Consumers & Climate Change
By James E. Houck
When marketing and selling products that have climate change benefits, remember there are two types of customers – those who make purchase decisions based on a product’s “Greenness” and those who don’t. Among those who don’t, some are simply indifferent and some have strong negative views regarding climate change. Each faction represents a large enough market not to be ignored.
Today the politically correct mantra for companies that are viewed as progressive and responsible seems to be the creation of more energy efficient and environmentally sound products. It’s no different for the member companies of the hearth, patio, and barbecue industries. We emphasize it in our advertisements and hear about the need for it from advocacy groups and from state, local, and federal regulators and policy makers.
It would seem that being environmentally progressive is what defines us as a good corporate citizen. But hold on – while many do, not all our customers see it that way, particularly as it relates to climate change, a.k.a. global warming. Moreover, even among those who are onboard with climate change, many don’t purchase products based on their “Greenness.”
In a survey conducted in the U.S. and U.K., 66 percent of consumers agreed that everyone should take responsibility for their personal contribution to global warming. Sixty percent of respondents wanted companies to provide more climate change-related, product-based information at the point of sale, and half would rather do business with companies that are working to reduce their contribution to global warming.
In contrast, and importantly, don’t forget the other 34, 40 and 50 percent of consumers who don’t share those views. Being proactive in regards to climate change seems to be the current politically correct stance but, to put it succinctly, the customer is always right. A successful business cannot ignore the viewpoints of a significant fraction of its potential customers.
|While the majority of Americans believe global warming is happening, still almost four in 10 are either unsure or don’t believe it’s happening. Source: The U.S. map is from https://environment.yale.edu/poe/v2014.|
Belief in Climate Change
The promotion and sale of products based on their climate change benefits first and foremost hinges on the potential customer believing that climate change is real. On average in the United States, 63 percent of adults believe it is real, 18 percent do not believe it is real, and the remaining 19 percent don’t know. The belief in climate change varies with region following expected socio-demographic characteristics. For example, 72 percent in New York State and 70 percent in California believe it is real, in contrast to only 57 percent in Oklahoma and 54 percent in West Virginia.
|More than 50 percent of adults in counties shown in blue are not worried about global warming; more than 50 percent of people in counties shown in yellow/orange are worried about global warming.|
Worry about Climate Change
Perhaps more important than the belief in climate change are consumers’ worries about climate change. Only slightly more than one half (52%) of adults in the United States say they are worried about climate change. While perhaps a simplistic assumption, if a person is not worried about climate change it’s less likely marketing claims purporting a product’s climate change benefits will sway them. Nor will they likely be willing to make the additional expenditure needed to replace a less Green existing product, or choose a typically more expensive Green product over a less expensive one.
As with belief in climate change, worry about climate change varies with region. Again, when socio-demographics are taken into consideration, the trend is not too surprising. Residents of urban areas are more concerned on average than residents of more rural areas. For example, 73 percent of New York City residents say they are worried about climate change and 71 percent of the residents of San Francisco say they are worried. In contrast, only 38 percent of the residents of Pickett County, Tennessee, and 40 percent of the residents of Woodward County, Oklahoma, are worried.
Climate Change Believers Who Do Not Elect to Make Green Purchases
A survey conducted of 2,734 consumers in the U.K. and U.S. found that even among climate change believers many do not make climate friendly purchasing choices or behavioral changes. The study found several reasons:
Expense – More than a third of respondents were discouraged from considering global warming in their daily life because they thought that products with the least impact on the climate were too expensive (U.S. 37.0%).
Confusion – Almost a third of respondents were discouraged from considering global warming in their daily life because they were confused about what to do to reduce their personal impact on global warming (U.S. 31.3%). Heightened public interest in climate change has developed into a crescendo of competing claims and counter claims adding to consumers’ confusion and fatigue.
Availability – More than a quarter of respondents were discouraged from considering global warming in their daily life because they thought that energy efficient choices were not readily available (U.S. 27.8%).
