Barriers to Entry: Lack of demand from clients and customers

This post is the sixth in a series of blogs addressing the barriers to entry for sustainability projects experienced by SMEs, the support that exists to implement and monitor projects and the benefits and returns typically seen when projects are completed.

Barrier to Entry: Overcoming low demand from existing or new customers

Regardless of whether SMEs operate in the retail, commercial or wholesale sectors, any business activities have a carbon footprint. Historically, a primary incentive for reducing a business's carbon footprint has been the savings from reducing energy costs, with a need for more internal efficiency driving decision-making. However, in recent years, with greater awareness of environmental causes entering the mainstream, consumers are beginning to ask that the products they buy, and the companies they buy from, make sustainability a more visible priority.

For organizations who sell directly to consumer markets, a 2015 poll from Nielsen Research found that 55% of consumers globally say they are willing to pay more for products from companies committed to sustainability; with over half of all polled saying, they regularly check product labels before making a purchase to see if companies have made an environmental commitment. This demand will only grow in the coming years, with over 75% of millennials claiming they are willing to pay more for sustainable products. This poses an opportunity for businesses who invest in environmental initiatives now to build brand loyalty and penetrate a market growing in purchasing power.

For organizations who sell to other businesses (B2B), being perceived as a sustainability-focused organization is still important — they may have customers who use sustainability criteria in selecting suppliers. By adopting sustainability initiatives, organizations who sell B2B can meet customer requirements while gaining an internal competitive advantage through increased resource efficiency.

The same Nielsen Research poll shows that, year over year, consumer demand for sustainable products is rising, with younger consumers showing an increasing desire to buy from environmentally focused companies. As millennials increase their purchasing power and market share, businesses who sell B2C and B2B have an opportunity to take advantage of shifting consumer trends to form longer, profitable partnerships with customers and partners alike.

Next blog in this series:

Too many sustainability metrics and not enough common standards (coming soon)

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