The Wealthy are Less Willing to Spend on Sustainable Products
Millennial and Gen-Z respondents were most likely to pay a premium for environmentally friendly practices.
Innovation to create sustainable beauty and fashion products and their packaging can be costly. But it’s not the wealthiest consumers that are the most interested in spending for eco-friendly practices, according to a new study by venture capital firm and brand incubator Squared Circles. The company has invested in brands like Nutrafol, which sold to Unilever, and the $ 135 sweatshirt brand Pangaia.
The new research report, out on April 22, finds that over half of its 3,000 survey respondents are willing to make lifestyle changes to support sustainability. Sixty-four percent of those surveyed said they “recognize the need to compromise the way we live to ensure sustainability.” But that number drops when paying higher prices for sustainable products and practices, especially among consumers in a higher income bracket.
Among the surveyed group, 52 percent would pay 10 percent more for a sustainable product. But when taking out responses by anyone with a household income below at least $100,000, that percentage drops to less than half at 45 percent.
“The more wealthy this consumer is, the more they scrutinize, interestingly enough, how they spend their hard-earned money,” said Lukas Derksen, co-founder of Squared Circles.
Gen X respondents were especially wary of sustainable products. Dividing its respondents into four psychographic groups, “Conscious Maximalists,” “Passive Activists,” “Checked Out” and “Modest Means,” the Gen X-dominant “Conscious Maximalist” segment was 27 percent more likely than average to strongly agree with the statement, “sustainable products don’t live up to the hype.”
However, the youngest segment of surveyed consumers was more willing to spend on sustainability than all age groups surveyed. Among the mainly 18-to-45-year-old “Passive Activists” profile, 76 percent believe that a company should be able to charge 10 percent more for a sustainable product, and 70 percent are willing to buy it. The rates for those making more and less than $100,000 were similar for this group, and 74 percent overall agreed that we must compromise our lifestyle for sustainability.
However, one area of sustainability that most consumers say they are not willing to sacrifice is quality. Only 35 percent said they would be willing to buy a product with lower performance if it was more sustainable.
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