How Digital Reframes the Business Case for Sustainability in Consumer Markets

Abstract

More than 90% of consumers in Germany find the deployment of renewables important or very important, 93% of German citizens want more renewable energy. At the same time, only around 20% of consumers actually buy energy from renewable sources for their homes. Where does this 70% gap stem from? Is it just complacency on the side of consumers? Does the same apply to other product categories?

The authors of this article argue that consumers are willing to pay for sustainability when considering three aspects. First, products and services need to address the individual values of consumers, i.e. the ecological or societal benefit need to be personalized. Second, products and services need to seamlessly fit the individual lifestyles of consumers. And, third they need to be conveniently accessible.

The above requirements may sound familiar. However, they appear in new light when considering how the digital revolution is currently reframing the landscape for sustainable consumption and production. This is, digital services are enabling a very different direct consumer interaction, and the technology that enables these services not only becomes more sophisticated but also more affordable.

Businesses need to understand how to navigate this emerging digital landscape with a strategic sustainability angle. Those that manage will be rewarded by stakeholders, consumers, and shareholders alike. Stakeholders will demand more transparency on product level than before. Consumers—depending on who they are—will buy what is traceable, they will pay for what they personally regard as sustainable or ‘good’, or they will simply return to where they had a positive feeling when shopping. Shareholders will appreciate both better risk management, higher reputation and advanced marketing strategies in the core business.

This article puts arguments behind the above expectations and proposes how companies can realize the business case for sustainability in a digital economy. This proposition includes three aspects. We reckon that rethinking strategy with a strong human centered design, technology angle and a profound understanding of consumer lifestyles is key to making these business models thrive.