Are people willing to pay for sustainability?

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:

1. The consistency between Gen Z and Millennials
2. 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.