Green disconnect between Asian consumers, firms

Businesses in Asia underestimate consumer interest and willingness to pay for green-certified goods, leaving large market potential untapped, new study finds.
Written by Jamie Yap, Contributor

SINGAPORE--Businesses in Asia significantly underestimate consumers' interest and willingness to dig deeper into their pockets for green-certified products, and end up missing out on a huge market opportunity that will enable them to charge premiums for green goods.

These were the findings uncovered in a new survey, titled Green Gauge 2010, unveiled at a media briefing here Tuesday. Commissioned by testing and certification service consultancy, Tüv Süd Asia-Pacific, the research was conducted in Singapore, India and China between November and December last year, and compared both consumer and corporate attitudes toward green products and services and sustainability certifications across three industries, home electronics, food and beverage (F&B) and clothing and footwear.

The three market sectors were chosen because they had maximum impact on consumer-buying decisions, explained Ishan Palit, CEO of Tüv Süd Asia-Pacific, who presented the findings.

According to the study, 84 percent of consumers said they were prepared to fork out on average 27 percent more to buy green-certified products and services. However, businesses expected only 43 percent consumers to do so, paying only a premium of 14 percent for such green products.

In addition, the survey revealed that green credentials were a major influence on the purchasing decisions of consumers across all three countries. Some 96 percent of respondents in India said independent green certifications were important factors in deciding which product to buy, followed by China at 94 percent, and Singapore at 90 percent.

While 96 percent of consumers and 89 percent of enterprise respondents shared a high interest in green products and services, businesses did not appear aware of the intensity of consumer interest. Companies were also unaware of how this might translate in terms of demand for green products and the opportunity to charge premiums for consumers willing to pay for such goods.

Survey findings also demonstrated that 49 percent of consumers were aware of independent green certifications, compared to 35 percent of corporations, and recognized the need to be responsible eco-citizens. In contrast, 43 percent of corporations said it was the government's job to drive sustainability.

Consumers more green
Overall, the Green Gauge study observed that consumers have become increasingly sophisticated with regard to green issues and embrace green products and credentials. Despite the soaring demand, businesses have been slow on the uptake.

Elaborating on the survey findings, Palit said it is clear that being green makes business sense and gives good ROI (returns on investment).

Speaking to ZDNet Asia at the sidelines of the briefing, he noted that companies should not view green as a mandatory corporate responsibility or potential market opportunities could be lost. Instead, they should look at the potential ROI when they produce products in a sustainable way and feasibility of charging a premium in the market, he said.

For any strategy or service to be sustainable for a businesses, it has to make economic sense to an organization, Palit stressed, noting that green has until now, been viewed by enterprises as mainly a compulsory corporate responsibility, rather than an economic incentive.

According to the Green Gauge study, 74 percent of organizations did not have sustainability policies or guidelines or did not communicate them with their stakeholders. And if there were such policies and guidelines, such implementations were driven by industry and government regulations for 81 percent of companies in China, 67 percent in Singapore and 55 percent in India.

Palit noted that, currently, there are only push factors for companies to go green. Once the "pull" becomes apparent--in the form of consumers' willingness to pay more for green-certified goods--the uptake from businesses would be much faster, he said.

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