Why Sustainability Still Matters – From Boardrooms to Grocery Aisles

Recent years have seen sustainability edge closer to the top of the priority list for investor and consumer-conscious companies as environmental emissions, energy efficiency, waste reduction and product circularity become increasingly integral to market strategy and investment. However, the regulatory engines governing ESG are currently undergoing change, particularly in North America and the EU. So, how might consumer and investor views on ESG change in times of political and economic transition? Let's take a closer look at how food and consumer product manufacturers and retailers are working to improve their “double bottom line” of planet AND profit in dynamic times.

“The only constant is change” is a common truism, but this is certainly the case when it comes to the sustainability regulatory landscape. Recent years have seen the EU's introduction of the Corporate Sustainability Reporting Directive (CSRD), which requires large businesses to give equal weight to environmental and social as to financial performance. However, the European Commission recently introduced the Omnibus Simplification Package to streamline sustainability reporting requirements and reduce administrative burdens for small and mid-sized enterprises. Meanwhile, in the US, where sustainability reporting is less formally regulated, the push to add weight to ESG considerations has come from pressure from buyers, consumers and investors.

While deregulation and favouring of voluntary pathways suggest that sustainability may be less prominent on corporate radars, research shows that consumers continue to seek and favour products with validated “green” ingredients and formulations that allow for circularity in reuse and recycling. Despite inflationary price pressures in certain global markets, consumers remain true to their willingness to pay a premium for products from companies that demonstrate such sustainable practises¹​. This is particularly true of younger generation consumers. For example, purchasing decisions by Gen Z (born 1997-2012) are more likely to favour brands that align with their ethical and social principles².

Despite competing priorities, environmental sustainability, social justice and corporate transparency remain strong factors in global consumer product markets, as evidenced by practises such as sustainable sourcing, eco-friendly packaging and corporate social responsibility initiatives. Consumer packaged goods producers and retailers should also be aware that, for many consumers (not least the young), buying a product is not just a transaction but a statement of their personal values and beliefs.​ A notable 88% of consumers demonstrate increased loyalty to businesses that embrace social or environmental causes. This loyalty translates to sustained revenue streams and a competitive edge³.

While consumer preferences dictate choices around more sustainable products and packaging, the influence of investors persists. Investors are acutely aware of the financial implications of climate change. For example, in the US, the devastating 2025 wildfires in California highlighted the vulnerability of our built environment to climate risks, and globally, 2024 was recorded as the warmest year in the 175-year observational record, surpassing the previous record set only the year before⁴. While impacted communities work to rebuild with more resilient infrastructure, the broad trend in the investment community indicates a growing emphasis on integrating climate risk assessment and management into investment strategies to safeguard assets before climate impacts occur⁵.​

Addressing ESG factors in risk management helps mitigate both physical risks posed by climate change, as well as the reputational and brand risks associated with social media and corporate governance failures. Proactive ESG strategies can prevent crises that might otherwise lead to financial losses or damage to brand reputation.​

This push and pull between regulated and voluntary ESG reporting and sustainability drivers creates a unique landscape for today’s consumer packaged goods manufacturers and retailers. Changing regulatory realities highlight the tension between simplifying compliance and reducing costs for supply chains while maintaining robust sustainability commitments that yield tangible climate risk benefits.

Consumer preferences and investor priorities are both generating inherent business benefits – from lower energy bills at production sites to more motivated, mission-driven staff. The solution for modern businesses must lie in navigating regulatory and market changes around product sustainability carefully.​ NSF helps organisations through its standards, certification, advisory and auditing services, supporting company-wide sustainability strategies, from lifecycle assessment and carbon accounting to circularity solutions in recycling, waste reduction, compostability and reuse*. Specific services we offer include supply chain monitoring and product transparency reporting to verify environmental and health product declaration (EPD and HPD), developing product category rules (PCRs) and conducting life cycle assessments (LCAs). We can also help you map your own ESG footprint and produce relevant ESG reporting (eg. CDP, Ecovadis) in support of external disclosures.

These offerings support the “double bottom line”, fostering greater brand loyalty, managing risks more effectively, sharpening your competitive edge and building resilience to deliver sustained growth in challenging and changing times.

Sources

¹ Nielsen, October 2015, The Sustainability Imperative: New Insights on Consumer Expectations. https://www.nielsen.com/wp-con...

² NIQ, July 2024, How Gen Z Consumer Behavior is Reshaping Retail https://nielseniq.com/global/e...

³ Forbes, November 2018, 88% of Consumers Want You to Help Them Make a Difference https://www.forbes.com/sites/s...

⁴ World Meteorological Organization, Climate https://wmo.int/topics/climate

⁵ Lord Abbett, January 2025, Investment Brief: California Wildfires’ Potential Impact on Municipal Bonds. https://www.lordabbett.com/en-...

*Use of NSF consulting services or attending NSF training sessions does not provide an advantage, nor is it linked in any way to the granting of certification.