Trust – About a quarter of respondents were discouraged from considering global warming in their daily life because they did not believe the claims made about energy efficient products and services (U.S. 23.4%). Seventy percent of respondents in the U.S. and U.K. said that independent parties should prove climate change claims. Individuals have also become cynical and disillusioned; some to the point of dismissing climate change.
Product Information – Almost half of respondents were discouraged from considering global warming in their daily life because they felt there was not enough information about which companies and products were better in terms of global warming (U.S. 43.7%).
|When asked, “How much do you trust different parties for information about global warming?” only nine percent of the survey participants said they trusted businesses. This suggests that, as a business, it’s a “tough sell” to change a consumer’s opinion on climate change.|
There Are Indeed Green Consumers
–Nielsen’s 2014 Survey
A Nielsen global survey on corporate social responsibility polled 30,000 consumers in 60 countries in an effort to understand: how passionate consumers are about sustainable practices when it comes to purchase considerations; which consumer segments are most supportive of ecological or other socially responsible efforts; and which social issues/causes are attracting the most concern.
- Fifty-five percent of global online consumers across 60 countries said they would be willing to pay more for products and services provided by companies that are committed to positive social and environmental impact. (Notably, 45% would not.)
- Fifty-two percent of global respondents said they have purchased at least one product or service in the past six months from a socially responsible company.
- Four in 10 respondents in North America and Europe said they have made a sustainable purchase in the past six months.
- Thirty-two percent of North American respondents said their purchase decisions were partly dependent on the packaging – they check the labeling first before buying to ensure the brand is committed to positive social and environmental impact.
- Millennials (age 21-34) appeared more responsive to sustainability actions.
|When asked, “What is the most important thing you can do as a consumer (to reduce global warming)?” only five percent of the survey participants said, “Buy environmentally-friendly products/support environmentally-sound companies.” However, perhaps significant to the hearth industry, “reduce energy consumption” and “limit fossil fuel use” were also noted.|
Columbia University’s Light Bulb
|Fluorescent bulb on left, incandescent bulb on right.|
Columbia University’s Center for Research on Environmental Decisions conducted two studies on political attitudes and support for energy efficiency. One study examined how political and environmental attitudes influence attitudes toward investing in energy efficient technology. National survey participants were asked to evaluate three reasons for adopting energy efficient technology (cost savings, reduction in greenhouse gases, and reduction in dependence on imported oil). They also rated the extent to which different groups were responsible for supporting energy efficiency and who would benefit from energy efficiency (self, government, business). Finally, political affiliation and environmental attitudes were measured.
The second study, and the study with perhaps the more surprising results, examined the political attitudes and reactions to Green consumer labels. This study evaluated how political and environmental attitudes influence interest in buying energy efficient technology when a “Green” label is present on the product. In the laboratory, subjects were given $2 and asked to choose between an incandescent light bulb and a fluorescent light bulb (CFL).
The benefits of the CFL were always described (it lasts 9,000 hours longer and uses 75 percent less energy than the incandescent). In one condition, the two bulbs had the same price (50 cents); in the other condition, the CFL cost three times as much as the incandescent ($1.50 vs. 50 cents). Half the subjects saw a blank sticker on the CFL; the other half saw a sticker that said, “Protect the Environment.” The participants’ political and environmental attitudes were also noted.
The major findings of the first study were that conservatives are less interested in supporting energy efficiency investments, and this is driven mainly by their disinterest in climate change. Conservatives and liberals both valued cost savings and reducing foreign oil.
The major and, as noted, somewhat surprising findings of the second study were that when the two bulbs were priced the same, all participants bought the CFL (regardless of how it was labeled). When the CFL was priced at a premium, liberals and conservatives bought it at near the same rate (about 60%) when the CFL had a blank label, but when the CFL had the “Protect the Environment” label, moderates and conservatives were significantly less likely to buy the CFL (dropping to around 40%).
