Canadian consumers are skeptical about "sustainable" product claims being made by companies, which jeopardizes opportunity in a growing market segment according to a Deloitte Canada report.

In Creating value from sustainable products, Deloitte delves into how consumers and businesses are responding to the influx of products labelled as sustainable. Their viewpoints are very different, the report finds.

After polling 1,008 Canadian adult respondents and 311 Canadian consumer business leaders in April 2023, Deloitte discovered consumers are interested in green or sustainable products, but are not sold on claims made by businesses.

Fifty-seven per cent of consumers say they do not believe most green or sustainable claims made by brands. This contrasts against business leaders, where 71 per cent say the public has significant trust in the authenticity of their brands’ claims.

“Some of the most surprising findings I would describe are the disconnect between business and consumers,” Joe Solly, Deloitte partner and national consumer sustainability leader, told SustainableBiz.

Frustration and skepticism from consumers

Canadians have shown interest in sustainable buying. Forty per cent say they have purchased goods or services because of sustainability claims.

All things being equal, 75 per cent would be more likely to purchase a brand that offers green or sustainable products. Ninety-four per cent believe it is a brand’s responsibility to create products that do not harm the planet.

But the lack of trust in brands’ sustainability claims trickles down into consumer behaviours. Nearly half (46 per cent) say they will not pay more for sustainable products because such claims are difficult to verify.

Almost two-thirds of business leaders are developing sustainable products and 81 per cent of that group say they've already developed at least one such product. Seventy-five per cent say they feel the exercise has been a success.

Forty-one per cent, however, feel they are at risk of greenwashing accusations if they pursue sustainability goals.

Thirty-six per cent of businesses do not have an interest in sustainability and 24 per cent say it's not a priority. The report describes business leaders as "largely unconcerned" with or "unaware" of consumer interest in the topic.

More regulatory frameworks needed

The absence of a significant regulatory framework or guidance for sustainability claims allows companies to “say whatever they want,” Solly said. He referenced brands that claim carbon neutrality for their containers but hide away the greenhouse gas emissions from the entire production or life-cycle of the product.

“For the ones that are participating in this (sustainability), there’s a bit of a false sense of security in terms of their claims being used in the market,” Solly said. “They potentially feel they can kind of say whatever they want, albeit good or misleading.

"They think there’s a high level of trust in the consumer base. In fact, there’s not. Only 26 per cent in our survey said they actually trust the claims that they’re reading today.

“A lot of consumers are frustrated. They’re skeptical.”

Greenwashing claims are placing a harsh spotlight on sustainability labels, which could impact consumer habits. In a time when trust is critical, a brand’s reputation is at risk, Solly continued. Younger consumers in particular are tuned-in to values like authenticity and environmentalism.

Consumers are voting with their wallets to support companies that have a purpose, and consumers expect companies to abide by it.

How to build trust with consumers

Most Canadians want to buy sustainable products, but 61 per cent do not want to think about sustainability when shopping or do not want to make purchasing decisions based on whether one product is more sustainable than another.

To address this, Deloitte says brands need to make their products inherently sustainable. Procurement teams need to ensure their supply chains are up to standard, assurance teams need to check and validate sustainability data, and marketing teams must have clear and informative messaging.

Deloitte offers several ways for companies to build trust about sustainability claims. Having a clear purpose and engaging with customers on a product and brand level are two of them.

More broadly, Solly suggests building transparency to foster trust. This means explaining the issues the business faces, revealing the material aspects like sourcing impacted by environmental and social factors, and linking a sustainability claim to the brand.

Third-party certifications for sustainability can help, with 49 per cent of consumers seeing this as useful, which rises to 55 per cent if it is a global standard. Such seals are not perfect however, as greenwashing claims have also been levelled at some of these organizations.

Solly recommends businesses decide if they want to create a sustainability framework on their own or leverage a third-party seal, which means carefully examining if the certification uses quality data and independent verification while continuously improving and maintaining transparency.

Solly said Deloitte’s consulting has helped its clients with sustainability, such as reducing Scope 1 and 2 emissions from the food industry and helping to investigate their supply chains to reduce emissions at the farm level.

The report names Maple Leaf Foods as an example for its climate neutrality achievement and science-based climate target.

Being a sustainable brand is not easy, Solly said, because there is not a lot of clear and consistent guidance. But he encourages businesses to keep going.

“There’s a market, there’s consumers with a propensity to spend. They told us that, the numbers are significant. It’s a missed opportunity for a business if they don’t jump on this in the near future.”