LEGO, IKEA, and Levi’s are Winning with Gen Z Customers through “Sustainability 2.0”

By 2030, Gen Z and Millennials are expected to account for nearly half of U.S. consumer spending. Gen Z will wield significant buying power as the largest and wealthiest generation globally. Unlike previous generations, Gen Z is not just brand-conscious, but rather value and values-driven, with environmental responsibility as one of the core drivers of their purchasing decisions.

By prioritizing eco-friendly initiatives, brands and retailers can cultivate loyalty among younger consumers and secure a competitive advantage. Research suggests that 80% of Millennials and 66% of Gen Z consumers consider sustainability a driving factor in their purchasing decisions. Additionally, more than half of these shoppers are willing to pay a premium for products that align with their environmental values. This shift in consumer behavior is evident as sustainably marketed products are growing twice as fast as their conventional counterparts.

Sustainability 2.0

While discussions around sustainability have been common in retail for some time now, we urge retailers to formalize their approach and integrate environmental elements into their overall business strategy. We call this approach “Sustainability 2.0.”

Sustainability 2.0 requires that companies hold themselves accountable with metrics and KPIs, that tie sustainability into performance expectations in concrete and measurable ways. Our experience suggests that this is a challenge for both retailers and consumer brands.  From merchants to operators and procurement to facilities management, sustainability requires integration throughout the business. To make true progress in sustainability, it must be integrated into the business both in terms of strategy and the roles and individuals charged with leading the business every day.

Spotlight on Sustainable Strategies  

LEGO: Connecting employee compensation to decarbonization goals

• LEGO aims to reduce emissions by 37% by 2032 and achieve net zero by 2050 through a variety of well-defined initiatives. To support this goal and motivate employees, the company has tied a portion of salaried employees’ bonuses to its annual carbon footprint.

Levi’s: Committing to sustainable production practices

• Levi’s is dedicated to reducing its environmental footprint through sustainable production methods. The brand has implemented Water<Less® technology, which has significantly reduced water consumption in the manufacturing process. Additionally, Levi’s uses sustainable materials like organic cotton and recycled fibers.

IKEA: Working to become a circular business

• IKEA is striving to become a fully circular business by 2030 by rethinking its processes and strategies. The company is developing new services and products that empower customers to acquire, care for, and pass on items in circular ways, helping to extend the lifespan of products through maintenance, repair, and resale. The company has set a goal to design every product to be reused, refurbished, remanufactured, and eventually recycled.

Putting Sustainability 2.0 Into Practice

For retailers looking to adopt Sustainability 2.0, the first step is to evaluate existing business practices through a sustainability lens. Engaging sustainability experts can provide an objective assessment and help identify areas for improvement. It’s essential to foster an environment where open discussions about sustainability efforts are encouraged, and a willingness to experiment with new approaches is embraced. By integrating proven sustainable practices across the business, retailers can position themselves for long-term success with Gen Z consumers.

McMillanDoolittle is committed to assisting brands and retailers in developing sustainable strategies. McMillanDoolittle has partnered with bgood collective to offer full-service sustainability consulting. Check out our blog detailing our partnership and services. Additionally, in collaboration with the Ebeltoft Group, we have published various whitepapers on ways retailers can become environmentally responsible. Access our global publications here, and contact us for a complimentary consultation.

About the Authors: 

Johanna Masket (johanna@bgoodcollective.com) is a proven sustainability strategist and business executive with extensive experience growing and developing global businesses. As the co-founder at bgood collective, she brings her strategy insights and operational experience to bear to guide clients through the path to sustainability.

Scott Benedict (sbenedict@mdretail.com) is an accomplished retail merchant, educator, consultant, author, board member, keynote speaker, and digital retailing executive with more than 35 years of diverse experience spanning traditional brick-and-mortar retailing, eCommerce, omnichannel, and international retail merchandising and operations.