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The ESG Review: ESG claims on packaging do drive sales, claims study

Amidst the furore over greenwashing and enormous pressures on household budgets, it seems most people are prepared to favour buying products that tout their ESG credentials on the packaging.

A new study by McKinsey and NielsenIQ this week found that products making ESG-related claims averaged 28 per cent cumulative growth over the past five-year period, versus 20 per cent for products that made no such claims. A small difference perhaps, but a significant one.

The study centred on NielsenIQ analysts of products, their brand packaging, and sales across a five year period, but referenced several McKinsey surveys into consumer attitudes to spending on products offered with ESG claims. Combined, it points overall to people (in the US at least) being broadly environmentally and socially responsible, and actually wanting their purchasing behaviour to make a difference.

From a communications standpoint, the underlying conclusion here is that people broadly believe what they’re told - or at least, what they’re told on packaging.

That doesn’t necessarily chime with my personal experience, having overheard many people cynically dismiss brand claims on packaging and in advertising for many years. But even if the study had a relatively narrow scope for ESG-related wording, it does hint that people not only have faith in scrutiny around brands’ ESG claims, but have a reasonably high level of it.

And while the language itself will be combed over by regulators, the study also seems to suggest that consumers believe any false claims made on packaging will be tackled.

With all of the froth and political wrangling about the validity of ESG investing, and the focus on corporate purpose to drive broader stakeholder value, it can be easy to downplay the importance of whether consumers truly believe what they see and hear about what ‘goes into’ the brands they buy day-to-day. The study, as it points out itself, shows “a clear and material link”.

And as scrutiny around claims, fact-sharing and language grows, surely that belief will only become a more potent factor, whether it be in positively reinforcing purchasing decisions or driving shoppers away when virtues aren’t made clear ‘on the shelf’.

As this MITSloan article points out, “ESG is not sustainability”. It makes the case that despite ESG - as an investment and stakeholder value platform - being criticised and needing to become more rigorous, the drive to deliver greater sustainability in people’s everyday lives continues unabated.

“Sustainability is good business, and the forces driving it are not going away. The real work of sustainability — not just filling out endless ESG questionnaires — will continue,” it says.

The more data can show the direct impact on sales, the more the drive for greater sustainability will continue to flourish - and that should only rub-off positively for ESG writ-large.

The ESG News Review is written by Steve Earl, a Partner at BOLDT.

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