Attention, CPG manufacturers! Gen-Z shoppers won’t have anything less than true sustainability

The world’s youngest consumers are placing heightened pressure on organizations to make their supply chains sustainable – from the raw materials they use to the manufacturing practices they employ.

Generation Z (or Gen Z) – born between 1997 and 2012 – is demonstrating more sustainable shopping behaviors than previous generations, with environmental and social consciousness driving their spending decisions.

Businesses that pay close attention to their wishes – and act upon them – will reap the rewards, driving sales, attracting talent, and increasing value among private and public investors.

Nearly three quarters (73%) of Gen Z consumers say they are willing to pay more for sustainable products, more than every other generation. Along with Millennials, they are the most likely to make decisions about what they buy based on their personal values and principles.

Their attitudes have been further shaped by the pandemic. Forced to stay at home and miss out on socializing and other experiential activities, Gen Z emerged as resilient. But they are also displaying increasingly tough stances on issues such as climate change, racism, sexism, and anything else that conflicts with their personal values. They are perhaps the first generational cohort hard-wired to call out a company for falling short of ethical or sustainable practices – and with the social connection tools to do so effectively. For this group, the power of word of mouth and social media influence carries significant weight – presenting a golden opportunity to broadcast sustainability success, while at the same time adding on reputational risk of poor performance or misleading claims.

Reimagining manufacturing and sourcing practices

Companies, then, must be transparent about the provenance of their products, extending this throughout their entire supply chain from the raw materials they choose to the manufacturing practices they use.

As the saying goes, a chain is only as strong as its weakest link. Yet, a monumental challenge lies in front of organizations in this respect, reimagining supply chains to meet Net Zero targets by addressing not only directly controlled Scope 1 and Scope 2 emissions, but also Scope 3 – the overwhelming majority – which occurs upstream and downstream. 

Securing the consumer of the future in the middle of so much disruption will be no mean feat either. These shoppers can spot bogus sustainability claims and are highly attuned to greenwashing. If a product has an eco-slogan or claim but lacks the information to back it up, Gen Z will hold them to account. Brands such as Allbirds are leading the charge by holding themselves accountable across the entire supply chain and publicizing the details.

Local nuances must also be considered, as Gen Z preferences and attitudes tend to differ around the world. A recent AlixPartners survey of Italian Gen Z consumers, for example, revealed that while Gen Z in Italy is less influenced by sustainability claims on packaging compared with the rest of Europe and U.S., they attribute a much higher importance to animal welfare, local origin, and certified supply chains.

Six steps to drive sustainable progress

There is little doubt that in a world of ever-increasing corporate scrutiny, failing to adopt sustainable manufacturing practices will prove damaging to brand value, sales, and ultimately market share.

In the immediate term, manufacturers should be laser-focused in addressing the following areas of sustainability impact to demonstrate to Gen-Z – and consumers at large – that their commitment to a more considerate way of doing business is much more than just words:

• Rigorously interrogate the potential for use of natural resources or recycled raw materials across product ranges
• Step up health and safety considerations, ensuring employees are treated with dignity, compensated fairly, and provided with adequate health and safety protection
• Drive greater energy efficiency, consuming fewer natural resources, reducing waste in factories and across the supply chain
• Recycle, or appropriately dispose of waste to minimize environmental impact and potential harm to local communities
• Bake sustainability and durability into product design, implementing refurbish and recycle processes to reduce landfill waste
• Be transparent – share factory footprints, labor standards, and the origin of raw materials

Read more about how we are helping clients cut complexity and improve the transparency of their route to Net Zero.