Will consumers pay more for carbon-neutral products?
Consumer behaviour and attitudes towards carbon-neutral products have significantly shifted in recent years. Scientists tell us that there is an urgent need to address the effects of climate change, reduce greenhouse gas (GHG) emissions, and transition towards a greener economy. As a result, the demand for carbon-neutral products, which have net-zero carbon emissions throughout their value chain, has been on the rise.
Several factors contribute to the increasing popularity of carbon-neutral products and the likelihood that consumers will pay more for carbon-neutral products. First and foremost, consumers are becoming more aware of the social cost of carbon and the impact of GHG emissions on global warming. They recognise that their purchase decisions can make a positive impact on the environment and align with climate action goals such as the Paris Agreement.
Studies have shown that many consumers are willing to pay higher prices for sustainable and carbon-neutral products. A 2022 study conducted by CHOICE in Australia found that 65% of respondents considered the carbon footprint of their purchases. About a third of people (34%) say they’re more likely or very likely to buy from a business that claims to be carbon neutral. This indicates a positive attitude towards products that contribute to climate neutrality.
The Role of the Supply Chain
The supply chain of carbon-neutral products involves sustainable practices and reductions in GHG emissions at various stages, such as using renewable energy sources, energy efficiency measures, carbon capture and sequestration, and offsetting remaining emissions through carbon credits or offsets. These products often come from supply chains that prioritise environmentally friendly practices, including using renewable energy, sustainable sourcing of raw materials, and reduced use of fossil fuels.
Business and Government Influence
In addition to individual consumer demand, the private sector and business leaders have also recognised the economic value and competitive advantage that can be gained by offering carbon-neutral goods. Companies prioritising sustainability and carbon neutrality can differentiate themselves in the market, attract environmentally conscious customers, and enhance their brand image.
Government policies also play a role in shaping consumer behaviour. For example, in British Columbia, Canada, implementing a carbon price has led to reduced GHG emissions and an increased focus on sustainable practices. The European Commission has proposed minimum prices for carbon in certain sectors, further encouraging businesses to adopt carbon-neutral practices.
Long-term Benefits of Carbon-Neutral Products
While the market price of carbon-neutral goods may be higher than conventional alternatives, consumers recognise their long-term benefits, such as mitigating climate change, reducing the social and environmental costs associated with carbon emissions, and promoting sustainable development.
In conclusion, consumer demand for carbon-neutral goods has increased steadily in recent years. People are willing to pay higher prices for products that have a lower carbon footprint and contribute to reducing GHG emissions. The positive attitudes towards sustainable practices, the urgency to address climate change, and the desire to positively impact the environment all drive the preference for carbon-neutral products. As awareness grows and more businesses embrace sustainable practices, the availability and accessibility of carbon-neutral goods will likely continue to expand, making them an even more viable and desirable choice for consumers concerned about the environment and seeking to support climate action.