Business Assurance - ViewPoint

What matters to consumers in the circular transition?

Overall story

That there is a need to transition to a more sustainable way of life is perhaps not in question but whether the world is moving fast enough is. DNV’s consumer survey on circular economy suggests that engagement is determined by numerous factors and there are many opportunities for increasing their level of involvement. While companies may be pushed into adopting new business models by regulators and initiatives such as the EU Circular economy action plan, consumers tend to have more freedom in determining their own actions. These will range from selective buying behaviour and circular programs to boycotts or almost complete disinterest at the other end of the scale.

Awareness advances actions

As many as 35.8% were not aware of what circular economy is. These respondents were screened out from the survey.  Among the remaining, almost have extensive knowledge and actively participate. This is very promising as it gives companies something to build from and drive results. Those expressing a slight knowledge were mostly not familiar with specifics, leaving a huge potential to engage them further. Knowledge appears to be highest among the younger age groups. Although it is possible that a lower engagement by those above age 55 might be more due to unfamiliarity with the term rather than the concept itself. Most respondents (60%) used media sources to gather information while political discussion and friends were used by less than 30%. Almost all respondents think consumers can play a role in the circular economy (86.1%). Out of these 65.4% think they can contribute through purchasing sustainable products and proper recycling. Interestingly, 20.7% believe boycotts and advocacy can work, which could represent a risk for companies that do not improve and communicate their contribution to circularity.

Engagement is personal

Consumers tend to focus most on aspects of circularity that are closest in proximity and main issues of concern in a person’s daily life. Reducing waste ranked highest followed by saving water, limiting emissions of greenhouse gasses, reducing extraction of natural resources, and better working and social conditions. All aspects score high, which could indicate that consumers are aware that circularity is a systemic challenge to be addressed in multiple dimensions. When looking at the difference between age groups, 76.5% above age 55 thought reducing waste was most relevant as opposed to just 42.5% of those ages 18-24. Moving to actions taken, consumers are primarily engaging in recycling and reuse. This mirrors companies’ current focus on process and product innovation. Buying new products with recycled properties was the most reported action. Again, there are marked age and gender differences. By age group, the second-hand option was most favoured by ages 18-24. A shift in circular economy models, toward more business model innovation, is essential to achieve a true circular economy. Scaling such models is also another way to get consumers to change behaviour and propel progress.

Encouraging involvement

On the whole respondents are quite receptive to circular economy models. This is a positive aspect which companies should capitalise on. In fact, 43% of consumers express a personal interest in the circular economy. There seems to be several aspects that come into play when consumers decide whether to buy circular products. Information on ecological footprint, working and labour conditions and quality of the product score highest. However, all aspects score high, which indicates that manufacturers and brands have multiple circular dimensions on which to be active. What is noticeable from the responses is that consumers are looking for manufacturers and companies to be more proactive. Most believe companies/brands should take responsibility for recyclability and end of product life as well as being more innovative. The channels are there for companies to engage with consumers. Consumers may be a bit sceptical or not even know exactly what they want. However, there is an opportunity to reach out through multiple channels, on multiple topics in a transparent way to build engagement and trust in the circular transition.

Deep-dive into specific areas

To get more in-depth insight into what drives consumers, a number of questions were asked covering the fashion industry, electronics and plastic packaging. Circular fashion products seem to be quite visible and 67.7% have seen a product in store or online. The primary reasons for choosing such an item, however, are still style and the price. Contributing toward environmental and circular causes ranks third. Price is especially relevant for the younger generations, which is potentially linked to their purchasing power. For those over 55, the act of being sustainable scores above average and they are willing to pay more than their younger counterparts perhaps. This may indicate that when purchasing power increases so does the possibility to act more freely and according to personal conviction. When it comes to electronics, the products’ circularity was rated highly although the greatest emphasis was on reliability, durability and repairability. Recycling rates are quite low and as take-back programs have tended not be well advertised this may be a factor. Upbringing and purchasing power seem to influence behavioural patterns. Those above 55 do more repairs. The younger generations tend to buy more second-hand and rent instead of owning. This could reflect a mix of it being trendy and that they have less purchasing power. Fewer companies engage in business model innovation, such as product as a service, which could also explain the lower adoption among consumers. Awareness around plastic packaging is surprisingly high. Almost half have decided not to purchase a product because the packaging was not sustainable. Those that would still buy may not necessarily be in a position to avoid doing so. Moreover, the large number of respondents saying that plastic packaging is acceptable if responsibly disposed or recycled shows the importance of such programmes.