An environmental message on an efficient product that sells at a premium deters a segment of the population from purchasing it. This gap disappears when the energy efficient product has the same price as the less efficient product, or when the environmental message is deleted.
|When a Gallup poll asked consumers if they thought global warming would pose a threat to them or to their life in their lifetime, nearly two-thirds said no. Interestingly, the percentage did not change much between 1997 and 2013, despite global warming being a significant topical and societal issue. Self-interest is a major factor in human decision making yet the self-interest of protecting oneself from the perceived threat of global warming is clearly not a motivator for the majority.|
The National Association of Home Builders Study of New Home Buyers
The National Association of Home Builders conducted a survey of homebuyers in 2012. The survey collected basic information about the current home of recent and prospective buyers, as well as their preferences for their next home. The results were based on 3,682 responses. Because home heaters, fireplaces and patios are “part and parcel” of most new homes, the attitudes of the survey participants are particularly relevant to the hearth, patio and barbecue industries.
The major finding was that while the majority of homebuyers were concerned about the environment in general, most were not willing to pay more for a “Greener” house. In fact, 38 percent of homebuyers reported wanting an environment-friendly home, but would not pay more for it. Another 29 percent were concerned about the environment, but didn’t take this into consideration when buying a home. On either side were relatively small shares of buyers at the extremes: 18 percent who were not at all concerned about the impact of building their home on the environment, and 14 percent who were not only concerned but would actually pay more for the house to reduce its impact on the environment.
|Environmental labeling can even have a negative effect on some segments of society. Source: Center for Research on Environmental Decisions, Earth Institute, Columbia University.|
The Green Power Story
A National Renewable Energy Laboratory (U.S. DOE) report published in 2011 detailed consumer attitudes about renewable energy. The data in the report were taken from Natural Marketing Institute’s “Lifestyles of Health and Sustainability” consumer trends database which contains responses from 2,000 to 4,000 nationally and demographically representative U.S. adults each year. This study is particularly relevant to the hearth industry, as one would expect consumer opinions on the “Greenness” of heating appliances and fireplaces to be similar to their opinions on renewable energy.
The study found that consumer price sensitivity for renewable energy increased from 2006 to 2010, in conjunction with overall increased price sensitivity for other Green products, as well as the overall consumer marketplace. Between 2006 and 2010 there was a decline in the number of consumers willing to spend more on renewable energy for their home. In 2010, 16 percent of the population reported that they would pay 20 percent more for products made in an environmentally-friendly and sustainable way, whereas one-quarter would pay $5–$20 more each month for renewable energy, which in many cases would cover the extra cost of renewable energy.
The study further concluded that these figures actually far exceed the number of consumers who indicated that they currently buy renewable energy (7%) and that not everyone who says that they will pay more for renewable energy will follow through on those actions. While seven percent of the adult population reported buying at least some renewable energy for their home, according to similar research, this is a significantly lower percentage than the proportion of the population that indicated they cared about renewable energy, and a higher percentage than penetration rates reported by utilities and marketers that offer renewable energy options to consumers.
There is no reason to believe that consumer behavior is dramatically different in 2015 than it was in 2010. In 2012, the last year DOE’s Energy Information Administration collected information on residential Green pricing customers, there were 2,162,230 Green pricing residential customers. The same year there were 126,832,343 total residential power customers, showing that only 1.7 percent of residential customers paid for the increased cost of Green power.
Our Small Microcosm
A 2012 HPBA national survey targeting 500 wood fireplace owners, 500 gas fireplace owners and 500 freestanding stove owners concluded, “Incentives to save money drive the greatest interest to consider adding a fireplace or stove.” The question survey participants were asked was: “Which of the following would you consider to be a major incentive for you to consider adding a fireplace or freestanding stove to your place of residence?”
A long list of options was provided to the participants, and more than one response could be chosen. Among them, four categories of responses were of most interest and could be broadly classified as (1) economic, (2) pragmatic, (3) “Greenness” and (4) aesthetics. Economic was the clear winner.
Is Change in the Wind?
|“This sister (Mother Earth) now cries out to us because of the harm we have inflicted on her by our irresponsible use and abuse of the goods with which God has endowed her … A very solid scientific consensus indicates that we are presently witnessing a disturbing warming of the climatic system.”
