National Survey Reveals 64.4% of Consumers Unfamiliar with the term ESG
Despite unfamiliarity with the term ESG, research indicates that ESG initiatives still have the potential to positively impact company sales and consumer sentiment
Rising public concern surrounding environmental and social issues has driven many companies to adopt more sustainable practices, but a fundamental question looms—how knowledgeable are consumers about organizations’ ESG (environmental, social, and governance) performance? The Fordham University Gabelli School of Business, a leader and innovator in the ESG space, and market research firm Rockbridge Associates, Inc. today announced the findings of a representative, national survey revealing that consumers are generally uniformed about ESG, despite being overwhelmingly supportive of the general aims of sustainability efforts.
The goal of the research conducted was to gain insights that can be used to guide efforts to make ESG metrics and reporting more salient to consumers. As the survey reveals, consumers are willing to reward companies or brands with greater purchases if they are informed with stories on their specific ESG efforts, which differs from the way ESG investors use the data.
“Consumers want companies to align with their values and address systemic environmental and social problems, but for it to matter to them, it’s clear that they want to be made aware of firms’ ESG-related initiatives and given compelling reasons to care through anecdotal stories,” said Lerzan Aksoy, Ph.D., interim dean and professor of marketing at the Fordham University Gabelli School of Business. Rockbridge Associates, Inc., in partnership with the Gabelli School of Business Responsible Business Coalition, surveyed a representative sample of 531 US consumers and gauged their familiarity with ESG and the term “greenwashing,” which is the act of misleading consumers regarding the positive environmental practices of a company or organization. The study also focused on the importance of lifetime impact of products on the environment, and the willingness to purchase resale and used items. Key findings include:
● A significant gender gap exists in ESG knowledge. Women are more likely to increase their spending with sustainability-focused firms, however, significantly fewer women report being familiar with ESG than men (pg. 7). Generational differences are present in ESG receptiveness as well. Younger consumers (ages 18- 34) are more positive towards ESG, and consumers 55 and older are much less so.
● Despite a lack of knowledge in ESG, overwhelming support exists for companies to achieve ESG goals. Regardless of age, gender or education, Americans want to see companies act on environmental, social and governance issues (pg. 8). They want to understand the total impact of the products they buy on the environment, minimize waste and be a part of change.
● Consumers want ‘lifetime impact’ labels on products to guide purchase decisions. Half of consumers believe it is important to consider the lifetime impact of a product (e.g., carbon emissions, recyclability, energy consumption, etc.) when deciding which products to buy. Most consumers want a product’s lifetime impact on the environment disclosed on the product label or packaging; the information of importance to most consumers is the recyclability of the product. Over 70% of consumers indicated a willingness to purchase recycled/gently used products (pg. 4).
● Greenwashing will negatively impact buying behaviors. Greenwashing (i.e.: false or exaggerated claims related to sustainability) have the potential to negatively impact consumers’ buying behaviors should they become aware; most consumers, however, believe that there is not enough information available for them to determine if companies are greenwashing (pg. 4).
“Overall, consumers are yearning for more than just data, which demonstrates that ESG information used by investors is unlikely to be persuasive for consumers,” said Aksoy.
According to Gina Woodall, president, Rockbridge Associates, “The survey highlights the disconnect between formal ESG initiatives at companies and what their customers actually desire and believe. This is why we have a parallel research program with the Gabelli School of Business—the American Innovation Index—which measures customer perceptions of how socially innovative brands are.”
For more information and the full findings, please download the report here.
Source: Fordham University Gabelli School of Business