In 2024, sustainability will continue to be a key concern for consumers and corporates alike. The Financial Times reported in November 2023 that 64% of consumers globally are worried about sustainability, with over half of these concerns stemming from extreme-weather related events (1). This concern was most pronounced in developing markets, where 79% of consumers were worried about sustainability – in contrast to 55% in developed markets (2).
In addition to climate change, particular concerns were expressed about biodiversity loss and decreasing supplies of natural resources, including water. Euromonitor International's Top Global Consumer Trends for 2024 pointed out that "60% of consumers tried to have a positive impact on the environment in 2023" (3).
As consumers consider and adopt more sustainable behaviours, they are also looking at how corporates approach not only climate change and natural capital, but also the human and social dimensions of sustainability. In this respect, sustainability poses both a risk and an opportunity for corporates in the consumer sector.
Consumers are holding corporates to account for their responsible business practices. This was emphasised in a recent future consumer index, where 78% of the 22,000 consumers surveyed said "they want companies to play a more significant role in securing a sustainable future" (4).
Disclosure requirements
Disclosure is a useful vehicle for corporates to convey sustainability information to consumers. But disclosure needs to be done with transparency and integrity – if it is to have impact and meaning. In 2024, we will continue to see a coming wave of both voluntary and mandatory sustainability disclosure requirements.
Companies will be exploring how to assess and report on their nature-related risks, impacts and dependencies in line with the Taskforce on Nature-related Financial Disclosures' (TNFD) voluntary disclosure framework (published in September 2023). The EU Corporate Sustainability Reporting Directive came into effect on 5 January 2023. We saw negotiations continue on the EU Corporate Sustainability Due Diligence Directive (CS3D). This will mandate entities within scope to identify, assess, manage, mitigate and prevent adverse environmental and human rights impacts across their global value chains. This latter moves beyond 'comply and explain' to 'comply or be liable'.
In 2023, we also witnessed further consolidation of international frameworks and standards for sustainability reporting, e.g. with the announcement of the oversight of the Task Force on Climate Related Financial Disclosures (TCFD) by the International Sustainability Standards Board (ISSB). Similarly, both ISSB and the European Financial Reporting Advisory Group (EFRAG) released new sustainability standards enabling more consistent, comparable and decision-useful sustainability information by report preparers, including corporates in the consumer sector.
The scope of transparency obligations extends beyond sustainability disclosure obligations. At the same time, the EU is legislating to mandate that both consumers and regulators receive greater transparency, e.g. with green claims or through the implementation of product passports and similar mechanisms. These collective obligations will start to change the game in the context of products.
Why disclosure matters
Transparency of commitments and actions, whether mandated or voluntary is critical, as is the level of integrity with which the disclosure is made. According to Forbes, this benefits businesses as "94% of consumers are more likely to be loyal to a brand that's completely transparent" (5). However, there are associated risks to bear in mind when making such disclosures. There is a growing trend of class actions across the EU with claimant groups becoming increasingly active and aggressive, with the broader transparency giving them far more data upon which to base their claims.
For more insights also see our Global Consumer Trends 2024 article 'The future of Class Action funding'.
Notwithstanding the global cost of living crisis, sustainability continues to influence consumer behaviour. The Financial Times reports that globally "consumers are willing to spend up to 12 per cent or more, on average, for a product that has a reduced environmental impact than for one that does not" (6). This is supported by sustainable consumer research findings where 25% of consumers are prepared to pay more for sustainability. This includes paying for biodiversity protection, sustainable products and packaging, or "for products or services of suppliers that respect human rights and commit to ethical working practices" (7).
Your commitment to transparency
The trends for transparency and integrity of disclosures are only going to intensify over time. As a priority, corporates need to determine their commitment to transparency and integrity and be willing to be held to account for their disclosures.
- Bain and Company. 14 November 2023. FT Moral Money. Selling sustainability: what consumers really want.
- Bain and Company. 14 November 2023. FT Moral Money. Selling sustainability: what consumers really want.
- Euromonitor International. 16 November 2023. Euromonitor International Unveils Top Global Consumer Trends for 2024.
- Natasha Spencer-Joilliffe. 21 November 2023. Balancing spending with sustainability: How is consumer behaviour changing amid cost of living pressures and global warming? FoodNavigator Europe.
- Gary Steele. 11 February 2021. Green Business is Good Business: Why Transparency is Key for Corporate Sustainability. Forbes
- Bain and Company. 14 November 2023. FT Moral Money. Selling sustainability: what consumers really want.
- Deloitte. The Sustainable Consumer 2023. As accessed on 24 November 2023 at: https://www2.deloitte.com/uk/en/pages/consumer-business/articles/sustainable-consumer.html.
If you have any questions or would like to discuss any of these topics, including how you can capitalise on this key trend of consumer concern and fully embrace sustainability in your transformational business strategy, please contact DWF's Sustainable Business and ESG Advisory Practice.
