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SCANDINAVIAN CONSUMERS AND THEIR ATTITUDES TOWARDS CLIMATE-FRIENDLY PRODUCTS QUARTZ+CO CARBON FOOTPRINT REPORT 2010 By Lars Bo Hansen

www.quartzco.com DENMARK Ryesgade 3A 2200 Copenhagen N +45 33 17 00 00

SWEDEN Birger Jarlsgatan 7 111 45 Stockholm +46 (0)8 614 19 00

NORWAY Inkognitogata 35 0256 Oslo +47 22 59 36 00


FROM FAD TO BUSINESS OPPORTUNITY Scandinavian consumer interest in carbon reduction is still high. Working with climate strategy and carbon footprint is not just a temporary fad, but a real and present business opportunity. This is the conclusion from Quartz+Co’s latest carbon footprint survey from 2010. A year ago, carbon reduction, CO footprint, green products and environmental concerns were on everyone’s agenda – and people were either pro or con. In all of 2009, COP15 was a global focal-point for political leaders, companies and consumers It was in this inferno of differing opinions, doomsday predictions and conflicting interests that we carried out our first analysis of Scandinavian consumer interest and attitudes towards carbon reduction and carbon optimised 1 products. Given such a media interest, it was not surprising that Scandinavian consumers expressed high and positive interest in climate-friendly products. Last year’s survey revealed that consumers were in fact willing to vote with their wallets and switch to climate-friendly products when offered the chance, however, they also said that they would like more useful information on the matter. When planning this year’s analysis, we did expect that the combination of a global economic downturn and general disappointment with the lacking results of COP15 would at best cause consumer indifference towards climate-friendly products, and at worst cause downright hostility. However, this has not proven to be the case.

progressive thinking. Obviously, we are still waiting for that great example on how to fully exploit and profit from the unmet consumer demand. Climate should no longer be ignored when discussing future strategies.

BACKGROUND The carbon footprint survey was conducted by YouGov Zapera during the summer of 2010 among more than 3,000 consumers in Denmark, Norway and Sweden. It gives a broad picture of Scandinavian consumers’ attitudes towards carbon footprints and climate care when purchasing a product or placing responsibility. The data in this report is a reflection of the views of the Scandinavian consumer; hence the numbers are a total of all Norwegian, Swedish and Danish consumers participating in the survey.

MOST CONSUMERS ARE WILLING TO PAY A PREMIUM 40% of all Scandinavian consumers are willing to pay a premium for a product that offers a reduction in carbon footprint, while 36% are not, and 24% don’t know. This, however, indicates a clear willingness to pay for climatefriendly products. FIGURE 1: ARE YOU WILLING TO PAY A PREMIUM FOR A PRODUCT TO MINIMISE YOUR CARBON FOOTPRINT? 2010

NOT JUST A FAD This year’s survey shows that Scandinavian consumers still view carbon reduction as a key area of interest when making buying decisions. They have not lost the interest, nor the willingness to act accordingly – which surely indicates opportunities for Scandinavian manufactures and retailers. This year’s report demonstrates that working with climate-friendly products is a real and existing business opportunity that can, for some, be turned into profitable growth. It is not just a fad. In most sectors, it is still uncharted territory and requires braveness and

Yes

40

No

36

Don’t know

24

0

5

10

15

20

25

30

35

40

45

50

55

60

65

Percentage (%)

When we asked the consumers who are willing to pay more, how much they are in fact willing to pay extra for a climate-friendly product, their answer was about 30% more.

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The survey was conducted by YouGov Zapera during the summer of 2009 among more than 3,000 consumers in Denmark, Sweden and Norway. 1


FIGURE 2: HOW MUCH MORE ARE YOU WILLING TO PAY EXTRA WITHIN THESE CATEGORIES? Domestic appliances

32

Electronics

30

Construction and renovation

actual buying decision in the store. So even though the survey points towards business opportunities for retailers, it is still important to control the sequence and progression of bringing climate-optimised products to the market.

29

Cars and other transportation

THE CONSUMERS ARE DISTRUSTFUL

31 28

Clothing Groceries

24 0

5

10

15

20

25

30

35

Offering climate-friendly products to consumers is not an easy task. This is particularly true when communicating the climate benefits of certain products.

