Who Cares?

Exploring Consumer Attitudes Toward Sustainability

North Carolina Sustainable Business Awards Conference

October 22, 2007

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Agenda

� Environmental Literacy

� Consumer Attitudes Toward the Environment

� The New Wal-Mart Effect

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Environmental Literacy

� The National Environmental Education & Training Foundation is a Congressionally chartered, private nonprofit organization that supports the development of environmental literacy in its many forms

� Conducts detailed annual surveys about public awareness of environmental issues

“Our years of data from Roper surveys show a

persistent pattern of environmental ignorance

even among the most educated and influential

members of society”

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Environmental Literacy

� Adult Americans really have a very poor knowledge of the environment

• 32% pass a basic quiz on environmental subjects

• Just 12% pass a basic quiz on awareness of energy topics

� Women have more support for the environment over the economy, and more support for additional environmental regulation, but lower levels of environmental knowledge

• Men score twice as well as women on awareness tests

� One of the biggest problems is the people overestimate what they know

• 70% of Americans think they know quite a bit about the environment, but really only about 10% have a real working knowledge of basic environmental facts and figures

� About 1/3 of Americans think that chloroflourocarbons or CFCs are still contained in spray cans

• They were banned in 1978

� About 1/3 of Americans think that disposable diapers are the number one thing going into landfills

• Diapers account for 1% of total; from a weight and volume perspective, the number one thing going into landfills is paper

� 45 million Americans think the ocean is a source of fresh water

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The 30:3 Problem

� "Thirty percent of people claim to be concerned about the environmental and ethical integrity of products and services they purchase and yet only three percent translate this attitude intobehavior.”

Wendy Gordon

Brand Green: Mainstream or Forever Niche?

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Yankelovich Green Monitor

� "Given consumer attitudes today, green is best characterized as a niche opportunity in the consumer marketplace," says Walker Smith, president of Yankelovich.

� "It is a strong niche opportunity, but it is not a mainstream interest that is passionately held or strongly felt by the majority of consumers.”

� “The amount of media interest given to the environment far exceeds the amount of consumer interest.”

� Segments include:

• Greenthusiasts (13% of the U.S. population)

• Greenspeaks (15%)

• Greensteps (25%)

• Greenbits (19%)

• Greenless (29%)

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2007 Roper Green Gauge

� True-Blue Greens (30%)

• Environmental leaders and activists most likely to walk the green talk

• Nearly half (48%) turn to environmental groups as their main source of green information

� Greenback Greens (10%)

• Do not have time to be completely green and not likely to give up comfort and convenience for the environment, but willing to buy green products

• Nearly half (49%) get information on green issues from newspapers

� Sprouts (26%)

• Fence sitters who buy green only if it meets their needs

• One third cite newspapers as their main source of green information

� Grousers (15%)

• Generally uninvolved and disinterested in green issues; Believe individual behavior cannot improve environment

• Newspapers again serve as their major information source on green issues

� Apathetics (18%)

• Basic Browns not concerned enough about the environment to take action

• Believe environmental indifference is the mainstream

• TV programs are their main source of environmental information

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2007 Hartman Report on Sustainability

� “How consumers feel about a world struggling to live in balance today for the benefit of future generations“

� Sustainability consciousness is defined as expressing or demonstrating through self-reported attitudes and behaviors a conscious willingness to incorporate some aspect of sustainability in a person’s normal routines

� Segments are:

• Core (18%) extend their risk awareness outward from their bodies to broader environments ranging from their community to globally

• Mid-level (65%) consumers focus on risks to their bodies, but also examine risks to surroundings at home as well as in society.

• Periphery (17%) limited involvement tend to concentrate their awareness of risks to their personal lives and bodies

� A small portion of Americans (7% of respondents) fall outside the World of Sustainability.

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Adaptive Reactions

“Thinking about the major problems facing the world, which of the following most closely resembles your perspective?”

