Consumers increasingly recognise environmental efforts

Business have been urged to ensure they communicate their green credential effectively as evidence grows that a company’s environmental performance is becoming an ever greater part of the buying decision.

Whether it’s recycled aluminium at Apple’s MacBook Air or compensation payments from Microsoft for emissions over the life of an Xbox, climate-friendly products are becoming more and more popular, according to new research from Hamburg’s Kühne Logistics University .

It found consumers are paying more attention  to a company’s green credentials when they decide to acquire goods or services.

The report explained companies use two ways to accomplish this their environmental aims, reducing emissions directly or compensating them afterward.

“Both approaches can make a product climate-neutral and have a positive impact on the environment, while compensatory measures are being discussed more and more critically in the public. To this end, the consumers in our study were only willing to spend more on the respective product if emissions were reduced,” says Prof. Christian Troester, of Kühne Logistics University

However the reasons for this behaviour are not entirely clear. “Consumers might show greater appreciation for companies that actively protect the environment by developing innovative processes,” said Troester.

There is one exception: If the emissions cannot be influenced by the company, for example, if they already arise during extraction of raw materials, compensation and reduction are perceived as equivalent. “The willingness to spend more money on a climate-friendly product tends to be higher the more environmentally conscious consumers are,” says Dr Nils Roemer of the Universität Hamburg).

“Consumers are increasingly aware of the social and environmental consequences of their purchasing decisions, and many companies are therefore already taking action and acting more ecologically,” The study added. “However, not all of them communicate these measures for fear of being accused of ‘greenwashing’, that is, of whitewashing their own activities.”

Clear communication about whether and how emissions are reduced is particularly important for companies, according to the study’s results.

“This allows companies that actively reduce emissions to differentiate themselves from competitors who merely compensate,” added Troester. “A clear breakdown of controllable and non-controllable emission components could also be important. In addition, it can be more expensive for a company to invest in innovative processes that reduce CO2 emissions. However, the results of the study suggest that these investments may be worthwhile, as consumers are willing to pay for them.”