How Are ESG Considerations Really Driving Purchase Behavior?

There’s a lot of talk about sustainability, but what about the walk? New research from consumer research platform Glow shows that the proverbial needle may be moving on consumer purchases of brands marketed under the broad umbrella of environmental, social and governance (ESG). 

According to Glow’s report – described as an inaugural sustainability benchmark – one in two consumers report that they have changed food or grocery brands recently based on “sustainability credentials” that include ESG performance. Those brands also have some stickiness, as 79% of respondents agreed that they are more loyal to purpose-driven brands.

Another topline finding that helps answer the often-posed question of value, more than two-thirds (64%) of consumers will pay more for products that support communities and vulnerable groups. Millennial consumers place more importance on ESG and sustainability, ranking those considerations among their top three purchase drivers.

That’s not to say that inflation hasn’t affected people's overall buying mindsets and behaviors, as seven in 10 of those polled said they are switching brands to save money. But many consumers said they will not trade down in some categories, especially baby care, household and dairy and eggs, for price over sustainability.

Glow, which used its proprietary social responsibility score (SRS) as well as data from NielsenIQ research, also affirmed that food and grocery brands can financially benefit from providing options for ESG-minded shoppers. After studying the sales growth of various brands, the firm found a positive correlation between a SRS and revenue growth. For example, the report noted, a $500 million turnover brand with an SRS that is 10 points higher than a similarly-sized competitor would expect to see an additional $25 million in revenue over three years, on average.  

Glow’s research uncovered other good news for grocers and CPGs. The report shows that supermarket and c-stores rank first of 20 industries that are leading in sustainability, while food and grocery brands are second.

This research got specific in terms of food and grocery brands, identifying the top 10 most socially- and environmentally-responsible brands. Most of those brands are within the health, beauty and household categories and include the following, in order of ranking: Dawn, Seventh Generation, Love, Beauty and Planet, Band-Aid, Dove, Kleenex, Cheerios, Lysol, Dettol, and Quaker.

“Brands are increasingly sharing their credentials, communicating their milestones and publishing performance against their ESG and sustainability goals. Consumers now have access to more sustainability information than ever before from a variety of controlled and uncontrolled sources. As a result, consumers are making their own impact by shedding the brands that don’t meet their sustainability expectations, and moving to brands that better align with their values,” said Tim Clover, founder and CEO of Glow.

The full report is accessible online.