Business purpose

How responsible is your business? Socially conscious consumers are watching

- April 13, 2022 4 MIN READ
Signpost with 'integrity', 'honesty' and 'ethics' on signs

There is increasing concern among shoppers when it comes to social, economic and environmental causes. This global rise of the conscious consumer means an increasing scrutiny on businesses and their practices, writes Alison O’Brien, director of customer success at PayPal Australia.

What started as consumer preference to buy from businesses that ‘do the right thing’ environmentally and socially, now also includes expectations businesses are also taking a positive stance on things like employee working conditions, equality and Fairtrade.

It’s a lot to keep up with.

Disconnect between consumers and business

Whether you’re a large enterprise or a small business, it’s vital to understand where Australian consumers are drawing a line in the sand on environmental and social purchasing decisions, because it impacts whether, and how, they will support your business.

PayPal Australia’s eCommerce Index reveals new insights on how Australians buy environmentally and socially responsible products and services, and how local businesses feel about these changing expectations.

Overall, there is a disconnect between conscious consumers and businesses, which is continuing to unfold in the local landscape.

Small and medium sized businesses will face new challenges and opportunities, as the expectations around environmental and social impact becomes the difference between clicking the purchase button or moving on for conscious consumers.

Here’s what the data revealed.

Hand holding banana with fair trade tag

The responsible business debate

Almost half (46 per cent) of Australians prefer to buy from a business that is environmentally and socially responsible. This goes beyond preference for some – almost one in five (18 per cent) have even boycotted a brand because of their values. This rises even further for younger consumers, sitting at one in four for Gen Z consumers (25 per cent).

What’s more, half of Australian consumers believe businesses should be held responsible for their environmental and community impact (54 per cent) and could do more to combat climate change (52 per cent).

However, businesses appear to be falling behind in meeting these expectations. Only 28 per cent of Australian businesses say they are committed to selling or producing environmentally and socially responsible products or services.

A first step can be as simple as ensuring your business has a clear mission and set of values that support environmental and social issues. This could be as straightforward as outlining your inclusive hiring policies, your recycling practices or ethical sourcing principles.

Small businesses often have the advantage of being local, with a story consumers can identify with. Relatively simple actions such as changing to renewable energy, using recycled or sustainable packaging material, improving waste management or reviewing your supply chain for Fairtrade practices, can resonate strongly with both existing and potential customers.

Importantly, your mission and values then need to be communicated to your customers and easy to find on your site. When businesses take a stand on social and environmental issues, and transparently communicate their values and actions, it can attract new customers, build brand loyalty and drive sales.

The ‘values’ veto

Let’s just revisit that number – almost one in five Australian consumers have boycotted a product, service or brand due to a brand’s corporate values or behaviour. This has almost doubled since 2019 (10 per cent), reflecting the growing awareness among Australian shoppers when it comes to who they’re buying from, and which products or services they want to use.

On the business side, 10 per cent of businesses have stopped selling a product because it was bad for the environment and another 10 per cent have stopped purchasing a product or service in their supply chain due to Fairtrade considerations.

Cafe worker passing product to customer in eco-friendly packaging

A minority of Australian businesses (20 per cent) believed price, product features and convenience are more important to their customers than ethical considerations, yet only 27 per cent felt businesses need to adapt to changing consumer demand for more environmentally and socially responsible products.

And although 45 per cent of consumers prefer to buy from brands that use environmentally friendly packaging and shipping materials, only 27 per cent of businesses have adopted these measures.

There’s obviously a gap between consumer expectations and business response – which environmentally and socially aware small businesses could leverage to both build customer engagement and drive sales, while also ‘doing the right thing’ and making a positive impact.

Protect the rights and wellbeing of your employees

From celebrity chefs and restaurant chains through to airlines and top retailers, there has been a spate of significant payroll scandals in Australia in recent years.

The majority of Australian consumers have chosen to avoid products or services from businesses that underpay workers or have unsafe working conditions (54 per cent), as well as those with discriminatory employment and customer service practices (52 per cent).

Aside from it just being the wrong thing to do, nobody wants to be the next name called out for underpaying or mistreating their workers. And while it’s the big names that make the media, small businesses can have their reputations shredded on social channels when these issues arise.

Against an unprecedented backdrop of change and uncertainty over the last couple of years, Australian consumers are increasingly aware of environmental, social and Fairtrade issues – and their purchasing behaviours are changing as a result.

Businesses that are committed to taking positive action, clearly outline their position, and communicate with transparency are likely to have greater appeal for these emerging conscious consumers.

This post originally appeared on Kochie’s Business Builders, read the original here.

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