New research from Bain & Company has found that more than 60% of businesses in the GCC region are currently off track to achieve their sustainability goals. The major study exploring the top sustainability concerns for business leaders, their customers, and their employees, found that an increasingly environmentally conscious base of consumers and employees in the GCC may prove “instrumental” in steering businesses towards their sustainability targets.
Indeed, within the study, the pivotal role of technology, policy, and behaviour change in achieving sustainable practices, was underlined.
Bain surveyed 23,000 consumers, and the results underscored the growing urgency of sustainability topics.
Some 64% of people reported high levels of concern about sustainability.
Most said their worries have intensified over the past two years and that their concern was first prompted by extreme weather.
“With the upcoming global focus on the region with COP 28 and the potential implications from this critical gathering, it is critical the CEO’s and Sustainability Plans in the corporate sector take centre stage in the next phase of the world’s transition. Our global report on the topic is grounded on the philosophy of Visionary Pragmatism in this path for executives to adopt as they are navigating taking the global ambitions and translating them into the day-to-day functioning of their respective companies” said Akram Alami, Middle East Partner at Bain & Company.
The Bain & Company research dispelled a number of common misconceptions, including that consumers won’t pay more for sustainable products and that consumer behaviour is fixed.
It discovered that baby boomers are just as concerned as Gen Z, with 72% of Gen Z consumers and 68% of boomers globally being very or extremely concerned about the environment. Moreover, in countries as diverse as India, France, and Japan, boomers are more concerned.
The research also found that as concerns grow, consumers are looking to make environmentally sound choices. Eighty-two per cent of consumers in Europe, the Middle East, and Africa are now likely to recommend a brand after learning that it supports a social cause.
Consumer behaviour can also change more quickly than many companies anticipate, it was found, with external factors such as government regulation heavily influencing the market.
China began offering financial incentives for electric vehicles in 2009, and now 19% of Chinese consumers report driving an electric car, compared with 8% of consumers globally, it was found.
Meanwhile, in England, the use of single-use supermarket plastic bags has fallen by 98 per cent since the government began requiring retailers to charge for them in 2015. A similar effect has been felt in the UAE, with the recent imposition of charges on plastic bags in supermarkets, which has swiftly prompted a notable reduction in their usage.
Further to this, it was found that there is a disconnect between what consumers want and what companies sell. Worldwide, 48% of consumers consider how products are used when considering sustainability.
These consumers are more concerned about how a product can be reused, its durability, and how it will minimise waste.
Contrastingly, most companies sell sustainable goods based on factors such as how they are made, their natural ingredients, and the farming practices deployed.
These factors cause many consumers to conflate “sustainable” with “premium.”
One result of this disconnect, the study found, was that nearly half of all developed-market consumers believe living sustainably is too expensive. By comparison, roughly 35 per cent of consumers in fast-growing markets believe this.
Bain’s survey also found that 50 per cent of consumers said sustainability is one of their top four key purchase criteria when shopping.
Yet, they may be making decisions based on misconceptions, it was shared.
When asked to determine which of two given products generated higher carbon emissions, consumers were wrong or didn’t know about 75 per cent per cent of the time.
Consumers say they rely most on labels and certifications to identify sustainable products, yet most were unable to accurately describe the meaning behind common sustainability logos, such as organic production or Fairtrade.
A lack of trust in corporations compounds the issue, it said.
Bain found only 28 per cent of consumers trust large corporations to create genuinely sustainable products, compared to 45 per cent who trust small, independent businesses.
The momentum behind sustainability and dynamic shifts in consumer behaviour has profound implications for any company. Bain identified four critical areas of focus.
- Devise a future-proof and flexible strategy. Few companies plan beyond the typical three-year strategic planning window, and even those that do look out five to ten years tend to focus on expectations for technology adoption. These plans fail to fully consider two other factors that move just as rapidly and with as big an impact: regulations and consumer behaviour.
- Acknowledge a fragmented consumer base. Companies need to deaverage consumers and innovate products and design propositions that appeal to different segments— local markets, consumers with different definitions of sustainability, and consumers with a range of purchasing motivations.
- Test and learn to determine what works—and repeat. In such a fluid environment, companies can lean aggressively on marketing experimentation, using digital tools to quickly test the sustainability messages that resonate with different segments and adapt accordingly. It’s a way to help consumers gain enough clarity to make decisions that are consistent with their values.
- Get out in front of regulations. Government policy inevitably becomes a huge contributor to changing consumer behaviour. Across all industries, companies need to be at the forefront of helping to shape the regulations affecting their business. A company’s ability to anticipate policy shifts and build future-proof portfolios will help determine whether it can outpace competitors.
Bain found 75 per cent of business leaders believe they have not embedded sustainability well into their business.
The instinct of many CEOs, it said, is to prioritise external hiring to address all skill gaps, including in sustainability. Bain shared that it advocates for addressing sustainability’s challenges through a combination of smart upskilling and cultivating a learning mindset.
A new Bain survey of 4,700 people found 63 per cent felt different skills and behaviours would be required for their company to execute its ESG ambition or strategy. Yet only 45 per cent of nonmanagers said their employer offers the reskilling and upskilling opportunities that would enable internal mobility.
Despite almost every CEO sharing that they have a talent problem, few companies have defined what it means to be a great employer.
In Bain’s recent survey, 44 per cent of respondents said it is easier to find a better opportunity outside their company than within it.