Marketing & Communications

Great Expectations:
Evaluating ESG Initiatives to Reach Target Consumers

When it comes to ESG initiatives and their relationship to consumer behavior, there’s no one-size-fits-all approach; but leveraging ongoing research into consumer attitudes can help align corporate ESG initiatives that can help steer your brand through uncharted waters and changing sentiments.

Brand Provided | By Lea Ben-Akiva | Published 2 years ago | About a 7 minute read

Image: Victoriano Izquierdo

The inclusion of ESG (Environmental, Social and Governance) initiatives may seem a ubiquitous part of today’s corporate procedures, but the impact of these initiatives on consumer sentiment and behavior should not be underestimated. Whereas price, flavor, convenience and other self-serving motivations may have traditionally driven purchasing decisions, consumers are now looking more at company-based ESG responsibilities when shopping.

These initiatives can have a sizable impact on brand identity and the overall perception of your products or services. Further, many of today’s consumers expect ESG initiatives from the companies they purchase from — be it in the form of value alignment, clean energy initiatives, fair labor practices and more. But which initiatives — and which values — are truly worth investing in will differ dramatically between consumer segments, such as age and gender.

In late 2022, we partnered with Opinion Route to take a closer look at how some aspects of ESG resonated with generational age groups. We also examined the differences between reported genders in regard to ESG matters. What we found was that the importance of such initiatives has never been greater — it is imperative that today’s brands make intentional, authentic moves toward ESG goals that resonate with their target audiences. Here’s what we’ve found:

‘Going green’ is still going strong

The foundational framework of the ESG concept dates back to the 1960s but didn’t enter the wider public eye until the 1990s with concerns such as the South African Divestment movement, pollution and human rights issues making waves in media and popular culture. As financial decision-makers and marketing experts began to see opportunity in the form of strategic value creation, US companies (followed by their global compatriots) followed suit — introducing corporate value and conduct guidelines for certain social and environmental topics. With the foundation of UNEP FI in 1992 and public outcry from global environmental crises such as the Exxon Valdez incident, the current enmeshment of environmental concerns with corporate strategy truly began to take shape.

Given the history of ESG, it is easy to see how environmental issues are often synonymous with ESG initiatives for many consumers. In a rare, cross-generational point of agreement, consumers across all age groups rank environmental concerns highest in importance across ESG categories. But the “why” behind this ranking is a complicated and intersectional one. Gen Z and Millennial consumers are more likely than older generations to accept higher product cost as a consequence of brand value alignment. A 2021 study by First Insight found that Gen Z shoppers would spend up to 10 percent more on “sustainable” products; a fact unsurprising to anyone familiar with what many have dubbed the “Green” generation. But the same study also found that members of the Silent Generation (b. 1928-1945) and Generation X (b. 1965-1979) were markedly more likely than Baby Boomers (b. 1946-1964) to share the same sentiment. It is clear that, while support of corporate environmental initiatives is growing, the consumer sentiments behind the numbers are more complicated than they appear. A solid communication strategy rooted in research will help brands thoughtfully craft messaging that both appeals to their target audience while simultaneously addressing the generational nuances within environmental concerns.

The social generation

For Gen Z and Millennial consumers, social issues are king. Where older generations are more likely to put environmental and governance concerns first, Gen Z and Millennial respondents were most likely to view ESG initiatives that prioritize mental health support and serve economically challenged communities in a positive light. For many younger consumers, the COVID-19 pandemic overlapped a formative period of their adulthood — transforming their relationships to themselves and each other and driving home the importance of connection in the sudden lapse of daily interaction. A 2020 study by social impact consultancy DoSomething Strategic surveyed young people in the US at the height of the pandemic to take a pulse on the impact of the pandemic on their outlook and wellbeing. A staggering 70 percent of respondents ages 17-24 noted that mental health issues had gained greater importance in light of COVID-19 and 1 in 4 had an “extreme” change in political view after experiencing both the health crisis and rise of racial and social justice protests that occurred in that time frame. While the physical, political and social limitations of the COVID-19 era may be waning, young adults who experienced the collective impact of the pandemic continue to rank social issues — and corporate response to them — as extremely important.

Despite the Gen Z and Millennial focus on social issues, there are some areas in this category where their elder counterparts also see importance — namely, when social issues intersect with worker rights. 77 percent of Boomers/Silent Generation respondents indicated that enforcement of labor standards were of extreme importance, compared to 69 percent of Gen Z/Millennial respondents. As Gen Z and Millennial workers age, it will be important to continue monitoring the social issue trend and how it changes. Brand Health Tracking should be utilized to investigate not just the impact of social initiatives on one’s product, but on the sentiment of their category over time.

The gender and value divide

While age is an important factor in determining the right ESG strategy for your company, gender and other intersecting factors can play an equally important role. Our study found that men are actually more likely to stop using a brand or product if it does not align with their personal values. Men are also more concerned with environmental issues and corporate response than women — with 42 percent of our male-identified respondents indicating company environmental initiatives as “most important,” compared to 34 percent of women. Men were more likely to rank specific environmental issues such as adherence to government standards and prevention of natural resource depletion higher than women. This gender discrepancy in regulation concerns is more pronounced across governmental concerns, with men ranking donating to political causes more highly than our woman respondents did (26 percent vs 21 percent).

As women gain more business and financial equity, the importance of investment in ESG initiatives will continue to grow and with it the need for an intentional, well-defined corporate strategy. A study of RBC Wealth Management clients found that, where male clients were more likely to prioritize financial performance, female clients put a greater stake in ESG impact when determining what companies and portfolios to invest in. Women are more likely than men to view social initiatives as important — with human rights concerns, labor standards and mental health support ranking highly. Shopper research looking into decision hierarchy, placement optimization and path-to-purchase can help brands home in on what’s really important when it comes to the gender divide and help determine how to leverage the right retail environment to align one’s ESG strategy with consumer experience.

The right initiatives for your audience

When it comes to ESG initiatives and their relationship to consumer behavior, there’s no one-size-fits-all approach; instead, conscious companies will need to fully leverage ongoing research into consumer sentiment with the rapidly changing coverage of a myriad of topics in the modern news cycle. Growing concerns around digital privacy and data usage, for example, look to be racing environmental concerns for importance in purchase decision-making, as are human and labor rights concerns. Finding the balance starts with truly knowing your target audience and using foundational market research to dig into the unique challenges and opportunities ahead. Thankfully, investing in corporate ESG initiatives is not in vain; 60 percent of our respondents noted that they would “choose a product or service that supports issues that align with my personal values, even if their costs were higher.” But alignment of corporate ESG initiatives with consumer concern isn’t just a business objective; it can help steer your brand through uncharted waters and changing sentiments.