Want to Save the Environment? Give Consumers More Benefits for Going Green

The Green Bundle: Pairing the Market With the Planet

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In the process of confronting pollution and climate change, environmentalists have had to grapple with the demands of capitalism. Some see markets and corporations as obstacles to saving the planet, while others seek to use government regulation or litigation to incentivize capitalists to change their behavior, and still others appeal to consumers to limit consumption. But so far, curbs on capitalism have had limited success in mitigating climate change, or producing transformational reversals of environmental damage. How can you change the consumption habits of billions of people? Must people be able to see personal benefits—to their health, finances, or status—before they will choose to live differently? UCLA Anderson School of Management business economist Magali Delmas, author, with David Colgan, of The Green Bundle: Pairing the Market With the Planet, visits Zócalo to explain how a revolution in sustainability might be achieved by harnessing the natural human urge to consume. Below is an excerpt from her book.
 


 

Human consumption is a primary driver of environmental problems. But our urge to consume is encoded in survival—it is clearly not going away.

That urge can also be harnessed to solve problems, though. Information is a powerful tool to enable and move consumers toward sustainable behavior, and it is more readily available than ever before. With information about the environmental impacts of products at their fingertips, consumers can make informed choices, driving a revolution of sustainability for whole corporate sectors.

So far, the revolution has moved slowly. Many companies have failed to translate green into gold. Firms tend to be idealistic about consumer behavior, underestimating their level of sophistication or relying too much on rational decision-making models that don’t account for biases in human decision-making. Furthermore, many have taken a piecemeal approach that decouples green messages from actual organizational practices, leading to inconsistencies and fomenting distrust.

People care increasingly about the environment but are busier and more skeptical about environmental claims. Products are usually not purchased simply because they are better for the environment, and product quality cannot be sacrificed for sustainable goals. Largely, today’s consumers are convenient environmentalists—they will buy green, but it needs to be on their own terms.

Complicating matters has been a steady stream of firms getting exposed for greenwashing and making other false representations. This has made consumers distrustful of green messages. And they are confused about what is really good for the environment in the first place. So, how do you reach these people—a majority of consumers— and convince them to buy green?

The answer lies in the green bundle.

Messaging that pairs sustainability with private benefits creates a win-win for consumers. They are not only doing right by the world but also doing the right thing for their own lives. In a sense, they get to have their cake and eat it too—they benefit psychologically from their altruism and benefit in a more tangible sense from added value.

Of course, to change consumer behavior, firms first need to get their message right. This goes beyond communications. It requires adopting a culture of transparency and framing authentic messages that resonate with consumers.

At a time when information zooms around the world in an instant from any handheld device, transparency is an unyielding force. In most cases, the cost of resisting is greatly outweighed by the benefits of embracing this force before competition.

To reach customers, green messages must pierce a busy cloud of green information. The message must be clear and credible. These may seem like simple imperatives, but many companies fail to hit all of the notes.

Practice green modesty and transparency. CEOs are pivotal to developing clarity and credibility. Rightly seen as figureheads for the companies they manage, they must exemplify a sustainable ethos in their personal and professional lives or risk damaging the credibility of the firm’s efforts. Going green cannot be delegated to a marketing department or PR firm. Indeed, one challenge that often arises (and leads to inadvertent greenwashing) is lack of coordination among different units of an organization. This can cause marketers, to overstate environmental benefits because they do not understand the complexity or impacts of a new product from R & D. To avoid this pitfall, CEOs need to set the tone by clearly stating their green modesty, instituting proper incentives, and relying on codes and standards that promote an ethical climate.

Although this may come as a surprise, even today many firms do not know the environmental and social impacts of their suppliers. Supply-chain environmental-sustainability scorecards are one way that companies can begin to take charge of this information. Once firms better understand the environmental impact of their products, they face the challenge of translating this information not only into a clear signal that can be understood by consumers but also into something that consumers care about.

The steps just described, though necessary, are insufficient to make consumers go green. Again, there is little willingness to pay for environmental benefits or the public good alone. Moreover, research shows that if there is any perceived trade-off in quality, even fewer people are willing to pay. Consumers’ willingness to pay is a less explored piece of the puzzle for green markets, but it is the key to developing effective informational strategies.

This is where the green bundle comes in.

Consumers will translate aspirational beliefs into actions when they see green products as being bundled with private benefits, such as health benefits or improved quality. Firms need to bundle environmental or public-good benefits with private benefits, including better performance, enhanced status, improved health, money savings, and even emotional returns.

Emphasize increased quality. Few are willing to pay a premium without some measure of private benefit. Conversely, with certain goods, such as cleaning products, consumers may confuse or associate eco-labeling with poor quality. It is therefore important to communicate quality alongside environmental virtue. The Clorox Company promotes the view that natural cleaners are at least as good as their conventional counterparts by boasting that products with the Green Works label “clean with the power you expect.”

In many cases, there is a natural overlap between quality and greenness. Performance, functionality, usability, durability, comfort, and convenience are all attributes that can be effectively bundled with sustainability.

Leverage peer pressure. Most of us care what others think, and we like to display the good things we are doing. The unusual appearance of the Toyota Prius became a selling point after the car was used to bring Hollywood stars to the red carpet of the Academy Awards. Suddenly, this strange-looking vehicle could make people look like stars themselves. Status is a powerful tool to compel behavior in the marketplace, and it is particularly effective when consumption is highly visible.

Promote health benefits. Research shows that the most important reason we buy green is for our health and the health of our families. Health is the main reason people choose organic products that are produced without chemicals. Thus, it was not surprising to see that, over a ten-year period, the organic-food market grew 238 percent, from $8.6 billion to $29 billion, while the overall food market grew 33 percent. Health attributes are an important private benefit that can be associated with green products.

But people do not always make the connection between environmental and health benefits. Information campaigns are one way to close that link, and there are critical times when consumers will be more receptive to campaigns about environment and health. These include national health crises, such as the water contamination in Flint, Michigan, which raise awareness and lead consumers to seek strategies to protect their health. They also include personal times in individuals’ lives, such as when they start a family or face health problems.

Unravel monetary returns. Money is the most cited reason to avoid or embrace green products and services. Premiums often scare consumers away, whereas monetary savings associated with saving energy or resources are appealing. But perceptions of premiums or savings vary widely depending on context or reference point. How financial incentives are framed makes a big difference. Small savings framed as a tax or a loss can be quite effective, and raising a product’s price can even help in some situations.

Stimulate empathy. The final piece of the green bundle is the emotional connection between the consumer and the sustainable products. Consumers will empathize with a cause when the story is told the right way. In addition, they need to believe their purchases will make a tangible difference. It is imperative to bridge the distance between green consumption and impact, making the benefits of consumption tangible by showing how they help a specific person.


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