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  • Henry Eisenhardt

Consumer Preferences Shift Towards ESG Related Operations

As the years move on consumers across the world are ever more concerned as to where the products they are buying are sourced from and how they are produced. Consumers are ready to hit the battlefield in either supporting or denouncing those businesses that shift their brands towards environmentally sustainable bases. No time has this statement ever been shown more in action than during the COVID-19 pandemic.

Over the span of the last few years social change has rocked the world. Still, this move towards equality and justice has not stopped on public grounds. The world has shifted their eyes to looking towards the private sector in hopes of accountability and actions in regards to helping the environment. Both consumers and employees are looking for companies that care just as much about the environment as they do their profit margins. Consumers care about the operations that lead towards the creation of their ever beloved goods and employees care about the ethical grounds of those who put them on their payroll. When both consumers and employees feel as if an organization is lacking in regards to ESG awareness they are more likely to avoid such an organization's path. This shift to more conscious consumers is ever more amplified by the economic recovery of a post-pandemic, post-recessionary, economy. Before this shift in consumer preferences companies faced only minor set-backs when a scandal in regards to sourcing or production “leaked”; however, now there are real fiscal risks when a similar esposé occurs. Companies are being forced to shift their line of sight away from short term fiduciary concerns to a more long run view of how environmental sustainability can affect their public perception. What is the path forward?

For many companies, especially those without direct financial means, there is still a large monetary hurdle to jump to reach environmental sustainability. The change from former means of production to those that are less carbon-efficient is expensive. Oftentimes environmentally friendly factors of production decrease company margins by noticeable factors as the marketplace for such practices has not yet reached a completely cost efficient scale of production. This places companies at risk of underperforming in relation to their profit goals putting executives in an uncomfortable position in decision making. Still, there is light at the end of the tunnel. As technology improves ESG friendly means of production will become less expensive. Merged with the fact that consumers provided financial incentives for change we will soon reach a point where moving to sustainable production is the most profitable route to take.

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