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Consumer perception of ESG credentials is driving brand switching – report

(Source: Bigstock.)

One in four Australian consumers have switched brands based on their perception of a company’s ESG performance according to a report released by research technology company Glow. 

Among all consumers, Gen Z and Millennials are switching brands at 2.5 times the rate of older generations if they lack confidence in a brand’s ESG credentials, the report found. 

Melbourne-based Glow collated more than 120,000 consumer opinions of about 120 food and grocery brands to create a Consumer ESG/Sustainability benchmark report for the Food & Grocery industry. 

The company concluded that brands that consumers perceive to be the most sustainable are growing significantly faster than those with weaker credentials. Australian consumers cite Who Gives A Crap, household cleaning product brand Earth Choice, Beyond Meat, gluten-free food maker Freedom Foods, alt-meat brand V2Food, and natural skincare maker Sukin as the six most responsible food and grocery brands.

Some leading brands are drawing people away from rivals at twice the rate of brands that have a less favourable consumer perception of their ESG credentials. 

Gen Z consumers are the most sceptical about such claims, scoring brands 15 per cent lower than other age groups, suggesting that companies need to strongly engage younger audiences to ensure future business growth. 

Graz van Egmond, CEO of the not-for-profit sustainability organisation the Banksia Foundation, says the report underlines why sustainability leaders need the full support of their peers and staff within their businesses to share important ESG progress with all stakeholders “in a truthful, transparent and timely manner”. 

“Consumers expect less hyped-up claims and more action. It is becoming more evident that they are seeking to understand the issues and the related solutions that businesses need to be working on,” he said. 

“Brands that lead their categories in ESG action, impact and communications will win the next generation of shoppers. Brands that are slow to grasp the importance of ESG prioritisation as a fundamental building block for the future of their business will find it impossible to compete.”

Of 22 industries measured by Glow, the food & grocery sector was ranked second in terms of their overall ESG performance. 

Consumers also said the products retailers stock shape how they perceive the retailer’s social and environmental responsibility.

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