Anyone at all versed in behavioral economics already has some understanding of the intention-action gap, in which one’s words don’t always match deeds. For many consumers, a similar cycle develops around sustainability. They want to live more sustainable lives, but time, money or some other factor prevents them from seeing that intention through. So, if a brand were to reduce the common friction points associated with doing business with and investing in green companies, then it stands to reason it would emerge as a leader and earn more market share.
This is especially true today, as a joint report by Barkley and Jefferies Group found that 95% of consumers say sustainability is as or more important than 18 months ago. With two-thirds of consumers reporting that they base purchasing decisions on brand values, an increased focus on sustainability presents a huge opportunity for insurance companies to gain traction with consumers looking to invest in like-minded brands.
In the insurance sector, the difference between quality and cost of coverage from one brand to the next are often minimal, at best, so brand values and consumer trust are increasingly important. Either one can be the tipping point in purchasing decisions. An increased focus on sustainability, therefore, can help insurance companies not only differentiate themselves from competitors but also connect with consumers on a deeper level.
Benefits of Sustainability in the Insurance Sector
People now expect all companies to take a stance on sustainability issues. Shifting your focus from a myopic view of consumer needs to a larger view of worldly needs meets this consumer preference for sustainability while also leading to better innovation within companies. Here are some other benefits of sustainability in the insurance sector:
1. Sustainability can lead to greater profits.
The purpose of most companies is to produce profitable solutions that help meet consumers’ needs. At first glance, it can appear as if generating more profits is in conflict with doing good in the world. However, shifts in consumer attitudes, beliefs and behaviors suggest that it’s often more profitable for companies to develop and launch sustainability initiatives. The majority of consumers (60%, according to the Barkley and Jefferies report) say they’re willing to pay a premium for products from environmentally or socially conscious brands.
Take Unilever North America. The company’s commitment to sustainability has more than paid off in its revenue growth. As of 2020, 75% of Unilever’s growth has been driven by its cadre of more than 28 sustainable living brands, which include the likes of Ben & Jerry’s, Dove and Seventh Generation. SAP, a multinational software and technology company, has experienced similar results in not only revenue but also business outcomes with its increased focus on sustainability. It’s also not shy about sharing its beliefs that sustainability can be profitable and that profitability can be sustainable.
2. Sustainability can improve employee engagement.
Engaged employees are less likely to leave, thereby cutting the time and expense associated with replacing and retraining talent. Companies focused on sustainability don’t often run into questions about how to engage their team members. Sustainability efforts provide employees with a sense of belonging and the feeling of contributing to the greater good, which improves job satisfaction and overall sentiments about a company.
This isn’t to say that pay or benefits are inconsequential, but good pay and benefits don’t guarantee low turnover rates. One survey found that a majority of Millennials would accept a smaller salary to work for an environmentally responsible company. Sustainability in the insurance sector could be a cure for its talent crisis.
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3. Sustainability can support brand growth.
Word of mouth has become a critical component to brand awareness and growth in the insurance industry. The question then is, how does an increased focus on sustainability encourage positive word of mouth? With younger generations, “green” word of mouth has become a trend: Millennials especially will recommend companies with ESG initiatives to friends and family.
In fact, 75% of people who recommended a brand in a six-month period in 2021 did so because of the brand’s environmental or social responsibility. Improved word of mouth can lead to increases in the quality and quantity of viable leads.
4. Sustainability can strengthen brand reputation.
Let’s look at two companies on opposite sides of the political spectrum: Chick-fil-A and Ben & Jerry’s. Chick-fil-A might make solid nuggets, but that’s not what the business is selling; Ben & Jerry’s might make excellent ice cream, but that’s also not what the business is selling. In truth, both sell their values and service experience to customers.
How is it that these category leaders — businesses that charge more per ounce for their respective products than their competitors — continue to win? It’s the reputation of their brands. It’s the values, service and trust that bring people back. Those three factors are crucial and connected. That’s what sustainability in the insurance sector can do for your brand’s reputation.
Why should companies focus on sustainability? Sustainability begets innovation and vice versa. Though quality and price will always play a role in purchase decisions, values have become the differentiator for many consumers — 50% of consumers, in fact, choose to buy from brands that share their values, the Barkley and Jefferies report found. An increased focus on sustainability efforts creates the trust capital your insurance brand needs to remain relevant and drive profits for years to come. Besides, our planet will be better for it, and isn’t that the most important reason of all?