Green Commerce: Understanding the Values of the Gen Z Consumer
Consumer priorities are changing, as Gen Z consumers have prioritized offerings and services from brands communicating a commitment to environmental responsibility and sustainability. This has proven to businesses that “claiming to be environmentally responsible is profitable” (Fancy, 2021), regardless of the depth or validity of these claims. This practice is known as greenwashing, when a business falsely advertises itself as “environmentally responsible” (Taylor, 2021). Greenwashing is harmful to both businesses and consumers, as greenwashing effectively destroys consumer trust in all environmental claims from any offering or organization with similar attributes or advertising techniques (Rotman, et al., 2020). This breach of trust highly impacts Gen Z consumers, whose purchasing decisions shifted to being driven by trusted social media influencers and word-of-mouth recommendations more than direct brand communications (Dorsey, et al., 2020, p. 151). It is imperative brands develop ethical messaging disseminated by relevant influencers on digital platforms in order to build consumer trust and guide the purchasing decisions of Gen Z consumers.
Obstacle 1: Greenwashing
One of the ways in which businesses have broken trust with Gen Z is through the practice of greenwashing in advertising. Claims such as “compostable” (Volcovici, 2021), “organic” (Rotman, et al., 2020), “green” (Rotman, et al., 2020), and “biodegradable” (Rotman, et al., 2020) carry different expectations for consumers than to brands, a loop-hole advertisers have exploited. The Federal Trade Commission (FTC) has issued warnings to organizations “that they should make environmental claims…for their products only if they can prove that they are true and if they are significant” (Volcovici, 2021). However, the Green Guides issued by the FTC offer suggestions to marketers, with many states establishing their own regulatory practices for marketing, meaning claims may have different meanings across state lines. The Green Guides have not been able to build consumer trust between Gen Z and businesses. Additionally, the U.S. Securities and Exchange Commission (SEC) announced it was “creating a Climate and [Environmental, Social and Governance (ESG)] Task Force to ‘proactively identify ESG-related misconduct’” (Fancy, 2021), which is “an unprecedented move that suggests there might be [greenwashing] abuses that have gone unaddressed” (Fancy, 2021). As environmentally-responsible consumerism is important to Gen Z (Dorsey, et al., 2020, p. 159), this puts them in conflict when making purchasing decisions and helps explain the importance of trusted word-of-mouth recommendations over unethical advertising.
Understanding Consumer Values
To build consumer trust, brands must understand the values that are important to Gen Z. Greta Thunberg, an active Gen Z environmentalist, shared an article on Twitter discussing how high-pollutant brands are using sport sponsorships to greenwash their brand reputations “to appear as friends of healthy activity” (Thunberg, 2021). This criticism highlights Gen Z’s expectation that brands align themselves authentically in all marketing endeavors and communications, including sponsorships, with their brand identities and values. When Gen Z discovers brands being inauthentic, they are outspoken on digital platforms, sharing visual and written communications supporting their claims. This creates a digital feedback loop for the brand and for Gen Z consumers: brands trend for negative reasons on social media platforms, increasing exposure of the alleged misconduct for Gen Z users. These negatively trending brands influence the Gen Z consumer’s purchasing decisions, as trusted influencers are specifically telling Gen Z not to engage with these brands, making them socially unacceptable (White, et al., 2019). To combat this negative feedback loop, brands must understand the values of their target audience as well as their own values and then engage in marketing activities that are authentic with their brand identity.
Obstacle 2: Transparency in the Supply Chain
The next challenge businesses face when capturing Gen Z consumers is providing transparent communication regarding supply chains. Gen Z consumers expect brands to “make the world a better place” (Dorsey, et al., 2020, p. 28). This includes the brand’s entire supply chain for products and offerings, including specific information on manufacturing, worker conditions and salaries, partnerships, and funding. When businesses are unable or unwilling to communicate this information, Gen Z consumers lose trust in a brand and allow this lack of information to negatively influence their purchasing decisions. A Gen Z Twitter user, Gemma Tomlinson, posted about two popular brands, Primark and H&M, criticizing them for greenwashing and unethical business practices (Tomlinson, 2021). This critique extended to “sustainable businesses and celebrities” (Tomlinson, 2021) that partner with Primark and H&M, stating these partners “should be embarrassed to take money from companies accused of exploitation, locking in factory workers and firing them for unionising” (Tomlinson, 2021). Gen Z uses digital platforms to hold brands accountable, which makes it easy for other users to view and engage with these criticisms. This type of feedback loop makes it challenging for brands to alter the consumer perception surrounding the practices in question.