� Radical Engagement (36%)

• “If people do not band together and employ radical means to overcome major problems, our future is bleak"

� Sustained Optimism (27%)

• "If we rely on rational intelligence and science, we can overcome major problems and secure a hopeful future"

� Divine Faith (20%)

• "If we leave things in God's hands, everything will turn out as it should"

� Cynical Pessimism (17%)

• "Save the planet? Who are we kidding? We can't even take care ofourselves"

� Pragmatic Acceptance (8%)

• "I don't worry about the major problems facing the world because they are beyond my control"

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Marketing to the Middle

� The Mid-level segment constitutes the largest and most heterogeneous group

• Much less extreme in their views on sustainability

• More open to efforts by mainstream firms to address issues of sustainability

� Mid-level sub-segments

• Radical Engagement position, brings environmental causes to the forefront

• Divine Faith, tends to be more concerned about issues of social responsibility

• The third group of Sustained Optimism shares elements of the two other groups, but has a more moderate, pragmatic way of dealing with sustainability.

� Core consumers are the most intensely involved and passionate about issues surrounding sustainability

• They are also the most cynical group of consumers

• Many within the core distrust corporations’ motives when it comes to green behavior

• Core is the most motivated and sets the agenda

� Marketers would be better to look to the core for inspiration on how to talk to the mid-level and for insights as to where the mid-level may be heading

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Key Values

� “Sustainability” is an umbrella term for six key values in the mindset of consumers:

• Healthier

• Local

• Social responsibility

• Environmental responsibility

• Simple living

• Control

� Many consumers feel they have control in their own households but feel out of control when it comes to regional, national or global issues.

• This leads to heightened interest and participation in purchasing sustainable products for personal health and safety benefits in the home and from convenient local sources

� Consequently, health and safety in the home affects purchase decisions.

� The vast majority of consumers at this time will not pay more or go out of their way to participate in regional, national or global issues

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Really Simple Segmentation

� Committed - knows what to do and does it

� Conflicted - knows what to do, but doesn't always bother

� Confused - doesn't know what to do, or how to make a difference

� Cynical - doesn't know and doesn't care

Joel Makower

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Pop Quiz

� Would you say the following quotes came from an environmental activist or a corporate leader?

• “We should view the environment as Katrina in

slow motion.”

• “We envision a point in the near future where

there will be no dumpsters at large retail stores,

and no landfills with throwaways.”

• “Have you ever noticed that when you’ve taken

the item out of the package you’ve got more

packaging than item?”

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Wal-Mart’s Journey to Sustainability

� Wal-Mart chairman Rob Walton - avid outdoorsman courted by Conservation International (CI), a leading NGO with pro-corporate orientation

• Made a $21M grant and joined their board

� CEO Lee Glass completed a review of legal and PR woes

• Commissioned a year-long review of environmental impact, using CI and BluSkye Consulting

• Influenced by Natural Capitalism (Lovins, Lovins and Hawken)

• Hired staff and PR firm with experience in Democratic presidential elections

• “I had an intellectual interest when I started. Now I have a passion.”

� Created 14 sustainable value networks, focused on specific areas (logistics, packaging, seafood, textiles, etc.)

• Comprised of executives, suppliers, NGOs, and regulators

� Managed by a corporate staff of 5 people

• Key decisions are de-centralized; constant push into local decision-making

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But What Are They Doing, Really?

� Like Wal-Mart as we know it, initial (relentless) focus on cost reduction within internal operations and with 60,000 suppliers

• Low-hanging fruit

• Innovation Projects

• Long term?

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The New Wal-Mart Effect

� Committed to the Senate Committee for Energy & Natural Resources in April 2006 to eliminate 30% of non-renewable energy in U.S. program

� Created a design collective with goals of reducing existing stores energy uses by 20% in seven years

� Developing a proto-type that is 30% more efficient in 4 years and 50% more efficient in 7 years

� Increasing truck fleet efficiency by 25 percent in the next 3 years, and doubling efficiency in the next 10 years

� Ultimate goal: help create business models and opportunities that will allow stores to operate on 100% usage of renewable energy

� Making global deals on purchasing LED lighting and solar panels

� Acres for America. Purchasing land in conservation areas for every acre developed. Existing and future.

