Last week we examined how ESG decision-making influence varies across industries: we saw how ESG is having the greatest impact on healthcare and pharma purchases while being less of a factor in financial services, personal care, investment and technology purchases.
This week, let’s keep the conversation going with another important question: does ESG position influence the price a customer is willing to pay for a product? According to Deloitte*, because ESG investment can drive competitive advantage, it should be made a strategic business priority. But we’ve uncovered a surprising plot twist: the financial payoffs are not the same across all industries. Let’s dig in.
According to Forbes, companies with high ESG scores experienced lower costs of capital, lower equity costs, and lower debt costs. But our research shows that it also has the potential to grow profits: 30% of customers report that a company’s ESG position impacts the price they are willing to pay for a product**
As prices for products and services increase market-wide, customers are beginning to recognize their role in the ESG equation. However, the size of the premium customers are willing to pay to purchase a product from ESG leaders varies by industry.
Technology Products:
Last week we showed you that only 21% of customers purchasing technology products reported that ESG impacted their decision-making. What is surprising is that half of those that stated ESG influenced their decision also confirmed they would have paid a higher price for the same product because of the brand’s leading ESG position. This includes 14% who reported they would pay higher than 10% of the purchase price.
Investment Products:
Last week we showed you that just 22% of customers purchasing investment products reported that ESG impacted their decision-making. This includes 7% of those that stated they would have paid a higher price for the same product because of the brand’s leading ESG position. It is also worth noting that more than 1-in-7 reported they would pay more than 10% higher than the actual purchase price in order to buy from the leading ESG brand.
Personal Care Products:
Last week we showed you that 30% of customers purchasing personal care products reported that ESG impacted their decision-making. This includes 10% who stated that they would have paid a higher price for the same product because of the brand’s leading ESG position. It is also worth noting that 10% reported they would pay a premium higher than 10% to purchase from the leading ESG brand.
Financial Services:
Last week we showed you that 35% of customers purchasing financial products reported that ESG impacted their decision-making. This includes 11% who stated that they would have paid a higher price for the same product because of the brand’s leading ESG position. It is also worth noting that 10% reported they would pay a premium higher than 10% to purchase from the leading ESG brand.
Healthcare/Pharma:
Last week we showed you that 39% of customers purchasing healthcare and pharma products reported that ESG impacted their decision-making. This includes 9% who stated that they would have paid a higher price for the same product because of the brand’s leading ESG position. It is also worth noting that 10% reported they would pay more than 10% higher than the actual purchase price in order to buy from the leading ESG brand.
Currently, ESG efforts are largely being driven by board members, shareholders, investors and the C-suite. The question remains how to operationalize ESG priorities across the organization. It’s time to align sales & marketing departments, supply chain and operations, and HR and talent departments in order to build a holistic ESG success strategy that is capable of capitalizing on this growing opportunity.
As the ESG movement continues to gain momentum, with more brands awakening to the potential of ESG, the time is now to understand the unique ESG position your brand must take to position itself as an ESG leader. Getting this right is crucial for creating an effective, future-focused, holistic strategy for growth, connection, and profitability.
The ESG experts at ONR are here to support your brand’s evolution in ways that create positive growth and ROI from strategic investment in its ESG efforts.
*[https://www2.deloitte.com/us/en/insights/topics/strategy/cfo-benefits-esg-investment.html]
**[https://www.forbes.com/sites/rrapier/2021/08/25/the-cost-of-ignoring-esg/?sh=112401d3d285]
Next Week:
Join us as we uncover the price points where ESG impact will be most significantly felt. Is it among the lower cost, day-to-day convenience products, or high-priced specialty purchases?
Stay tuned!
Did you enjoy this post, have an ESG comment or question? Let us know in the comments and we will respond.