ncsbc 2008 presentation final

Has Consumer Demand Reached the Tipping Point?

Fall 2008 Sustainable Business Forum

November 10, 2008

Session Description

� News Flash: 110% of Consumers Shop Green! Many recent studies have claimed that consumers want green products and are willing to pay more for them. Is it true? Have we really reached a tipping point?

� While there are a bewildering number of claims and success stories, what is the deeper underlying reality of consumer demand for green products?

Do Consumer Actions Matter?

Consumers have direct or indirect control over more than half of total emissions

So, Has Consumer Demand Really Reached the Tipping Point?

� I have the answer. And the answer is……

YES

NO

MAYBE

IT DEPENDS!

Yes

� Overwhelming trend coming from every industry, country, sector (business, government, NGO, personal)

� Reinforced in popular culture

� Increasing awareness of the need for change

� Significant growth of green products and green industries

� Reinforced through mass media (e.g. NBC Green Week)

Some Evidence

� Almost three-quarters (72%) of U.S. adults believe their personal actions are significant on the environment

• Women are much more likely than men (77% versus 67%) to believe that their actions are significant.

− In fact over one-third (35%) of women believe their actions are very significant on the environment compared to 21 percent of men who believe the same;

� Republicans are less likely to say their personal actions on theenvironment are significant (63% vs. 78% for Democrats and 77% for Independents);

� More than half of U.S. adults have made changes in their lives that they believe will help sustain the environment

33%

38%

42%

44%

48%

49%

52%

54%

55%

58%

61%

62%

74%

79%

81%

83%

87%

Concern for the environment continues to grow worldwide, particularly in Latin AmericaMore concerned compared to 5 years ago

Mexico

Thailand

Argentina

Brazil

Malaysia

Italy

Spain

Singapore

Japan

Australia

Korea

USA

UK

Russia

France

Germany

Hong Kong

I am more concerned about the condition of the environment compared to 5 years ago – completely/pretty much agree.

No

� Despite progress, most indicators of environment health are in a state of decline

� Time and time again, consumer interest seems swayed by the latest crisis

• Remember $5 gas?

• How about a Dow at 14,000?

� 48% of Americans are skeptic about global warming

� 17% believe their actions are not significant on the environment

• Progress: this is down from 21% last year

� 58% of Americans have not heard the phrase "environmental sustainability"

� Adult Americans really have a very poor knowledge of the environment

• 32% pass a basic quiz on environmental subjects

• Just 12% pass a basic quiz on awareness of energy topics

Environmental Degradation - Worsening Faster!

Cause

Effect

Green vs. Green

� "What would you say is more important to your region – protecting the environment or economic growth and development?“

US Canada US Region

East Midwest South West

% % % % % %

Economic growth and

development 63 45 57 69 64 62

Protecting the environment 27 44 31 18 27 29

Not sure 10 11 12 13 8 9

May ‘06 June‘07 Nov‘07 June ‘08

% % % %

Economic growth and

development 54 48 51 63

Protecting the environment 34 43 37 27

Not sure 12 9 12 10

US ONLY

Maybe

� Every Green segmentation scheme shows a range of commitment

� Greens (in various shades) make up 40 – 60% of the population

� Really simple syndication, from Joel Makower:

• Committed - knows what to do and does it

• Conflicted - knows what to do, but doesn't always bother

• Confused - doesn't know what to do, or how to make a difference

• Cynical - doesn't know and doesn't care

It Depends

� Significant segment descriptors

• Category

− Luxury/premium products better able to command price premium than commodities

• Age

− Just under half of Echo Boomers (those aged 18-31) and Gen Xers (those aged 32-43) have heard of sustainability used (46% and 47% respectively), while just 30% Matures (those aged 63 and older) have heard it used.

• Education

− Just under half of those with a high school education or less (46%) have changed their lifestyle compared to two-thirds (65%) of those with a post graduate degree.

• Other variables

− Income

− Race

− Nationality

Gap Between Behavior at Home and Work

� Nearly three-quarters (73 percent) of workers said they strongly or somewhat agree that it is important to them that their employer is an environmentally and socially responsible company.

� But, what the workers themselves do at work vs. at home shows a disconnect.

� Economic motivators are more powerful than environmental concerns

57%44%Put PC in sleep mode

58%34%Turn off computer

92%52%Turn off light

HOMEWORK

6 Key Dimensions and 20 Attributes Measured in the Reputation QuotientSM

I. Emotional

Appeal

IV. Financial

Performance

III. Workplace

Environment

II. Products &

Services

V. Vision &

Leadership

VI. Social

Responsibility

ReputationReputation

QuotientQuotientSMSM

(RQ)(RQ)

1. Feel Good About

2. Admire and Respect

3. Trust

15. Market Opportunities

16. Excellent Leadership

17. Clear Vision for the Future

8. Rewards Employees Fairly

9. Good Place to Work

10. Good Employees

11. Outperforms Competitors

12. Record of Profitability

13. Low Risk Investment

14. Growth Prospects

18. Supports Good Causes

19. Environmental Responsibility

20. Community Responsibility

4. High Quality

5. Innovative

6. Value for Money

7. Stands Behind

How the RQ is Calculated

� The RQ score is calculated by summing the ratings on the individual RQ attributes then dividing by the total possible score and multiplying by 100.

