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Growing value of green consumers in Indonesia
The findings reveal that 99 percent of Indonesian consumers are aware of what climate change is, and while the depth of that knowledge may vary, there is growing emphasis on green consumption.
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rowing recognition of the climate crisis is penetrating public discourse in Indonesia, leading to increasing numbers of so-called green consumers making sustainable purchasing decisions.
The question of sustainability is undeniably complex, with interrelated challenges and opportunities facing both businesses and their customers. What is clear is that a truly integrated solution will require enterprises to better understand the evolving sentiments of customers.
Boston Consulting Group (BCG), in partnership with workforce platform Sampingan, undertook a survey of 600 Indonesian consumers to gauge their attitudes toward sustainable decisions, and their understanding of the evolving low-carbon landscape. The findings reveal that 99 percent of Indonesian consumers are aware of what climate change is, and while the depth of that knowledge may vary, there is growing emphasis on green consumption.
Understanding Indonesia’s green consumers
While most Indonesian consumers evidenced a broad recognition of climate change, the majority seem to exhibit only a surface knowledge of what climate change means in a global context, with just 77 percent aware but not regularly following news or information on the issue.
Our study found that half of the respondents had never heard of the seminal Paris Climate Change Agreement, and 20 percent had heard but did not really understand its meaning. There were similar findings in the understanding of low-carbon energy transition, with just under half (40 percent) not understanding this concept.
While just over one-quarter (27 percent) expressed an understanding of the true impact of climate change, it is clear that public knowledge is likely to expand in the future. Over half of respondents claimed to already actively participating in low-carbon activities, and 50 percent were willing to pay a green premium of at least 10 percent on an original price for low-carbon products and services, demonstrating a clear link between understanding and action in this evolving space.
Action turns into sustainable opportunity
While sustainable action is so far limited, the study’s findings demonstrate a positive outlook ahead for green consumption growth.
Food and beverage was the most prominent area where green decisions are informing consumers today, with 54 percent of respondents actively making informed consumption decisions such as reducing food waste and eating locally produced food. This was followed by consumer goods (35 percent) where users are buying sustainably packaged products and transportation (34 percent) where individuals are utilizing low-carbon transport alternatives. Between 10 and 16 percent of consumers were already taking action while being unaware of the real impact, perhaps demonstrating a recognition that action is needed, while not being clear on the information as to how or where the impact will occur.
Understanding of the low-carbon transition spurs greater engagement, although more acute in consumption sectors than personal jobs or advocacy. Across financial decisions (15 percent), jobs (27 percent) and advocacy (38 percent) people are already taking action, both informed and uninformed, to promote more sustainable decisions.
Perhaps the most telling statistic for strategic decisions in both public and private spheres is the large number of consumers considering action in the future. Almost half of consumers are considering greener decisions in both finance (47 percent) and jobs (46 percent), with one-third considering active advocacy. Growing numbers of consumers are considering action across various economic sectors, with 41 percent planning to take action for greener and energy-efficient housing solutions, 38 percent planning action for greener transport and recreation and 36 percent looking for more sustainable fashion.
These findings indicate that green consumers not only form an influential consumption group for private sector enterprises, but also show the appeal of sustainable commitments in future elections.
Counting cost of green decision making
This study shows that recognition of climate change and an imperative for green consumption is on the rise, and consumers are willing to take action alongside their words in future decisions.
With almost two-thirds (65 percent) of all respondents claiming they would actively advocate and buy from companies that implement green initiatives, there is a clear opportunity for enterprises to build revenue through engaging with green consumers and embedding sustainable actions within their operations.
This action is not simply limited to advocating for change, but also willingness to make personal financial changes. Almost one-third (30 percent) of respondents to the study were willing to pay a green premium of up to 10 percent on an original price for low-carbon products and services, and fully one-fifth were willing to pay half again as much as the original price for low-carbon products and services. This shows clear encouragement for greener products offerings, and an eager green consumer group willing to take advantage of those offered.
Consumers need support of private sector stakeholders to achieve green consumption ambitions. 33 percent need education about the benefit of green activities, 31 percent need options with lower prices and 19 percent are looking for easier options to complete green activities. Housing and utilities (39 percent) and recreation (27 percent) are the most price-sensitive, with respondents unable to afford more low-carbon alternatives.
There are three clear ways that companies can embrace this growing opportunity. The first is through action to revamp their sustainability agenda, placing sustainability truly at the heart of business strategy. This can begin with developing an end-to-end sustainability strategy anchored to low-carbon objectives, including baselining current emissions standards to evidence progress in achieving targets on the sustainability road map.
There are a number of interventions enterprises can take to embed such a sustainability strategy. Working with suppliers and raw material providers offers a valuable path to improving sustainability of operations, working in partnership to enhance green practice within the end-to-end ecosystem. Innovating new product and packaging solutions can be another key intervention.
Enterprises can also work to involve customers in supporting green products and activities, helping to drive behavioral changes through campaigns or new advertising strategies. Our survey found that 33 percent of consumers were actively looking for more information on green topics. Enterprises’ own engagement in this area also offers a route to integrate customers’ sustainability actions with those of businesses, such as encouraging recycling or sustainable product end-life cycles.
Finally, enterprises should work to explore green business initiatives, with an eye on true net-zero operations and accelerated low-carbon transitions. This not only provides a pathway to open up new green consumer growth areas, but enables businesses to genuinely contribute to climate change solutions. Creating carbon-neutral products, investing in low-carbon companies or exploring nature-based solutions are just some ways to do this.
It is clear that climate change awareness is growing in Indonesia, and with it both the demand for, and opportunity of, green consumers, making fertile ground for companies with genuine sustainability credentials.
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Marc Schmidt is managing director and partner of Boston Consulting Group, while Wisnu Nugrahadi is cofounder and CEO of Sampingan.
