Awareness of the climate and nature crises is shaping what consumers are choosing to buy. A new PwC survey finds that some are willing to pay 9.7 per cent more, on average, for sustainably-produced or sourced goods, despite cost-of-living and inflation concerns.

Looking to brands to demonstrate environmental stewardship, consumers are shifting purchasing power to support more sustainable products and services. The preference for businesses to be seen as less environmentally damaging is forecast to be an enduring trend and one that can lead to bottom-line growth.

The economic risk from climate and nature is real. According to the World Economic Forum’s Global Risks Report 2024, environmental risks make up more than half of the top-ten risks over the next ten years, with extreme weather events, critical change to Earth’s systems, and biodiversity loss and ecosystem collapse taking podium positions. Considering more than half of the world’s gross domestic product (GDP), equivalent to an estimated US $58 trillion, is moderately or highly dependent on nature, rising from US $44 trillion in 2020, these risks cannot be ignored.

Market share up for grabs

Deloitte research cites a growing trend of consumers becoming more environmentally conscious. The annual survey into consumer attitudes to sustainability and sustainable behaviours found that more consumers are taking into consideration durability and repairability when making a purchase, and whether products are labelled as responsibly sourced or manufactured, or support biodiversity. As market conditions change, market share is up for grabs and organisations that successfully pivot their value proposition to align with the future market will outperform their peers.

Consumer markets will likely be disrupted by new entrants offering more alternative sustainable products and services, which appeal to this growing market demand. The speed and extent of these product-level changes are also determined by the emission pathway, to include the Paris Ambition, Paris Agreement, stated policy, current policy and no policy, each of which will have different consequences for sales of a particular product or service.

Regulatory pressure building

In the transition to the net-zero and nature-positive future, fashion and apparel brands find themselves the subject of increasing regulatory scrutiny. The attention is justified; globally the sector produces more greenhouse gas (GHG) emissions than the shipping and aviation sectors combined.

The pressure to disclose credible and rigorous transition plans that qualify and quantify on a wide range of environmental, social and governance topics is increasing. Brands seen to fall short of expectations may face restricted access to capital and loss of brand value. In fact, businesses that fail to prioritise sustainability and operate without integrity risk losing their social licence to operate.

And consumers are keeping watch. Businesses that don’t prioritise sustainability will see their customers flex their purchasing power in support of companies that best align with their sustainability principles.

Resetting the fashion-and-apparel business model

There are opportunities in resetting the business model to support more sustainable practices and some brands are responding creatively to the challenges. Outdoor apparel and gear company Patagonia has leveraged Sustainability Intelligence, connecting climate and nature analytics, data, technology and information flows to meet its ambitious climate and nature goals, while achieving business success. Incorporating circularity into processes can also be advantageous and there are companies, like Nudie Jeans, that design clothes for durability, promote trade-in programmes, repair services and second-hand sales as part of their re-use initiative.

Achieving profitable sustainability

That said, prioritising sustainability throughout the entire value chain of a global organisation is transformative and requires resource and time, so preparing at the earliest opportunity makes good business sense. Our latest discussion paper Market demand: changing perceptions in the era of climate and nature disruption is focussed on fashion and apparel and part of a sector-specific series considering changing market demand as a transition risk. The paper features a case study that explores the decade-long business transformation of a fictional fast-fashion company, Wardrobe Inc. The detailed study identifies key insights that help Wardrobe Inc. to address market-demand risks and opportunities, build brand value and achieve profitable sustainability in readiness for the net-positive future. While Wardrobe Inc. is a fictional company, the data used are representative of similar-sized organisations in the apparel sector.

Companies must move with market conditions. Analytics that enable a business to keep abreast of shifts in consumer demand and deliver a holistic view of the risks and opportunities that emerge from these changes can offer organisations early warning of future market trends. These insights support better strategic decision-making that builds resilience against potential revenue shocks and positions a company to establish a business advantage.

  • Download the discussion paper Market demand: changing perceptions in the era of climate and nature disruption – fashion and apparel here.