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Why Consumers Want More Action on Sustainability

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Why Consumers Want More Action on Sustainability

Earlier this year, CGS, a global business applications provider, unveiled its latest annual 2022 Retail and Sustainability Survey. The survey examined different aspects of sustainability from a consumer perspective to gauge sustainability adoption and consumer perspectives, among other things. Surprisingly, despite economic uncertainty in the past, present, and looming on the horizon, consumers seemed eager to embrace sustainability and demand it from legislators and companies alike. This article will look at the survey and how sustainability is impacting consumer goods.

What’s the sustainability movement?

Despite current world events and inflation, consumers are more interested than ever in shopping for sustainable products. The United States Environmental Protection Agency (“EPA”) defines sustainability as the pursuit of creating conditions where humans and nature can coexist and support present and future generations.

Sustainability is important because it enables us to fulfill our social and economic needs without jeopardizing our society. CGS’s latest 2022 Retail and Sustainability Survey explored how consumers view sustainability today.

Sustainability interest is surging after the Covid-19 pandemic

The interest in sustainability briefly dropped during the pandemic as countries turned towards trying to stop the spread of Covid-19 at any cost. Global supply chains came to a grinding stop, and consumer desire for goods evaporated overnight. In 2020, only 51% of respondents indicated that sustainability was at least “somewhat important.” Today, however, 79% of U.S. consumers report believing that sustainability is “somewhat important” when looking for fashion, apparel, and footwear. For younger generations, 33% of Millennials believe that purchasing sustainable products is “very important,” and 27% of Gen Z believe the same, which is key when it comes to eco-friendly initiatives.

Importantly, past surveys demonstrate that consumer concern for sustainability has only risen. In 2019, 68% had responded that sustainability was “somewhat important.” 

Sustainability at any cost?

Sustainability often comes at a price, but despite inflation and other global disruptions, many Americans are open to shopping sustainability. Among those surveyed, 68% indicated they would pay more for sustainable products. This increased from 56% in 2020 to 47% in 2019. Gen Z stood out again when it came to spending and reported that they were the most likely to pay up to 100% more for a sustainable product.

Related to cost is also where consumers are shopping. Sustainability is driving consumers to change the brands they shop from based on whether they make sustainable offerings. 50% of U.S. consumers have changed where they purchased goods in the past year, and 14% are purchasing from businesses with sustainable practices.

Can fast fashion clean up its act?

These trends can also be seen when it comes to some of the world’s biggest startups, like Shein. Shein is best known for turbocharging the fast fashion business model and producing clothes at unbelievable prices. In the U.S., environmental and social good can hugely impact a company’s ability to attract capital in today’s market.

Shein and other fast fashion startups mostly ship their products via the mail. However, Millennials and Gen Zers both reported making more purchases in-store over the past year, with 45% and 43%, respectively. In the end, cheap clothing may be convenient, but it is not necessarily driving consumer demand.

Consumers expect transparency

Sustainable production practices aren’t the only concern for consumers – expectations for transparency have also continued to rise. Demand for increased transparency rose from 2020 when only 23% reported that brands gave enough transparency into their sustainability practices. Today, in 2022, 34% felt that brands were transparent enough. Many global manufacturers are putting planet preservation into their business plans.

At the forefront of sustainability is the practice of ethical labor standards. The survey found that 32% believed that brands should commit themselves to ethical labor practices and that it should be their priority.

Should sustainability be legislated?

However, what should we do when brands refuse to change? The CGS survey also attempted to glean answers on whether consumers thought businesses or the government should be in charge of driving sustainable initiatives. Earlier this year, in anticipation of New York Fashion Week, New York legislators unveiled the Fashion Sustainability and Social Accountability Act (“Fashion Act”). The Fashion Act would have forced brands in fashion to adopt sustainability-related obligations.

Following this announcement, 49% of respondents indicated they would like to see more sustainability from different brands. Interestingly, 23% were opposed because they feared it might lead to more expensive goods. 

The survey also broke down people by age to determine which age groups were more inclined to support sustainable legislation. 59% of Millennials and 60% of Generation Z were in favor of national/global sustainability laws. In contrast, the older generation of Baby Boomers found only 37% in support of sustainability legislation.

California leads the charge in sustainability legislation

In June, California passed a similar bill addressing everything from fast fashion and e-commerce packaging to clothing displays and beauty packaging. Among other requirements, the bill will demand producers that sell, distribute, or import into California (basically any company operating in the U.S.) to reduce single-use packaging by 25% by 2032. Of course, the California law is still too new to predict how it will actually impact consumers.

The beauty industry, in particular, faces tremendous hurdles when it comes to reducing packaging. Single-use sachets, which are commonplace to deliver product samples, are almost impossible to produce in recyclable versions. In contrast, some experts view this as an opportunity to establish reuse and refill infrastructure and technology. 

In any case, supply chains, retailers, and distributors will all be forced to adapt to these industry disruptions. CGS’ survey indicates that consumers are hungry for these changes and willing to encourage legislators to act when companies fail to.

What’s driving the “going green” phenomenon?

Besides legislation, though, what precisely is driving consumers’ motivations for “going green?” Among all age groups, Gen Z was the most influenced by celebrities and other influencers for going green at 15%. However, receiving information about sustainability initiatives and lower pricing ended up being the most influential. 38% of respondents said they would be more motivated to purchase sustainable products if they received more information, and 56% were motivated by lower pricing. 

Lower pricing isn’t the only thing consumers appreciate, though. Many buyers also appreciate business updates via texting and SMS, which allows them to quickly and conveniently communicate with the brands they love.

How do consumers embrace sustainability?

