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Business Leadership Cost-of-living Sustainability

How the cost of living crisis is having a negative impact on sustainability

By Alex Lewis, Co-founder

Revolt

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February 23, 2023 | 7 min read

Alex Lewis of purpose consultancy Revolt delves into research that shows a decrease in consumer concern about sustainability amid economic hardship.

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The Covid-19 pandemic significantly shifted people’s perspectives on the importance of environmental sustainability. In a 2021 study by the IBM Institute for Business Value, 93% of global respondents said that Covid-19 affected their view of sustainability. We saw its importance for consumers continue to increase in 2022, with a study by the same group revealing that 51% of respondents believed environmental sustainability to be more important to them than it was 12 months ago. 49% said they’d paid a premium for sustainable products during that time.

This shift in perspective was a positive sign; things seemed to be heading in the right direction in terms of the public getting behind sustainability. But in 2022 people all around the world saw their food and energy costs rocket and the cost of living crisis became the hottest topic of conversation, dominating headlines.

These price rises resulted in 71 million people in developing countries falling into poverty. It hit the most developed countries too, with one in four people struggling financially. By May 2022, The Food Foundation was reporting that nearly one in seven adults in the UK said they couldn’t afford to eat every day – an increase of 57% since the start of the year.

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What do people care about right now?

This shift in public focus from sustainability to the cost of living crisis has been borne out in our own consumer research at Revolt. Produced from a survey of 5,000 people across five global markets, our annual Causes That Count report indexes the top 50 causes and assesses how important they are to people. The 2023 report has shed light on how sustainability is currently viewed.

After a volatile year for many countries’ democracies, Revolt’s 2023 ranking revealed a general shift in people’s focus, with political causes stealing the limelight, dominating the top 10 in all five markets. After coming first in last year’s ranking, ‘climate change’ dropped three places in the overall ranking, being replaced by issues that many might feel have more immediate and personal impacts: ‘access to healthcare’, ‘unemployment and job security’, and ‘poverty, hunger and homelessness in my country’.

We also saw nearly all other environmental causes fall down the ranking as they became less top-of-mind: ‘the plastic crisis’ dropped seven places to #38, ‘biodiversity and species extinction’ dropped by six places to #33, and ‘the health of our oceans’ plummeted 10 places to #19. It’s clear from our evidence that people just aren’t as concerned about the environment as they were twelve months ago.

It would be a mistake to conclude that individuals are no longer interested in climate change or environmental sustainability. What we are seeing is that issues with a more immediate and direct personal impact are becoming more front-of-mind. We’re not just seeing this in the Causes that Count rankings; we’re also seeing a shift in consumer behavior, played out in purchasing decisions. A 2022 Kantar poll showed that 55% of consumers who purchase sustainably-branded grocery products have already or intend to switch to non-eco-friendly brands due to the increasing cost of living. Sadly this isn’t too surprising, given that sustainable products have been estimated to be 75% to 85% more expensive than conventional products.

An unintended consequence

This is where it gets problematic. While people’s concern around sustainability has been replaced by worries about inflation, their shift to cheaper, less sustainable products and services could actually have an unintended effect on the cost of living crisis. The Energy and Climate Intelligence Unit estimated that the soaring food inflation was caused by energy price shocks and climate change, with 88% of the 12.7% increase in prices seen by July 2022 stemming from these two factors. The problems that climate change create, such as extreme weather and weakening soil health, will only continue to exacerbate the issue. The Climate Change Committee has suggested that if we continue on this path, it could lead to a 20% average rise in food prices globally by 2050.

Many consumers are in a difficult situation and are faced with difficult choices when it comes to buying sustainable products that will benefit them in the future. They’re opting for cheaper ones that they can afford now but which might have negative future impacts. This is where brands can play a crucial role in making sustainability as accessible as possible, and ensuring that consumers are not paying a tax for choosing to make more environmentally friendly choices.

Brands, big and small, should be thinking holistically about their actions. For example, the cleaning brand Method is helping people go green with plant-based, biodegradable cleaning products at a more affordable price. US retailer Target took a different approach to ensure that they stock and showcase sustainable beauty brands such as Hey Humans and Anomaly.

Supply-side changes are equally meaningful, especially in the context of creating a new baseline standard of sustainability, such as Budweiser’s commitment to brewing their beer using 100% renewable energy (indeed, 68% of global consumers say that businesses should ensure all their suppliers meet high standards of social and environmental practices).

Many brands are missing these key opportunities in the sustainability space. The same Kantar poll that stated that consumers were switching to non-eco-friendly brands also stated that 68% of consumers would switch back to a sustainable brand if the cost of living lowers. Consumers are looking for brands to help them now more than ever, and the brands that succeed will be those that are able to look after their consumers through economically challenging times, while still looking after the planet we will all continue to depend on.

Business Leadership Cost-of-living Sustainability

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