AUSTRALIANS EMBRACE SUSTAINABILITY BUT IT COMES AT A PRICE

Sustainability is now a primary driver of value for Australians. New research by global consultancy firm Simon-Kucher reveals while half of the nation’s consumers are willing to pay a premium for environmental products, brands are pricing their products just above their purchase limits.  

Over 1,000 Australians were surveyed as part of a larger global report gauging the role of sustainability in major markets, and current attitudes towards sustainable products and services. Majority (69%) of Australians aspire to purchase more sustainable products as a standard component of their purchasing behaviour, however, 41% view current pricing levels prohibitive. A sense of responsibility, fear of environmental damage and the notion of feeling good about their purchase form the basis of their purchasing behaviours. 

Amelie Spaniol, Senior Manager at Simon-Kucher Australia said, “Consumers recognise environmentally led products and services come with a cost. Brands that bridge the affordability gap and meet their price perceptions will realise a material commercial advantage in the market.” 

Sustainability as a key purchase driver 

Sustainable practices have become a standard preference in consumer purchasing behaviours. In Australia, 61% prioritise sustainability as a top three value driver in purchase decisions, making it their baseline evaluation criteria. This rises further in industries that hold a tangible link to sustainability, such as energy and home improvement. Consumers are willing to pay most for sustainability in the automotive, consumer goods and construction sectors. 

Generational comparisons 

Across all generations in Australia, the willingness to pay premiums for sustainable products has increased from 31% in 2022. However, this overall percentage varies among different generations. Boomers have the lowest average at 16% to 25% compared to Gen Zs, where the average attainable premium is 41% to 46%. Gen Zs also prove to be the most sustainably aware, with 75% considering sustainability when purchasing. 

Greenwashing awareness  

Although consumers are showing more support for businesses with sustainable practices, they have become more actively involved in discerning sustainability. Instead of entrusting a brand’s claims, around 80% of consumers are initiating their own research on products and their environmental impact.​​​​​​ More than half (54%) of customers perceive that brands are guilty of greenwashing, often due to the void of evidence aligned to the sustainability claims. When brands are transparent and claims are proven to be authentic, it leads to a loyal customer base and a distinct competitive advantage.