Finally, when companies aren’t doing enough and legislators are coming up short, many consumers in the U.S. are taking things into their own hands. 42% of respondents indicated they are waiting longer or choosing longer shipping options for products that are better for the environment. When broken down by generation, 31% of Generation X and Millennials are waiting longer, and only 27% of Gen Z are. In the end, these types of motivations are also shifting business behavior.

The bottom line

Sustainability isn’t just a throw-away trend, and “going green” will only become more popular. The CGS 2022 Retail and Sustainability Survey reveals just how much consumers are demanding that companies and legislators embrace sustainability. Today, sustainability isn’t just about “green statements” but about real, lasting change.


Trump’s Tariff War Doing The U.S. More Harm Than Good

Freshman economics students learn about the law of unintended consequences, which is that government actions and policies have unintended effects.

President Trump’s import tariffs would make a good case study, because they’ve had enough unintended effects to qualify for the Guinness Book of World Records.’

Trump, AKA the tariff man, likes to point out that tariff revenue has been pouring into the government’s coffers. In fiscal 2018, it came to $41.3 billion, according to the Treasury Department. That is less than one percent of all federal revenue for that year, and about 5% percent of the federal budget deficit, which was $779 billion – a 17% increase from fiscal 2017.

Moreover, $41.3 billion is only slightly more tariff revenue than the government took in in each of the three previous fiscal years.

Trump, as is well-known, also likes to use tariffs for what he calls “leverage,” although you might consider that a euphemism for arm-twisting. Whatever you want to call it, it seems to work, and why wouldn’t it? If someone pointed a gun at you and said, “Gimme all your money,” you’d probably give it to him.

China, Canada, Mexico, the European Union and other targets of Trump’s tariff war don’t want to tangle with him or with the richest country on earth (for now). So, each of them has tossed him some bones to keep him from biting them.

These are trade policy effects that Trump is no doubt proud of.

But the following are not.

A recent study by economists from the New York Federal Reserve Bank and Columbia and Princeton Universities, entitled “The Impact of the 2018 Trade War on U.S. Prices and Welfare,” found that the principal victims of Trump’s tariff war were American consumers.

“[We] find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018,” it said.

This is an unintended, but certainly not an unanticipated, effect. Trade sanctions always victimize consumers.

And farmers.

When other countries react to what they consider unfair trade practices by the United States, they almost always hit back where it hurts – in farm country. Since China imposed a retaliatory tariff of 25% on American soybeans, farmers who had been exporting most of their beans to China are now storing them in grain bins, where they’re in danger of spoiling. China has made up for the loss by buying more soybeans from Brazil.

U.S. energy companies can’t ship liquified natural gas to China, because China has imposed a 10% retaliatory tariff on U.S. LNG. The world’s second-largest LNG importer, after Japan, China has turned to other suppliers, such as Australia and Qatar.

Some Chinese companies have gotten around Trump’s tariffs on $250 billion in Chinese exports by opening factories in other countries and shipping to the U.S. therefrom. For example, the Washington Post reported on March 27 that Fuling Global Inc., a Chinese company that makes paper cups and straws for the U.S. market, opened a factory in Monterrey, Mexico and will ship its products to the U.S. from there, duty-free under NAFTA.

U.S. importing companies have to post a customs bond to assure the Customs and Border Protection agency that they will pay the tariff on the goods they import. As a consequence of Trump’s tariff war, the cost of a customs bond has increased exponentially, 500-fold in some cases, Reuters reported on March 29. This poses a particular hardship on small companies. Those that don’t pay the full amount receive insufficiency notices. CBP issued about 3,600 of those in the first quarter of 2019, a spokeswoman said. She declined to say how that compared with previous years. The Roanoke Insurance Group of Schaumberg, Ill. provided data showing that CBP issued an average of 2,070 per year between 2006 and 2017.

This problem is bound to get worse this month, as Mexico is expected to publish a list of retaliatory tariffs to supplement those it imposed in June 2018 after the Trump administration imposed tariffs on steel and aluminum imports of 25% and 10% respectively. The Mexican government reasonably expected those tariffs to go away after it agreed to the NAFTA renegotiation that the U.S. forced on it. But they didn’t.

The steel tariffs have been great for the U.S. steel industry, but not for anyone else. U.S. Steel (NYSE:X) CEO David Burritt said in a March 25 letterto the Wall Street Journal that the tariffs had allowed his company to restart plants and create more than 1,000 jobs.

Industries that use steel – autos, construction, home appliances and many others – aren’t so thrilled about the tariffs. The Ford Motor Company (NYSE:F) reported in January that the tariffs had cost it $1.1 billion more in 2018 than 2017.

Life will get a lot worse for the auto industry if Trump imposes a 25% tariff on imports of autos and auto parts, as he is considering doing. That would increase the average price of a car – foreign or domestic – sold in the U.S. by as much as $2,750 and “threaten” more than 366,000 jobs, according to a study by the Center for Automotive Research.

Caterpillar (NYSE:CAT) said the steel tariffs had cost it more than $100 million in 2018 and that it expected to pay twice that much this year. Caterpillar said it planned to raise prices on most of its products by as much as 4%.

The U.S. and Chinese governments have been saying lately that they’re close to a deal to end the trade war. If Trump follows through on his threat to put a 25% tariff on auto imports, he’ll find himself in another, with the EU, the world’s largest market, all because the EU has a 10% car tariff.

John Brinkey was speechwriter for U.S. Trade Representative Michael Froman and for Korean Ambasador Han Duk-soo during the Korean government’s quest for ratification of the Korea-US Free Trade Agreement.