Three factors are driving us toward a major shift in consumption patterns where consumers will consider sustainability as a baseline requirement for purchase: 1) Trust drives behavior and, ultimately, business outcomes; 2) Sustainability promotes trust, particularly among younger generations; and 3) Younger generations will soon have most of the purchasing power in the U.S. Companies that understand these trends — and create truly sustainable brands that make good on their promises to people and the planet — will seize advantage from brands that make flimsy claims or have not invested sufficiently in sustainability.
For most consumers, sustainability has been considered a “nice-to-have” in the brands they buy, but it’s rarely been table stakes. That’s about to change. Our research suggests we’re on the brink of a major shift in consumption patterns, where truly sustainable brands — those that make good on their promises to people and the planet — will seize the advantage from brands that make flimsy claims or that have not invested sufficiently in sustainability. We’re fast approaching this tipping point where sustainability will be considered a baseline requirement for purchase, and companies should prepare now.
To understand why, you need to know three things:
- Trust drives behavior and, ultimately, business outcomes.
- Sustainability promotes trust, particularly among younger generations.
- Younger generations will soon have most of the purchasing power in the U.S.
1. Trust drives behavior and, ultimately, business outcomes.
We study trust, and through our research involving hundreds of thousands of consumers and employees across more than 500 brands in 30 sectors, we’ve measured the power of trust to drive a range of positive behaviors.
Trusting employees are more motivated to work, have lower rates of absenteeism, and are less likely to look for another job. Trusting customers are more likely to choose a brand over competitors, buy it again, and promote it.
And highly trusted companies outperform others by up to 400% in terms of market value. These astonishing returns are realized because the marginal effect of trust on companies’ stocks grows as those companies earn trust. Our TrustID platform, which measures company trust, shows that when a company’s score moves from 30 to 31, it sees a roughly 3% increase in expected stock returns. When scores climb from 60 to 61, the increase is 6%.
2. Sustainability promotes trust, particularly among younger generations.
With such a high payoff for trust, the obvious question for organizations is: What creates trust in a brand? Our research shows that sustainability is a powerful driver. To understand why, you first must understand where trust comes from.
At its core trust is built when a brand or organization makes good promises and then delivers on them. They do this by conveying a positive intent and demonstrating competence, respectively.
We surveyed more than 350,000 U.S. customers aged 18 to 98 to gauge their perception of brands’ intent and competence. We measured intent using a combined score of two of the four factors we use to gauge trust: brands’ perceived humanity (empathy, kindness, fairness) and transparency (openness to sharing motives and relevant information in plain language). We measured perceptions of brands’ competence using a combination of the remaining two trust factors: capability (the quality of offerings) and reliability (consistent delivery).
We found not only that sustainability stood out as a critical driver of intent, but that there was an important generational effect. While both younger and older consumers care about brands’ competence (their quality and consistency), younger consumers’ trust in brands — and their resulting purchasing behavior — is much more strongly influenced by the brands’ positive intent.
Consider these findings: When Gen Z and Millennial customers believe a brand cares about its impact on people and the planet, they are 27% more likely to purchase it than older generations are — a clear measure of sustainability’s power to drive buying decisions in this group.
To zoom in a bit further, we can look specifically at the impact of humanity and transparency, the trust factors that comprise good intent.
- When Gen Z and Millennial customers rate a brand highly on humanity, they are 15% more likely than older generations to spend more money with the brand and choose it over its competitors.
- When they rate a brand highly on transparency, they are 30% more likely than older generations to spend more money with it and 20% more likely to choose it over its competitors.
3. Younger generations will soon have most of the purchasing power in the US.
Forecasting experts calculate that the purchasing power of Millennials and Gen Z will surpass that of Boomers around the year 2030, with up to $68 trillion in wealth transferring from Boomers to these younger generations by the end of this decade.
To earn these younger consumers’ trust, it’s clear that your brand’s sustainability efforts must deliver on humanity and transparency:
- To highlight humanity, demonstrate that your organization values and respects everyone, regardless of identity, background, or beliefs; respects and takes care of its employees; and puts the good of society and the environment above pure profit-making.
- To underscore transparency, make sure it’s easy for consumers to find straightforward information about your brand’s impact on communities and the environment.
Organizations that do this well will reap the rewards. Take our findings among grocery stores as an example. Publix, one of the largest-volume supermarket chains in the U.S., ranks #1 in customer trust of 11 peer grocery brands in our TrustID dataset, with humanity and transparency scores that are 75% and 47% higher than the number-two player, respectively. This difference is even more pronounced with Gen Z and Millennial customers, who score Publix as 83% and 95% higher than the number-two player, respectively. As a result, trusting customers are 54% more likely to purchase from Publix than from competitors. And this is even more pronounced with Gen Z and Millennial customers, who are 162% more likely to purchase from Publix than from competitors.
This trust, and the resulting customer loyalty, flows from Publix’s visible investments in people and the planet. For example, Publix employees automatically receive quarterly stock benefits with the option to purchase additional shares. This makes Publix one of the largest employee-owned companies in the world, with over 200,000 employees who together own roughly 80% of the company. Publix also offers medical and tuition benefits as well as company-matched retirement plans, even for part-time employees. And employees receive regular reviews and raises for performance. These benefits help explain why voluntary turnover is only 5% — compared to the industry standard of 65%. It’s no wonder that Publix is one of only four companies that has consistently landed on Fortune’s “100 Best Companies to Work For” list for the 26th consecutive year.
On the planet side, Publix has actively invested in reducing food waste and promoting conservation. For example, in 2022 the company sent more than 54 million pounds of food waste–manufacturing byproducts to farmers to turn into animal feed. That same year, its seafood department switched from polystyrene containers to returnable plastic totes, eliminating the use of 190,000 containers, while the deli department opted for lighter plastic bags and replaced plastic-wrapped cutlery sets with cutlery stations. Together, these moves eliminate over 360,000 pounds of plastic waste per year. Publix has also created its own line of sustainable food products under the “GreenWise” label, demonstrating its commitment to quality ingredients and strict animal welfare standards.
Let Publix’s experience be a lesson: While the tipping point may not come until 2030, companies of all types should expand their sustainability efforts and communications today to win trust — and customers — in the future.