� Sharing all learnings in technology with the world, including competitors

• “The more people who can utilize this type of technology the larger the market and more we can save our customers”

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Sustainable Store Experiment� Recovered cooking oil bio-fuel boiler

• The Bio-Fuel Boiler reduces the Supercenter’s use of natural gas by just of 30,000 therms, or enough natural gas to heat and provide hot water for 26 single family homes in McKinney for an entire year

� Building integrated photovoltaic: roof mounted polycrystalline

• The Garden Center canopy is estimated to generate 14,585 KwH per annum, which is enough electricity to power 486 single family homes for one day and reduces greenhouse emissions by an estimated 22,100 pounds per year, lowering the demand for local power generation. An average household CO2 output is 22,750 pounds per year

� Building integrated photovoltaic: roof mounted, clerestory amorphous

• Each vestibule is estimated to generate approximately 4,177 KwH per year. Combined, this is enough electricity to power 270 single family homes for one day and reduce greenhouse emissions by 12,750 pounds per year. An average household CO2 output is 22,750 pounds per year.

� Building Integrated Photovoltaic: Curtain Wall, Clerestory Mounted Polycrystalline And Amorphous

• The façade-mounted crystalline panels are estimated to generate 23,544 KwH per year. This is enough electricity to power up to 780 single family homes for one day. The façade-mounted thin film laminates are estimated to generate 2,431 KwH per year. Reducing dependence on conventionally generated power, the two laminates are estimated to reduce greenhouse emissions by 37,750 pounds per year. An average household CO2 output is 22,750 pounds per year.

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Sustainable Store Experiment

� Fly ash in building concrete

• Every ton of fly ash utilized saves the equivalent of one barrel of imported oil (energy). Approximately 800 tons of fly ash were used in this building’s slab and foundation system.

� Natural daylight and dimming controls

• The lighting savings at McKinney are projected to approach 300,000 KwHs a year.

� Reflective coating on the building

• The west face of the building has been coated with reflective ceramic paint to reduce heat gain inside the building.

� Alternative freezer/cooler refrigeration units

• By relocating the refrigeration systems to the roof, copper piping and refrigerant leads were reduced by more than 40%. In combination with the added glass doors at the display cases, an estimated energy savings of 645,000 KwH annually will be achieved, providing enough power for 65 single family homes for an entire year.

� Radiant floor heating

• A radiant floor heating system conducts heat through the floor using hot water which is pumped through a series of tubes in the concrete floor. Since radiant energy warms us so effectively, the thermostat can be set at a lower temperature. This kind of heating conserves energy through the even release of heat from the floor.

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Sustainable Store Experiment

� Air distribution system

• This system is estimated to save about 600,000 KwH of electricity per year, which is enough to power about 60 single family homes for an entire year.

� Burning used motor oil

• Used motor oil from the store’s Tire and Lube Express is collected and saved for use in a biofuel boiler. The boiler generates heat on site to heat the building. Combined with cooking oil collected from the deli, the natural gas saved is just over 30,000 therms, which is estimated to be enough to heat and to provide hot water for 26 single family homes in McKinney for an entire year.

� Recycled food waste

• Food waste from the produce, deli, meat, and dairy departments is typically hauled to a landfill. Since this is organic waste, it is hauled to a local commercial composting facility where it is processed and made into compost.

� Air conditioning condensation water

• Condensation from the store’s refrigeration and air conditioning systems is collected, stored in the pond on the east side of the building, and used to help irrigate the landscaping.

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For More Information:

Jim Jubelirer

Vice President

Harris Interactive

6007 Hathaway Lane

Chapel Hill, NC 27514

(919) 969-7818

(919) 969-7813 fax

jjubelirer@harrisinteractive.com

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References

� National Environmental Education & Training Foundation

• www.neetf.org

� Yankelovich Green Monitor

• www.yankelovich.com

� Roper Green Gauge

• http://www.gfkamerica.com/news/gfk_roper_environment_companies.htm

� Hartman Report on Sustainability

• http://hartman-group.com/products/reportSustainability2007.html

� Joel Makower

• www.makower.com

� Wal-Mart Sustainability

• http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=217

� Green Business

• http://www.greenbiz.com/news/news_third.cfm?NewsID=35988

� American Environmental Values Survey

• http://ecoamerica.typepad.com/blog/2006/12/american_enviro.html