Smurfit Kappa: “Conscious Consumerism” a primary driver of eco-centric business models

28 May 2020 --- A new survey by Smurfit Kappa is providing insights into how “Conscious Consumerism” continues to drive the need for UK organizations to embed environmental sustainability into business operations. Within this shift, the burgeoning demand for transparency, propelled by next-generation consumers, is emphasized. The survey highlights how two-thirds of UK businesses have struggled to measure the bottom-line impact of their sustainability strategies. Moving ahead, the company expects environmental sustainability to remain a priority for businesses in a post-COVID-19 era, propelled by what is coined “The Consumer Effect.”

“In the past, sustainability was considered more of a corporate topic but now the sustainability agenda is being driven by consumers. While this survey was conducted just before the COVID-19 pandemic, we are seeing growing evidence that these trends will continue as our economies begin to re-open,” says Steven Stoffer, Group VP of Sustainability and Development at Smurfit Kappa.

The company’s newly issued Balancing Sustainability and Profitability Survey, which was conducted among 200 senior executives and 1500 consumers in the UK, examines the business community’s and consumers’ views on sustainability and how they are adapting to create a more environmentally sustainable future.

The survey found that 61 percent of consumers expect the brands they buy from to have clear environmentally sustainability practices. While 65 percent of consumers say price is still a key factor in their purchasing decision, in the past six months more than half say they have purchased a product specifically because it had reusable or biodegradable packaging and 56 percent have paid more for a product or service that was sustainably sourced.

“Pre-pandemic, consumers were increasingly demanding sustainable [products]. Ethically sourced products and recent research in the US suggests that COVID-19 has not reduced consumers’ demand for sustainable products,” Stoffer explains.

The driving force of “Conscious Consumerism” is echoed by the survey, which reveals 63 percent of businesses stated that their organizational attitude towards sustainability is customer-driven. However, half of the organizations say that greater customer (and consumer) awareness of the effects of their environmental sustainability practices would be most beneficial to their long-term impact.

The research also shows 69 percent of consumers struggle to identify whether brands practice environmental sustainability. “This suggests there is a knowledge gap between brands and consumers and indicates there is an onus on brands to better communicate what they are doing in the area of sustainability. In general, more education is necessary and if brands can get this right, it will hugely strengthen the brand-customer relationship,” says Stoffer.

Environmental sustainability and financial benefits
Improved customer experience/satisfaction is pegged by Smurfit Kappa as the leading metric that UK businesses (58 percent) use to measure return on investment from environmental practices. However, the Balancing Sustainability and Profitability Survey also found that only 18 percent of organizations are currently measuring their sustainability plans with four in ten businesses saying measurement is the main barrier to implementing environmentally sustainable practices. 

The research also showed that 82 percent of business executives treat environmental sustainability as a long-term investment, rather than a cost. Crucially, this is changing the rules of financial reporting in nearly three-quarters of businesses. However, less than half of organizations have the ability to link environmental sustainability to financial results.

“As we enter uncertain economic times, businesses are placing every effort on recovery and are focused on how to rebuild as public health restrictions begin to be eased. As we have learned from past economic downturns, business leaders also need to keep an eye on the future, in which sustainability will be a core pillar of business strategies – the climate crisis will remain post-COVID-19,” stresses Ken Bowles, CFO at Smurfit Kappa.

“This will require a multi-stakeholder dialogue between industry, government, regulators and consumer representatives to ensure a collective approach is agreed to make the financial case for sustainability more accessible for business,” he adds.

Smurfit Kappa publishes its progress on its long-term sustainability targets annually in its Sustainable Development Report aimed at elevating transparency. The Group has formulated ambitious long-term targets in five key areas where it can make a difference in terms of sustainability, highlights Bowles.

“Over the past few decades we have been implementing projects that tick both the sustainability and financial return boxes like, for example, the major overhaul of our Townsend Hook Paper Mill in Kent (UK), which increased capacity by 3 percent while reducing energy by 15 percent,” he outlines. “The energy usage per ton also decreased by 18 percent. Making sustainability performance measurable, transparent and tangible for our stakeholders is an approach we have implemented since we started reporting our progress in 2007.”

Environmental drivers are here to stay 
Growing social and environmental awareness is increasing pressure on businesses to play their role in reducing the impact of climate change and waste. The survey found that 72 percent of businesses see environmental sustainability as a lasting trend. 

“Globally we have faced one of the biggest challenges to our health and livelihoods in recent months, but climate change and sustainability will remain the existential challenge of our time. People are realizing that time is running out to address the issue. Sustainability must remain at the heart of the global business agenda as we look to the future,” asserts Tony Smurfit, Group CEO of Smurfit Kappa.

Environmental sustainability is also opening up growth opportunities for businesses; 83 percent of businesses surveyed by the company described sustainability as a “business opportunity to be exploited.”

“Sustainability is a catalyst for growth, but businesses will need to strike a balance between sustainability practices and profitability if they are going to ensure long-term stakeholder buy-in. Those businesses that see the value of investing now for the long-term, will be positioned to win in the future,” concludes Smurfit.

In recent developments, Smurfit Kappa signed a commitment to align its CO2 reduction target with the Science Based Target (SBT) initiative. Earlier this month, the company reported significant progress in reducing its relative CO2 emissions in its recently-published 13th annual Sustainable Development Report (SDR). 

Edited by Benjamin Ferrer