apparently greener hearts and minds?

Here, the way we live and buy may be lagging behind our research responses.

In some areas, such as selecting ‘green power’ from energy retailers, there is some notable upside off a low base. From April to June 2007, Australian ‘green power’ customers grew by 15% to nearly 600,000 households supplied by 254 approved generators. This is despite many consumers’ confusion about ‘green power’ – except its higher price.

Another upward trend is in ‘ethical investment’ or funds that screen companies’ environmental (and sometimes social) performance. One outfit, Australian Ethical Investment, has grown its funds under management from $85m to $600m since 2000.

Anne O’Donnell, AEI’s CEO, has lately been fielding increasing inquiry traffic, particularly through independent financial planning and advisory channels. She’s optimistic about a connection between what Australians think is right and what they put their money into.

O’Donnell said that “higher awareness about climate change looks to be translating into more people’s investment choices and we see this upward trend continuing.”

“People can certainly do the practical things around the household to make a difference. Ultimately, what makes the biggest difference is our money – how we spend or invest it. Given that all Australians are investors through super, it’s probable more people will in future choose to also make a difference through where their money goes in investment terms,” O’Donnell said.

However, elsewhere in the economy, there is limited movement toward living and buying green. At the consumer retail level, the going looks glacial.

Food, beverage and grocery companies are known not to even bother with market research so strong is their view that product or brand greenness is irrelevant to the Bloggs Family’s choices at the local Woolies.

Little is known about the ‘new green consumers’. However, their choices – such as willingness to pay electricity premiums and involvement in sustainable investment – point to higher socio-economic status. Maybe, they’re the doctors and lawyers in their lycra peejays and pricey bikes on the weekend – bike sales cleared two million for the first time in 2006! Not a bad niche to be working.

Marketer’s Perspective

Paul Costantoura, General Manager of Australian Research Group, sees climate change as new hot button for different choices around the house and at the shop.

“What we’re seeing now are early indicators. An increasing number of people have made an ’emotional buy-in’ to the climate change issue. They haven’t done the cost / benefit about their own actions or have deep knowledge about the issues yet, but they have made a start down that track,” Costantoura said.

“More will now focus on the causes of and solutions for climate change. This will affect their decision-making. Their intentions and their actual behaviours will become more aligned.”

Costantoura’s worked as a marketer and advertiser, including for accounts such as Guinness and high tech companies in the UK. He argues that current household and purchasing choices may reflect the relatively subdued green marketing to date.

“For some time, public concern has been running ahead of both the Government response and commercial marketing activity. Many people would like to do something, but aren’t being presented with the right options in the right way. The door is open for smart marketers to capitalise on a market which is ready to pay a premium to satisfy their desire to do something that will help avert climate change,” Costantoura said.

Crystal Ball

The difficulty may not be with Australians’ inclinations but their attention spans.

Buying green often looks to require a PhD in environmental science; the soon-to-be-released survey found that 90% of Australians think it’s hard to know what a climate-friendly product looks like.

Australia appears to be the only OECD country without an official ‘green labelling’ scheme. With Federal Labor promising to broaden the current whitegoods energy efficiency labels to other products, this may be drawing to a close.

The bottom line may then be clearer – whether mainstream Australians will buy what’s environmentally superior or just continue telling researchers what they think is ‘environmentally correct’.