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Tehmina Haider and Michael O\u2019Leary lead L Catterton Impact, the impact investing arm of the consumer private equity firm L Catterton.<\/em> Michael is also the author of <\/em>Accountable: The Rise of Citizen Capitalism (HarperCollins 2020).<\/em><\/p>\n This spring, ExxonMobil<\/a> chief Darren Woods came under fire<\/a> after telling Fortune Magazine<\/em> that consumers\u2014not ExxonMobil\u2014were the ones holding back the transition to clean energy. \u201cWe have opportunities to make fuels with lower carbon in it,\u201d he said<\/a>, \u201cbut people aren\u2019t willing to spend the money to do that.\u201d<\/p>\n The SEC\u2019s new rules<\/a> on climate disclosures similarly put emissions on consumers\u2019 shoulders: though public companies must now report their emissions, they don\u2019t have to include the emissions that come from consumers using their products. Instead, those emissions implicitly remain part of the consumer\u2019s<\/em> carbon footprint.<\/p>\n Many in the climate community bristle<\/a> at blaming consumers. After all, even the concept of a consumer\u2019s \u201ccarbon footprint\u201d was only popularized by a BP-funded ad campaign<\/a> in the early 2000s.<\/p>\n But Darren Woods is right in principle: It doesn\u2019t matter what sustainable products companies create if consumers don\u2019t buy them. We shouldn\u2019t blame consumers for companies\u2019 actions, but we should focus on what they actually want to buy.<\/p>\n Within the climate movement, we\u2019ve too often taken an \u201cif we build it, they will come\u201d approach to climate investing, assuming that if we can just develop the technology, then climate-conscious consumers<\/a> will be eager to adopt it. Consider transportation and food, which together make up roughly half<\/a> of a consumer\u2019s total emissions in many countries. Within each, we\u2019ve developed technologies that offer substantial reductions, but we\u2019re now seeing just how fickle consumer adoption can be.<\/p>\n According to the Department of Energy\u2019s latest analysis, the cradle-to-grave emissions for today\u2019s electric vehicles are 48% lower<\/a> than comparable gas vehicles. However, electric vehicles only made up 7.6% of automotive sales<\/a> in the U.S. last year, up from 5.9% the previous year but still a long way from the two-thirds share some project<\/a> for 2030.<\/p>\n Within our food system, independent assessments of alternative proteins suggest emissions savings of up to 90%<\/a> compared with beef, similar in scale to the savings from adopting a vegan diet<\/a>. But at just 2% market share<\/a>, alternative proteins have yet to break into the mainstream.<\/p>\n Overall, consumption accounts for 72% of greenhouse gas emissions<\/a>, just above consumer\u2019s 68% share<\/a> of U.S. gross domestic product. To limit global warming to 1.5\u00b0C above pre-industrial levels, we need to cut per capita emissions by 50%<\/a> within the decade. But whatever emissions savings these and other climate technologies boast will only come to fruition if consumers love them enough to pull out their wallets.<\/p>\n At the impact fund we lead, we\u2019ve seen that despite the many studies citing how much consumers\u2014especially younger consumers<\/a>\u2014care about shopping more sustainably, the reality is more complicated.<\/p>\n For any category, consumers tend to have a set of criteria they care most about, like price, quality, or convenience. Eighty percent of consumers<\/a> now say it\u2019s important for brands to be sustainable, but sustainability is almost never among their most important criteria. If forced to make a trade-off between sustainability and those other factors, support for the sustainable option can collapse by 70% or more<\/a>.<\/p>\n Indeed, one way to tell the story of the stalling growth<\/a> of plant-based meat is that as close as it\u2019s gotten to mimicking meat, it still fails to outperform on consumers\u2019 most important criteria of taste and nutrition<\/a>. Many consumers marvel at these almost-meat alternatives, but not enough prefer them.<\/p>\n The only way to drive long-term adoption of a sustainable product is by flipping the trade-off, and finding ways to make its sustainability a positive driver of the other<\/em> criteria that consumers care about. Ironically, only when consumers prefer the sustainable product for reasons unrelated to sustainability will it achieve mainstream success.<\/p>\n For example, far more consumers will say they buy a dairy alternative because it\u2019s healthier and tastes better<\/a> than because of any desire to help the environment, something organic produce<\/a> has long benefited from. Electric heat pumps, which now make up a majority<\/a> of new heating system sales in the U.S., save money<\/a> for the average consumer. More Gen Z consumers say they shop sustainable brands because of quality or value<\/a> rather than concern about the climate.<\/p>\n As with any consumer market, segments of consumers may weigh factors differently. For decades, cars sold in Europe have had roughly 50% better fuel economy<\/a> on average than those sold in the United States. That\u2019s not because of unique European technology. That\u2019s because of historical consumer preferences<\/a> supported by tighter regulations<\/a>. Similar patterns are playing out again with electric vehicles, as penetration in Europe is double<\/a> that in the U.S.<\/p>\n Though much of the conversation about climate companies focuses on the cutting edge of the technology landscape, innovation in business models can also be highly impactful.<\/p>\n Resale, rentals, refillable products, and reusable packaging all require very little novel technology but can still outperform on consumers\u2019 key purchasing criteria. Secondhand apparel has grown far faster<\/a> than apparel at large, for example, mostly because it satisfies consumers\u2019 desire<\/a> to save money.<\/p>\n The lesson is simple: The consumer is still king. If we hope to make significant progress towards a world with net zero emissions, we need to build products they want to buy more than the traditional alternatives. And that matters far more than on whose environmental balance sheet we decide to measure those emissions.<\/p>\n We can\u2019t blame consumers for climate change until we give them better options.<\/p>\n\nConsumers may like sustainability, but they abhor a trade-off<\/strong><\/h2>\n
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