Why Purpose-Driven Brands and Sustainability Appeal to Gen Z

Matt Hay
May 2020

What Purpose-Driven Brands and Sustainability Mean to Gen Z

Gen Z places great importance on a brand’s authenticity and transparency, defining and evaluating companies on their ethics as well as their products. In this month’s whitepaper, we explore the topic of purpose-driven brands and sustainability and what it means to teens and young adults.

 
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Purpose-Driven Companies

According to the 2019 Porter Novelli/Cone Gen Z Purpose Study, 93% of Gen Z say if a company makes a commitment, they need to have the resources to follow through. This means greater accountability for companies incorporating sustainability practices. Companies who demonstrate authentic purpose will be rewarded, specifically due to Gen Z’s use of “purpose” as a core filter when deciding the companies they support. 90% of Gen Z consumers believe companies must act to help social and environmental issues and 75% will do research to see if a company is being honest when it takes a stand on issues. 

One example of a successful purpose-driven company is Seventh Generation. How does an eco-conscious brand like Seventh Generation stay competitive versus its successful international competitors? While Seventh Generation is priced higher, they incorporate sustainability practices such as internal workforce benefits and eco-conscious ingredients into their company and product. Seventh Generation can successfully charge a premium for a comparable product because the company synthesizes the three elements that make up a successful purpose driven brand – the linking of functional, emotional and societal benefit.

Seventh Generation further displays its sustainable practices by synthesizing a yearly corporate conscious report. By doing so, the company is demonstrating transparency while also making it easier for consumers to see the brand’s authentic purpose.

MAX Burgers is an international restaurant chain. It started to transition into a purpose-driven company in 2008 with carbon offset initiatives that included food production from farm output to transportation to preparation in the restaurant. Then MAX launched the “world’s first climate-positive burgers” in 2019, and announced that their new business practice was to continuously plant enough trees to offset 110% of MAX’s carbon emissions. While MAX is still competing against much larger quick serve competitors, they’re the most profitable restaurant chain in their home country of Sweden. Their newest goal is to generate no more than half of their revenue through animal meat by 2022 and reported in June 2019 that MAX was already 40% to goal. In an interview, Vice President Claes Peterson attributed MAX’s newest success to Gen Z and their preference for quality and sustainable food.

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Buy Less and Make it Last

Coined by British designer Vivienne Westwood, the phrase “Buy Less and Make it Last,” is being adopted by many eco-conscious consumers. According to the State of Consumer Spending Report, “Generation Z is the most willing to pay more for sustainable products (73%) compared to Millennials (68%), Generation X (55%) and Baby Boomers (42%) and many prioritize eco-friendly and ethical brands when making purchase decisions. A study done by First Insight found that, “73% of a cohort with an averaging age of 22 would pay more for sustainable items, with most willing to pay a 10% price premium.” Online searches for “sustainable fashion” tripled between 2016 and 2019, causing companies to abandon the fast fashion business model adopted by retailers like Forever 21 in favor of sustainability practices.

H&M is a clothing brand that capitalized on the eco-friendly trend to differentiate themselves from their “wasteful” fast fashion competitors, as a recent report from the United Nations estimated that 10% of the world’s carbon emissions are generated by the fashion industry. H&M’s switch to be more people and planet-focused also came after the company received international backlash stemming from humanitarian groups when a report came out that women workers in H&M’s Asian factories faced abuse daily. Negative publicity and consumer displeasure propelled H&M to launch a sustainable initiative: the Conscious Collection. This collection features clothing made from recycled materials, such as Vegea – their vegan leather made from grapes. H&M produced a video campaign capturing the “climate-positive” fashion and the company’s new dedication to sustainability, with the most popular video amassing over 1.4 million views.

Another company that has capitalized on the growing trend of Buy Less and Make it Last is Allbirds. The shoe company prides itself on using merino wool, a sustainable resource virtually absent in the footwear industry. Allbirds invests in eco-conscious materials by putting greater emphasis on reducing carbon footprints on a corporate and individual level. Their challenge against mainstream “shoe culture,” which has been predominately established by millennials, pits them directly against competitors like Nike who drop new collections often. Allbirds’ prices subvert the idea that sustainable items are always the more expensive, as they range from $95-$115. Instead of using social media to boost the sales of the latest shoe line, Allbirds uses social media to reemphasize the company’s mission to reduce the enterprise’s carbon footprint.

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Socially Conscious Investing

It is important to understand a company’s position on environmentally, socially and governance friendly (ESG) projects for publicly traded companies. A company’s relationship with sustainable practices can not only affect a consumer’s relationship with their product but can also have far reaching effects on how consumers invest in your company. According to the March 2020 MSCI Report, “demand for sustainable investments is being driven, in part, by millennials who prefer to invest in alignment with personal values.” The trend of sustainable investing among millennial investors rose drastically from 84% in 2015 to 95% in 2019 according to Morgan Stanley Institute for Sustainable Investing.

 

For more information about sustainable marketing and how your brand can reach Gen Z, please contact us.