Sustainability Ranks Among Top Purchase Decisions

NEW YORK — Brands that don't devote time or attention to sustainability will pay a higher cost than ever before, as one in two consumers report they have changed food and grocery brands based on environmental, social or governance (ESG) considerations. This figure is even higher among millennials, seven in 10 of whom have switched brands due to sustainability concerns, according to the 2023 US Brand Sustainability Benchmark Report.

Produced by research technology company Glow in partnership with NielsenIQ, the report provides sustainability benchmarks for the U.S. food and grocery industry based on NielsenIQ data and Glow's proprietary measure Social Responsibility Score (SRS.)

SRS assesses consumer perceptions of brand ESG performance based on 33,000 respondents' views on more than 150 brands, collected from April to December 2022.

According to the report, consumers are changing brands to better align with their values and choosing brands with the strongest perceived sustainability credentials at twice the rate of the average brand. Approximately half of consumes have changed food and grocery brands based on ESG considerations, while approximately 70 percent of millennials have done the same.

Consumers also have high expectations of brands, as 85 percent believe it is important that businesses act responsibly when it comes to society and the environment. More than a third of consumers believe it is very important for businesses to do so, with this figure rising to nearly 40 percent of Gen Z and millennial consumers.

Sustainability is a significant decision-driver, as one in five consumers rank sustainability as a top-three decision criterion, with one in 10 millennials rating sustainability as their most important reason to select food and grocery brands, above even price and quality.

"It is vitally important for companies to contribute to supporting society and the planet. And there is a growing body of evidence that doing so is more than the right thing to do, it is good for business," said Julia Collins, founder and CEO of Planet FWD. "This report provides further evidence from Glow and NIQ that those who are leading in consumers' minds are already reaping the commercial benefits and are best placed for future success."

A SUSTAINABLE PATH TO GROWTH

Two Glow studies based on more than $1 trillion in annual sales data identified a positive relationship between ESG credibility, as measured by SRS, and revenue growth. A 2-point increase in SRS equates to an additional 1 percentage point increase in revenue growth.

Glow also reported that across all food and grocery departments, sustainability efforts from brands can reduce the risk of consumers trading down, as seven out of 10 departments measured found that at least one in 10 consumers reported sustainability as the main reason they are not trading down in that area.

"Social and environmental performance is critical even in an economy with rising cost of living. Now more than ever, if brands want to retain and win consumers, they must stand for something," said Glow's Mike Johnston, managing director, data products. "All consumers are looking for ways to save money. They will need a compelling reason why they shouldn't walk away from your brand for a cheaper alternative. Along with quality, sustainability is a key barrier to change, especially for millennials."

Overall, consumers view the food and grocery industry as a leader in ESG practice. It ranked second out of 20 industries measured in the research behind supermarkets and convenience stores. However, while brands are pushing efforts forward, a gap exists between consumer expectation and industry delivery, according to Glow.

The industry's biggest opportunity to improve perception is addressing key environment concerns, including reducing emissions and climate change while respecting and protecting natural resources, as well as demonstrating strong corporate governance by taking care of supplier welfare.

"Consumers want to hear about what brands are doing to support people and the planet. And they want that information through credible sources, including close to point of purchase: on-pack and through digital discovery on retailer sites," said Sherry Frey, vice president of total wellness at NielsenIQ. "Brands doing that well can be seen as sustainability leaders and reap the benefits in terms of growth."

According to the 2023 US Brand Sustainability Benchmark Report, the most socially and environmentally responsible consumer brands are:

• Dawn
• Seventh Generation
• Love, Beauty & Planet
• Band-Aid
• Dove (body care)
• Kleenex
• Cheerios
• Lysol
• Dettol
• Quaker