Is Gen Z’s Demand for Sustainability Changing Supply Chains in the UK & Ireland?

Greater consumer demands for sustainability are driving companies to rethink their supply chains by reducing carbon emissions, prioritising ethical sourcing and increasing transparency to meet regulatory and market expectations. 

A new research paper by Vlerick Business School highlights the generational difference in consumer willingness to purchase products from sustainable brands.

The study focuses on individuals’ willingness to buy two brand types: those that are on-trend and ‘exclusive’ and those striving for inclusivity and sustainability.

Researchers examined responses from almost 25,000 individuals across 20 countries and Hong Kong and discovered that Gen Z is significantly more likely to pay a premium for inclusive and sustainable brands, in comparison to older generations. 

Frank Goedertier, Professor of Marketing at Vlerick Business School, explains: “Traditionally, many companies have invested in creating brands that are perceived as exclusive or trendy, luxurious, high-status. A core motivation for this is that there is the conviction that such brands trigger a high willingness to pay a premium. 

“We wanted to find out whether positioning a brand around ‘inclusivity’ and a commitment to be sustainable and contribute positively to society, could nowadays also trigger such a consumer willingness to pay a premium, especially when targeting new generation Gen Z consumers.”

Consumer demand and supply chain decisions

The study highlights how Gen Z is more willing to buy inclusive and sustainable brands compared to older generations.

This drives companies to transition to ethical sourcing, sustainable production and responsible logistics to meet these changing demands. 

However, Gen Z is also more likely to pay for on-trend and exclusive brands, indicating a desire for status-driven and ethical consumption.

Patagonia, a leader in sustainable and ethical fashion, aligns with Gen Z’s preference for ethical business practices and sustainability by focusing on recycled materials, responsible sourcing and transparency in its supply chain. 

Its Founder, Yvon Chouinard, highlights the importance of responsible sourcing: “The best we can do is minimise the harm we do to the planet. We’ll do what we can to clean up our own house and convince other businesses and suppliers to use cleaner energy and more responsible materials, but it’s a never-ending summit. The work is never done.”

He continues: “One of the best tools we have is to show that doing the right thing for the planet can be profitable. We’ve proven it for decades now. Customers are putting pressure on companies to take action and that’s a good thing. Young people are voting with their purchases and companies should recognise that customers are changing.”

Patagonia also shares information about its owned facilities and its suppliers across the supply chain to increase transparency. 

What is sustainable sourcing in retail?

Sustainable sourcing in retail refers to the responsible procurement of materials and products that uphold ethical labour practices, minimise environmental impact and support long-term resource availability.

Those retailers that embrace sustainable sourcing also integrate traceability measures to reduce risks linked to human rights violations and ensure supply chain transparency. 

By adopting this sustainably-conscious approach, retailers can strengthen brand resilience against regulatory pressures and meet growing consumer demand for ethical products.

The report mirrors this method, highlighting that women are more likely to support brands that promote sustainability and inclusivity. They are also less inclined to pay a premium for brands marketed as high-status or exclusive. 

This indicates that women perhaps prioritise ethical purposes and values over luxury branding.

Brands aiming for sustainability in a bid to appeal to Gen Z and female consumers must ensure their supply chains adhere to ethical labour practices, reduced carbon footprints and responsible material sourcing. 

International fashion giant H&M has continued to promote transparency and integrate sustainable material in its supply chain. 

In 2023, a significant majority (85%) of its materials were made from recycled or sustainably sourced materials, with hopes to reach 100% by 2030. 

Leyla Ertur, Director of Sustainability at H&M, says: “We continue our work with improving conditions for people working in fashion supply chains. As a global fashion retailer of our size and scale, we can and want to have a positive impact on communities that are connected or impacted by our industry.

“We can see the difference this approach makes already. Through the Future Supplier Initiative, which is organised by The Fashion Pact, we are working with like-minded brands on a project in Bangladesh to help shared suppliers reduce their emissions.

“We are currently onboarding suppliers to the project and the next steps will be to identify individual investments for the most impactful abatement measures on a factory level. So, we urge more brands to join forces in strategic levels to see what we can achieve together.”

The impact on logistics and distribution

Vlerick Business School’s report highlights the fluctuations in consumer preferences across generations and geographies, with its findings emphasise the need to adapt business strategies to meet changing demand from consumers. 

Companies may isolate Gen Z consumers by focusing on exclusivity. Instead, integrating inclusivity and sustainability into their brand messaging could drive interaction. 

Brands appealing to men may find success with status-driven and exclusive positioning, whereas businesses focusing on women may improve their work by focusing on ethical and sustainable practices.

Regional variations

• South Korea and Singapore showed the highest willingness for sustainable and inclusive brands
• China, South Africa and Thailand had the highest willingness for on-trend, exclusive brands
• European countries are the least willing to pay for more sustainable and inclusive brands

As brands move to sustainable and inclusive practices, they must consider environmentally-friendly logistics, such as ethical warehousing and circular economy models, to meet the rise in demand for sustainability and transparency from consumers. 

eBay leads sustainable commerce by supporting a circular economy, extending product life cycles and reducing waste. 

The platform offers a scalable solution to minimise the demand for new production and craft a more sustainable and efficient supply chain.  

Jamie Iannone, President and CEO of eBay, explains: “Creating a more sustainable future has been a cornerstone of eBay for more than 25 years. As long-time champions of re-commerce and the circular economy, we are leading the way toward a healthier planet and a more inclusive economy.

“I’m proud of the progress we are making on our climate goals and the positive impact this has on our planet. Today, eBay is leveraging new technologies more than ever to create trusted experiences for customers to sell and buy pre-loved goods.

“Our team is committed to helping people make meaningful choices about how they shop and do business. Together, we are building a better future for our global community.”

Original Article – Is Gen Z’s Demand for Sustainability Changing Supply Chains? (supplychaindigital.com)