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UK consumers will pay more for green, but not much more

Peta Hodge
29th September 2009
In the current economic climate, businesses pricing environmentally-friendly products and services for the UK market should try to keep any ‘green premium’ to between one and five per cent, a new survey suggests.
The survey – ‘Green Appetites’, by multinational insurance group RSA – found over a third (35 per cent) of UK consumers are willing to pay this much extra for an environmentally-friendly product or service. 

However, only 11 per cent are willing to pay between five and 10 per cent and only one per cent are sufficiently committed to pay an environmental premium of more than a 10 per cent.

Overall, this means almost half of UK consumers are willing to pay some kind of green premium, even in the current recession.

Dr Paul Pritchard, UK head of corporate responsibility at RSA, said the report “highlights consumers’ enduring interest in the environment despite the current downturn” – though it also points out that this interest is far from universal.

While 47 per cent of UK consumers are willing to pay a green premium, 34 per cent said categorically that they were not and 14 per cent weren’t sure.

Although they may not be willing or able to back up their views with hard cash, the survey suggests that environmental issues have become an increasing priority for most UK consumers and businesses.

The vast majority (80 per cent) see the use of reusable plastic bags as a crucial environmental issue, for example. 

The fact that this came out as the survey's top environmental priority is interesting – perhaps reflecting the fact that this is something consumers can do to help the environment at little or no cost to themselves and also, possibly, the success of efforts by the Government and leading supermarkets to reduce the use of plastic bags.  

Pritchard said it was fascinating to see the issue of reusables feature so prominently in the survey. “While some commentators might want to focus attention on 'big' issues such as energy or transport, it’s clear that campaigns with clear well explained goals, allowing consumers to get  involved, can be engaging and successful,” he said.

In future, the UK consumers surveyed indicated that they are most likely to do their bit for the environment by buying energy efficient goods (74 per cent) and locally grown produce (58 per cent), they are less likely to go for renewable energy (41 per cent) and fuel efficient cars (32 per cent).

Only a few (24 per cent) said they would let environmental concerns dictate the clothes they bought and only 21 per cent plan to carbon offset their holidays. 

The level of commitment to green goods and services amongst UK consumers is closely mirrored in most of the other European countries surveyed. In fact, France records an identical 47 per cent of consumers prepared to pay an environmental premium, compared with 50 per cent in Sweden and 54 per cent in Germany.

Denmark is the only European country surveyed to register significantly higher levels of green demand than the UK, with 64 per cent of consumers saying they are prepared to pay more for greener goods and services. 

Interestingly, consumers in the emerging economies of Chile and China appear considerably more environmentally conscious than those in the developed world, with 89 and 90 per cent respectively prepared to pay a green premium – and 15 per cent of consumers in both countries saying they would pay more than 10 per cent.

The nine markets covered by the survey were Canada, Chile, China, Denmark, France, Germany, Sweden, United Arab Emirates and the UK.

UK consumers will pay more for green, but not much more
80 per cent of UK consumers see the use of reusable plastic bags as a crucial environmental issue
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