Green Goes the US

17 11 2010

http://www.hktdc.com/info/web/mi/article.htm?LANGUAGE=en&ARTICLE_ID=1X076QN7&DATASOURCE=hkthk

American consumers are really falling for “green”. If they weren’t convinced by the passionate advocacy of their President, Barack Obama, they are certainly looking deep into their instincts for a “good deal”, and many a willing to pay a premium for green products, based on recent findings by some major surveys. 

Advertising agency Ogilvy & Mather’s (O&M) 2010 Post-recession Consumer Survey suggests that US consumers have developed a new set of values and priorities. The survey indicates that US consumers now focus on living more environmentally and financially sustainable lives, with the recent recession a bellwether for their choices.

Some 69 per cent of the consumers surveyed by O&M felt the recession had caused them to rethink their perspectives and values, while 78 per cent said the recession had changed their spending habits for the better, and 73 per cent said they would rather have fewer, but higher quality possessions.

The changing attitudes mean that consumers will examine their purchase option more carefully, according to O&M, and they will research before making a final decision. That means reading labels, comparison shopping and speaking to friends. Furthermore, O&M’s observations show that US consumers are adopting sustainable living habits for the long term, with sustainability even described as the “new happiness”.

In another study, research firm Mintel revealed in March that 35 per cent of US respondents surveyed said they were willing to pay more for green products. Mintel noted that this trend was especially robust in food and beverage and personal care sectors. Consumers were still buying green products at a premium. 

The natural and organic food and beverage sector achieved a 1.8 per cent increase in sales in 2009, following a growth of 24 per cent for 2006 trough 2008. Mintel’s survey results indicate that approximately 3.7 per cent of total US food sales in 2009, compared to 1.2 per cent or US$6.1 billion in 2000 when the US Department of Agriculture issued the final National Organic Program rule. Fruits and vegetables accounted for about 38 per cent of total organic food sales in 2009 and the share of the US fruit and vegetable market held by organic produce has surged from approximately three per cent or US$2.55 billion in 2000 to 11.4 per cent or US$9.5 billion in 2009. 

While green personal care products dropped 1.2 per cent in 2009, Mintel expects this segment to see vigorous growth in the years ahead because one-third of US consumers still have not tried personal-care products. 

The increasing popularity of green consumerism in the US is further echoed by Cotton Incorporated’s 2010 Consumer Environment Survey. It revealed that many consumers are still driven as much by the desire to save money as by the desire to protect the environment. 

For example, 80 per cent of surveyed consumers say that they conserve energy, 74 per cent purchase energy-saving appliances and 68 per cent limit their water useage. These appear to be mainly money-driven decisions, but with a positive impact on the environment. 

Still not all choices made by US consumers have a financial motive. The percentage of surveyed consumers opting not to use plastic bags increased from 39 per cent in 2009 to 45 per cent in 2010. 

On apparel, the Cotton Incorporated survey found environment-related claims were made in only 0.6 per cent of products and were priced seven per cent higher than clothing not marketed as environmentally friendly. About a third of the surveyed consumers said that they would be willing to buy apparel and home textiles at a premium if labelled as environmentally friendly. 

Also of interest is the fact that 42 per cent of consumers that purchased a clothing item that was later determined to be produced in a non-environmentally friendly way, said they would hold the manufacturer accountable. 

Regulatory Efforts  

Despite the US government’s relative indifference in the past, environmental protection and clean energy have been gaining relevance over the past four years and are high on the agenda of the Obama administration and the US Congress.

Global warming is a growing concern for many, to be addressed sooner rather than later through energy conservation and emphasis on renewable energy sources. Volatile oil prices and continued instability in the Middle East and other oil-producing regions have persuaded US federal and state authorities to seriously consider a new strategic outlook. 

While certainly not a novel concern for policymakers, energy security is particularly relevant these days, in light of the continued instability in Iraq and Nigeria, and historical tensions between the US and Iran. The issue also appears to enjoy broad support on both sides of the US political spectrum. 

Environmental issues feature prominently in President Obama’s trade policy strategy for 2010, and the new National Export Initiative, announced in January 2010. One of the seven core policy priorities included in the 2010 trade policy strategy is facilitating progress on national energy and environmental goals by working multilaterally with willing partners to liberalise trade in innovative, climate-friendly goods and services through tariff reductions. 

The trade strategy indicates that the US will back initiatives that lower the cost and enhance the effectiveness of US energy and environmental strategies, promote investment in clean energy technology and work to ensure that emerging and less developed economies reduce carbon emissions, while protecting intellectual property rights.

US states have also been compelled to address a number of pressing environmental concerns in order to fill the vacuum left by the federal government, which was reticent to regulate on the environmental impact associated with consumer and other products during the previous Bush administration. 

Legislative and regulatory action at the state level has covered a broad range of environmental issues, including the recycling of electrical and electronic equipment; the use of hazardous substances in electrical and electronic devices; the sale of mercury-added products; the use of phosphorous in dishwasher detergents; potential restrictions on the free distribution of retail plastic bags; and the commercialisation of incandescent light bulbs in order to promote energy conservation and security. 

States such as California and Washington, which have been pioneers in the development and implementation of forward-looking environmental and consumer product safety policies, have gone to great lengths to address these and other environmentally related issues. Other states, including Maine, Minnesota, Oregon and Vermont, have been especially proactive on certain issues of special interest to their respective constituencies, while others have followed a much more laissez-faire attitude. But Americans are increasingly alive to the likely impact of “green” on their domestic and business lives

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