The ROI of Ends: Turning ESG into Consumer Connection
Companies are investing heavily in sustainability, often driven by compliance with environmental, social, and governance (ESG) standards. Publicly listed businesses spend between $220,000 and $480,000 annually on sustainability ratings1. Yet, despite this investment, many fail to communicate these efforts effectively to consumers, relying on symbols and data points that are poorly understood.
The Problem with Labels
Across the EU, there are over 200 environmental labels in use, and globally, the number exceeds 450. Yet, consumer understanding of these labels is strikingly low.2 A UK study found that three-quarters of the public struggled to understand common sustainability terms like "environmentally friendly" and "locally grown." Only 4% could define "circular economy." This highlights a fundamental disconnect between companies and their customers. Why are businesses spending so much on certification if they’re failing to communicate it effectively? Even worse, some companies face accusations of greenwashing when their efforts are perceived as misleading or hollow.
Sustainability Without Connection
Many companies are focused on legislative compliance and securing ESG ratings, but that focus doesn’t always translate into consumer understanding or loyalty. Worse still, companies often report dissatisfaction with ESG ratings due to data errors, which erodes trust in these ratings altogether. In a world of overwhelming certifications and labels, an article from The Economist argued that ESG efforts should be boiled down to one measure: emissions. 3While simplifying the metrics could help, it still doesn’t bridge the gap between a company's sustainability efforts and consumer awareness.
The Consumer Gap
Consumers are increasingly interested in sustainable products. A McKinsey survey found that 60% of US consumers were willing to pay more for sustainably packaged products, and NielsenIQ reported that 78% of consumers see a sustainable lifestyle as important. 4However, companies often fail to convert this interest into sales because they don’t engage consumers in meaningful ways. We can see an example with this in the WEEE directive symbol, common in the EU. It portrays a wheelie bin with a cross through. Saying to the consumer “Don’t throw it in the bin.” But a consumer might then ask “What should I do with it?”. After all a person can’t do don’t. It is un-actionable. Which is often where consumer experiences linger with ESG initiatives. The business has ticked the certification box, but failed to tell the consumer what it means.
The ROI of Consumer Experience
So, how can businesses get a better return on their sustainability investment? The answer lies in moving beyond certification symbols and focusing on consumer experience. The money spent on compliance and ratings would be better invested in creating experiences that allow consumers to actively engage with a company’s sustainable practices.
Designing Consumer Off-Boarding Experiences
Instead of merely placing sustainability labels on packaging, businesses should design consumer off-boarding experiences that turn sustainability into a shared, tangible experience. For example, a good consumer off-boarding experience should be...connected consciously to the rest of the experience through emotional triggers that are measurable and actionable by the user. It should identify and bond the consumer and provider together in mutual responsibility. Its aim should be to neutralise the negative consequences of consumption. It should be concluded in a timely manner and avoid assets falling outside the consumer lifecycle.
The bottom line is clear: businesses need to focus less on ticking regulatory boxes and more on creating genuine experience with consumers through sustainability. This shift can transform ESG efforts from a compliance exercise into a powerful tool for building brand loyalty and trust. In other words, the real ROI of sustainability lies in how well a business can turn its efforts into meaningful consumer experiences.