— Pope Francis,
If one believes President Obama and Pope Francis (or more accurately their science advisors) and 97 percent of the atmospheric scientists, extreme weather events will become more frequent and severe. Logic would suggest that increased consumer belief in climate change, as well as concomitant altruistic or self-interest motivations for the purchase of climate friendly products, would follow.
However, while there could be a point of precipitous change in public opinion, surprisingly recent history, as documented in the numerous studies discussed in this article, shows in fact that there is no clear or certainly quick response in opinions with observed and seemingly unusual weather patterns.
This is further exacerbated by the fact explained by credible climatologists that climate change effects will be superimposed on the normal fluctuations of weather, i.e., some years may be more or less normal while others, when the stars are in alignment, may have exceptionally severe weather. Opinions on climate change may accordingly wax and wane, but would seem to, in the long term, become more concerned about climate.
How do you argue with…?
Annually the United States is responsible for about only 17 percent of the global emissions of greenhouse gases. Unilateral and ambitious U.S. plans to curb greenhouse gas emissions have a goal of less than 30 percent reduction to that 17 percent U.S. portion. On top of that, scientists now believe that black carbon (not a greenhouse gas per se) is second only to carbon dioxide in its effect on the climate.
The U.S. emits only about seven percent of the world’s black carbon. So why are we, as a nation, doing anything, when our efforts will represent a considerable burden to U.S. taxpayers, will probably put us at an economic disadvantage with the rest of the world, and will only reduce global climate impacts by perhaps a few percent?
You have not studied history if you think China, Russia, India and the various squabbling European nations are really going to be our partners. Hence a consumer might say, sell me your least expensive product; I don’t care about your academic climate change claims. If greater efficiency means I will save some money, well, okay then.
|Consumer price sensitivity for renewable energy increased in the five-year period from 2006 to 2010. It’s unclear the degree to which this trend has continued to the present, but data are illustrative that a large fraction of consumers will focus on price first and foremost. *The $5-$10 and $5-$20 increments represent the typical increased cost of renewable energy ($5-$10 prior to 2009).|
The Intergovernmental Panel for Climate Change (IPCC) is an internationally accepted authority on climate change operating under the auspices of the United Nations. The IPCC provides reports that have the agreement of the world’s leading climate scientists. A recent IPCC report says that there is evidence that consumers can play a critical role in mitigating climate change, but it also says that voluntary consumer-facing initiatives by corporations, local and regional authorities, and civil society organizations have, to date, had limited impact on the national or regional level emissions.
Certainly there is an opportunity for climate change impact mitigation at the consumer level in that about 38 percent of the overall United States greenhouse gas emissions are from direct energy consumption by households, plus additional emissions are embedded in the consumption of food, water and other materials.
A cold, hard evaluation of the various studies and facts clearly shows that price is still king in the purchasing process. There is but a fraction of consumers who are environmentally motivated and committed to making “Green” choices even at a cost. This fraction is regionally variable and may increase with time as there is an increasing manifestation of climate change.
But, to date, this cause-and-effect relationship has not been clear or simple. Pragmatism may drive consumer choices in response to future power outages, extreme cold, extreme heat, etc. A wild card may be governmental regulations forcing purchasing decisions to more climate-friendly products.
As an example, the hearth industry has already seen governmental actions with the Department of Energy’s attempt to regulate the efficiency of decorative gas fireplaces and fireplaces with standing pilot lights. Reduction in greenhouse gases was one key (albeit not well thought-out) rationale cited for these actions.
|*A total of 1,566 responses from 514 wood fireplace owners plus 520 gas fireplace owners and 532 freestanding stove owners. 2012 HPBA survey|
Statistical and other data cited are from surveys and studies conducted by the Yale School of Forestry and Environmental Affairs, Consumers International, Gallup, Nielsen, Columbia University, National Association of Home Builders, Hearth, Patio & Barbecue Association (The Stevenson Company), National Renewable Energy Laboratory, Energy Information Administration, U.S. Department of Energy, NASA, and the National Oceanic and Atmospheric Administration.
The Litany of North American Extreme Weather - 2015
About the Author
Dr. James E. Houck has been involved in environmental research and the hearth industry for over 30 years. He currently is an independent consultant and can be reached via email.