Influencing Consumers Through Digital Platforms
To communicate effectively with Gen Z consumers, brands must be active on the digital platforms their target audience is using. New platforms are constantly emerging with specialized ways of sharing content, such as the audio-based platform Clubhouse or the video-based platform TikTok. Brands must understand which platforms they can share content on authentically and identify relevant influencers to communicate brand messaging to Gen Z consumers. For brand partnerships or promoted posts with influencers to be successful, influencers must disclose their relationship with brands to followers (Mothersbaugh, et al., 2019, p. 223). This need for transparency, even with brand-influencer relationships, harkens back to Gen Z’s expectation of brands to be transparent throughout their supply chain. This does not mean partnerships or social media communications cannot be meaningful, impactful, or influential while including this disclosure.
One brand that has successfully prioritized influencer transparency, brand transparency, and social responsibility is Patagonia. In 2015, rock climber Anne Gilbert Chase posted a picture on Instagram tagging Patagonia, thanking the brand for sponsoring her trip (Gilbert, 2015). The image showed Gilbert Chase and a friend at an airport next to Patagonia duffle bags and the tone of the caption was conversational and warm (Gilbert, 2015). In 2021, Patagonia posted an image from Jason Thompson, a team mate of Gilbert Chase, promoting her latest blog post and acknowledging Patagonia’s support of the expedition in a story-telling tone (Patagonia, 2021). The image showed a person wearing Patagonia while sitting in a tent on a snowy landscape near rock-climbing gear (Patagonia, 2021). This influencer partnership embodies Patagonia’s brand identity and brand values. Additionally, the image-based social media platform Instagram is a natural choice for a brand that values an outdoor lifestyle to communicate brand messaging and offerings. Along with well-chosen influencer partnerships, Patagonia makes their supply chain transparent for consumers, even publishing “an interactive website where consumers can follow products from the production line all the way through shipment” (Bhargava, 2021, p. 139). Effective influencer partnerships and transparent communications like this make brands such as Patagonia appealing to Gen Z consumers.
The Future of Green Commerce
Environmentally-friendly and transparent business practices are extremely important to Gen Z consumers. Unethical marketing practices such as greenwashing have broken the Gen Z consumer’s trust in business communications. As a collective, Gen Z has a general distrust of direct, branded marketing communications and favors recommendations from trusted influencers, such as celebrities and friends, to guide their purchasing decisions. This social influence is important for brands to understand. To connect with Gen Z consumers, brands need to participate only in ethical, transparent marketing activities that align with their brand values. Gen Z is likewise demanding transparency in a company’s supply chain and social responsibility, such as “a company’s commitment to equal pay and inclusiveness, and environmental responsibility” (Dorsey, et al., 2020, pp. 101-102). Brands that understand the values of Gen Z consumers and meet these consumers on the relevant platforms build consumer trust and loyal customers from this booming demographic.
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References
Bhargava, R. (2020). Non obvious mega trends: How to see what others miss and predict the future. Ideapress Publishing.
Dorsey, J., & Villa, D. (2020). Zconomy: How Gen Z will change the future of business—and what to do about it. Harper Business.
Fancy, T. (2021, March 16). Financial world greenwashing the public with deadly distraction in sustainable investing practices. USA TODAY. Retrieved March 22, 2021, from https://www.usatoday.com/story/opinion/2021/03/16/wall-street-esg-sustainable-investing-greenwashing-column/6948923002/
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Mothersbaugh, D. L., Hawking, D. I., Mothersbaugh, L. L., & Tom, G. (2016). Consumer behavior: Building marketing strategy (13th ed.). McGraw Hill Education.
Patagonia. [@Patagonia]. (2021, March 15). After a failed first attempt, three friends return to India’s. Instagram. [Photograph]. https://www.instagram.com/p/CMNo5k8H-1G/
Rotman, R. M., Gossett, C. J., & Goldman, H. D. (2020). Greenwashing no more: The case for stronger regulation of environmental marketing. Administrative Law Review, 72(3), 417–443.
Taylor, M. (2021, March 22). Major climate polluters accused of greenwashing with sports sponsorship. The Guardian. http://www.theguardian.com/environment/2021/mar/22/major-climate-polluters-accused-of-greenwashing-with-sports-sponsorship
Thunberg, Greta. [@GretaThunberg]. (2021, March 22). This is ‘sports-wash’- when heavily polluting industries sponsor sport. Twitter [Post]. https://twitter.com/GretaThunberg/status/1373912236905861120
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Volcovici, V. (2021, March 16). Green groups file FTC complaint against Chevron over climate claims. Reuters. https://www.reuters.com/article/us-usa-ftc-greenwashing-idUSKBN2B82D7 White, K., Hardisty, D. J., & Habib, R. (2019, July 1). The elusive green consumer. Harvard Business Review. https://hbr.org/2019/07/the-elusive-green-consumer