Could Climate-Consciousness be the Key to Consumer? 60+ Brands Pioneering Sustainable Models

MARKET MAP: THE RISE OF THE CONSCIOUS CONSUMER

The image shows brands seeking an edge in existing markets with a climate-conscious approach enabled by innovation in technology, business model, or distribution — or combinations of the same.

Clockwise, the brands listed work in:

• Transportation transformation (upper-right)
• Conscious commerce (bottom)
• Residential retrofitting (upper-left)

WHAT YOU NEED TO KNOW: THE CONSCIOUS CONSUMER

Editor’s note: The below are excerpts and digested insights from Meera Clark’s original post, “The Environmental Era.”

Why is this such an important category moving forward?

• Consumer spending will increasingly reflect greater demand for climate-conscious products and services: A 2022 Sensormatic survey found that nearly 80% of US adults are proactive in considering the sustainability of products, retailers, and brands on at least some of their purchases.
• Sustainability concerns are most pronounced among younger generations. A Deloitte survey of more than 20,000 respondents this year found that nine in 10 Millennial and Gen Z consumers report actively trying to protect the environment.
• Government regulation is increasingly incentivizing climate-conscious processes and products in consumer-facing industries: California leads the way with laws that have mandated organic waste composting, construction efficiency, and zero-emission vehicles by 2035. Federal law is following suit with tax benefits for solar and battery installation, and the allocation of $5B to a national network of charging stations.

What applications or business models might evolve in this category?

• Conscious Commerce requires efficiency-optimizing logistics and laying the groundwork for circular economies (i.e., commerce in which goods, components, and packaging can be endlessly recycled to minimize waste and energy impact). Circular and sharing economies will play a growing role in extending the durability of goods. The most successful business models will find novel ways to alleviate environmental impact across every stage of the value chain, including in materials, manufacturing, logistics, and resale.
• Residential Retrofitting offers an opportunity in improving the carbon footprint of home construction, energy use, and appliances. Leading applications include innovation in solar, battery installation, energy-efficient appliances (including heat pumps, electric stoves, and electric dryers), water efficiency, and material conservation in new construction. Sustainable innovation could take shape through full-stack providers or embedded offerings that transform existing operators.
• Transportation transformation captures the shift towards electric vehicles and other less carbon-intensive modalities for getting from place-to-place. New financial instruments will be needed to bridge the affordability gap of EVs, as lower-cost models are still lacking. The growing proliferation of EVs requires new underwriting methodologies compared to the combustible engine. EV-oriented infrastructure will allow for new transportation marketplaces and support stations to emerge and evolve in the coming decades.

What are some of the potential roadblocks?

• The main blocker is how costly these products are. While consumers show commitment to environmental engagement, they also show little willingness to compromise on quality, cost, or convenience. Category-defining companies pursuing this opportunity will need to meet consumers and “prosumers” where they are, offer clear cultural and economic incentives, and drive delight every step of the way.

BACKGROUND ON REGULATION AND LEGISLATION

Commerce

While the US makes up only 5% of the world’s population, it produces close to 30% of the world’s waste.

• Initiatives like California’s SB 1383, which mandates organic waste composting (including food), are establishing formal legal frameworks for more climate-conscious consumption.

Residential

Roughly 20% US greenhouse-gas emissions come from residential energy consumption. Residential retrofitting increasingly appears to be the most cost-effective area for reducing emissions. Policy initiatives addressing this issue include:

• The US Inflation Reduction Act (IRA), which offers a 30% tax break for both rooftop solar and battery installation as well as rebates and tax credits for energy-efficient appliances (think heat pumps, electric stoves, electric dryers, and more).
• California’s CALGreen (fka Green Building Standards Code), which introduced legislation for new construction, including planning and design, energy efficiency, water efficiency and conservation, material conservation, and resource efficiency.

Transportation

Almost 40% of transportation-related emissions come from passenger cars alone. Federal and state governments are feeling both policy pressure and budgetary support for this transportation transformation.

• Progressive bodies like the California Air Resources Board have already mandated that by 2035 all new cars and light trucks sold be zero-emission vehicles
• The Bipartisan Infrastructure Law has allocated $5B towards the development of a national network of EV-charging stations.

ACKNOLWEDGMENTS

Thanks to Meera Clark for sharing the original post, her ideas and insights, and reviewing this brief. This post is from The Conscious Consumer, her content collection on Substack.