Average Percentage (%)

The consumers were also asked if the amount that they are willing to pay to minimise their carbon footprint has changed during the last 12 months. 27% of the Scandinavian consumers answered that they are now a lot more or a little more willing to pay extra in order to reduce their carbon footprint. 56% of the consumers see no change in their willingness to pay extra to reduce their carbon footprint. FIGURE 3: HAS THE AMOUNT YOU WOULD PAY TO MINIMISE YOUR CARBON FOOTPRINT CHANGED FROM 12 MONTHS AGO? 2010

Δ 2010/2009**

I am now a lot more prepared to pay extra

3 24

There has been no change

I am now a lot less prepared to pay extra Don’t know

These results are quite interesting. It seems that the consumers who are not willing to pay extra for climatefriendly products are very sceptical of climate-friendly products or even climate change. FIGURE 4: WHY ARE YOU NOT WILLING TO PAY A PREMIUM?

-2

I am now a little more prepared to pay extra

I am now a little less prepared to pay extra

We asked the sceptical consumers why they are not willing to pay extra for climate-friendly products. 32% say that they do not think that the products are actually climate friendly, 29% say that they cannot afford the products, whereas 24% answer they do not think it makes a difference and 11% say they do not believe that we have climate issues at all. (Please note that the consumers were able to choose more than one category, so the numbers do not add up to 100%).

The products aren’t climate f riendly

-1 56

3

4 -1

5

-1 8

1

0 5 10 15 20 25 30 35 40 45 50 55 60 65

-3 -2 -1 0 1 2 3 4 5

Percentage (%)

32

I can’t af f ord it

29

It doesn’t make a dif f erence We don’t have climate issues The climate doesn’t interest me

24 11 5 23

Other Don’t know

3 0

5

10

15

20

25

30

35

40

Percentage (%)

Only 8% of the consumers are a lot or a little less prepared to pay extra for a climate-friendly product compared to 12 months ago. In the retail environment of 2010, where consumer spending is still under pressure, the fact that more than half of all consumers tell us they are willing to pay up to 30% more for a climate-friendly product should make all retailers consider their strategies and policies. The consumers express a willingness to pay a premium.

This is supported by the answers in the question “how credible are the green claims of the retailers and manufacturers from whom you buy?”. Only 2% of the consumers, compared to 3% the year before, say that the claims are highly credible. 68% say that they are somewhat credible compared to 69% the year before, which is a minimal change. 22% say that the claims are not credible at all, a number which has not changed from the previous year.

Obviously, these statements of interest must be taken with a grain of salt. In Quartz+Co, we have previously seen examples of consumers saying one thing in surveys and then acting differently when making the

2


FIGURE 5: HOW CREDIBLE ARE THE GREEN CLAIMS OF THE RETAILERS AND MANUFACTURERS FROM WHOM YOU BUY? Δ 2010/2009**

2010

Highly credible

2

FIGURE 6: WHEN MAKING A BUYING DECISION, WOULD YOU VALUE INFORMATION ON THE PRODUCT’S CARBON FOOTPRINT? Δ 2010/2009**

2010

1

Yes

Somewhat credible

68

Not at all credible

8

-1

5 10 15 20 25 30 35 40 45 50 55 60 65 70

-3

-2

-1

0

1

2

1

17

Don’t know 0

2

25

No

0

22

Don’t know

-4

58

1

3

Percentage (%)

0

10

20

30

40

50

60

-4 -3 -2 -1

70

0

1

2

3

Percentage (%)

THE NEED FOR INFORMATION IS STILL HIGH The fact that not all the consumers are fully convinced of the credibility of the green claims could be explained by the difficulties experienced in communicating the green message. It is a complex issue to communicate precisely on e.g., a small product label. This issue is confirmed by key retailers and manufacturers in the Scandinavian grocery markets. A case in point illustrates this: it has taken many years to teach consumers how to read and use the nutrition list of the content in groceries. Adding a list with information on carbon footprint just adds complexity and difficulties of balancing different characteristics of a product regarding nutrition, production processes, climate, quality and more. In this respect, 58% of the consumers say that they would value information on a product’s carbon footprint when making a buying decision. This is only a marginal difference compared to the year before when 62% of the consumers answered that they would value information on this. Only 25% say no.