� For example, if there were only 5 attributes:

• Trust the company a great deal 6

• Stands behind its products & services 7

• Develops innovative products & services 6

• Offer products & services that are good value for money5

• A company with strong prospects for future growth 5___

29

29 X 100 = 82.8 RQ

5 x 7

� The highest possible RQ score is 100.

16

Corporate Social Responsibility –What the public considers most essential

2004 2005 2006 2007

% % % %

Treatment of Employees/Human Rights 38 33 34 33

Personal health and safety 30 30 29 32

Treatment of environment (SR) 10 11 12 12

Involvement in local community (SR) 8 9 9 7

Responsible advertising 5 6 5 5

Charitable donations (SR) 1 2 2 2

• When asked what is MOST essential to them when evaluating a

company’s corporate social responsibility, most people say that the

company’s “treatment of [its] employees, including their labor

practices and human rights record” matter most (33%).

• The “personal health and safety associated with using the

company’s products and services” is a close second (selected as

most important by 32% of the General Public).

• Treatment of the Environment was significantly less important

(12%).

Harris Polls

� Economic Growth or the Environment? When Cornered, Americans Believe Economic Growth is More Important [July 30, 2008]

� http://www.harrisinteractive.com/harris_poll/index.asp?PID=938

� The Environment…Are We Doing All We Can? [June 19, 2008]


� For Earth Day: Americans Think All Three Presidential Candidates would do a Better Job Handling the Environment Than President Bush Has Done [April 21, 2008]


� For Earth Day: Two-thirds of Americans Believe Humans are Contributing to Increased Temperatures [April 18, 2008]


� Adults in Five Largest European Countries and the U.S. Supportive of Renewable Energy, But Unwilling to Pay Much More for It [February 26,

2008]


Harris Polls

� Global Warming Seen as a Problem That Needs to be Addressed Globally, But Most People Want U.S. to Take the Lead [November 7, 2007]


� Large Majorities See Organic Food as Safer, Better for the Environment And Healthier — But Also More Expensive [October 8, 2007]


� Three in Ten U.S. Adults Believe That The Federal Government Should Have Most Environmental Responsibility for U.S. Food Industry [July 18,

2007]


� One-Quarter Of Americans Do Not Recycle In Their Own Home [July 11,

2007]


� U.S. Adults Less Likely Than Europeans to Think Humans Are Contributing to the Increase in Global Temperatures [April 23, 2007]


Publicly Released Research About “Green” Issues conducted by Harris Interactive� Survey of homeowners, conducted on behalf of Applied Materials, measured

current and future usage of solar power to generate electricity for the home. The survey also examined barriers and incentives to usage of solar power, including attitudes toward government incentives. [August 2006]

� http://appliedmaterials.com/news/assets/solar_survey.pdf

� General population survey, conducted on behalf of the Biotechnology Industry Organization (BIO), determined consumer attitudes towards biofuels. [October 2006]

� http://bio.org/ind/biofuel/survey.asp

� Survey of car drivers, conducted on behalf of Pavilion Technologies, measured consumer awareness of, and attitudes towards, biofuels. The survey also determined barriers and incentives to biofuel usage. [December 2006]

� http://www.pavtech.com/index.php?option=com_content&task=view&id=239&Itemid=35

� Survey of employed adults, conducted on behalf of Adecco USA, gauged employees’ attitudes about working for a “green” company. [March 2007]

� http://www.harrisinteractive.com/news/newsletters/clientnews/2007_Adecco.pdf

� General population survey, conducted on behalf of Xantrex Technology, gauged consumer interest in renewable back-up energy for their home. The survey included back-end analysis by homeownership status. [April 2007]

� http://www.xantrex.com/web/did/1693/readnews.asp

Publicly Released Research About “Green” Issues conducted by Harris Interactive� Survey of employed adults, conducted on behalf of 1E and the Alliance to Save

Energy (ASE), examined PC usage at work. The survey focused on reasons why workers do or do not shut down their computer at the end of the workday. [May 2007]

� http://www.kiplinger.com/businessresource/summary/archive/2007/Energy_1E_Alliance.html

� Survey of employed adults, conducted on behalf of Sun Microsystems, determined green behaviors at home versus at work. The survey also gauged employees’ attitudes toward socially and environmentally responsible companies. [June 2007]

� http://www.sun.com/aboutsun/pr/2007-08/sunflash.20070801.1.xml

� General population survey, conducted on behalf of the Clean Fuels Development Coalition (CFDC), examined adults’ attitudes toward ethanol, specifically with respect to national security, America’s reliance on foreign oil, and the impact of oil and ethanol costs on food prices. [September 2007]

