Increasingly, people are clamoring for companies to focus on sustainability. But the question is: are those same people willing to pay a premium for it?
Not surprisingly the answer depends on your age.
Here’s the breakdown (courtesy McKinsey & Company) of the percentage of each generation that is willing to pay more for products that are environmentally friendly (i.e. net-zero, recyclable, minimal packing).
- Gen Z (age 11 to 28): 49%
- Millennials (age 29 to 43): 48%
- Gen X (age 44 to 58): 23%
- Baby Boomers (age 59 to 77): 16%
- Overall: 28%
A couple of things struck me about this data:
- The consistency between Gen Z and Millennials
- The significant drop off from Gen X (52% lower) and the Baby Boomers (30% lower)
This bodes well for the future but perhaps not as much as you might think. I did some quick calculations of what percentage of the population is likely to pay more for sustainable products in 20 years. I assumed a consistent population growth, and that the percentage of the younger generations (pre-Gen Z) willing to pay more would be in the 60 to 70% range which may be optimistic.
The net result is that by 2045 or so about 49% of the population would be willing to pay more.
The moral of that story: it takes decades to move the needle on changes in human behavior. And a willingness to pay more for sustainable products isn’t a particularly intrusive change. The transition to 100% electric and the elimination of fossil fuels will take considerably longer. And by considerably I mean two to three times longer.