RESPONSIBILITY FOR THE CARBON FOOTPRINT The Scandinavian consumers still see the manufacturers as the part of the supply chain where most should be done when trying to reduce the carbon footprint. 59% of the consumers say that manufacturers have the largest responsibility for minimising the carbon footprint. 16% of the consumers point to the government and 15% point at themselves. FIGURE 7: WHO DO YOU FEEL HAVE THE LARGEST RESPONSIBILITY TO MINIMISE THE CARBON FOOTPRINT FROM THE SERVICES AND PRODUCTS YOU BUY?

2010

Δ 2010/2009**

Manuf acturers and producers

59 15

Me The government Retailers and supermarkets None of the above Don’t know

0 -1

16

1

1

0

2

0 7

0

0 5 10 15 20 25 30 35 40 45 50 55 60 65

-3

-2

-1

0

1

2

3

Percentage (%)

Over the last couple of years, we have seen several notable and ambitious examples of companies in the fast-moving consumer goods industry working with climate strategies and reduction of their carbon footprint, but there is still a long way to go. The manufacturers that we have spoken to say that they need a more aligned public and regulatory lifting of the bar to ensure a more co-ordinated general improvement. They do not yet see that the retailers and consumers are willing to act on

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interest. Or in short, they tell us that the business case for differentiation on carbon footprint is still not demonstrated in practice – hence many of them still hesitate, and with good reason.

CONSUMERS’ VIEW OF BEST PERFORMERS Last year and this year, we have asked consumers which companies they feel have the strongest green profile. Not surprisingly, Vestas is number 1 on the list in both 2009 and 2010, working with renewable energy. DONG Energy is the second most frequently answered company and Coop Denmark A/S is now number 3 on the list, moving up from number 4 in 2009.Coop Denmark A/S seems to have succeeded with profiling itself as a green company. The biggest drop in ranking is Novo Nordisk, who dropped from a fifth to an eight place. On the other hand, ministries and governments have climbed from a ninth to a fifth place. FIGURE 8: WHICH DANISH COMPANIES OR PUBLIC SECTOR ENTITIES DO YOU FEEL DO MOST TO PROMOTE SUSTAINABILITY?

No. of responses

Rank 2010

Rank 2009

Vestas

108

1

1

DONG

102

2

2

Coop DK / Änglemark

47

3

4

DSB

32

4

3

Company

Ministries and state government

30

5

9

Danf oss

24

6

8

A.P. Møller Mærsk

33

7

6

Novo Nordisk

22

8

5

Energy and utilities

22

9

7

Local and regional government

21

10

10

Grundf os

21

10

11

Coop Denmark A/S, tells us that one of the major projects in Coop Denmark A/S is identifying and working with ten actions concerning the environment that will promote sustainability and a more green profile for the retailer. Key areas are: reducing the climate footprint within their own operations, reducing the carbon footprint of the goods they sell and sharing information and knowledge on climate matters with the consumers. Mogens explains that there is a great progress in Coop Denmark A/S’ work with the ten actions for the climate, and that they have just launched a new initiative for carbon neutral laundry detergent from Änglamark. By planting approximately 3,000 trees in Uganda, Änglamark is compensating for the carbon emission from the production and transportation of the product, hence creating a carbon neutral laundry detergent. The product is sold in stores from October 2010. In general, Coop Denmark A/S can confirm that reducing the footprint internally makes good business sense and that consumers are indeed positive towards climate- optimised goods and products. Moreover, Coop Danmark A/S believes in the value of ongoing communication with and education of the consumers regarding climate-friendly products.

_________________________________________

CONTACT INFORMATION For further information on the survey, please contact Lars Bo Hansen, Partner and climate expert in Quartz+Co on lars.bo.hansen@quartzco.com or at +45 20 49 55 27. _________________________________________

WORKING WITH SUSTAINABILITY IN COOP DANMARK A/S As our survey shows, Coop Danmark A/S is rightfully recognised by the consumers as the retailer that is furthest ahead in actually doing something for the climate and promoting sustainability. We have spoken to Coop Danmark A/S to hear more about what they have done to become a sustainable retailer. Mogens Werge, Director of Consumer Affairs in

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