� http://www.cleanfuelsdc.org/pubs/documents/HarrisPollRelease101507.pdf

� General population survey, conducted on behalf of Arrow Electronics, determined consumers’ knowledge and usage of various lighting options, specifically LED or solid-state lighting. The survey also examined consumers’ preferred price point for LED lighting, including incentives that would encourage them to pay a premium. [October 2007]

� http://findarticles.com/p/articles/mi_m0EIN/is_/ai_n25362028

Publicly Released Research About “Green” Issues conducted by Harris Interactive� Survey of Fortune 1000 executives, conducted on behalf of 1E, determined who at

their company is primarily responsible for corporate power consumption management. [March 2008]

� http://www.harrisinteractive.com/NEWS/newsletters/clientnews/2008_1E.pdf

� Survey of employed adults, conducted on behalf of Adecco USA, gauged employees’ attitudes about working for a “green” company (follow-up to 2007 survey). The survey also examined general population perceptions on “greenwashing”. [March 2008]

� http://www.reuters.com/article/pressRelease/idUS140783+17-Apr-2008+PRN20080417

� Survey of parents of children under 18, conducted on behalf of Stremicks Heritage Foods, examined what foods, vitamins, and nutrients parents include in their child’s diet, and determined knowledge about, and perceived importance of, omega 3 DHA fatty acids. The survey included back-end analysis by parents of children under 6. [March 2008]

� http://www.reuters.com/article/pressRelease/idUS123722+21-Apr-2008+PRN20080421

Publicly Released Research About “Green” Issues conducted by Harris Interactive� Survey of Fortune 1000 executives, conducted on behalf of Makovsky + Company,

examined executives’ attitudes about climate change from a personal as well as professional perspective. The survey revealed substantial gaps between what executives think their company should be doing to address climate change and the actions that are currently being taken. The survey determined reasons why corporations should act on climate change issues, as well as barriers to doing so. Executives also assessed the role of various entities (individuals, governments, corporations, NGOs) in bearing responsibility for climate change issues. [March 2008]

� http://www.reuters.com/article/pressRelease/idUS120191+23-Sep-2008+GNW20080923

� General population survey, conducted on behalf of Farmland Dairies, examined adults’ milk-drinking preferences, including attitudes about organic and skim milk in particular. [April 2008]

� http://tastecincinnati-food.blogspot.com/2008/06/organic-vs-hormone-free-dairy-survey.html

� General population survey, conducted on behalf of Trilogy by Shea Homes, gauged consumers’ concern about the environmental legacy they will leave behind for their grandchildren’s generation and their interest in reducing their carbon footprint and making their home more “green”. Consumers were asked to rank the benefits of a “green” home they would find most appealing and the features that would be most important to them if they were planning to purchase one. The survey also included back-end analysis by Baby Boomers. [May 2008]

Publicly Released Research About “Green” Issues conducted by Harris Interactive

� General population survey, conducted on behalf of Trilogy by Shea Homes, gauged consumers’ concern about the environmental legacy they will leave behind for their grandchildren’s generation and their interest in reducing their carbon footprint and making their home more “green”. Consumers were asked to rank the benefits of a “green” home they would find most appealing and the features that would be most important to them if they were planning to purchase one. http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=ind_focus.story&STORY=/www/story/10-14-2008/0004903346&EDATE=TUE+Oct+14+2008,+08:00+AM

� General population survey, conducted on behalf of Whole Foods Markets, examined consumer attitudes about, and purchasing habits of, natural and/or organic foods. The survey focused specifically on the impact of the economy and higher food prices on grocery shopping preferences and behaviors, and also determined consumers’ likelihood to take advantage of tips, coupons, and money-saving recipes. [August 2008]

� http://media.wholefoodsmarket.com/pr/wf/national/8-26-08valuesurvey.aspx

� Survey of laptop owners, conducted on behalf of Boston-Power, determined length of ownership of laptop, satisfaction with the battery’s performance, and frequency and method of replacement and disposal of laptop battery. The survey also gauged the importance of various features and laptop owners’ willingness to pay a premium for certain features, including a battery that is better for the environment. [September 2008]

� http://www.reuters.com/article/pressRelease/idUS139551+17-Sep-2008+BW20080917

References

� The Bridge at the End of the World: Capitalism, the Environmentand Crossing from Crisis to Sustainability, James Gustave Speth

� National Environmental Education & Training Foundation

• www.neetf.org

� Hartman Report on Sustainability

• http://hartman-group.com/products/reportSustainability2007.html

� Joel Makower

• www.makower.com

� TNS Green Life Study

• http://www.tns-us.com/greenlife/

� American Environmental Values Survey

• http://ecoamerica.typepad.com/blog/2006/12/american_enviro.html

For More Information

Jim Jubelirer

President

Jubelirer Research and Consulting

(919) 969-7818

[email protected]

ncsbc 2008 presentation final

Health & Medicine

environment women

environment progress

significant onthe environment

economic growth

consumer actions matter

green industriesreinforced

personal actions

nbc green week